Tracking your net worth is an excellent way to get a bird's eye view of your finances. But how do you know if you're on track? Well, it depends.
Reaching financial freedom means you've accumulated enough assets to support your current lifestyle indefinitely. The problem is, your lifestyle is probably going to vary significantly from your 20s through retirement.
Most of the time, I can get by spending about $2,500 – $3,000 per month. That's $30,000 – $36,000 per year.
Many people use the “25 times” rule of thumb to determine how much they need. That means saving 25 times your expenses before retirement.
If that's the metric I'm using, I'll need to sock away $900,000 on the high end.
It's an ambitious goal, but I'm not convinced it's really enough. Especially when you factor in the possibility of future lifestyle inflation. Either way, I've got some hustling to do.
Have you checked out my latest side income report?
I earned $2,228.55 through a combination of freelance writing, social media consulting, blog advertising / affiliates, and dividends. However, I've stepped back on freelancing while I focus on some other projects. So I'm not expecting to earn anywhere near as much in quarter two. A reduced side income means I'm re-examining some of my expenses.
I've stepped back on freelancing while I focus on some other projects, so I'm not expecting to earn anywhere near as much in quarter two.
I've realized making long-term, meaningful change is best accomplished slowly. Why? Spending habits are a lot like dieting.
Diets like slow-carb or Whole 30 often seem like they are working, but after a few months, I'm back to my bad habits again.
That's what happens to most people. And I suspect it's the same when it comes to making sudden and extreme changes to a budget.
Last week I deleted the Postmates app from my phone. It's way too easy to order delivery from some of my favorite restaurants when I'm working from home, especially when I'm writing at night.
So I'm declaring May a food delivery-free month. I'm attacking my expensive food habits one at a time, and next month, I'll take a closer look at something else.
What a difference a year makes! I'm really happy with the amount of progress I've made on replenishing my cash supply.
As you may remember, I emptied my savings account after quitting my job in August 2014 and I've been slowly working on rebuilding my emergency fund since January 2015.
I made the mistake of not keeping enough of my emergency fund in cash, so I was forced to sell some stocks to pay my bills that fall. It's not a catastrophe, but being forced to sell stocks at a loss to pay your bills is far from ideal.
Speaking of emergency funds, I wrote this guide about where to stash your cash for MagnifyMoney.
My investments haven't been super exciting lately. I've maxed out my Roth IRA for 2016 ($5,500) with a few different index funds. And the slow trickle of passive dividend income in my brokerage account is still pretty motivating.
Last year, I started using Personal Capital to monitor my net worth. I love seeing all my accounts in one place! Plus, it's great to see a clear breakdown of how much I'm paying in fees for my various investments.
Note: If you sign up for a free account through my affiliate link above, I may receive a small bonus. And your support helps keep the lights on at Cashville Skyline. So, thank you!
As more and more people continue moving to Nashville, home values in our urban core continue to climb. Zillow reports my neighborhood's home values have increased by 18.3% over the past year. And they're predicting another increase of 6.2% over the next year.
I'm pleased with these increases, but I try not to focus too much on it because I'm not planning to sell my home. What's most important to me? It's affordable, walkable to places I like, and less than 15 minutes from my office.
The value of my 2006 Toyota Corolla continues to drop, but it still has less than 80,000 miles! I'd love to hold onto it for another 10 years, so I try to drive it as little as possible.
2nd Quarter 2016 Goals
Now that I've maxed out my Roth IRA for 2016, I'm moving on to my next goal—saving $15,000 in cash for my emergency fund. I have $11,299.75 in a high-interest savings account, so I've got $3,700.25 to go. It's a goal that's definitely possible by the end of quarter two, but I may need to put off a few larger purchases (new bike, plane tickets, etc.) to achieve it.
Readers: Did you meet your financial goals this quarter?