Sunday, October 7, 2012

Monthly Snapshot: October 2012

A former boss once told me that I'd never really be done with a project if I didn't know what success looked like.  Suppose that I came up with an idea to improve an internal process within the company: employees don't know how to file their TPS reports.  I might decide to create an instructional guide, and to offer some training sessions.  But I want to make sure the plan is accepted by the employees, so we'd need to think about change management, as well.  I could find all the stakeholders and subject matter experts, identify the root cause of the problem, create an implementation plan and even put that plan into action.  But if I didn't know what success looked like, how could I be sure that the plan worked?  After all that work, what evidence would we have that showed employees filing their TPS reports with the proper cover page?

Personal finance is like that, a lot of the time.  We try our best to save, but we treat ourselves and splurge a bit on the weekends, of course.  In general, it's pretty rare that we ever take a look at our financial picture.  When we do finally open up those retirement account statements, it's not all that clear how far we are from retirement because, hell, how much do you need to retire, anyway?

So in this project of financial independence, what does success look like?  For me, it looks like this: our passive income covering our expenses, in a sustainable way.  More specifically, that means having a paid-for home, with enough assets to cover $2,000 a month in spending.  Maybe that's $600k in liquid assets, maybe it's two rental homes.  But that's the picture I'm trying to paint over the next few years: my money working hard, so I don't have to work.

With that in mind, I'll be taking a snapshot at our finances every month, to see how different that picture looks from victory.

I'll admit that it's scary to post this information publicly. Beyond the general awkwardness of telling someone, anyone, anything at all about your finances, I'm also concerned that this kind of information will just be taken the wrong way.  The three people that read this blog all know who I am and where I live.  One of them is better off than me and he might laugh out loud when he see these figures.  Another guy is just staring out and he'll think I'm a a rich jerk, and then he will start asking me to pay for pizza all the time.  I guess that's why we don't share our salaries with our coworkers and friends:  someone is going to feel disappointed, and that person might be you.

Still, this blog is here to tell our financial story.  While it's different than a lot of people's stories, I don't think it's so unusual that most all of our friends and neighbors could make it their story, if they wanted.  Yes, it's possible to save and invest and pay off debt, even during this crazy recession.  And, if you keep reading this blog, I'll show that it's not that hard, either.

So, all that said, here's how things look at the Done by Forty household at the start of October:

Assets (including the house): $350,219.00
Liabilities  (the mortgage): $51,606.00
Liquid Assets (no house/cars): $189,773.00
Home Value ( $151,311.00
Net Worth: $298,614.00

We started keeping track of these net worth figures this year for the first time, and there's a grainy chart below that shows our progress.  When we started the year, our net worth was below $200k, so 2012 has been good to us. A lot of the gains we've seen are due to the home market rebounding in Scottsdale. (Shhh....don't tell anyone.)  But I anticipate we may give some of that money back in the coming years.  The other big driver to the net worth gains is seen in our mortgage payments: we're coming after that debt like a damn spider monkey.  Next month I'm hoping we can cross over a couple big milestones: getting the mortgage under $50k, and crossing over $300k net worth.

With a picture of what success is going to look like, we're on our way...with a ways to go.

Monthly Snapshot, Oct 2012


  1. I am struck by the juxtaposition of “See Success” and “Building the Pathway”. As a minimum it would make filing those TPS reports a bit more tolerable? Let the mind lead, right, as in to see a desirable outcome, & the journey becomes an enjoyable experience?

    You have me in Bob the Builder mode, so please elaborate about your instructional guide and how you would conduct training sessions?


  2. Hi Kosmo,
    I have to admit, I don't really have any plan to get Peter to fill out the TPS report properly. Maybe one of his other 7 bosses will find a way? :)