Welcome to another post in my Financial Independence Update series! If you don’t know what the purpose of this series is, please read this first. This month, I am covering August of 2018.
I want to follow this particular format in these posts:
- Main Goal(s). This will talk about my main financial goal(s) that I set out for the particular time period.
- Ups and Downs. This will be a general reflection of what went well, what did not go well, and some improvements I am looking to make.
- Financial Picture. This is not a net worth update. In this section, I will talk about how I deployed my cash in a way that improved my financial situation and why I did it the way that I did.
- Looking Forward. In this last section, I will talk about what I plan on doing going forward. This can include how I plan on deploying cash, any changes in my strategy, or any significant expected changes in my financial situation in general.
Primary Goal: Net Worth Increase
The primary goal of this month was to increase my net worth as much as possible. This was accomplished in three different ways.
- More frugality than usual.
- Quarterly bonus from work.
- Exercising more stock options from work.
I knew ahead of time that this month was going to be a higher income month. My Q2 work bonus is usually distributed in August. I wanted to be extra careful to not spend it. Therefore, I made an extra effort to be frugal. This month, I needed to buy a pair of pants and a couple of shirts. In an effort to stay frugal, I went over to Goodwill. There, I managed to buy a pair of pants, a button down shirt, and a polo for under $15 total.
The last major driver of my net worth increase was the exercising of my employee stock options (ISOs). Every month, I vest in a new round of ISOs from a previous startup buyout. This month, I decided to execute on the last few months worth of options.
Secondary Goal: Student Loan Paydown
This will probably remain a secondary goal for a while. The only update here is that I changed the auto-pay on this loan to be less than half of what it has been. I have a feeling that markets that might be falling in the future, and I want to make sure I stockpile some cash to be ready.
Tertiary Goal: Emergency Fund
My last few posts in this series have had my emergency fund as my least priority. I will repeat, as I have been, I do not see a need for me to prioritize an emergency fund in my current situation. If you want more information on why this is the case, head on over to my post on emergency funds.
Ups and Downs
This month had lots of “ups”. My parents came to visit from Rhode Island, my wife and I got to spend lots of quality time together, and my net worth went up a lot! Despite getting a bonus, I was also able to not spend more money. I think this is extremely important. I believe the term for this is “lifestyle inflation”. To be honest, I couldn’t have asked for a better month.
A lot of my “spending money” was spent on fast food. For more context on what I mean by “spending money”, head on over to this post. The TL;DR of the post is the following: my wife and I have separate checking accounts that hold a very small portion of money. We designate this as “spending money”, which we essentially have the right to blow on whatever we want. Every month, these accounts get replenished. Continuing on….
The reason I consider the above to be a “down” is more of a psychological reason. Yes, this very small amount of money can be used anywhere for any reason. What do I have to show for it, though? A larger waistline? Going into next month, my plan is to spend that money on things I truly enjoy.
To recap the ups and downs section with actual numbers, here is how my financial picture changed from August 1 to August 31. Keep in mind that these numbers are tracking changes, not the current values.
- Net Worth: Increased by $5,500
- Assets: Increased by ~$1,500
- Debt: Decreased by ~$4,000
August was a really great month. We were extra frugal, exercised some ISOs, and got my bonus. We did all of this while also expanding my waistline! The major plan for next September is to try to cut costs even more. My wife and I noticed that we are nowhere near optimized on our grocery bill. We both agreed we can do a lot better. Our biggest goal for next month is to only shop grocery sales and to clip coupons. Let’s see how that works.
I hope you are enjoying these posts. Again, I am not trying to brag or show off. The goal with this series is to give you more of the emotional side of my journey to financial independence. The point is to show you that while it may be simple, it is not easy. Let me know in the comments if you are finding this series helpful, and any similarities/differences you are encountering on your journey!