October ’17 Financial Update – Keep on Rollin’


This is the inaugural post of a series that will provide regular updates on our personal financial situation and performance.  All of the metrics and relevant data points you will see here are things that I have tracked using a combination of Personal Capital and my own spreadsheets for the past 5 years.  For privacy reasons, I’m not going to display dollar values, but will show trends and ratios.  My hope is that by seeing how I track my own finances, you may get some ideas for how to better track yours.  Feedback appreciated, as always!


October was another good month for us financially, continuing the trend we’ve been experiencing for the better part of the last few years.  Here are the highlights:

  • 43% after-tax savings rate incl. dividend reinvestment and employer 401k matches
  • 12.7% growth in net worth over the past 12 months
  • Asset allocation is within a few percentage points of target (no rebalancing required), investment performance is largely tracking the S&P 500

Income Sources

Our income has had a few bumps up and down in the past 12 months as you can see in the following chart:

Oct 17 - Income Sources

My income has been pretty consistent over that time, but my wife’s has been variable.  She started a new job in March after taking a year off with the birth of our son and moving to a new state.  The drop in October is due to her going on maternity leave after our daughter was born.  She’ll be back in business in January.

The big spike in other income are the huge tax refunds we received after having our earned income drop meaningfully from last year after switching jobs/lifestyles.  Significantly higher withholdings last year all came back to us.  I’d expect this to be minimal go forward.

Passive income are things like dividends, Lending club earnings (net of write-offs), and Realty Shares investments.  These are small now, but I’m working to build further.  I’d eventually like to see these reach comparable size as our earned income.

Details of how each have changed as well as relative proportions are included below:

Oct 17 - Income Sources Table

While our total income in the past 12 months has grown 4.8% over the last year, you can really see how much the underlying distribution has changed.

12 Month Average After-Tax Savings Rates

It’s not what you earn, it’s what you keep.  After backing out our tax withholdings, we have pretty consistently saved around 40% of our earnings after we regained dual income status.  That figure goes up slightly if you include all of the dividends we’re reinvesting plus the employer match we receive on 401k contributions.

Oct 17 - Savings Rates

Based on Mr. Money Mustache’s simple retirement math, we’d have around 20 years of working left until we can retire if we were starting at zero.  We aren’t, so it’s a lot nearer than that!

Oct 17 - Savings Rates Table

Our savings rate dip this month was largely attributable to the loss of my wife’s income/ability to contribute to her 401k.  But fear not, while she was working we doubled up contributions on hers so we’re not too far from maxing it out despite only working part of the year.  My 401k will be maxed out by December as well.

Our other savings during the year are IRA contributions ($5,500 each) and a little bit of taxable savings when there was an extra paycheck one month.  We still need to contribute to our kids’ 529s this year to get a credit on our state tax return.

Net Worth Growth

Our net worth has been on a tear over the last twelve months!  Thanks, bull market.  Given the nest egg we’ve built to date, the market is a bigger influence on our net worth growth as our savings as you’ll see in the next section.

Oct 17 - Net Worth Growth

Oct 17 - Net Worth Growth Table

* Total net worth – home/vehicle equity – unvested 401k balances – estimated deferred taxes
** Baseline net worth – 401k/IRA retirement savings – 529 college savings – life insurance cash value

Total net worth is up 12.7% in the last 12 months and 1.2% last month.  This number will always trail baseline net worth growth at is includes our house which I value at the lower of our purchase price or market value.  Since home equity makes up approximately one-third of our total net worth, it acts as a pretty big anchor on growth (by design to be conservative).

Baseline net worth is up 21.6% in the last 12 months and 1.9% last month.  This is pretty representative of growth in my investment portfolio, but also recognizes that I’ll have a hefty deferred tax bill due when I ultimately cash in retirement savings.  I’ve tried to capture that to be conservative.

Liquid net worth is up 5.8% in the last 12 months and 0.6% last month.  There was a big spike in the middle of the year when I drew down a portion of our HELOC in anticipation of dipping my toes in the crowdfunding real estate with RealtyShares.  As I made a few investments, the liquid balance went down.

Changes in Net Worth

November of last year was the last month our net worth declined; it’s grown every period since!  I look at the source of change three different ways: savings, investment portfolio gains, and all other changes.

Oct 17 - Changes in Net Worth

Oct 17 - Changes in Net Worth Table

Even though we’re saving ~40% of our after-tax income every month, gains in our investment portfolio were responsible for effectively three-quarters of our growth in net worth.  That is crazy!  It’s both liberating (and a bit depressing) that what we do day-to-day has such a small impact on our overall financial situation.

Investment Portfolio Asset Allocation

I track all our investments in Personal Capital which is useful for having asset allocation tracked automatically.  Here is our asset allocation in October 2017.

Oct 17 - Asset Allocation

This is pretty close to our target allocation with roughly three-quarters of the portfolio invested in equity index funds.  The balance is invested in bond index funds and alternatives (primarily real estate).  We don’t own any mutual funds, which helps to keep the overall expense ratio pretty low

None of these buckets are materially different from our target allocation, so no rebalancing is necessary.  In the future, I may expand my allocation to alternatives in order to generate some additional passive income from real estate investments.

Oct 17 - Tax Allocation

In addition to tracking our investment portfolio asset allocation, I also track the distribution by tax status.  Our investment portfolio comprises tax-free Roth IRAs, tax-deferred 401k’s and taxable brokerage accounts.  This mix doesn’t move around substantially month to month, but I’d expect it to shift slightly more towards tax deferred over time as the biggest category of our savings are 401k contributions.  In any case, it’s nice to know I’ll have a number of different drawdown strategies to consider, regardless of where the tax code ends up.


I plan to build out a few additional metrics in future months, which I will add to forthcoming versions of this series.  Here are ones I’m thinking about:

  • Years to FI (based on current net worth, savings and spending patterns)
  • J Money’s Lifetime Wealth Ratio (current net worth / cumulative earnings)
  • Months of savings in emergency fund
  • Investment portfolio expense ratio
  • Asset/liability leverage metrics

Readers, are there any blind spots you see in our financial metrics?  What metrics do you use to track your financials?

John started Present Value Finance in 2017 to share his experiences and insights on personal finance to help people make better decisions and take control of their financial lives.  

He achieved financial independence in 2016 by walking away from the high stress world of corporate finance to focus on his family. He’s a husband, father, family CFO, and all around finance geek.


  1. Huge fan of your pretty charts! I think your changes in NW is particularly informative because people often fail to recognize the increase of ‘new money’ vs. ‘returned money’ in the way of returns and interest/dividends and it’s nice to see it broken out that way.

    We only track 3 things and report on them quarterly and they boil down to 3 of our primary goals to reach FIRE status (1) paying down our mortgage (2) filling up our Early Retirement “Gap Years” bucket for retirement spending prior to age 60 and (3) filling up our Traditional Retirement bucket (living/spending from 60+). For the last 2 we try to focus not so much on the amount but in the year’s worth of living expenses they can fund. However, we are a little farther in our journey than you are and prob. closer to retiring. We no longer add to our emergency fund for example and have actually decreased it in recent years. Cheers!

    1. Glad you found it useful. I like to see how much of my net worth growth is from me actively doing something (saving) vs just along for the ride (returns).

      I like the way you track things too. Easy to track understand what it means for being able to retire successfully (which is the whole point).

  2. Hey! Loving your comprehensive treatment of progress reporting. This is something that I’ve been thinking about for a while and building up a dashboard of sorts to report on our progress as a family.
    One thing that might be informative would be a breakdown of mo they expenses. It isn’t everyone’s cup of tea but could provide insight for others looking to reach the same stage of progress toward FI as you have. I’m a big fan of reporting on % to FI and years to FI. Even going so far as to report on whether you did better or worse than those benchmarks and why could be interesting.
    Keep up the great writing. Awesome to see someone with plenty of data and charts!

    1. I just did a huge two part post on percent and time to FI, both what got us to where we are today and where we can maybe go. It’s the most comprehensive look at my finances I’ve done to date.

      I’m still on the fence about the value of benchmarking. The only person you’re running this race against is yourself. I think more people would be likely to discouraged than encouraged by the comparison. What do you think?

Leave a Reply

Your email address will not be published. Required fields are marked *