Thursday, 24 January 2013

December 2012 Expenditure Tracker

ItemDec 2012Target (new)Over/(Under)
Share Investments+$1,513+$3,100-$1,587
Offset Acct.+$3,644+$1,300+$2,344
Personal expenditure+$2,967+$2,000+$967

This is my last expenditure tracker post for the 2012 calendar year and in addition to doing the monthly tracker it will give me a chance to assess how I went for the whole calendar year versus my goals at the start of the year as well as my reset goals in the middle of the year.

There were no particularly big impacts on my expenditure goals for December 2012.  This was largely due to the fact that I was travelling for much of the month and my only real investments were in my automatic employee share plan and reinvestment of dividends.  The rest of my savings went to my home loan offset account as I had found no real compelling reasons to either buy or sell stock at the prices at the time.

If I look at the 3 accounts in turn over the month

  • Home Loan offset account
    • This increased much more than usual for the reasons I outlined above - I had no particular feelings about stock investments and I actually didn't spend that much in cash over the month (my credit card is another story though that effect will be seen in the January 2013 expenditure tracker post) and so all this saved cash was put into my offset account
  • Share investments
    • As outlined above these increased slightly due to my employee share plan as well as Dividend Reinvestment Plans that I had in place 
    • I was tempted to sell out of several securities which had a run but I held back and was glad I did so because the strong run in risk on securities has continued into the start of 2013
  • Personal expenditure
    • I spent quite a lot of money on my credit card in November 2012 compared with the previous month and I had to pay this off in December.  This was offset by a reduction in cash related expenditures.  
    • I did not spend as much cash because for a fair bit of the month I was outside the country 
Below I have included two tables. One which outlines my expenditure performance when compared with what I had set out to do at the start of the year and the second a half year performance assessment (i.e. since I reset and realigned my expectations)

ItemJan 12 - Dec 12Target (old)Over/(Under)
Share Investments+$51,787+$39,600+$12,187
Offset Acct.+$29,029+$19,200+$9,829
Personal expenditure+$41,593+$18,000+$23,593

Although it may seem strange that I achieved all of my savings goals for the year while at the same time really spending much more than I was hoping to spend, this is due to the fact that I received a bonus which I don't account for when making my expenditure and savings goals.  I am happy that I far exceeded what I had originally planned to do on the savings and investing front at the start of the year although I really do need to control how much I spend.  I spent over $40,000 in after tax dollars living at home in what should be quite a low expenditure environment.  Going forward I am going to try and control this some more.

ItemJul 12 - Dec 12Target (new)Over/(Under)
Share Investments+$26,978+$18,600+$8,378
Offset Acct.+$35,024+$7,800+$27,224
Personal expenditure+$19,421+$12,000+$7,421

Since re-setting my expenditure goals to what I think are more achievable and normal expectations I have done much better.  Not all of this was because I increased the amount I was willing to spend on personal expenditure but I have actively been spending less per month.  Once again the significant out performance of my savings and expenditure goals was due to the bonus that was paid in the second half of the year.

You May Also Be Interested In:
Expenditure Tracker - All Posts
Net Worth - All Posts
December 2012 Net Worth - $334,000
Unrealistic budget expectations - Always be prepared to reset your expectations

Wednesday, 23 January 2013

December 2012 Net Worth: $334,000 (+4.7%)

As I pointed out in my 2013 Financial Goals post, I was away for the last past of 2012 and the first part of 2013 with no access to the Internet (for all considering going to India - wi-fi access is NOT freely available).  As a result I am rather delayed in my December 2012 net worth post.  The date at which it is accurate is also not 31 December 2012 but rather 14 January 2013 because this was the first day I was able to get accurate data.

Value% Change
Net worth$334,000+4.7%

My net worth performance for December 2012 was actually very pleasing because, although it does not account for all of my expenditure on my overseas trip, it includes a large portion of it.  The surprising fact is that, because I took a vaccination in a country where goods and services and living are so much cheaper than Australia, the amount I spent on the trip was not vastly dissimilar to the amount I would have spent partying / going out and generally living life at home.

In my November 2012 net worth forecast I had actually forecast a decrease in my net worth due to the holiday, Christmas presents and the purchase of my sports car.  If I had purchased my sports car I think I would have had close to a flat performance however I delayed this purchase while I travelled.  As outlined in my 2013 financial goals - I am no longer sure if I want to purchase that car or put the money towards moving out of home.

There were several big items this month which significantly impacted my net worth performance.  These included
  • Included restricted cash from my bonus as part of the net worth calculation
    • Last month I mentioned that I had no way of valuing this.  Since then I have received statements which make this value clear (and I can also see how it moves).  This amount is invested in the stock market so I have included it as part of my equities investments
  • The superannuation component of my bonus was credited to my super account
    • This happened on a month delay.  I did not expect the increase to be as big as it was so it was quite a pleasant surprise when the amount was credited to my account
  • Continued investment in my employee share plan
    • The automatic investment every month in shares is a real benefit to my net worth and I am coming around to the idea that 'automatic savings' are a really good thing - although you will not keep track of it as closely you will never miss an investment due to fear or time issues
    • This amount also increased with the increase in my wage in December
This post is coming close to the end of January so I have a pretty good idea of how I am going to go in January 2013

I am predicting a relatively flat January 2013.  I have saved a little and invested a little but will largely be paying off my credit card and also the foreign currency component of my trip to India (which for reasons which I wont go into I did not have to fund upfront).  Other things which will affect my net worth for January include
  • Increased personal expenditures:  I found that I am doing the holiday season catch ups quite late and so my expenses are increasing as a result
  • A weekend holiday away:  Although I just got back from an overseas holiday I have booked a weekend trip away with my girlfriend which will have an impact
  • Strong share market returns:  The share market has started extremely strongly in 2013 and this is driving much of my net worth gains.  
My goal for January 2013 is to get my net worth above $336,000.  I know this is a rather small increase but for this first month I am not aiming too high.

You May Also Be Interested In

Tuesday, 22 January 2013

2013 Financial Goals

A belated Happy New Year to all of my readers.  My apologies for being absent for a significant period of time.  I spent several weeks travelling through India on holiday.  I had planned on doing a series of posts from there however discovered that it was near impossible to get a sim card as a tourist and the wireless access was terrible.

On that note I thought I would make my first topic for 2013 my financial goals for the year.  I confess that this has taken much more effort than it did last year.  It is a function of uncertainty of where I want to be a year from now.  I imagine that many people who are making big transitional moves in their lives face the same problem.  For me the uncertainties revolve around

  • My living arrangements
    • Currently I still live at home however want to move out this year.  I do not know whether I will rent or buy.  
    • Setting financial goals for the year is difficult therefore because I don't know if my focus will be saving for a large enough deposit or on economising how much I spend on actually living out of home
    • One of my goals from 2012 was to buy a sports car.  I was fully prepared to do this in January and have more than enough to do so but if I want to move out of home it may not be the most sensible move
  • Whether I can dedicate the time and effort to starting my small business
    • Regular readers may remember that last year I went through many of the preliminary steps to starting my own business
    • Life and the sheer time and effort involved however were much more than I imagined.  While it is still something I want to do if I don't want to once again trade in my life for money (as I did in investment banking)
  • Whether I start the CFA or undertake other further study
    • I am seriously considering doing the CFA at the moment.  Whilst my work would pay for all completed units so the cost is not too great, the time commitment is huge and I probably would not be able to start my business at the same time
Having said that, I have always believed that goals should be flexible and should be subject to change.  These goals are based on the assumption that my life situation does not change and so will almost certainly change over the year.

2013 Financial Goals
  • Limit my personal expenditure to $2,200 per month
    • This is an increase by 10% on my previous objective.  I did this for several reasons including
      • I still had trouble meeting $2,000 a month last year so I've given myself a little more fat this year
      • I have spent a lot of money over the last month (and predict this will continue into the current month) to update my wardrobe.  While I will expand on this later the long and short of it is that I hate shopping and so don't do it very often.  The result was that when I looked at what I was actually happy to wear outside the home there was not a lot.
  • Pay my home loan down by $3,500 per month ($42,000 over the year)
    • Because I want the greatest possible flexibility when it comes to my living arrangements (see above) I am dedicating more funds this year to to home loan relative to my stock investments.  
    • Last year it was the other way around as I felt I was very over-weight property and needed to increase my stock holdings.
  • Invest $2,000 in the stock market ($24,000 increase in stock investments over the year)
    • This should be reasonably easy to achieve.  I automatically invest $1,100 every month through my employee share investment plan and so the additional commitment is not that great
    • The challenge here is that once every six months I will be selling out of my share plan shares which then gives me a lump sum to invest at that point in time
    • I do not have sufficient exposure to Australian index funds so I do plan on increasing the amount I have invested in these over the year
2013 Non financial goals which will have a (significant financial impact)

Part of setting financial goals is working out what you want to achieve in all those other important parts of your life.  I set goals for almost all aspects of my life and some of these will have a financial impact.  Some of the ones that will have an impact for me include
  • The purchase of my sports car (or alternatively rental costs if I move out)
  • An overseas holiday to Latin America
  • A skiing holiday (potentially overseas but potentially locally as well) - I don't know how to ski which means I really shouldn't be too fussy.
As with last year the costs of these items should be covered by my annual bonus.  Unfortunately for me this bonus is paid at the end of the year and a significant portion of it is deferred compensation.

Have you set your financial goals for the year?  What are they?  How much did you think about them and do you track them?

You May Also Be Interested In: