Net Wealth report – April 2019

Welcome to the April net wealth report. Each month, we report on our income and expenses for the month and any movements in our net wealth. This was the first month I have ever had since leaving school of not having any employment income. We had a great trip to Melbourne to see Mum – paid for with points. Autumn is a fantastic time of year, with the trees turning yellow.

April 2019 flows

Income

Our income this month was down significantly from last month (obviously!) and we are in a negative saving period.

 $
Total5,887
Medicare refund143
Investment income641
Capital Gains4,887
Other215

On the positive side, we did receive some interest and dividend income in from our investment portfolio. The increase in our investment portfolio of $5,400 was quite healthy, at a bit over 1.2% for the month or 14% annualised, but we can’t spend this month. That’s an equivalent of ~3% passive income to cost. Once we hit 100%, then our passive income completely covers our expenses. Our other income includes $215 from selling old baby equipment and some cash coming from our Cashrewards account.

Cash inflows are not expected to change until one of us gets some paid employment. Technically, I am still on “leave” having been paid a lump sum for my redundancy.

Expenses

Wow, what a month for expenses. Firstly, the dryer died. Then the dishwasher blew up. Finally, Mrs Smith decided that we needed a new fridge. With a family of 4 to feed, our current fridge just couldn’t handle the load anymore.

So, off to the local Harvey Norman store we went, where the salesman rubbed his hands with glee as we outlined the extensive list of items that we needed.

Outside the mortgage, the next most expensive item was the final payment for Mrs Smith’s 40th birthday trip. However, most of this expense will be reimbursed by the others coming, so we will see a large inflow next month.

Top 10 expenses$
Total19,400
Household3,667
Mortgage3,418
Travel3,100
Groceries1,448
Clothing1,372
School Fees1,000
Utilities759
Motor733
Childcare714
Dining612

If we add back the travel, our cash outflow for the month was around $16,000, which was about normal.

Time to zero analysis

With the lack of incoming income, I’ve done some analysis on how long we can survive on our current financial resources. I looked at three scenarios, a high, average and low case and calculated at what point in time our cash would run out. It’s slightly sobering, but as can be seen from the graph below, its any time between December 2019 and May 2020, depending on spending levels. Our current spending is tracking somewhere between the high and average spend scenarios at the moment, mostly driven by the large purchases we made during March. Hopefully it pairs itself back a bit.

Dollar per day measurement

I track a lot of our expenses on a “dollar per day” basis. I find that this gives a much better view of our costs over time and better comparison. Below, I have graphed our dollars per day for the mortgage and our utilities. The big leap in the mortgage was a 10 basis point rise in mortgage costs last year. We have probably the lowest mortgage interest rate possible – I keep a very close eye on it. I also expect interest rates to be cut some time this year, which will save a lot. Hopefully we get an interest rate cut soon. There is plenty of media chatter about the RBA reducing rates in the face of a slowing economy. Fingers Crossed!

I will post the rest of our net wealth report over the next week or so. This includes my monthly Kiva update and more detail in our investments and net wealth.

Jim Smith

James Smith is a personal finance expert with over 20 years experience. He believe that money should not be stressful. By using the Stress Free Money pyramid it helps everyone achieve their financial dreams.

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