Once again, it’s time for a monthly review of my finances. I generally break things down by evaluating my assets and my debts (which together make up my net worth), and then using these numbers, I attempt to set goals for the coming month. This is a useful exercise for everyone to do, simply so they can keep tabs on their overall assets and debts and make sure that they are consistently heading in the right direction. Let’s break it down.
December went very well, mostly thanks to the fact that I didn’t spend nearly as much on Christmas as I was originally anticipating. I actually already had many of the gifts on hand and others were handmade gifts that I invested time in rather than money. The end result? The Christmas bill wasn’t nearly as big as I thought.
Thus, I far exceeded my goals. I wanted to achieve a debt reduction of 1% (check), an asset growth of 0.2% (check plus plus), and Christmas gift-giving without worry (check plus plus).
When I have months like this, where I’m able to do the things I personally want with no worries at all, it makes the frugality and cost-saving choices that I make seem really worthwhile. At that pace, carried over several years, all of my debt vanishes in about eight years and my assets double in value in about twenty eight months – and that’s in a down stock market. Now, admittedly, I can’t keep up the pace – in some months, I have tax bills and other unexpected expenses. But that doesn’t change one simple fact: I’m making good progress each and every month, and that good progress really adds up.
My goals for next month are fairly modest, mostly based on the fact that I have to do some traveling.
Asset growth of 1% This requires my normal plan plus either a non-disastrous month on the stock market or some strongly frugal living from me.
Debt reduction of 1% Again, I’m hacking away at debt at the same pace as before, so this is pretty expected provided there are no unforeseen events.
These should both be achievable if I stick to my basic principles of frugality, reasonable spending, and automated saving and investing. I’m not planning on any big “stretch” goals until the spring, because the next few months are filled with some travel and a few unpredictable expenses.