Financial Update Jun 5, 2019: NW $3,125,524 ( -2.7%: -$75,856)

May was good for income. The pay from the new assignment kicked in, along with severance payments and some deferred compensation from the past. All in all, we generated $74k of available funds for the month.

Expenses were high for yet another month. Our home is 5 years old and the AC and plumbing need occasional maintenance, and we had a couple of $300 visits from the contractors. The rest of the home maintenance included biweekly cleaning, monthly billing from a mosquito system in the backyard as well as pest control.

Clothing and shoes was big this month due to a lumpy order to my tailor for some custom shirts. With extensive travel on the new job, I need to have two sets of 5 shirts each, so one set can be laundered while the other is being worn during the week on travel. A luxury expense for sure, but due to sensitive skin, having very high quality soft cloth in the shirts matters to me. This is a one time expense that should not repeat in the foreseeable future.

The next big lumpy item was electronics – a new Sonos sub and an apple play 2 compatible speaker. We had been trying to figure out how to stream any kind of music from our phones to the Sonos music setup. The latest hardware incorporating compatibility with Apple allows for that so …. another luxury purchase but one that we hope to enjoy for some time to come.

Finally we splurged a bit on some bulk luxury cosmetics during international travel. Our eating out expenses remained high as well as a celebratory spirit kicked in with the end of school. All in all, almost 50% of our spending was discretionary – luxury – splurging so not a month to holdup as a model of frugality. Both our total and core expenses were high. With that …let us get into the details below…

Due to high income, we increased our saving rate for the month to 86%. Almost all of the surplus cash was reinvested in our high income portfolio. As a result, the annualized distribution from the portfolio increased from $138.6k to $144k. The retirement portfolio continued reinvesting all distributions in a hands free – automated way.

The drop in net worth this month had a few factors going into it. Most importantly, I realized I was not accruing for taxes on an ongoing basis, so it would lead to lumpy payments as the taxes come due. So I made a one time change to catch up with the tax obligation, taking a $30k charge for the next estimated tax payment due Jun 15. After this, the monthly cash flow will accrue any taxes in the same month so there are no net-worth surprises.

The rest of the net worth drop was simply due to the markets. Even though we added our income and portfolio distributions, they were dwarfed by the market drop. The good news is that we continue to buy through the lower asset prices.

Next month, we will do a mid year review relative to our goals for 2019. Till then, enjoy summer!

Leave a Comment

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

*