Wednesday, October 7, 2015

Freedom Check - September 2015

At the end/beginning of every month, I will update the status of my freedom fund as a way to stay accountable to you and myself. Assuming everything else remains constant, the freedom fund is based on the number of months that I am able to sustain myself without income.

Freedom Check - September 2015

Income = 100%

Family = 0%
Personal = 0.1%
Rental = 18.2%
Food = 22.1%
Transport = 2.5%
Cell = 0.3%
Household = 0.8% 
Travel = 2.1%
Misc. = 3.5%
Shopping = 18.2%

Contribution to Freedom Fund = 32%

Average Savings Rate (2015) = 31.94%

Value of freedom: 24.13 months

Commentary: Nothing significant for September.

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  1. nice graph but what does 24 months of freedom mean? what is the goal (i.e. is there a specific number to achieve here before you are free)?

    Also, I believe this does not take into account future increase in expenses (inflation, general expenses, etc.)

    1. Hey donkeykong, months of freedom represents the number of months that I'm able to survive without any form of income. For me, it's better to visualize it this way as compared to a 'net worth' of say $500,000 - it has a different meaning to everyone. To someone who is spendthrift, it may be gone within a few years...but for someone else, it may last a lifetime.

      My formula for months of freedom is adjusted every quarter to account for said inflation, etc...

      My goal is not really represented by this graph, but by the dividend income that I publish on my dividend portfolio page. Once it generates sufficient monthly income, then I'm almost financially independent.

  2. I did the exact same thing when I was paying back my student loans and it was very encouraging (screenshot: The bars are how many months worth of loans I knocked out every month, and the red line is a cumulative count of the months I had saved myself overall. It was a much more tangible concept for me to grasp than dollar amounts. It's one thing to say "I paid $1400 towards my student loans this month" and it's another thing altogether to say "I knocked out 3 months of debt from my life this month".

    I'd never thought to do something similar in my retirement planning, which is silly considering how helpful I found the chart and how often I sang its praises. I guess I need to figure out the nuances of the formula I would need for retirement living before I set out to make the chart. That's hard to do considering I'd like to retire into the vagabond life, but it's worth a shot :).

    Thanks for the reminder! New follower and loving your writing!

    1. Hi Dazen, thanks for sharing. Like I always say, personal finance is much more about psychology than 'finance'. Visualization helps and it's a tool that helps keep us on track.

      Just like how idioms explain a complex concept way better than journals do.

      Cheers and hope to see you around on the blog :)