I’ve debated many times whether I really want to be completely open about our finances and reveal everything. I am all for accountability, but I also don’t want to divulge too much of our financial situation.
But at this point, it feels like I need to be held accountable for my dreams. I’ve been doing really good in accomplishing a lot of the things that I wanted to do these past few months of 2019. Now that we’re moving into the second half of the year, I feel like I need to ramp up the work that needs to be done to get closer to my goal of financial independence. I realized that I needed to be clear, to write down in firm numbers what I need to accomplish. In order to do that, though, I have to start with what we have now. So I’m just going to lay it out now and see how everything goes.
Our numbers in a nutshell
My current average monthly net income: $1900
My husband’s current average monthly net income: $2,500
My husband’s net annual bonus for 2018: $7,000 (This amount changes every year, though. It can range from $3,000 to $8,000. Sometimes, he won’t even get it so I’m going to keep this optional.)
Our combined estimated net annual income for 2019 (minus bonus): $52,800
Our retirement savings in US brokerage accounts (as of July 2019): $33,000
The estimated value of the property I had bought in (2018): $17,000
Our average monthly expenses for 2018: $4500
Our annual expenses for 2018: $54,000
Our combined current net worth as of July 2019: $130,000
I’ve rounded out the numbers using a rough estimate of 100 yen per dollar. (It is actually closer to ¥108 per USD $1 as of July 2019 but this makes things easier). Since I have a mix of US and Japanese accounts, it would be easier to just get a rough estimate in dollars.
That’s how my mind usually works. I usually wind up calculating everything related to financial independence in dollar amounts. I find this weird because I’m living in Japan and earning money in yen. (Maybe it’s my subconscious reminding me that I want to live in the US during my retirement phase.)
These numbers are always changing, however. My income can drop depending on the amount of extra work I can do. Hubby’s bonus also goes up and down. The amount we save every year is not very consistent. I have yet to develop a consistent process of saving into investments.
But working with these basic numbers, I can estimate our retirement number is going to be more than a million dollars. (Our annual expenses $54,000 x 25 puts us at $1.3 million.) This seems a little bit discouraging because:
My age: 39
My husband: 45
I feel like we’re too old and we won’t be able to save enough in order to hit that retirement number. Hopefully, though, what I’m trying to do is try to get a cash flow going with multiple sources of income.
From our net worth, we have a lot of money sitting in cash. This is cash that we don’t know what to do with. Personally, I want to throw it all in the stock market or another rental property that generates an income. It could also be used to buy a home so we don’t have to worry about paying rent any more.
To be honest, we don’t really know what to do with it, but it’s there and it’s giving us flexibility and peace of mind. It’s not earning a lot in interest (make that 0%) and I’m well aware of the opportunity cost of not investing it to get the maximum possible returns… but, it’s there if we need it. Right now, though, we haven’t agreed about what to do with it so we’re just going to keep it in a savings account instead of a brokerage account.
I am also saving aggressively to buy another rental property. That’s part of the reason why it’s sitting in cash. Right now, the plan is to save as much cash as I can to buy another rental property–without having to take out loans–that will generate more monthly income. I hope to save 70 percent of my income this year.
You might also wonder why our expenses are so high for last year. A lot of it went into savings, though. There were large amounts of cash that got moved from savings accounts into brokerage accounts. I’ve counted those savings into our expenses. This year, it looks like it’s the same. I have’t done the averages yet, but I hope they are the same as last year, or at the very least, lower.
Also, because hubby is still sick, we have to spend a lot of money on his treatments. Other times, these are expenses related to things that ease stress in our lives. This means eating out at restaurants and taking trips. Sometimes these expenses are also family related gifts–which is a big part of the Japanese culture.
So there you have it. Our real numbers.