Our family grew a little a couple of weeks ago…and boy has this changed things! Not everything has been as entirely smooth as we wanted, but our financial preparations ensured that money hasn’t been a source of stress at all this quarter – one of the biggest payoffs in pursuing FI I think it’s possible to have.

Let’s get into the update…

Back in Q3
Net worth: $715,665 / Portfolio: $245,244

We have contributed $12,998 to our portfolio and re-valued our property a little as a result of seeing a similar unit sell. It’s no big deal at the moment given that the property isn’t a productive asset outside of providing somewhere for my mum to live. After the volatility of this year, it doesn’t bother me as much to see our net worth bouncing about a bit. The fluctuating exchange rate between the GBP and USD has also made this significant part of our portfolio quite volatile too as we tend to value everything in USD.

Here are the current numbers:

• Net worth: $771,918 ($56,254)
• House: $426,000 ($6,761)
• Retirement Accounts: $41,917 ($4,594)
• Portfolio: $283,001($37,757)
• Cash: $21,000 ($7,141)

Reflections on the year
The stock portfolio is down just under 10% in total from what it was purchased at. This has fluctuated a bit, but we’ve settled into this new normal. We’re pretty calm in our convictions that this will turn out fine in the long run, but people’s reactions have been interesting when they have asked about it. We never considered selling at any point…where would the money go otherwise? The increased dividends have helped stave off the panic. If we consider YTD, we’re down 14.74%, even with dollar cost averaging in our salary every month. Not great, but we have to remember that bull markets make you feel good, bear markets make you rich.

Wins this quarter:
We increased our cash allocation as we planned to, which meant no stress in buying baby things. Some things have been second hand, other things new. It didn’t really matter as we had budgeted the money for it. Additionally, the birth became quite a lot more expensive very quickly as things became a bit complicated… but this wasn’t a stress as we knew we had budgeted for it. The process of pursuing FI is the reason money wasn’t a factor in our stress, we would have been absolutely floored by it all otherwise! Skills like budgeting, tracking our spending and planning our finances have changed our lives over the past few years. This is the fruit of those efforts.

Goals going forward:
We already effectively live on less than one of our monthly salaries and just invest the other. There is a bit of a leap of confidence, however, when you don’t have the second salary coming in that you can definitely still afford to survive! Not only that, but how much do babies actually cost? We think we have planned this ok, but we’re not going to find out how well we’ve done this until we give it a go. Additionally, there is a possibility that Shortbread & Converse junior (a new nickname is going to be needed here…) may need some extra medical care. It might be that the government hospitals are actually better than the private system for this as they have a greater number of specialists and specialist departments. Even so, there might come a time when a private procedure is needed. Our cash reserve should probably cover this for now so we’re not too worried outside of the basic terror that all first-time parents feel.

Other than the financial, the only other goal will be to try and get used to having a new baby at home. Will this take more than a quarter?…probably! We’re going to keep goals pretty small for now.

And goals in 2023?
We’re not completely sure what we should be targeting for net worth growth in 2023. $800k net worth seems doable if markets don’t tank again…but after this year who can predict anything?! $300k in the investment account might well be achievable by next quarter as we are considering investing Shortbread’s maternity pay instead of holding it in cash. An article will probably be written on our thinking behind this later. We think we have a handle on how much money we need to live on each month as we have been pretty diligent in tracking expenses. The one big unknown is the new baby! We have a decent cash reserve in case anything doesn’t work out how we planned. We don’t have any huge expenses on the horizon this year (we have had to budget to move apartments twice in the last two years!), so hopefully we can just settle into a rhythm and invest what is left after expenses. I should also get a bonus in Q3 this year, so hopefully all of this combined should make 2023 a good year for investments even on a single salary.

Dividends also surprised us this year. We received $4,220.13 (noice?), which was quite a bit higher than we had predicted at the beginning of 2022. $5k would be nice for 2023…we shall see! At that point the dividends spun off from the portfolio start to look a little bit like a side hustle in themselves.

Let’s say we’re targeting $85k contributed (including dividends reinvested) in 2023. It leaves some leeway for spending on our trip home in the summer and any surprises from paying things like tax bills. Maybe it will be higher, maybe it won’t.

Happy new year everyone!