Our financial goals: time for another report

The summer is truly over and it is time to sit down – with a glass of nice wine in my case – and take stock of what has been achieved so far and what is still there to excite our passions and try our endurance. And while I rarely publish personal posts on Tuesdays (usually I try to publish deep stuff that reflects personal position and experience but it is to empower you, my readers) today is an exception; today I will round up the steamy Summer and prepare for a fruitful Autumn.

Let me remind you about my different sets of goals.

My words for the year

Remember that I am not very keen on traditional goal setting; I mean like New Year’s resolutions and things. I have targets – and will be telling you about these ones later – but otherwise prefer to have broad aim that give orientation to my efforts. It works a bit like a compass – there is a general orientation but there are different ways to get South. This is what the ‘words for the year’ do for my life. For the curious and the enlightened, I really wish this were my idea; but it is an idea that Chris from The Art of Non-Conformity put forward couple of years ago.

My words for 2013 are ‘health and wealth’. As you will see, I have been doing rather well on the wealth part of it; and most important of all, in February we paid off all our consumer debt which at £100,000 was no mean feat, believe me. This is a great foundation for building real wealth!

I am not doing very well on the ‘health’ side of things; no, I am not ill. I just have allowed myself to become ‘less fit and more fat’ when the healthy thing to do is exactly the reverse. To keep accountable on that front I started another blog: the Rotund Writer. I know, I did keep this quiet but the time has come to tell you about it: if any of the readers of The Money Principle wishe to join me on my double adventure of making more of my writing and making less of my roundness you will be very welcome!

In brief:

Wealth – pass

Health – watch this space

Specific money goals

I also set some ‘proper’ and very specific financial goals; these were set two years ago and two of them still play; one has become redundant but I’ll explain this later.

Goal 1: Generate £1,644 ($2,658) per month passive income

I have absolutely no recollection how did the number come about; were I to venture a guess I would say that this was predicated more on need than ability. Another clarification I need to make is that probably ‘passive’ income is not the appropriate thing to aim for at this stage – it is more appropriately to talk about additional income.

Accepting these corrections/clarifications this is a undisputed pass.

From the beginning of the year, between the two of us we have earned an average of £3,054 ($4,751) above our regular monthly income. Which is splendid!

Goals 2: Transform some non-income generating real estate into income generating assets

Remember I was telling you that your net worth matters, but the structure of your net-worth matters even more? Well, this is what I am talking about. When I first calculated out net-worth I noticed that we are actually not that hard up. Our problem was the problem of many British people – all our wealth is in non-income generating real estate and pensions. Where there is no fluidity of money, there is no capital, there is no ‘passive’ income. Your money doesn’t work for you.

This is why I set this goal two years ago and for a very long time it was a complete and total fail.

Until…

…three things happened.

First, in August I finally managed to sell the apartment in North Bulgaria that my sister and I inherited from my parent. It is not obscene amounts of money – the market is dodgy, waiting would have been dodgier – but we are just waiting for the money to reach our account (from our account in Sofia).

Second, having done up the top floor of our house we have a room and bathroom that can be rented out. We don’t really want someone here all the time; this may put stress on the workings of the family. But we are having visitors at the University staying with us. One is staying for three months starting on September 10th; another one is staying a week during September (we have another spare room we can rent out on a very short term basis). Which means that in September our house will generate £580 ($902) and in October and November it will be bringing £450 ($700) per month. I suspect we’ll take a break after that and repeat.

And third, it is highly likely that our apartment in Sofia will be rented out. This is not going to make much money but it will be more than enough to cover the expenses around keeping the place

Altogether a big, fat PASS (you can tell I am really please about this one, can’t you).

Goal 3: Reduce our liabilities by £100,000 ($160,000)

Remember that these were set two years ago and back than we still had £72,000 ($110,000) debt? You all know that we have paid all this off (we finished paying off the debt on February, 2) and have no consumer debt apart from the mortgage.

This goal is the one that has lost its importance – we do have a bit of mortgage but it is at very low interest. Hence, instead of reducing further and immediately liabilities we have an investment goal:

By the end of October 2018 to amass £2.5 million (about $4 million).

How are we doing on this one?

Well, it is early days yet and we are at the stage of initial accumulation. Seven months after paying off the debt we have £24,000 ($37,000) kept in liquid investments (ISA and savings) and have another £20,000 ($31,000) ring-fenced to do the roof and install solar panels. I suppose this can count as an investment of sorts and at any rate it is absolutely necessary.

Finally…

I am rather glad I wrote this update. It turns out we are doing fine and our investment goal, while still looking a bit ambitious, doesn’t feel anything as impossible as it did at the beginning of the year.