Visualize My Finances: Volume 1

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Visualize My Finances is a series in which I help readers visualize their current financial situation and their potential financial future.


I’m excited to introduce a new series called Visualize My Finances. In this series I use charts and graphs to help readers visualize their financial situations and their potential financial futures. 

I have always thought that it’s easier to understand your finances if you can actually see them. Often pictures convey information better than numbers can. That’s my whole motivation behind this series – to help people view their financial situation in a way they haven’t before. 

This week’s featured reader is Angela from Connecticut. Angela is 28 years old, single, with no kids, and lives with a roommate. She works as an account coordinator and her current financial goal is to pay down her debt as quick as possible. In the long-term she’s aiming for an early retirement around age 50 – 55.

Let’s check out Angela’s current financial situation and see what it looks like visually!

The Numbers

To start, let’s take a look at Angela’s net worth.

Part 1: Net Worth

Assets
Savings Account $1,200
Checking Account $400
Roth IRA $3,987
401(k) $20,856
Car $18,000
Total Assets $44,443
 
Liabilities
Car  $15,258
Credit Card Debt  $2,000
Student Loan Debt  $43,360
Total Liabilities $60,618
 
Net Worth -$16,175

Although Angela has a negative net worth, there’s a lot of positive factors working in her favor. For one, she has over $20,000 in her 401(k) account, which is above average for her age. Also, she’s only 28 so she has plenty of years ahead of her to pay down debt and continue to ramp up her savings in her retirement accounts. The fact that she’s even thinking about her finances in her 20’s places her ahead of most people. 

Next, let’s see what her monthly cash flow looks like.

Part 2: Monthly Cash Flow

Income
Day Job $3,000
Stock Dividends $5
Bank Interest $5
Cashback $10
Total Monthly Income $3,020
 
Expenses
Student Loan Payment $500
Car Payment $420
Credit Card Payments $350
Rent $337
Medical Bills & Rx $300
Groceries $200
Insurance $149
Dining Out $100
Entertainment $100
Travel $100
Gas $85
Charitable Giving $50
Internet $42
Cell Phone $25
Total Monthly Spending $2,758
Total Monthly Savings $262

Currently Angela is saving about $262 each month, but I can easily see this number growing larger in the future because:

a) She’s throwing $350 each month towards her credit card payments, which will allow her to pay off her $2,000 in credit card debt in about six months if she keeps up that pace. 

b) Once she’s done paying off her credit card debt she’ll have an additional $350 each month to put towards her student loans on top of the $500 she’s already paying each month. The more she puts towards her loans, the less she’ll have to pay in interest each month and the faster she can pay down the debt. 

Now let’s visualize these numbers!

The Visuals

Part 1: Current Net Worth

 

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Part 2: Monthly Cash Flow

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Part 3: Visualizing the Future

Now that we’ve seen what Angela’s overall net worth and monthly cash flow looks like, here’s what her financial future will look like if she continues with this monthly savings rate:

Current Monthly Savings: $262

Current Yearly Savings: $3,143

Projected Net Worth by saving $3,143 each year at various interest rates:

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Now let’s try a thought experiment: We’ll assume her savings grow at a 6% annual interest rate (completely reasonable) but let’s see what the impact of saving even more per month would look like on her financial future:

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Here’s what’s incredible: By saving a couple hundred dollars extra per month, these savings can turn into hundreds of thousands of extra dollars over the course of the next 20-25 years. 

Conclusion

Because Angela is so young and has a long savings horizon, she’s in a great position to save a serious amount of money over the next couple decades. At her current monthly savings rate she’ll have around $100k – $150k by age 50, but if she can make a few tweaks to ramp her savings rate higher she can have hundreds of thousands more than this.

In terms of monthly expenses, I don’t see much for Angela to cut. Her housing, transportation, food, internet, and cell phone costs are all fairly low. Her best bet would be to increase her income. This could mean looking for a promotion, job-hopping, or picking up a side hustle. Check out my interview with Financial Panther for a plethora of side hustle ideas. Even earning a few extra hundred bucks each month would lead to some massive savings over time.

I’d like to thank Angela for being the first participant in this new series and hopefully these visualizations proved to be helpful. Best of luck in your financial journey, Angela 🙂

If you’re interested in participating in this series, shoot me an email at fourpillarfreedom@gmail.com.


My favorite free financial tool I use is Personal Capital. I use it to track my net worth, manage my spending, and keep an eye on my monthly cash flow. It only takes a few minutes to set up and it makes tracking your finances simple and easy. I recommend trying it out.

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4 Replies to “Visualize My Finances: Volume 1”

  1. Love the idea for this new series. Like you mentioned, her spending looks pretty good. Unfortunately, the debt payments are really weighing down her ability to save. Once she can pay those off she’ll create a big gap between her income and expenses.

    One possibility would be to sell her car to get rid of the loan, and then buy a $3,000-5,000 car to last her a few years. This clears up another $420 per month that can be used to attack the credit cards and student loans, and gets her to debt freedom MUCH faster.

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