Hello again and Welcome back! It’s me, Dauvo, with another awesome Italian life update! If you’ve followed us previously, you may have noticed a large gap since my last post. First, I’d like to say that plans are many times interrupted as life goes forward. But, we were always doing something useful with our time. Haha. I’m excited however to talk about something special, Cash Flow!

Recent News

One of the reasons it took me so long to add to the site is that I had to rebuild it from scratch. Just after my last post, my site was hacked by a simple bot that brought everything I had created crashing to its knees. So I had my hosting service nuke the site and we started all over with increased security, complex passwords, and a site backup plan initiated. I copied the text of my previous posts and re-posted them. I apologize if your email was spammed this week. If you go back you’ll notice I haven’t yet updated the photos as they were, only so many hours in a day, as you well know. Live and learn. Believe me, I learned a lot!

In January, I shared a few posts with goals for 2017. I had time this week to create a base page on the site for goal tracking and accountability. It’s not 100% complete, but it’s freely accessible if you want to check it out! I believe a lot in transparency, and that often includes sharing content and information that other people may consider less than polished.

Sant’Angelo Project

Speaking of unpolished, that’s a perfect segue into the project I’ve been working on for the last 3 to 4 months. Haha, perhaps that doesn’t sound so professional, but you’ll get what I mean when you check out the Remodel Italia live YouTube updates I posted during the project. Oftentimes, I had just finished working, and you can still see the dust floating in the air!

I may have mentioned before, in early 2016 we purchased a condo in the city Sant’Angelo Lodigiano near our home. My wife’s parents are nearing retirement and decided to invest in a home closer to their kids who both reside in Lombardy. We picked the property out for them with rigid guidelines:

Not on the ground floor
Larger than 90 Square meters

OK not so rigid, but at the time it seemed like a lot. I must be forgetting some.

To this day, we have completed 80% of the project tasks. I’m not going into extreme detail because I want to take more pictures when everything is completed. So for now just enjoy the suspense!

Paradigm

For a while now, I’ve been tracking other blogs, following the trends while searching for the ‘what’ that I could focus on here on our goals site that might be different from the rest of the personal growth blogs out there. I initially started this blog with three main categories, keeping a broad spectrum in order to guarantee I could come up with interesting content.

Well as of May 2017, I officially have a purpose! But surprisingly, nothing has, or will change! The only thing that has been shifted is my paradigm. That’s what is great about projects like this site. That every time I work on it, I become more in tune with what I truly want to improve about our family.

Transparency

As a continuation of the previous argument, what I really wanted to share today is something I’ve been considering for more than a year. Finally, I feel like I have something to say/share that contains valuable content and depth. Net Worth and Cash Flow Tracking!

I really enjoy the blogs that consistently provide in-depth information on their financial situation. Perhaps because it is a topic you don’t typically share with strangers, or that you would ever ask of one. It could also be because I spent just short of three years meeting people, while assisting them with their future financial plans. Whatever it is, I have an unstoppable drive to reach financial freedom for my family, and if possible for all of yours as well! This being said, I believe that transparency regarding our financial situation and more specifically our Net Worth is highly crucial in keeping us accountable for our goals.

Awesome! Now to the meat!

One Year Cash Flow

At the end of April 2017 I spent some time searching and found an app that really helps with our financial accountability as a family. It is called ‘Wallet’ by BudgetBakers, and today I am going to share the results of our past years financial in’s and out’s through a series of screenshots from the app.

Just to be clear, I don’t receive any money for promoting this product, I just really enjoy it!

To start things off, I’m going to share a breakdown of our accounts. We’re definitely not a rich family, and what you might find surprising is how many different accounts we are tracking. 29 accounts which total €13,262.43 between 3 currencies. I know there are going to be quite a few minimalists out there wondering ‘why in the world…?’ But believe me there are plenty of justifications, and perhaps a few lazy responses. Haha.

A quick breakdown by color:

Yellow: Cash accounts
Green: My wife’s accounts
Purple: My in-laws project cash/account
Orange: relatives… no hide option
Blue: My Italian accounts
Red: Visa Cards
Light-blue: U.S. accounts
Light-gray: earnings/rewards
Black/gray: closed/empty accounts

I don’t imagine I will share this information often. And truthfully, I see an error in its accuracy already. But I wanted you to get a glimpse of what kind of effort we are going through for this cause, as well as what kind of tools this app offers.

May 1, 2016 until April 30, 2017

Major milestones contributing to our financials of this year:
Sent our oldest off to daycare
Visited family in the United States
Remodeled our own home
Remodeled Sant’Angelo Condo
Used car purchase
Regular church donations
Monthly living expenses

Typically, we live in ‘savings mode’.
Limit eating-out,
Search free activities
Play the ‘Need? or Want?!’ game

When I compare our life today to my single life, I’m astonished that we can survive, and frankly enjoy life, on so little.

I spent a lot of time preparing this information, and when all’s said and done, I’m still convinced it’s not quite accurate. You’ll see what I mean in a moment. While striving to increase Net Worth, it is important to understand it doesn’t matter how much you makes, but how much you save. Or in other words your cash flow.

You want to see what our cash flow looks like for the year? Good, because that’s what I was going to show you!

Cash Flow

Tracking an entire year’s worth of expenses and income can be very eye-opening. In addition to all the milestones we faced, we also have goals that require us to spend money, resulting in a lower positive cash flow.

In the next few photos you can see the yellow portion of the circle which reflects our income for 3 different periods. The first, comparing the previous 6 months to that of the last 30 days.

Later we will compare the same 6 month period to the last year. The rest of the colors reflect our personal expenses for the year. So a yellow section equal to more than 50% would seem to reflect a positive Cash Flow. At 31.8% income it would appear we are not living within our means. In other words we are spending money before we ever earn it, and if we continue this way, we will be in trouble.

That’s scary stuff!

When we inspect the income vs expenses for longer periods we see at 6 months 45.5% income. Over the longer term we have spent less, but in recent events it depicts a spending surplus. TRUE, with our Sant’Angelo Condo Project and recent Car Purchase all residing in the last 4 months.

OK, justifiable! But I still feel disgusted that we spent more than we earned for the year! Let’s look at another graph from Wallet.
The Cash Flow Chart.

 

 

Cash Flow Chart

Wallet has a few different ways of reporting information. The Cash Flow Chart is the best depiction of what we are looking for. During the same 6 month period the chart shows a negative cash flow. As well as the shorter 60 day period. The black bar indicates money coming in for that period and the red, money going out. The green line is the cumulative cash flow for those same periods. So as long as the bar stays above the midpoint, we saved money!

Cash Flow 1
Cash Flow 6 month – 60 days

Talking about scary stuff! Did you notice the cash flow? For 60 days and 6 months? Ouch!

€8,000 negative Cash Flow?

Already you can see a similarity than in recent months we had a negative cash flow because of our car purchase and project expenses.

One Year

Now let’s look at the last year in comparison to 6 months.

See anything different?

Cash Flow 2
Cash Flow 1 year – 6 month

Exactly!

It shows a positive cash flow of almost $4,000. So what happened?

To better understand let’s look at the ‘balance chart’ for that period. In 6 months we have a decline versus more of a hill shape for the full year.

balancechart
Balance Chart

What we learn is during a 1 year period we gained money, that’s for sure! However we were required to use some of our hard-earned savings from previous periods in order to sustain that positive cash flow.

If the spending spree doesn’t end, the upcoming year will eat away the rest of our savings as well. It’s hard to imagine where one year can lead! Check out what I wrote on this site just over 1 year ago!

Choice

Luckily, we have the control readily available. It is in the choices we make everyday! It can be hard, especially when you have kids. You want to give them as many opportunities as possible to learn and grow.

Sometimes you just can’t resist. Do you like the scooter  we bought for our oldest last night? She’s a natural!

Steps to take

Reviewing our cash flow status for the year, what are our next steps?

  1. Identify ways to decrease spending
  2. Identify if spending was for Active or Passive assets
  3. Make a budget based on findings
  4. Use ‘wallet’ to track and stay within budget.

I imagine many of you can come to your own conclusions, but for clarification purposes I will expound upon each step.

Clarification

    1. We all have different types of expenses. When budgeting there are expenses that are harder to adjust, For example a mortgage payment, as well as others that can be dropped without a second thought (your third energy drink of the day). Now that we have a full list of all the expenses we have done in the past, we can easily identify those we can live without!
    2. Robert Kiyosaki is an author I enjoy.  In ‘Rich Dad’s CashFlow Quadrant’ He talks about spending your hard-earned money on things that will produce more money, i.e. a rental apartment. Have we purchased anything that will pay us over time? Or was it just money consumed?
    3. Hopefully if you are tracking your spending for a longer period you’ve already started budgeting, If not, now is the time! Set up literal quantities of cash that is already in your possession, Use that money, and only that money to achieve your monthly goals! As long as the number is less than what you earn in the next period, you will achieve a positive cash flow! And REPEAT!
    4. ‘Wallet’ has a goals feature that I still need to start using that will help with step three. When the goal is complete, NO MORE SPENDING!

That’s all for now

Thanks for sticking with it today! I know numbers can be boring, but I’ve enjoyed analyzing our current situation! We’ve only just begun! This was just step one! I still have to share our future budget and ultimately begin our Net Worth Tracker!

Don’t forget to subscribe!  

Next Step:

Invest wisely!

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