If you are like many in the personal finance community, you have more spreadsheets than you own shoes. We generally love our data sets and projections. I have one spreadsheet that lets me have all of my mortgage payments recalculate to see how different payment strategies would affect the final payoff date.
A lot of us also love to track and make public our net worth. We do this to keep ourselves accountable for what we write and be on the hook to push ourselves to the max to get to financial independence.
These things are great to data mine your own finances but these numbers are independent of each other.
The Green Swan and the FIRE Prowess Score
The Green Swan came up with a great way to figure out where you are on your path to FIRE (financial independence and retire early).
You can use as many or as few years as you want in order to do this calculation. (obviously the more you use the more you average out the trends)
FIRE Prowess = Change in Net Worth / Total Gross Income
Take a look at my scores for last year and how we are doing so far this year:
Unfortunately, I have only been tracking for a short time but the beauty of this score is I can take a snapshot during any range.
What do those numbers mean? Glad you asked:
- Negative or 0.0x – Looks like you have some work to do. Time to grow the gap between how much you make and how much you spend. Take a look at your spending and make a budget!
- 0.0x to 0.25x – You are making progress but look to see if there is more you can do. If you are here maybe you aren’t looking for early retirement and that’s ok.
- .25x to 0.50x – Looks like you are cruising through! Keep going and you will be on a great path for FIRE.
- .50x to 0.75x – You are making some solid progress! You are on track for early retirement but you could do it sooner if you keep going.
- .75x to 1.0x – Kicked it into overdrive! FIRE is all you can think about?!
- 1.0x and over – Calling you a super FIRE! Way to go!
That was a full throttle year for us. We were halfway through our debt pay down and looking towards the future. I had to dig through all my paperwork to figure out what our net worth was in January since I officially started in March of 2016.
Most of the .523 was from paying off debt but you have to start somewhere if you want to achieve financial independence.
Based on my numbers we are making solid progress towards FIRE but we could do a lot more. It took me by surprise our 2017 number was higher than 2016. I felt we had let up off the gas. I know this year has had excellent market returns but we have increased retirement contributions too. There is a lot of time left this year and we have plans for increasing our contributions!
I can’t wait to see what our final numbers are for 2017 and how much we can push it in 2018! We are planning on maxing out Ms Blue Ribbon’s Roth and cranking up my 401k. Any extra will likely go into restarting my Roth.
Between our goals and spreadsheets we should be able to get closer to that 1.0 range!
Sound off in the comments with your numbers!
Chain of Posts
This is part of a chain of posts by all sorts of bloggers. Be sure to check them out and join in if you are interested.
The post that started it all: The Swan’s FIRE Prowess Gauge
Check out the Retirement Manifesto’s post that started the chain.
Others in the chain Othalafehu, Shnugi, Dad Dollars Debts, Debts To Riches, Adventure Rich, Freedom Is Groovy, Working Optional, Budgets Are Sexy, Life Zemplified, Physician Wealth, Married And Harried, Ms. Liz Money Matters, Actuary On FIRE, Trail to FI , Maximum Cents, Retiring On My Terms, Minafi, Military Dollar, Finance Yo Self, The 7 Circles, The Money Metagame, Savings Summit Of Coin