Tracking progress is important. It keeps your focus on the end goal: have enough money or passive income to be financially independent. A lot of people do not only track it, but also share it on their blog. This is great, as it shows to people that it is not a theory to become FIRE. It demonstrates that it is something that can be done, by normal living beings. Sharing this info is something I want to do in a way that people can see my progress, but have no clue on my actual net worth. It is personal finance after all.
Many anonymous alternatives exist, as I have seen on other blogs
1- show how many monthly expenses your current net worth covers: The E factor
2- compare the safe withdrawal rate of the current portfolio with your monthly expenses
3- track progress in pct towards a communicated financial goals (I want to make a million dollar)
None of the above satisfies my current need to keep the info personal. So, the walnut index will be used track our family progress towards financial independence. The index will be a progress tracker that allows me to share progress, and yet have the feeling that the info is kept personal.
Maybe I am being extreme on my privacy, maybe in doing so, I nurture the Belgian behavior that speaking about finance is not done. But it is what comforts me for now.
The amberindex will simply be a number that shows how the given fund has evolved since the beginning of 2015.
As from the net worth report of May, the amber index will express in percentage how far I am in reaching my number. 100 pct means that in theory, according to my model, we are financially free…
9 thoughts on “The amber index keeps it personal”
I chose different numbers:
1) the net worth per annual income. Advantages:
-better comparable with people that have a different living standard.
-it is even comparable to governments: they have the public debt to GDP ratio.
2) independence ratio: passive income divided by total income.
Both anonymous, but they give a lot of insight and are easy comparable to others!
Making it comparable is indeed an important point.
I might have to change the description to be more clear. The amber index is basically indicating how far we are if we would apply a 4pct withdrawal rate for the current expenses…
You are so right! I keep reading American blogs where they announce to the world exactly how much they are worth, but I cannot for the life of me imagine doing such a thing on my blog. Maybe it’s a European trait – we are more reserved 🙂 I like your way of doing it – it allows you to show progress without having to undress naked, financially speaking 😉
Being naked on the internet not my ambition. The index allows you to see where i am on my path… that is it. UP to you to imagine if it is a million or 5 million or 600K. We each need to do what makes us feel comfortable
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