Putting my money where my mouth is? Annual net worth update and 2021 summary – with real numbers.

If you’ve been following me for a while, you would have likely seen an occasional net worth update either on my instagram or YouTube channel. I have stopped doing them monthly a while ago because they’re a little time consuming, and also I didn’t feel the need to have my financial life scrutinised unnecessarily. Now that we’re ending the year and I’ve told you about my financial plans, it’s also time to tell you what in financial terms I’ve been doing all of the 2021. And for my love of the simple life, a lot has been going on.

January – March

The year started strong – I remortgaged my home (Property AG) and was working towards a completion on a small investment flat down in SE25. I also started a new job – slightly higher paid than my previous one, but only slightly. But you can’t always have it all, so while the job was going great, the investment property transaction fell apart in February. I was NOT happy. However, while my own investments were driving me crazy, my partner and I also decided to move.

He purchased a home for us in a different area of Greater London and we were slated to move in late March. I considered whether I wish to sell the flat we had been living in for the last four years or whether I should rent it. I opted for renting it out. With the mortgage I had in place I had to repay any further borrowing to classify for switch from residential to buy to let loan and to make the whole process of moving even more stressful and expensive, my bank at the time raised my interest by whopping 2.15%. And then we moved just in time to spend the Spring in the leafy suburbs.

April – October

With the move, my living expenses have changed – where he was contributing a small monthly rent to me while we lived in Property AG, the roles reversed when we moved with me moving to paying him a small monthly rent. We carry on splitting our bills and general living expenses down the middle – it works well for us.

Not much happened for the next couple of months, aside from research into how I can still achieve my desire to own another buy to let, bringing us into late July. I decided to do something scary – with probation in my new job well and truly behind me and tenants building a solid track record of rent payments in Property AG, I applied for a remortgage of that property and pulled £60,000 out of it, increasing my mortgage from at the time around £125k to a hefty £185k (approx 62% LTV). I used a brokerage to find me a mortgage with a company specialising in residential investment loans and had it completed within 6 weeks – just in time for the end of August. While the transaction was happening, I trawled London commuter neighbourhoods for the perfect 1 bedroom flat. I settled on one in Colliers Wood (Property FC), negotiated and ok – not great but ok- offer and spent the next 2.5 months wrangling in the solicitors, estate agents and my nerves. I have of course missed the reduced stamp duty window which ended in September costing me just short of additional £3k in taxes, but decided to push forward anyway.

While all this was happening, Mr and I went to the expensive Greek Islands for a break, twice, costing us a pretty hunk of cash but being still more affordable than if we were to travel in non-pandemic times.

November – December

I completed in mid-November, spent a day cleaning up the flat and rented it the next day despite personally being convinced that I need to refurbish the bathroom before I find a tenant. Turns out – I found a tenant willing to let me do works in the flat during his tenancy. The fact that it rented in a day, same as Property AG, is a constant reminder to me that London is actually nuts – and I love it for just how nuts it is.

After renting the property out, I decided to take a deep breath and give myself a month off from thinking about money, investments and what will need to happen in order for me to never worry about money again. This month is now up, just in time for the year to end too. Let’s show you the figures now.

The debts

I started the year with what in fact was two mortgages under single Mortgage AG label – a mortgage proper and additional borrowing which I was planning to use to purchase a property – the one that didn’t work out. I then paid the additional borrowing, remortgaged and used the funds obtained that way as a deposit on the FC property, mortgaging the remaining cost of purchase.

My debts have therefore increased from the breezy £172,793 at the start of the year to a significant £350,201 at the end of the year. That’s a £177,408 increase. Both properties mortgaged generate rent suitable to service the loans.

The assets

While the properties have been at the forefront of my financial year (Property AG & Property FC), I have also given a fair amount of attention to my private pension. I have talked about legal ways of tax optimisation related to pensions already, so won’t go into that in too much detail – you can see the results in the table with a significant increase in that asset’s value. Meanwhile, savings and investments dropped – this is because a chunk was used to pay off the additional borrowing to convert my mortgage from a standard to buy to let in March.

I am now going to focus most of my 2022 on rebuilding my savings and stock market investments – don’t expect any more large money moves for the year, but honestly that’s what I say every year and it doesn’t always work out. One thing related to stock market investments that will change in my portfolio is is my increased focus on slowly excluding funds which fail to deliver on environmental and ethical fronts. This is likely to make my portfolio slightly more volatile for now, but also will give me a peace of mind for the future.

The net worth

Moment of truth – I wanted to hit £250k and failed miserably. The ‘missing’ £6k and some change were used to cover taxes and solicitors fees in November. I also have one more rent payment coming my way before the year is out, but since I don’t count birds on the roof, it’s not yet reflected in this breakdown and would not change the ‘fail’ status on this goal. But I don’t feel bad about this particular fail – making a £40k increase this year is still exciting and miles ahead of being in the red back in 2014.

While I didn’t hit my target I am still leaving 2021 with a lot to be grateful for in terms of finances and life in general – the year has been challenging and stressful, but it’s also been good, graceful and rewarding in many ways and that’s the vibe I am keeping close when looking back on everything that went on in my personal and financial life.

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