Income/Expenses For May 2014

budgetI’ve been tracking my income and expenses online since I initiated this blog back in early 2011. I do this for a few reasons.

First, I want to prove to the world that itโ€™s possible to become financially independent at a relatively young age even if you donโ€™t make a lot of money. I donโ€™t make a six-figure income. I never have and I probably never will. But itโ€™s not necessary. Often, people focus on income too much. Expenses are just as important because if you make $200,000 per year, but spend $190,000 of it youโ€™ll never become financially independent. Conversely, bringing home $40k and learning to get by on half of it means youโ€™ll likely be able to retire if you want to within 15 years or so. Making less means you have less to save, but spending less means you need less to retire off of.

The second reason I do this is because I want this to be a live look at one manโ€™s journey. You can find countless books by financially successful people, but often itโ€™s long after they’ve completed their trek to significant wealth that theyโ€™re then telling you how they did it. Itโ€™s easy to postulate. Itโ€™s much more difficult to actually show the whole process in action, for better or worse.

And finally, knowing that every dollar I spend is going to be published for the world to see serves as reinforcement to stay frugal. Thereโ€™s been more than one occasion where I decided against a particular expense after realizing I might be a bit embarrassed to write about it.

So each month I will post myย income and expensesย for the previous month. I track every dollar in and out, so what you see is exactly what I earned and spent (rounded to the nearest dollar).

Income from May 2014:
Day Job Paycheck$3,927
Dividend Income$308
Online Income $1,139
Total Income$5,373
Expenses from May 2014
Rent & Utilities $2,378
Health$503
Auto$300
Student Loans$224
Fuel$190
Groceries $110
Fast Food/Takeout109
Auto Insurance$49
Restaurants$41
Pharmacy$40
Gym$30
Mobile Phone$25
Amusement$1
Everything Else*$381
Total Expenses$4,376

*The Everything Else category includes expenses I don’t have a regular budget for. For this month, I spent $247 on gifts between a baby shower for my pregnant little sister and my parent’s 25th anniversary. I also spent $45 on office supplies, including printer ink and a thumb drive. I serviced my car before leaving Florida for $34 and also bought a pair of 25 lb. dumbbells for $55.

So as you can all see this was an incredibly expensive month for me, and quite possibly one of the worst monthsย I’ve ever had in my entire life. I’ll explain a bit more below.

First, income was incredible. The day job income was pretty solid this month, although this is quite possibly one of the last times I’ll have a budget for this category as I recently quit my job to move back home to Michigan and focus on family and writing. I actually only worked for about half the month, butย my pay plan was completely commission-based as a percentage of sales. So the pay I received in May was actually for sales generated in April. As such, the income in May didn’t reflect my schedule. However, any income I end up receivingย in June from residual sales will be extremely light.

Dividend income was yet again fantastic, and continues to be so. It was just another solid month of passive income as my invisible second worker makes me richer simply for being alive. A wonderful arrangement!

Online income was astounding. I’m just incredibly grateful that you readers continue to take an active interest in my writing and adventures. I’ve recently had more time than ever to write and I’ve been publishing at a slightly faster rate. The plan is for this trend to continue, publishing faster and faster while still keeping the message and quality intact. We’ll see how it goes! In the meantime, I thank you readers from the bottom of my heart for all of your support. The income you see here in this category is net of hosting fees ($152). One of my big goals this year is to earn $12,000 in online income. I should have been more specific about this goal in terms of whether it was grossย or net, included or excluded hosting fees, etc. I’ll be more exact next time. However, with this month included I’ve now grossed (net of expenses) $4,846 for the year in this category. That puts me right on pace for my goal, so I’m very excited. In addition, I expect this to rise from here a bit as I’ve made some changes with advertising and I’m also still seeking freelance opportunities.

Expenses were pretty rough. The most obvious biggie was rent. So what I did here was include the rent and utilities owed for the month of May, but I also realized the rent charges for the months of June, July, and August. Although I moved away, I still owe my half of the rent until our lease expires at the end of August. And while my half of rent is only $462.50, I actually offered to pay the entire month’s of rent in August as a token of my appreciation for my girlfriend’s support over the past five years. I decided to realize all of the cumulative rent on this month’s budget due to the fact that the money has already been set aside and “spent” as well as the fact that I have the income for one last month to realize such a large expense. I also wanted to clean out past expenses and see exactly what my budget looks like on a forward basis now that I no longer have my day job income.

You’ll also see health was high. Most of that was due to a vasectomy I had performed in mid-May. I decided a long time ago that I wasn’t interested in having children, and this just made sense for me.

My food spendingย actually wasn’t that badย considering I bought some meat and sides for a Memorial Day barbecue once I arrived up here in Michigan, and I also had to restock some basic groceries that were left behind in Florida. Overall, I consider the fact that I spent less than my typical $280 target on an expensive month that also included travel as pretty strong. Looking forward, I expect to spend even less on food now that it’s mainly just me I’ll be buying food for.

You may notice I have noย bill for internet this month. I cut the internet from the Florida apartment during the month and therefore owed Comcast nothing. My girlfriend now has cable and internet in her name going forward. The $1 spent on amusement was for a Redbox DVD rental. Finally, my auto insurance was cheap yet again, but my six-month policy expires in a couple weeks. There’s a chance that this may go up now that I’ve moved to Michigan. Ditto for health insurance. I’ll have updated figures on these premiums moving forward soon.

I managed to save 18.6% of my net income this month. That’s the lowest figure I’ve ever achieved since I started publicly tracking my income and expenses over four years ago. However, I don’t think it’s too bad with everything that happened and all of the unusual expenses I realized this month. I hope to improve on this moving forward, even without the day job income. As I’ve mentioned before, I’m going to give myself a trial period of three months or so to see how my budget looks without conventional income. I’ll be going over some changes I’ve made to my budget to accommodate this plan very soon. And trust me, the changes have been aggressive and thorough. I’m excited to share these changes!

Myย goalย is to save 50% of my net income, averaged monthly. So far, I’ve hit rates of:

  • 49.8% – January
  • 21% – February
  • 59.1% – March
  • 51.6% – April
  • 18.6% – May

I’m now at an average of 40% for the year with five months down. It looks unlikely that I’ll be able to exceed my goal this year, but I’ll continue to work hard and do my best. This may be the first time in five years that I’ll save under 50% of my annual net income, but I’ll actually consider coming anywhere close to that level as a victory considering I quit my job halfway through the year and I also moved across the country.

How was your budget for May? Better or worse than expected?

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

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72 Comments

  1. I think that, considering all of the changes in your life this month, you’ve still done pretty great! It’ll be interesting to see how the changes impact on your budget this month, now that you’re settled.

  2. Hi Jason,

    even if your saving rate is lower than usually, I think it has been a pretty solid month (keeping in mind that your rent will decrease next months). Do you have any plans regarding your car? Do you need it in Michigan as well? Your car related costs (~$540) are a pretty big part of your overall expenses. How does the public transportation/biking situation look like up there?

    Best regards
    DividElephant

  3. Nicola,

    Thanks so much. It sucks to post a savings rate below 20%, but I also have to remember that’s 5-10 times what the average American saves in any given month. So when I look at it that way I did pretty good.

    However, I’m also looking forward to really tightening things down a bit going forward to see if I can make it solely from online income/dividend income! ๐Ÿ™‚

    Thanks for stopping by. Appreciate the support!!

    Cheers.

  4. DividElephant,

    Thanks. Appreciate the kind words there. It’s a rough budget to post for the world to see, but could have been worse.

    That’s a great question regarding the car. I’ll be going over that very shortly, but keep in mind that the $300 for “Auto” isn’t really a hit to my cash flow. That’s the amortization of my car I bought in cash late last year. And this month was one-off in terms of fuel spending. Going forward, I expect the cash flow to be light fuel, insurance, and occasional maintenance/repairs.

    Staying in Florida would have made going car-free very realistic, since I wouldn’t have needed the car at all. However, I don’t think it’s possible up here. My family, while close to one another, is a bit spread out for biking. There is no public transportation around here. And even our bigger cities (Ann Arbor, Grand Rapids) don’t really have great public transportation. And, of course, both of those cities are 1-2 hours away from family and friends. So it’s a conundrum. I don’t think I’ll be able to get by without a car up here, but I knew that going in. I keenly remembered trying to get by without a car up here a number of years ago and it was a disaster. It’s way too cold for about 4-5 months per year to bike around, and plus the ice/snow keeps things tricky. I’m sure some would say I’m just a wuss, but if I ever live in Florida again I’ll make living car-free a priority. And I’m not totally against living in a city with public transportation options up here, but that trade-off of living far away from family (the reason I moved back) would be pretty hefty. One compromise may be to get a scooter again and scoot around for 6 or so months per year. However, I would still need the car for the other six months.

    Cheers!

  5. DM,

    I’ve always enjoyed the glimpse into your personal life via the income/expenses, but I’m really interested to see how things go moving forward with the new income focus and if you begin to retrench and slash your expenses.

    Your online income is impressive! I wouldn’t mind knowing more about what you’re doing in that category if you don’t mind sharing. Maybe a future post???

    The Stoic

  6. Hi Jason,

    Like The Stoic I would appreciate more information about your online income: how it works (page per view or click on ad), how you find the advertisement and how you manage it.

    Thanks and take care.

    Eric

  7. DM,

    I have been following your blog for about a month. I found your blog through Mr. Moneymustache. Love your blog went back and read through almost every post from the beginning.

    I am 23 years old and have been investing since I was 18. Last year I received roughly $2000 in dividend income. Your blog is inspiring and motivating to continue on and work even harder.

    I was wondering where you loved everything you have come to know about your investing strategy. I love reading your analysis on stocks and I wanted to know if you have any suggestions for where to learn more about the fundamentals and analysis side of investing (besides your blog of course).

    Keep on keeping on.

    Brian

  8. Hi Jason,

    Good luck moving forward in the income/expense category! I guess you probably won’t have a truly clear picture until July once you are settled in and that residual income has dried up.

    In regards to your question on the reader’s own budget for May, I am disappointed I came in at savings under 50% this last month. But, life is good! I came within a few % of savings and did all of the following luxurious spending last month:

    Purchased a Quarter of a Cow – mostly prepaid food expenses, but higher qualify for about the same price or less
    Booked some hotel stays for upcoming vacation
    Purchased a used CuttleBug machine for my spouse’s scrap booking hobby (yard sale… not new, so about 1/3 the price)
    Dinned out three times
    Purchases of snacks and alcohol for socializing with friends and family
    Changed cell phone plans mid month and purchased a phone with AIO (TY for the recommendation).

    All of this is optional, unnecessary to our livelihood, spending is just under $1,000. Granted about 1/2 of that should decrease our grocery spending over the next year, it is great to know that I can cut $1,000 from a month with 47% savings! In fact, if we did none of this spending, we could achieve savings rates of 60-65%! Hard to complain about life in its current state, and as the majority of our net worth is going towards loans, we should see decreased expenses in the future.

    **Note principal repayment portions I do not consider expenses as this is still building net worth, just in non-liquid assets.

    Good luck Jason!

    Kipp

  9. DM,

    May is definitely an anomaly for you. There is no doubt in my mind that you will implement some type of “scorched earth” policy for reducing your expenses to just bare essentials. May is in the rearview mirror and I look forward to seeing your June-August 90 day expense average!

    MDP

  10. It is great that you were able to save 18% of income for the month in spite of realizing 4 months of rental expense and moving across the country.

    I try to save at least 25% of my income, but being a single income family of 4, it is really difficult. I will continue to cut the expenses while at the same time try and increase my income through dividend growth and other investments.

  11. With all the costs associated with your life change, especially covering your share of the remaining lease, it’s rather amazing that you still finished in the black for the month. Frugality rocks!

  12. It’s absolutely necessary to use a car in Michigan.
    They key is trying to bike as much as possible during the 7-8 warm months, and reserve the car for the long winters.

  13. The Stoic,

    Sounds like a great idea for an upcoming post. I’d love to explain where the income comes from and how it’s grown. Although, to spoil the surprise most of it comes from Google AdSense and some freelance writing I do.

    I think the next post, however, will be discussing how I’m going about cutting expenses fairly dramatically. I’m excited to share that!

    I’m sure you’re still getting by on very little. I could probably learn a thing or two from you about reducing food costs, but I’m a bit stubborn in my ways when it comes to eating/not cooking.

    Hope all is well!

    Best regards.

  14. Eric,

    No problem! I’ll go over all of that in an upcoming post. I’ll try to address where the money comes from, how many pageviews I get, etc.

    Cheers.

  15. Daniel,

    I would agree with that.

    However, keep in mind that the income I derive from my blog requires work and activity on my part, whereas the portfolio generates passive income. So there’s a big difference there. I could cash out all of my stocks and buy a franchised restaurant or some other business and generate more income than the blog and portfolio combined, but my workload would exponentially increase as well.

    But it is interesting how blogging about financial independence and investing in stocks has led to this wonderful side effect of earning a small living from the writing. I guess I should start blogging about blogging? ๐Ÿ™‚

    At any rate, I’m most fortunate. I only hope it can continue at this pace.

    Thanks for stopping by.

    Take care!

  16. Brian,

    Wow. You’re in an incredible spot there. $2k in dividends at age 23! I can only dream of how far ahead I’d be if I had started at your age. Great job!

    As far as where I learned, almost everything I’ve read is included in my Getting Started page:

    https://www.dividendmantra.com/getting-started/

    Specifically relating to valuing stocks, I’d probably most recommend The Dividend Toolkit. Goes over valuation in-depth and also includes a spreadsheet with DCF/DDM tools. Of course, keep in mind it’s part art and part science. And your model will only be as accurate as the input. You’ll get a feel for your own method over time. And you’ll never stop learning and tweaking!

    Best of luck going forward. Keep in touch!

    Cheers!

  17. Wow! 18 percent of your income has been saved even after adding 3 months of rent and your trip back to Michigan!!! You’re great man!

    Most people don’t even save 5% of their income… And some spend 125% of it each and every months… ๐Ÿ˜‰

    Keep going!

  18. Kipp,

    And thank you for the referral on Aio! Hope it’s treating you well thus far. ๐Ÿ™‚

    It sounds like you had a great month not just in savings %, but also balancing your quality of life with spending and saving. It’s also great to know that if it came down to it you could cut a lot of that “fat” from the budget and still get by okay. Not that you would necessarily want to, but it’s good to know you can make those moves if you had to.

    I’m certainly not as hardcore as I used to be, but I’m aiming to get back to those days here pretty quickly since my income has dropped so dramatically. We’ll see how the quality of life goes in the meanwhile since it’s been a while since I’ve really tightened the belt.

    Hope you’re enjoying this summer weather. Alternating days of sun and rain, but when the sun is out it’s beautiful!

    Best regards.

  19. MDP,

    Ha! I like the “scorched earth” term. That’s kind of where I’m at right now. I’m certainly no Sherman, but I’m leaving no stone unturned.

    I’m very excited to see how June-August look. The only abnormal costs I expect from here will be a gift for my oldest sister’s birthday (she turns 30 soon) and some expenses associated with registration/license in Michigan. Other than that, I think I’m clear for takeoff. ๐Ÿ™‚

    Appreciate you stopping by! And congrats on another very successful month. Over $10k in new investments is most impressive.

    Best wishes.

  20. DGJourney,

    Thanks! It could have been worse, but considering everything that happened and how much was on the plate I think I did alright.

    I can imagine it’s pretty tough saving a lot of income when you have a family of four and you’re the only earner. I give you props for even saving 25%, which is probably possible due to a combination of above-average salary and some frugality. Keep up the great work!!

    Cheers.

  21. Chris,

    Frugality rocks hard! ๐Ÿ™‚

    And I’m also pretty excited that I ended up in the black. I thought it was going to be closer than that, but luckily I had a pretty strong month of sales in April which increased my pay in May. I won’t be assisted like that again in the near future, so it’s up to me to save, save, save now.

    We’ll see how it goes. I’m excited to take on the challenge.

    Best wishes.

  22. Cool!

    I know it’s been suggested several times, but have you considered doing some kind of ebook? As you mentioned in one of the comments below, the blog isn’t really passive but if you created a product like an ebook then once you’ve done the work of producing it you have a source of passive income for years to come and potentially a good source. You have several topics that you could make a book out of and I’m sure you have plenty of followers that would be willing to make the purchase. I know I would although I would want a signed copy so you need to print a few hard copies! ๐Ÿ˜‰

  23. Josh,

    Thanks for adding that. I’m all for a car-free lifestyle when possible and realistic, but I don’t see how one does it here in Michigan. I tried it once when I was living in Ann Arbor for a bit during a pretty cold/snowy winter and it was hard. Waiting for the bus on a cold bench when it’s 10 degrees outside is no fun at all. But walking significant distances in deep snow because the bus routes don’t cover a good portion of the city is even less fun. I don’t know if I’d ever want to do that again, even for the cost savings. Of course, I’m a big wuss when it comes to cold weather! ๐Ÿ™‚

    I agree that maximizing car-free time during the 7-8 warmer months is probably your best option. Unless you can really create your own local economy where you live within a mile of everything. Then you’d probably do alright.

    Best regards!

  24. Allan,

    I used to be one of those people that would spend close to 100% of my income, sometimes more. It pains me to even think back to those days!

    Thanks for the support. In light of what most Americans save, I did pretty solid here considering that I realized 3 months of my half of the rent, plus an entire month on top of that. Without that, I would have had an excellent month. But such is life, and it was my choice to move back to Michigan. ๐Ÿ™‚

    Hope all is well on your side of things.

    Cheers.

  25. The Stoic,

    I’ve definitely considered writing a book, and may yet do that. I don’t know if it would be an ebook, however. I might just go full tilt and actually write a book and get it published. I don’t know if it would lead to a lot of income – it seems the costs for publishing and marketing can eat into your cut, as well as the fact that the author only gets a small portion of the overall sales revenue. However, I think I’d like to write a book simply because I think it could reach a broader audience and impact more people’s lives. Of course, I’d be grateful for any income it would generate. We’ll see. I’m hopeful I can put something together at some point!

    Thanks for all the support. And you’ve got an autographed copy coming your way if I ever do write one! ๐Ÿ™‚

    Take care.

  26. I quit tracking my budget and income since it has been fluctuating a lot (mostly since I’ve been playing around with 401k contributions and such).

    Earlier this year, I had a low contribution at 4% to get the full match, and then planned to invest the rest in Roth and taxable accounts. I switched gears in May and decided to max out my 401k, Roth, and keep (new capital) taxable investing to a minimum. This puts me at a 401k contribution of 26% and Roth contribution of $550/mo in order to reach the max 17.5k limit and $5.5k limits, respectively. Painful, but autoinvest is nice in that it takes a lot of the work.

    I try to go by an easier method, increase in NW (aftertax earnings – expenses + 401k contributions/match) which tracks ~$4k/mo in contributions (assuming expenses are kept in check) and has been much higher between $5-6k in recent months due to the market run up.

    I’m dreading & looking forward to a correction of 10% which will obviously hurt my NW value, but give me much greater buying/investing power.

    Investment ideas I’m considering:

    – Cut MO and/or AAPL holdings in half and reinvest… possibly into WFM

    Haven’t done enough research on WFM, but the pullback to ~$40 makes me want to look into it further.

    Hope the transition is going well so far. Summer must be cold compared to south Florida!

  27. It’s a slippery slope comparing yourself to “average”.

    If you’re the smartest guy in the room, you’re in the wrong room… an adage I like to live by.

    Hopefully you’ll be among the frugality/dividend rockstars again once you are able to start investing substantial amounts again.

    Good luck building up the online income. From reviewing a handful of your older posts it seems to have been an upward trend. Should be even better now that you’re able to put up more content.

    Cheers to living the good life!

  28. I also have most of my family here in Michigan and they are scattered everywhere from Detroit to Shelby Township. It just wouldn’t be possible for me to have everyone within walking distance…

    Since the bus service is god awful in this whole state, I wouldn’t even think of getting rid of my car. I’m also a wuss when it comes to cold weather and I wouldn’t want to try bus-jumping like you did.

    Josh

  29. If you publish via Amazon…CreateSpace for traditional books and Kindle for EBooks you get the vast majority of the revenues and it costs you nothing but the time to write your book. They’re ruining the traditional publishing industry, it’s insane not to use them. Plus, they link together on your book/author page. You can still find people to edit and market, if you want. I’ve written two books and the last cover I had designed on Fiverr for $5 and it’s a great cover. No monetary reasons not to write a book!

  30. Funny, 18% savings would be a phenomenal month for most people. And this internet income, how do I make that happen? All from this blog? That is fantastic. Keep writing and we will keep reading!

  31. Is all your net income just from ads on this blog? What is your plans to ramp this up in the future? So no more dayjob pay for awhile right? Still saving 18% is pretty good however it might be a tough years in savings with not enough coming in. Will be interesting to see how you manage it without a 9 to 5.

    Good Day and Grind On!

  32. Ravi,

    Those are some interesting investment moves. I looked at WFM quite a bit after the big drop. Looks like it hasn’t recovered yet. I like the business, but I also wonder about competition. Down in Sarasota I noticed that Trader Joe’s was all over them, but that’s all anecdotal. But the consumer base appears loyal, and I don’t think the organic/health food trend is going anywhere. I do wonder about margins being squeezed over time, however. But the margins are healthy and could sustain a drop. They’d still be a very strong retailer even after something like that.

    The transition is actually going very well thus far. Of course, we’ll see how my tune changes when winter hits! ๐Ÿ™‚

    Cheers.

  33. Ravi,

    I hear you. I don’t usually compare myself to average. But it does make me feel better to know that even at my worst I’m still 5-10 times what average is. ๐Ÿ™‚

    And I’m doing my best to get back to some extreme frugality. Look out for my post over the next day or so for my thoughts on that. ๐Ÿ™‚

    The online income has been such a surprise, and a blessing. I’m truly grateful for it. And since my income trails by about a month I know where June is going to be and it’s going to be significantly higher than what I received in May. Exciting times!!

    To our success!

    Cheers.

  34. Agreed. If AAPL is any support, all businesses have to evolve and margins are always pressured when they want to grow (keep high margins and grow less or strategically accept lower margins and grow faster).

    AAPL margins have been pressured, but it was more of an adaptation and change in sales mix.

    As far as WFM goes, I haven’t researched enough to make an opinion on their potential.

    I think a key question is if/when larger retailers start offering organic foods, will customers defect from WFM or will less new customers come into WFM? I think WFM offers an experience that would be tough to replicate without comparable margins… at least for the affluent customer who cares about those things.

    I also agree. If I had a choice between shopping at Whole Foods and Trader Joes, I choose TJ. I don’t really care for everything to be organic, but I like that TJ seems to have better quality stuff even in non-organic choices.

  35. Josh,

    Ahh, in that case it would be just about impossible to get by without a car and continue to spend time with family. I’ve contemplated getting rid of a car and then relying on rental cars for weekend visits if I moved to a bigger city in the future, but that comes with costs as well. Put another way, I think I could get by without a car here in Michigan if I planned my life around it, but not if I wanted to continue spending time with family. Living car-free and seeing family are diametrically opposed based on how spread out everything is here and a lack of public transportation infrastructure.

    Best wishes!

  36. Purewater,

    I’d love to get some more info on CreateSpace. I popped by their forums a little while ago and did some poking around. From what I could tell, there are pretty significant costs to do a run and publish a book. I could do an ebook for pretty cheap, but publishing a conventional book would take some upfront costs. Do you have any tips or info on how much I’d be looking at to do an initial run of, say, 5,000 books?

    Any info is really appreciated!

    Best regards.

  37. KeithX,

    The online income is a split between ad revenue the blog generates and freelance writing income. It’s about a 70/30 split right now. A few readers were asking about that so I’ll write a post covering that pretty soon here.

    And I appreciate the readership. Truly.

    Best regards.

  38. Asset-Grinder,

    Well, the online income is split between ad revenue the blog generates and freelance writing. It’s about a 70/30 split right now, with 70% of that income coming from ad revenue. I’m hoping to increase both in the near future, and feel pretty good about my chances.

    I’ve got a post coming up over the next day or so discussing some major changes to my expenses to discuss why I think it might be realistic to make writing my 9-5 gig. ๐Ÿ™‚

    Cheers!

  39. Asset-Grinder,

    By the way, I’ve tried commenting on your site but it doesn’t allow a url/name option. Great job this past month! ๐Ÿ™‚

    Cheers.

  40. Purewater,

    Ahh, I was spending time in the wrong forum apparently. I see CreateSpace publishes on demand so there’s no need for inventory. Very cool concept!

    I’ll definitely research this a bit more. Weekend project! ๐Ÿ™‚

    Cheers.

  41. Mark,

    Appreciate the support very much!

    And I was just by your site a bit ago…looking for that dividend income update. ๐Ÿ™‚

    Hope all is well up where you’re at. Summer is here!

    Cheers.

  42. Glad you made it to Michigan safe and sound! 18% is still more than many people are able to save!

    Take care!

  43. DM – From the tone and frequency of your recent posts, it appears that you both enjoying, and quickly adjusting to, the semi-retired life. ๐Ÿ™‚ You are living the life that many of us here are striving for. I know things will be much tighter for awhile without a paycheck from your day job but I have a feeling your online income will be growing exponentially in the comings months. Hope you have nothing but success as you move forward with growing your dividend and online income. With your lifestyle centered around frugality, I have not doubt you’ll prosper. Best wishes!! AFFJ

  44. Even in your worst month you managed to save more than the average bear. When you encounter life changes like these it takes muscle to properly change from one configuration to another. You don’t wanna know what we spent in order to ditch out house and realize the freedom of renting (and all the benefits that come with living in a nicer city). That’s just the way it is. In any case, the 50% goal is just that, a goal. Since you are in a completely different configuration now, it no longer serves its original purpose.

    I finally understand your rental expense, that’s very nice of you to do, especially picking up the full rent for August.

    A vasectomy…I get the willies just thinking about it =). I don’t think I’ll ever have kids, but still =).

    Thank you for sharing your income and expenses, this is better than any reality TV!

  45. ILG,

    Thanks, bud. The % was still solid against the average, but I do hold myself accountable to a higher level. But I’ll still take it considering all the life changes. I hope to really improve on this in the future, though. ๐Ÿ™‚

    Best regards.

  46. AFFJ,

    I’m really enjoying life up here. Writing, spending time with family, slowing down, managing investments a bit closer…everything is just really wonderful. However, I also miss my former partner in crime. She’s a really lovely person and I wouldn’t be where I am today if it weren’t for her. It’s really tough because I felt like I was choosing between her and my family at a point there when we were discussing future plans. We still chat and we’re happy for each other and we also still love each other. So you never know!

    And thank you for the support. I really appreciate it. I really hope that I’m able to continue writing for the foreseeable future. At the very worst, it’ll be a very interesting three months or so! ๐Ÿ™‚

    Cheers.

  47. Spoonman,

    I can imagine you guys also had a rough period there to transition out of the house and into renting. By the way, how is that treating you? As a lifelong renter I sometimes wonder if the grass is greener on the other side. But then I look at the numbers, the maintenance and upkeep involved, lack of flexibility, transaction costs, etc., and I stick with renting. It’s a lifestyle call for me right now rather than a straight up financial call.

    The vasectomy actually wasn’t bad at all. It was maybe 15 minutes and painless. Really crazy.

    Looking forward to seeing how your transition to FI goes here pretty soon. ๐Ÿ™‚

    Take care.

  48. Renting is treating us quite well. The grocery store is just two blocks away, the beach 9 blocks away, and our friends 3 blocks away. We hardly use our car.

    About buying a house, well, I can say that owning a condo has major downsides. In addition to the huge closing costs when buying and selling the place, you might end up feeling like a renter anyway if you have to deal with a meddling home owner’s association. If we ever buy again it’ll be a single family home, but I don’t know if that will ever happen.

  49. Spoonman,

    Thanks for getting back to me. And that sounds like an ideal situation. I’m a big fan of creating a local economy where you have most of what you need within walking distance. At that point even if you have a car you’re rarely using it (as you’ve experienced).

    And I hear you on the condo. I don’t think I ever want the maintenance/upkeep of a SFH, so I’ve been tempted by the idea of a condo. However, they seem to deftly combine all the downsides of both renting – shared space, noise, lack of free space/storage, common walls – and home ownership – high transaction fees, lack of flexibility, lack of liquidity, costs of repairs, etc. – in one package. And then you get to add in an HOA and the fees they come with, as well as the fact that you’re basically entering into a financial agreement with a bunch of people you don’t know.

    Guess I’m stuck being a renter for now. But life could be worse!

    So glad you guys chose an optimal location/situation. That’s really fantastic to hear.

    Thanks again.

    Best wishes!

  50. Jason,
    Glad you’ve found early financial independence. Being close to family and concentrating on your writing and being able to afford it is early FI.

    I’ve been looking at RIG, beat up stock at 7% yield at a 71% payout. What are your thoughts?”

  51. Don’t buy a condo!!!

    Jason you just made a great wrap-up of what a condo is… All the downsides of renting and owning a property.

    People who are buying condos are usually people who have no interest in maintaining a property… So they let others (condo association) do it for themselves. For sure no one wants to spend thousands per year on condo fees so the contractor at first keep them very low when they first sell the units, the first buyers want to keep them very low too because anyway the building is brand new and if they want to sell the property they want the monthly fees to be low because new buyers won’t be interested… There are so many condos for sale…

    After a couple of years the condo maintenance fund ends up being under what it should have been and then the circus starts… Maintaining a single family dwelling costs a lot.. Now imagine maintaining a 12 units?! Or a 200 units?! No one will be aloud to do it by themselves. You’ll have, as a group, to hire contractors… And contractors know it so they make the price accordingly… And they are not there to make you save money… They know that only a liscenced contractor can do the work.

    Many of my friends and colleagues are condo owners and they only talk about their unrespectful neighbours, the special 5000-10000$ fees they had to pay last year and the new one they have to pay this year in addition to their actual mortgage and condo fees because the condo fund was depleted…

    When you let someone else manage your assets… Well we all know what happens… You wouldn’t let someone manage your portfolio, don’t let someone manage your property!

    That’s my point of view!

    Last week-end I went to see my girlfriend’s parents. They’re in their sixties, they own a house and they want to renovate the bathroom a little… They made two quotes for the exact same work… One at 17,000$ (I think I will make a complaint about that one – they put 3500$ to make a 80 square feet ceramic floor which could cost less than a 100$ if I would do it by myself) but her parents thought that the guy was nice and had been recommended by a realtor they know and in whom they have confidence… and another one at 8000$ from another cobtractor they didn’t know.

    I made a list of all the materials needed to do the job and called a plumber and an electrician to do things legally And ask them to make the necessary hook ups… I could do the same for 2500$… Including the electrician and plumber. This is a two or three week-ends project.

    2500$ and put your hands to the floor or 17000$? There is a huge gap… And I never forget that these quotes are paid with after tax money so it really is more of my brute salary…

    We already pay taxes and inflation… Manage your money by yourself! People who want your good too much…. Usually take it!

  52. Yep. Agreed. 18% savings rate despite all the cross-county move and the cumulative rent expenses is quite impressive.

    As to housing expenses, they key is to budget the anticipated repairs and set those monies aside for the day they actually occur. Essentially, your escrowing the maintenance like the taxes and insurance. No surprises. No budget busters. Problem is that few do that and then live to regret the “foreseeable unforeseeables”.

    I think Warren Buffett made the point once that depreciation is not a free lunch. While homeowners don’t get the tax advantages of deducting depreciation, real estate investors do. Many real estate investor newbies thinks that’s free money, but it isn’t. It’s a tax deduction for repairs and replacements you WILL ultimately make–just a matter not of “if” but of “when”. Anyway, I don’t mean to drone on about this, just educate a little. When you own your home, set a monthly pro-rates portion of future repairs aside and leave it alone. When you get hit with that water heater replacement or roof repair, you’ll breeze through because you’ve already paid for it. Only draw back is you won’t have any horror stories to share because you were to wise, prescient and responsible. Bummer!

    Anyway. Congratulations, DM on making some lemonade out of those lemons!

  53. Jason,

    I find your story very motivational. I just started reading about reaching early retirement about six months ago, and it’s unfortunate I didn’t find this information 20 years ago. My goal is to retire at 58 (better late than never); I’m currently 51. The details around your monthly expenses are very helpful. Keep up the good work!

  54. The way I see it is that you were able to cover your basic expenses with your dividend and blog income easily. The rest were one-time expenses that are not occurring. Hence, you are as close to financially independent as there is. Of course 100% coverage with dividends is preferential, but you have your “side business”, that pays you dividends also – DMantra site.

    However I was wondering how you are going to find the cash to buy more dividend stocks every month. I know dividend growth will provide for a raise for you if you never added any cash, and in seven – ten years it will be double what it is today. However, that would still be insufficient for you to cover expenses without working.

    Good luck!

    DGI

  55. Congrats on the 18% on an expensive month. Better than most Americans. May was also an expensive month for us too. Repairs to the house can eat into the budget quickly even when you do all the work yourself.

    More importantly, congrats on getting the vasectomy. Best decision I made after having my second kid. And you’re right it’s quick and fairly painless.

  56. Charles,

    I suppose I have found my own little version of freedom, although I’m not completely independent yet. One day, though! ๐Ÿ™‚

    I took a quick look at RIG. The yield is very nice, and the dividend is well-covered. The only thing I don’t like is the revenue and EPS is all over the place. In addition, from what I’ve been reading a lot of these drillers face declining dayrates for their rigs. So that puts pressure on revenue and margins, and EPS estimates have been coming down for ’14 and ’15. It could be a nice play, but there’s plenty of risk involved. And I don’t know how much liability they still have in regards to the spill.

    Best of luck!

    Cheers.

  57. Allan,

    Thanks for stopping by and giving your perspective on condo ownership. Couldn’t agree more.

    At that point you’re basically entering into a financial agreement with a bunch of other people, and as you mention you’re also allowing others to handle a portion of your finances in the form of contracting out work and charging you for it. All in all, I think condos are a no-go for me. I’ll probably just continue renting for the foreseeable future, but if a SFH came up at the right place at the right time I might be interested.

    Glad we’re on the same page regarding condo ownership. I’m sure there are many happy condo owners out there, but there are a lot of potential headaches involved that I’d rather avoid. It’s really all about upside vs. downside, and I believe condos have more potential downside than upside.

    Best wishes!

  58. Curtis,

    Thanks for dropping by! I appreciate your opinion on depreciation, as you’re obviously an expert in this area.

    And I agree: There is no free lunch in life. You get what you pay for, and it’s the same with depreciation. The only way you might end up slightly ahead is through sheer luck by buying and selling at the right time, getting out just before major components break down.

    I’m a lifelong renter, and so far I really dig it. Although, there’s no free lunch with that either. The rent includes the cost of the property, taxes, insurance, repairs, etc. However, it’s easier to “right size” a rental than it is a house – try finding a studio SFH. ๐Ÿ™‚

    Thanks for the perspective. Much appreciated!

    Best regards.

  59. EAWoods,

    Better late than never, indeed!

    I’m glad you found my humble little spot on the internet. And I hope you continue to stay in touch. I do my best to post relevant information while also tracking my progress for inspiration/motivation.

    And best of luck with your goal of retirement at 58. That would still be a hell of a feat compared to what most Americans are able to achieve. ๐Ÿ™‚

    Cheers!

  60. DGI,

    Well, that’s the rub. So if I’m unable to cover my expenses and also have free cash flow left to reinvest into stocks then this plan won’t work. I’m giving it three months to see how much free cash flow is left over after all my expenses are paid. Whereas most people would probably just do it if expenses are covered, I’m not giving up on my vision of FI where dividends cover expenses. So I’m hoping online income covers my expenses with a little left over, which I can then combine with dividend income to continue buying stocks. I don’t know if it’s going to work, but I think my worst-case scenario might be working part-time to supplement this income. At that point, I would think I’d have more than enough to cover expenses and also be able to afford one stock transaction per month.

    We’ll see how it goes. I anticipate my purchases being slower and smaller than usual, but I’m still planning on buying stocks as usual.

    I look at it like a different road to the same path. Whereas before I was on the freeway to financial independence, I’m now on a 45 mph country road. Same destination, but taking a slower, more enjoyable path.

    Thanks for stopping by. And I appreciate the well wishes. Looking forward to seeing you hit FI in just a few years! ๐Ÿ™‚

    Best wishes.

  61. Chad,

    Thanks so much. Appreciate the support. I’m really disappointed to post these numbers, but I suppose that’s what’s nice about the blog. It tracks my victories and my defeats live as they occur. Too often, you read about people who have done well with their finances and they only talk about the good stuff, making it sound easy. And it’s not. ๐Ÿ™‚

    And the vasectomy was indeed quick and easy. The actual procedure was painless; however, the day or so afterwards involved the most soreness/pain. But for someone like me who’s not particularly interested in having children it’s just the responsible thing to do.

    Appreciate you stopping by.

    Cheers!

  62. I know the market was pretty solid in May, but I just checked and saw NW increased by $10k in May!

    I know the market has been frothy lately, and I also received rent early this month (so let’s subtract $1.2k to normalize), but WOW! Even an $8k increase in one month is just a little mindblowing.

    I think I ended up contributing close to my normal of $4,000 (AT income – expenses + contributions), so that means that some way or another I earned at least $4k+ in gains.

    I’m sure I’ll be feeling the negative pain from market values dropping once a correction sets in, but I’ll just rest assured that my contributions have more buying power!

    I think this is the first month ever where investment gains were greater than income, and I don’t expect to see it regularly for a while still, but man is this an AWESOME feeling. I’m definitely looking forward to another 5 years when investment earnings continue to increase as a % of my W-2 income.

    Happy investing!

  63. “The second reason I do this is because I want this to be a live look at one manโ€™s journey. You can find countless books by financially successful people, but often itโ€™s long after theyโ€™ve completed their trek to significant wealth that theyโ€™re then telling you how they did it. Itโ€™s easy to postulate. Itโ€™s much more difficult to actually show the whole process in action, for better or worse.”

    I like this. Reality blogging!

  64. Ravi,

    That’s fantastic that your investment gains outpaced your income. I don’t know if I’ve achieved that milestone thus far, but I imagine it will be much easier going forward with my large investment base and lower income! Probably not something to brag about now, but it is what it is. ๐Ÿ™‚

    I imagine a correction will be also more difficult for me to deal with now since I’ll have less capital available with which to take advantage of Mr. Market’s folly. But if we get some really cheap stocks I may just have to grab a the first decent job I can find around here to start pumping some income into the market! ๐Ÿ™‚

    Cheers!

  65. Hah, Thought you’d lost your mind! Like all Amzn services, their customer service is outstanding so if you have questions (and you will) they are very eager to help. The whole process is a learning process so I say go for it and plan on making a few mistakes.

    This was the article that got me to take the leap into self-publishing by James Altucher. Hope you find it as encouraging as I did.

    http://www.jamesaltucher.com/2011/05/why-and-how-i-self-published-a-book/

    Contact me via solitudecanyon.com if I can help. I’m no expert but have learned a few things.

    Randall

  66. Purewater,

    That’s an interesting and very informative article by James there. Haven’t run across it yet.

    I’ll definitely have to look into this. Seems like a lot of upside with very little downside, other than the time needed to write the book.

    Appreciate the information!!

    Best wishes.

  67. I wouldn’t be so quick to dismiss those one time expenses. I keep close track of my expenses. and it seems that every month has a different one time expense of one kind or another. One month is car repair. another month it is a gift for someone. you get the idea. so I would track these one time expenses and budget in the average from a twelve month period.

  68. San Fran Sam,

    Yep, I’m with you. I tend to notice gifts in particular. I’m actually thinking about creating a new budget category specifically for gifts since they come up so much. I guess a baby shower isn’t a regular thing, but certainly birthdays, holidays, etc. It’s something I’ll probably change going forward as they’re definitely not one-time expenses.

    It’s always something, right? Life has a way of surprising us. ๐Ÿ™‚

    Best wishes.

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