First, I want to prove to the world that it’s possible to become financially independent at a relatively young age even if you don’t make a lot of money. I don’t make a six-figure income. I never have and I probably never will. But it’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 you’ll never become financially independent. Conversely, bringing home $40k and learning to get by on half of it means you’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 man’s journey. You can find countless books by financially successful people, but often it’s long after they’ve completed their trek to significant wealth that they’re then telling you how they did it. It’s easy to postulate. It’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. There’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 my income and expenses 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|
|Expenses from May 2014|
|Rent & Utilities||$2,378|
*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 months 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, but 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 receiving 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 gross 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 spending actually wasn’t that bad 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 no 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!
My goal 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