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. Oftentimes, 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 $40,000, 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 August 2014:|
|Expenses from August 2014:|
|Rent & Utilities||$250|
This is my second full month of living without the comfort of a traditional paycheck and it was another big success. Most of my income now comes from my online endeavors, which I broke down a few months ago. I’ve been staying incredibly busy writing, and I appreciate all of the support you readers give me. I’m incredibly grateful that I’m in this position right now, and I’m enjoying every moment of it.
The passive dividend income I earned during the month of August was really solid. This income alone covered almost ¼ of my personal expenses, which is just amazing if you really think about it. I’m exactly where I want to be, and where I had planned to be from the outset. Things are rolling along here.
The wonderful thing is that even though there are only two income categories listed above, I actually received income from 20 different sources when you individually count out the companies that paid me dividends. That’s some pretty serious income diversification, and much better than the days when I had only one source – my day job.
Expenditures were high this month.
*The everything else category includes expenses I don’t have a regular budget for. I booked a flight for my significant other, still in Florida, to come up and visit me in late October for what would be our fifth anniversary together. We’re going to spend a few days down in Ann Arbor so that we can explore the city together and figure out our next step, whether that be her moving to Michigan or me going back to Florida.
That covers almost everything there. The rest of the everything else category was filled out by $37 I spent to service my car.
I spent a bit more on food than I’d like, but this seems to be a recurring theme for me. It may look like I spent a lot on fast food this month, but almost all of the $83 I spent there was related to two events: I got some takeout pizza one night for family, and I also went to Cedar Point toward the latter half of the month. Food is really expensive inside the park, and I spent $40 before I knew it. But it was a great time, and the tickets were free thanks to my aunt scoring some tickets through work, so it balanced out.
My fuel bill was crazy high. This was due to crisscrossing the state of Michigan to check out a couple of cities for livability, as well as an ill-fated trip out of Michigan. I expect September to normalize.
My two-month forbearance on student loans ended, so this represents a normal payment for me. I believe within the next six months my student loan minimum payments will be increased, as I’m on a graduated plan.
I didn’t have a mobile phone bill this month. I received some credits through Aio Wireless for a referral. Sweet!
The $300 amortization of the cash purchase of my Corolla will be over at the end of the year. Anxiously awaiting that, as that’ll free up the budget quite a bit.
I managed to save 34.8% of my net income this month. That’s obviously a bit disappointing to me as I’m used to saving a lot more of my income on a regular basis. But I’ve voluntarily taken a fairly substantial pay cut by quitting my full-time job to focus on writing. Of course, I have no regrets whatsoever about my decision. I may be saving less, but I’m enjoying the process a lot more.
I have a goal this year 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
- 72.9% – June
- 59.2% – July
- 34.8% – August
I’m now at an average of 45.9% for the year. Oh, so close. I’m optimistic that I’ll hit 50% for the year, but I also know it’s going to be incredibly difficult. The holiday season will be coming up in a couple of months, which will mean travel and gifts. And my income doesn’t leave a lot of room for error like it used to. But if I can save even close to 50% while totally transforming my life like I have recently then I think I’ll be very happy with that result.
September should be an improvement over this month. I don’t have any major one-time expenses that are coming up, so I’m hoping to raise my average a bit here over the next few weeks. It’s more challenging than ever to save, with less income and higher expenses, but I’m extremely fortunate to take that challenge on and see where I land!
Did August treat you well? What was your savings rate? Any surprises?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net