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 October 2014:|
|Expenses From October 2014:|
|Rent & Utilities||$530|
I’m now four full months into writing full-time for a living, and it’s truly been an amazing experience thus far. I can say I have no regrets, and it’s been one of the best decisions I’ve ever made. I was absolutely burned out working in the auto industry; the hours, clientele, technicians, management, meetings, and CSI scores were just weighing me down. But this has been a great transition. I’m more motivated than ever to continue saving and investing my way to financial independence, as my energy levels have never been higher. It seems like every month is a new record for online income, and this month was no different. This is by far the most I’ve ever earned from various online endeavors, and I hope to keep this rolling. Thank you all for your continued support in this department!
I also received a solid month of dividend income, as I just recently discussed. Growing cash flow that I don’t have to work for is an easy sell for me! I continue to be amazed by the progress here, and October was just another step in the right direction. You can see that this income covered just over 20% of my personal expenses (not counting business expenditures). I’m rather proud of that, especially since I’m still working through some rather large, temporary expenses. Not to mention that October isn’t even a particularly strong month for me in regards to dividend income.
The other income was related to cash back rewards. Although I don’t spend much money, I’m a huge fan of credit card rewards. And you’ll see that even though I’m fairly frugal, this income shows up fairly regularly. I look at it almost like another dividend payment.
*The Everything Else category includes expenses I don’t have a regular budget for. For this month, I spent just under $7 for a new beach chair. Claudia and I enjoy occasional late afternoons out at Siesta Key Beach, watching sunset. We’ve never really had any good beach chairs, so our beach visits typically involved plopping down on a towel. Pretty frugal, but I guess we’re getting old. I now prefer a nice chair, and $7 isn’t bad. We each bought one, and they’re those camping chairs that you get in a bag. Works well enough.
Rent is obviously normalized once again. This includes my half of rent for our two bedroom condo, along with electricity and water.
Food expenses were fairly high this month. That’s due to a combination of the fact that I’m now spending a bit more on groceries since Claudia and I now cook and eat together (I’m not eating as many sandwiches these days), and also due to the fact that we went out to eat twice in one day for our five-year anniversary celebration. That one day alone accounted for about 80% of the restaurant spending you see above.
You’ll see a new budget category, titled “Engagement Ring”. As previously discussed, I’m amortizing the cost of the engagement ring I purchased for Claudia at a $200 per month rate. The ring cost $1,487, so I’ll be done accounting for this expense by next summer.
All other expenses were largely in line. I spent very little in fuel as I didn’t drive much this month. You’ll notice that I didn’t spend anything on health insurance this month. Apparently, there was a gap in coverage that I wasn’t aware of. So when I signed up for Florida health insurance on the national exchange back in late September, my coverage wasn’t designed to start until early November. So I had no charges for this month. I also had no mobile phone expenses again, as I still have some referral credits on my Aio Wireless plan.
I managed to save 53.3% of my net income this month, which is actually one of my better monthly results in what has been an expensive and eventful year. Quitting my job in the auto industry to pursue writing has certainly led to a drop in income for much of the summer, while I’ve also been amortizing the cash purchase of my Toyota Corolla at the same time. Add in the engagement ring now and saving a high percentage of my net income has been and continues to be challenging. However, while this may be my least impressive year in regards to savings, it has been by far my best year in regards to quality of life. I wasn’t sure how my savings rate would be impacted after moving away from my full-time job, but I’m incredibly pleased with still being able to save a substantial portion of my net income while pursuing a true passion of mine.
One of my goals is to save 50% of my net income throughout 2014, averaged monthly. So far, I’ve hit rates of:
I’m now at an average of 46% for the year. A solid result, but well behind my goal. It’s now painfully clear that I won’t hit the goal this year, which will be the first time in four years I won’t manage to save at least 50% of my net income for an entire year. But I’m excited and anxious to finish out the year as strong as possible while still enjoying life along the way. If I can come within a couple of percentage points of my lofty goal even after all that’s happened over the last six months or so I’ll be pretty happy.
I expect November to look a lot like this month. I expect expenses to probably be slightly higher as I’ll have the health insurance to contend with, but I’m hoping that income will be even higher. I’m optimistic that I can cross over the 50% mark again.
How did October treat you? Meet your savings target? Any unforeseen expenses?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net