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 November 2014:|
|Expenses From November 2014:|
|Rent & Utilities||$537|
Five months into writing for a living, and I can gratefully say that the transition has been a raging success thus far. My tenure so far is a long way from the eight years I spent working in service departments of various auto dealerships, but every month is a blissful addition to the new career. This was by far the most I’ve ever made from online endeavors, mainly boosted by a record output in regards to the number of articles I published throughout November. I could write even more, but I’m insistent on maintaining what I feel is a high degree of quality. Plus, I have to be careful not to turn all of this into “work” that isn’t enjoyable. But I honestly can’t see that happening, as I truly enjoy writing, researching, conversing with you readers through the comments and emails, and everything else that goes along with this. November was also a record month in terms of traffic here to the blog, with just under 280,000 pageviews for the month. As always, thank all of you out there for your continued support.
The dividend income certainly helped as well. Though not my biggest month of the year by a long shot, this source of income not only covered a good chunk of my personal expenses, but did so passively. I love writing, but it requires action on my part. Dividends require practically nothing once they start rolling in.
*The Everything Else category includes expenses I don’t have a regular budget for. I purchased a Christmas tree for $39 plus tax from our local Walmart. It’s a bit over six feet tall, white, and pre-lit. Great tree. We really love it. There were a couple of cheaper options closer to $25, but they just weren’t really what we wanted. All in all, I think we got a good deal here.
Most of the other expenses were pretty much in line for the most part. I didn’t do much driving, as usual. So just one tank of gas. Most of my driving is actually related to errands for Claudia and her son, which I perform to help out. Other than that, I spend most of my time at home writing. I’m actually thinking about taking a day every week to get out of the apartment and write down at a McDonald’s or something. There would be a cost associated with that, but it might be fun to get out and about here and there. Then again, things are working pretty well as is. And I’m not really interested in spending more money.
Food was a tad high. Nothing really abnormal, however. We had neighbors over one Saturday night and I kicked in for a few pizzas. We also visited the Sarasota Medieval Fair and the food there was pretty expensive. We’ve never been to it in all the years we’ve lived here, but it was a great time. Nothing but good things to say about that.
Amusement was much higher than normal, mostly related to the aforementioned fair. We also checked out a local institution for live music last Saturday. $10 for three hours of great entertainment. Money well spent, in my opinion.
I long for the days when I was able to get by for $1,100 or $1,200 per month. But I think the recurring expenses will come down substantially next year. The amortization of my Toyota Corolla will be over after December. It also looks like my healthcare will be going down, as I’ve noticed some cheaper bronze plans on the exchange for 2015. I’ll also be done accounting for the engagement ring in the spring, so I think the budget will improve dramatically toward the back half of 2015 and beyond. Of course, dividend income will be simultaneously rising. Things are looking up for me!
I managed to save 51.5% of my net income this month. That’s fairly solid considering that I’m still working through some temporary expenses and I’m working for myself now. That’s really not that far off from some of my historical results when I was pulling down the 50-hour workweeks at the crummy dealership. I can’t say I’m disappointed at all, and I also think there’s possible room for improvement next year. This number, however, is a bit inflated right now because of the fact that my quarterly estimated income taxes are not enough to cover my tax liability due to setting up lighter payments earlier in the year before I was making as much income online. That will adjust itself next year when I do my taxes and I’ll obviously set up a much larger payment schedule next year now that I’m making more income online. All in all, however, I’m very happy with this result.
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 46.5% for the year. That’s below my goal, which I’m not real pleased with. But considering that I set that goal up at the beginning of the year before I embarked on this journey to pursue my passion of writing as a career, even coming that close is a success. A solid finish in December means I’ll come within just a few percentage points of my goal, which was a rather aggressive goal in the first place with hindsight on my side.
December will no doubt be expensive. I’ve already booked our tickets to Omaha for the Berkshire Hathaway Inc. (BRK) shareholder meeting, so that’ll be one less expense for 2015. But tack that on to some gift spending, and I already know December is going to be rough. Nonetheless, I’m excited for the holiday season!
Full Disclosure: Long MCD and WMT.
Did you save as much as you wanted to for November? On track to meet your savings goals for the year?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net
Edit: Corrected disclosure.