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 et 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/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 February 2014:|
|Day Job Paycheck||$1,494.00|
|Expenses from February 2014:|
|Rent & Utilities||$534.00|
*The Everything Else category includes expenses I don’t have a regular budget for. For this month, I spent $26.00 on flowers, candy, and a card for Valentine’s Day. I also paid $11.00 for a new kitchen mat. Finally, I paid $55.00 to do my taxes on TurboTax.
Income was great this month, but it was skewed. I owed $2,777 in federal taxes due to dividend and online income earned in 2013. So I reduced my income from my day job accordingly to reflect the taxes owed. I always include net income in these reports, and so I reduced my income to reflect true net this month. Otherwise, I had a pretty solid month at work. I’ve noticed my numbers at work being negatively affected by some recent changes, so I expect my day job income to start trending downward over the next month or so.
Dividend income for February was fantastic. It was a superb improvement on February 2012 as previously discussed. I’m really proud of how my dividend income snowball is coming along. It’s slowly turning into an avalanche.
Online income was really strong yet again, although the net was impacted by higher-than-usual expenses. I had to hire out assistance ($350) to help me move all my content over from Blogger to WordPress when I migrated over to the latter last month. I also purchased a Genesis theme ($100) from StudioPress, which is why the site looks so great. I also had to renew my domain name with GoDaddy ($17). In addition, I paid $15 to have my header designed for me. I then initiated an email service because FeedBurner sucked ($20). Finally, I paid for hosting for the first time ever. I signed up with Liquid Web to run a 4GB VPS, and this is costly ($170). However, even after all of this the net was still pretty solid! I’m a bit behind my goal to earn $12,000 in online income this year after this month, but I’m hopeful I’ll be back on pace very soon. Note: The StudioPress and Liquid Web links are affiliate links, but I only include them because I recommend both services.
Expenses were mainly held in check this month. Thankfully, no major surprises came my way.
I actually didn’t spend as much on food as I initially thought I was going to. The only reason it was high as it was is because I took my girlfriend out to a rather expensive Valentine’s Day dinner. Without that, it would have been a fantastic month in the food department. But there’s always something, right?
Fuel was very light this month as I spent two weeks at home during my little sneak peek at financial independence. Instead of using this time to go out and hit the town, I instead hunkered down at home to see what the day-to-day looked like if I was actually financially free. And let me tell you it looked great! I didn’t spent a lot of money, but instead just lived my life as I normally do. The time I didn’t spent at work I instead spent on the blog writing or over at my investment account reviewing my portfolio and researching new potential investments.
All other expenses were normal. It’s always good to have a nice, clean month!
I managed to save 21% of my net income this month. Obviously, it’s a disappointing figure. However, this low figure isn’t due to really high expenses, but rather a large tax bill that reduced my income. I’m also comforted by the fact that even with $2,777 going to the federal government I still had a savings rate well above the average American.
My goal is to save 50% of my net income, averaged monthly. So far, I’ve hit rates of:
49.8% – January
21% – February
So far I’m at an average monthly savings rate of 35.4% for the year. It’s a slightly disappointing start to the year, but I’m still hopeful I can hit the 50% savings mark for the fifth year in a row. I knew this year was going to be challenging with reduced income at work and added expenses in the form of a car, but I’m going to give it my best shot. Looking out over the next couple months I think March will be a challenging month with the second half of some dental expenses coming in. I also expect lighter income. April will also be a tad expensive as I have a day trip planned for my girlfriend’s birthday. But I think looking past the next couple months I have a great shot at a very frugal summer.
How was your February? Did you have a great month for your budget?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net