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).
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*The Everything Else category includes expenses I don’t have a regular budget for. For March, I spent $52 on a gift for my uncle for his birthday. I then also spent $36 as I pitched in half to replace a vacuum for our apartment. Our vacuum was no longer working, so this was an unfortunate, but necessary expense.
Income was fantastic yet again. My day job income was pretty much in line with what I made last year. This was due to some strategic planning on my part. See, my sales are being materially impacted by the new addition to our team. Knowing this was going to happen, and also realizing I was in need of a break from things at work, I scheduled my two-week vacation the very day my yearly anniversary hit on February 17th. My vacation pay is based on my previous 52 weeks of earnings, so I knew I wanted to schedule it while it was worth the most. Scheduling this vacation later in the year would have meant my pay would be based on lower earnings. So even though my sales at work were much lower in March of this year compared to what I was able to produce last March (after adjusting for time off), my vacation pay more than made up for this.
And other income sources were well above average, which helped in a big way. First, dividend income was phenomenal. This was a record-breaking month for me here, and I’m so incredibly grateful and proud of this. I’ve worked very hard to get to where I’m currently at, and I’m now reaping the rewards of past seeds sown. I won’t be receiving dividend income like this every month this year, but I’ll certainly take it when I can get it!
Online income was simply wonderful. I really can’t believe that I’m able to produce a sizable income from my writing now. This is perhaps what I’m most proud of out of all of my income. The fact that you readers are taking an interest in my journey and my words means the world to me. This income is derived from any income I generate from online activities, including income from this blog and freelance writing. This income is net of hosting costs, which were lower this month ($67) due to a credit I have on file with Liquid Web due to some issues when I first set up my account. I’m on pace to generate ~$12,000 in online income this year, which one of my goals. Note: The LW link is an affiliate link, but I only include it because I highly recommend their services.
The other income was received as cash back rewards from the two credit cards I use. I charge every single expense I can, and then pay it all off at the end of the month. Then every few months or so I cash in my rewards as statement credits.
However, where I really scored some victories in the income department, my expenses were disappointing. Unfortunately, much of this was out of my control.
Most of my expenses here are rather normal. However, the one major increase was due to the finalizing of dental costs relating to a root canal I initiated back in January. Most of the costs were realized that month, but the remainder, due to crowning, show up here.
Food was a tad high, but not out of control. I’m actually a bit bewildered as to how I spent so much on groceries. I looked through my receipts and don’t see anything too far out of the ordinary. However, sometimes I end up stocking up on things towards the beginning or the end of one month which causes some fluctuations in my food costs from one month to another, and it looks like that’s what happened here.
The mobile phone expenses were high, but that was due to me switching services to Aio Wireless and “splurging” on a new phone. Of course, this was all done to save on mobile phone bills over the long haul, and so far I’m incredibly happy with this decision. I’m getting great service with Aio, and thanks to a reader’s suggestion I swapped the SIM card from my crappy new phone to my old iPhone 3G and it works perfectly. Thanks, torsverr.
All other spending looks pretty normal. Fuel was held in check very nicely, and I didn’t go crazy on anything.
I managed to save 59.1% of my net income this month. I feel like I’m getting back to normal here, though I also know my income from work is going to be significantly reduced going forward. Due to such, I’m considering some moves here that may cause a short-term hit to my savings rate for a long-term increase in happiness and overall well-being. In addition, I’m looking forward to lower expenditures over the summer and fall as I’m coming out of an expensive funk now that dental costs are behind me and tax season has also concluded.
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
With the first quarter behind me, I’m now at an average monthly savings rate of 43.3%. Not incredible, but it is respectable. I knew this year was going to be challenging, but I’m just going to continue putting in maximum effort. I know hard work goes a long way, and I’m not letting my foot off the gas pedal. Looking forward, I’m expecting less income from my day job, but I remain hopeful other income sources will make up for this somewhat. And I know I’ve got some spending coming up relating to a birthday celebration for my girlfriend in late April. Other than that, however, I think expenses should be fairly low for the foreseeable future.
How was your March for budgeting? Did everything go to plan?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net