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).
|Income from April 2014:|
|Day Job Paycheck||$3,225|
|Expenses from April 2014:|
|Rent & Utilities||$525|
*The Everything Else category includes expenses I don’t have a regular budget for. For this month, I spent $58 to renew my annual registration on my car. I also bought a webcam ($36) as I had an interview via Skype for a potential opportunity in mainstream media to further spread the message behind this blog and broaden the audience. Unfortunately, I don’t think that went anywhere, but it was an interesting opportunity. There was also some major spending for birthdays this month. Both my girlfriend and her son have birthdays in April. I bought her son a gift ($16), and I also spent $101 for my girlfriend as I rented a room in Naples, Florida for the night and got her a small gift in addition to that.
For starters, income was great. However, you’ll see a major drop in income from my day job compared to last April. This is because of the pay cut I took earlier in the year due to some changes at work. While these changes have taken a few months to meaningfully materialize, this is likely a permanent loss of income on the level of what you see here in the YOY reduction. My sales for this April were approximately 30% lower than what I was able to accomplish last year, and that’s mainly because the sales pie has to be cut three ways instead of two. Although I also shaved ~$233 off this total this month to account for my quarterly estimated taxes, this is still way lower than what I could have potentially earned.
But what I lost in income at my day job was pleasantly made up for by income elsewhere. Obviously, dividend income continues to hum along very nicely. April’s dividends helped tremendously, and that’s $312 I didn’t have to go out and work for. What a burden to be lifted from my shoulders.
And income from my online ventures continues to surprise and grow. I’m simply amazed at what has transpired here, and I remain eternally grateful to all of you readers out there that continue to stop by this site and support what I’m trying to do here. As you’ll notice, I don’t really push any products here, so almost all of my income is generated via passive display ads and freelance writing. The income you see in the table is net of hosting fees ($152) and email costs ($20). I’m aiming to generate $12,000 in online income this year, net of expenses. I’m solidly on pace to exceed this goal, so I’m extremely happy with this. There’s a part of me that wants to transition from working at a car dealership to writing on a more full-time basis, and that idea becomes more and more realistic with every passing month. This type of change would slow the journey to financial independence down because I wouldn’t be able to save as much, but it would surely be a more scenic and enjoyable route.
Expenses were a bit higher than normal, mainly due to the aforementioned expenses related to gifts. For example, my food expenses look pretty out of control this month. But almost 1/2 of this spending was all done in one day in Naples. I took my girlfriend out to lunch and dinner (Naples is expensive!), and then we also went to this popular cupcake place after dinner. Subtracting this one night out and I only spent about $200 on food this month, but I was more than happy to take her out for a good time. She’s been incredibly supportive of what I’ve been doing over the last four years, even while she doesn’t share the same vision and enthusiasm. So I wanted to show my appreciation a bit.
I think the rest of the expenses look fairly normal. However, transportation costs continue to weigh on me. Fuel was a bit high due to the trip south and back, and I’m still amortizing the purchase of my used Toyota Corolla. I long for the days when I was riding the bus and my little scooter, that’s for sure!
I managed to save 51.6% of my net income this month. I consider anything over 50% as a definite victory, although I barely scraped by this month. But I’ll take it! A win is a win.
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
- 51.6% – April
So it looks like I’m now at an average savings rate of 45.4% for the year. Not my best showing for sure, but I’m hopeful that I can make up for this later in the year. Again, I knew it was going to be challenging with rising costs across the board and the amortization of a car purchase, but I feel pretty good about how I’ve fared thus far. Looking forward, I expect continued savings rates lower than what I’m used to, but I’m also anxious to continue doing my best. And what’s maybe best about this blog is that since it’s a live look at my journey to financial independence, you’re able to see challenges and setbacks, not just all the good stuff.
What did your budget for April look like? A victory or a setback?
Thanks for reading.
Photo Credit: Stuart Miles/FreeDigitalPhotos.net