Income/Expenses For August 2014

budgetI’ve been tracking my income and expenses online since I initiated this blog back in early 2011. I do this for a few reasons.

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 August 2014:
Online Income $2,749
Dividend Income$439
Total Income$3,186
Expenses from August 2014:
Auto$300
Rent & Utilities $250
Student Loans$224
Fuel$185
Health Insurance $178
Hosting$150
Restaurants$100
Fast Food/Takeout$83
Auto Insurance$69
Groceries$64
Pharmacy$45
Gifts$39
Email Services $20
Amusement$3
Everything Else*$372
Total Expenses$2,077

Income

This is my second full month of living without the comfort of a traditional paycheck and it was another big success. Most of my income now comes from my online endeavors, which I broke down a few months ago. I’ve been staying incredibly busy writing, and I appreciate all of the support you readers give me. I’m incredibly grateful that I’m in this position right now, and I’m enjoying every moment of it.

The passive dividend income I earned during the month of August was really solid. This income alone covered almost ¼ of my personal expenses, which is just amazing if you really think about it. I’m exactly where I want to be, and where I had planned to be from the outset. Things are rolling along here.

The wonderful thing is that even though there are only two income categories listed above, I actually received income from 20 different sources when you individually count out the companies that paid me dividends. That’s some pretty serious income diversification, and much better than the days when I had only one source – my day job.

Expenses

Expenditures were high this month.

*The everything else category includes expenses I don’t have a regular budget for. I booked a flight for my significant other, still in Florida, to come up and visit me in late October for what would be our fifth anniversary together. We’re going to spend a few days down in Ann Arbor so that we can explore the city together and figure out our next step, whether that be her moving to Michigan or me going back to Florida.

That covers almost everything there. The rest of the everything else category was filled out by $37 I spent to service my car.

I spent a bit more on food than I’d like, but this seems to be a recurring theme for me. It may look like I spent a lot on fast food this month, but almost all of the $83 I spent there was related to two events: I got some takeout pizza one night for family, and I also went to Cedar Point toward the latter half of the month. Food is really expensive inside the park, and I spent $40 before I knew it. But it was a great time, and the tickets were free thanks to my aunt scoring some tickets through work, so it balanced out.

My fuel bill was crazy high. This was due to crisscrossing the state of Michigan to check out a couple of cities for livability, as well as an ill-fated trip out of Michigan. I expect September to normalize.

My two-month forbearance on student loans ended, so this represents a normal payment for me.  I believe within the next six months my student loan minimum payments will be increased, as I’m on a graduated plan.

I didn’t have a mobile phone bill this month. I received some credits through Aio Wireless for a referral. Sweet!

The $300 amortization of the cash purchase of my Corolla will be over at the end of the year. Anxiously awaiting that, as that’ll free up the budget quite a bit.

Savings

I managed to save 34.8% of my net income this month. That’s obviously a bit disappointing to me as I’m used to saving a lot more of my income on a regular basis. But I’ve voluntarily taken a fairly substantial pay cut by quitting my full-time job to focus on writing. Of course, I have no regrets whatsoever about my decision. I may be saving less, but I’m enjoying the process a lot more.

I have a goal this year 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
  • 18.6% – May
  • 72.9% – June
  • 59.2% – July
  • 34.8% – August

I’m now at an average of 45.9% for the year. Oh, so close. I’m optimistic that I’ll hit 50% for the year, but I also know it’s going to be incredibly difficult. The holiday season will be coming up in a couple of months, which will mean travel and gifts. And my income doesn’t leave a lot of room for error like it used to. But if I can save even close to 50% while totally transforming my life like I have recently then I think I’ll be very happy with that result.

September should be an improvement over this month. I don’t have any major one-time expenses that are coming up, so I’m hoping to raise my average a bit here over the next few weeks. It’s more challenging than ever to save, with less income and higher expenses, but I’m extremely fortunate to take that challenge on and see where I land!

Did August treat you well? What was your savings rate? Any surprises?

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

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104 Comments

  1. I would love to know how your grocery spends are so low! I know you have take out on there and restaurants, but even so, your food bill is small. Would you share that at some point? We’re slowly working on getting our savings rate higher, but some months things seem to happen and money drains away! I was also wondering, are you ever going to aim to earn a certain amount i.e. I’m going to aim for $4,000 income this month or whatever? That being said, your online income is already great!

  2. Great looking month Jason! I see your online income dipped a bit, which would be expected given the fluctuating nature of such things, but overall, an awesome increase as compared to where you started. Would you envision this continuing to trend upwards, by and large, or plateau at certain point unless you branch into different revenue streams or income generating activities (separate blog, additional freelance opportunities, etc.)?

  3. Jason, what’s the email services fee about? 45.9% for the year is still quite impressive. Definitely aim for getting to the 50% mark. I know you can do it. 🙂

  4. I’ll be glad when the amortization of the cash purchase is complete. I know you paid cash but it still seems like you have a car payment. Yuck. Achieving a 50% savings rate for the year looks a little tough but you still might be able to pull it off. Persevere to the very end and finish strong!

  5. Howdy Jason! My savings rate for August was a solid 50%, but my annual average savings rate is only 40% due to travel/entertainment expenses. We like to take “mini” vacations throughout the year, like this past June we went to Dallas to a Doobie Brothers/Boston concert. Just recently, I bought tickets to see the Band Perry who will be playing in Bossier City this December. I try to balance saving for retirement with enjoying life.

    BTW, my next stock purchase will be T! Got to love that dividend.

  6. Saving 35% of your income for the month of August simply highlights the ebbs and flows of life. It is impossible to have a consistent savings rate month to month as unexpected expenses always seem to arise. Whether it’s a higher fuel expense, pizza, god forbid health or some other out of the blue unexpected bill that just pops up. The key is to be mindful of where the spend is and how to mitigate as much as possible. In all, you are doing very well my friend and have a mentality that everyone should adopt regarding finances. This post already highlights what you know… the key is increasing savings versus increasing income. Thanks for sharing.

  7. My food bill is extremely low relative to everybody I know as well. My secret? I don’t shop at major retailers whenever I can help it. I buy most of my groceries from a local farmers market. I don’t usually spend more than $25 each time (I usually go once every week). Also, I don’t buy much alcohol, and if I do, I buy a very cheap red wine (Evodia) from a liquor store that sells it the cheapest ($6.99 for a 750mL). I MAKE that bottle last, too.. Jason doesn’t appear to drink much if at all, and cutting alcohol from your budget can help significantly.

    Hope that helps.

  8. Keep up the good work Jason! My August went smoother than expected, just really one unexpected bill from an appointment my wife had in April which was all applied to deductible… gotta love the speed of medical billing.

    That is some very nice dividend income for what is an “off” month. Your September should look fabulous with all of those extra dividends rolling in!

  9. 34% still isnt that bad, especially considering an expensive month. And your online income is rocking! Its pretty much what your day job paycheck was, but was probably a lot more fun/interesting earning it! And from your ‘other’ category, its definitely worth it to get the lady back in the picture 🙂

  10. Keep it up man! I enjoy knowing that FI can be done on a budget; its nice to know there are a bunch of us out there.

    – Grem

  11. Nicola,

    My grocery bill is low simply because I don’t eat much. Limiting portions has a great way of helping out my wallet and my waistline. 🙂

    That being said, I discussed what I was eating and buying back in March:

    https://www.dividendmantra.com/2014/03/my-frugally-fit-diet/

    I’m no longer buying/eating Lean Cuisines because I don’t have to cart a lunch off to work anymore. So that has saved money. Generally speaking, I eat one bowl of granola for breakfast, one sandwich for lunch, and dinner is just whatever is on sale. I don’t cook at all, so until I’m back with my significant other I buy prepackaged foods for the most part. I usually drink no-calorie flavored water throughout the week. All of this obviously doesn’t add up to much. Without the takeout and restaurant visits I’d spend very little on food.

    That’s a good question in regards to online income. I don’t know if I’ll ever aim for a certain number, because a lot of it is really out of my control. Most of the blog’s income is really relating to advertisements, where the income oscillates quite a bit from month to month. Right now, freelance writing is my biggest income generator, and it’s difficult to really scale that up much more because I’ll simply run out of time at some point. Overall, I’d be very happy if it were just to stay at this level over the long haul. I think I can still achieve FI with this level of income, especially as the dividend income grows.

    I hear you on how things happen. Life has a funny way of interrupting our plans. But the key is just to keep an eye on the long haul and do our best. 🙂

    Thanks for stopping by!

    Best regards.

  12. W2R,

    Thanks so much. I think it was still a very solid month, though not up to my usually high standards. But I don’t regret my decision to quit my job for even a second. 🙂

    It’s tough to say what’s going to happen with the online income. I think freelance writing will plateau pretty shortly because there’s only so much time in the day for me to write. The blog income could go up, but it oscillates pretty substantially from month to month. I think my biggest opportunity for more income from here would probably be to write a book, but it’s hard to set aside the time. I’m staying busier than I thought I’d be, but one thing that will make such a project easier will be to find a permanent housing situation. Right now, I’m renting a room, and this makes it difficult to create my own space and routine to maximize my time. I’m confident I can kick it up a notch once my girlfriend visits me in October and we lay plans for the future.

    Hope all is well over there!!

    Best wishes.

  13. I noticed that I don’t really ever see a line item for taxes in your expenses. How do you account for those? Is it going to be a bigger bite now that you’re effectively self employed, and owe both halves of the payroll taxes (social security and medicare)?

  14. Jason,
    Good job, making 30+ percent more than you spend is still way above average. If you stated it I missed the text, but is $2K in expenses pretty typical for you now? $2K is living pretty frugally my friend, especially if you get to travel to AA and Cedar Point.
    Best wishes,
    KeithX

  15. Tawcan,

    I use an email service to send my emails out. I am able to customize the way my emails go out and how they look. I was using FeedBurner for free for quite a while, but I didn’t like it at all. The $20/month allows me to customize the look/layout of my emails, without worrying about being blacklisted or something.

    I’m still definitely aiming for 50%. I’m going to give it my best, but I think it’s going to be really challenging. But that’s half the fun, right? 🙂

    Take care!

  16. Jake,

    Yeah, I can’t wait to get rid of that $300 monthly “bill”. That will really free up the budget and ease my ability to get to where I want to be. Of course, I’ll get rid of the car amortization and there will be something else pop up in its place. 🙂

    I’m definitely going to persevere. I don’t know how to do it any other way!

    You two had a great month of savings for August. I wish I could come even close to that 76.5% rate. Keep up the fantastic work.

    Best wishes.

  17. luckydog17,

    That’s a very solid savings rate both for the month and the year. I always like to aim for 50% because that’s the level where you start to cross over into extreme savings, and it makes the idea of retiring within 12-15 years pretty realistic.

    But you definitely have to balance enjoying life now with saving for later. I’m lucky in that I’ve always enjoyed things that don’t really cost a lot of money. But spending a little money on food during a trip to Cedar Point was a good example of enjoying the day. Sure, I could have probably done it on less, but I had a great time.

    I definitely love that T dividend. I go back and forth on it. I don’t believe there’s any margin of safety here, because I usually aim for 10% returns. And assuming a 2.5% dividend growth rate with a 5.5% yield means you’re looking at 8% total returns, assuming a static valuation. But they could increase the dividend growth rate, especially if the Directv deal goes through. Plus, you have the time value of money to take into consideration.

    Thanks for stopping by!

    Best regards.

  18. DivHut,

    Absolutely. Life has a way of getting in the way of our best-laid plans. And even though my expenses were fairly static for quite a while there, my income would oscillate quite a bit. So that created a bumpiness in my savings rate from month to month.

    But it was the years of learning to live on less and be happy that allowed me to take on this transition and succeed thus far. Creating great savings habits opens up a whole world of potential opportunities. 🙂

    Thanks for all the support. Keep up the great work over there.

    Cheers!

  19. Dividends & Zen,

    Yeah, great point there regarding alcohol. I almost never drink. That makes a big difference.

    Great tip there regarding the local farmers market. I actually experienced the opposite down in Sarasota, where the prices there were higher than at major retailers. But I’m sure that varies from locality to locality.

    But I just don’t eat much, at least during the week. That frees up the budget quite a bit on the weekends when/if I want to go out and grab some food. I would say eating out at restaurants is still an experience I quite enjoy, even though it goes against my frugal nature. In fact, I can say with confidence that if I were a billionaire tomorrow my lifestyle wouldn’t change much. I wouldn’t go out and buy a Ferrari or a big mansion. But I would probably eat out a lot. I just enjoy it.

    Cheers!

  20. Kipp,

    Thanks, man. August was a disappointment when compared to my lofty standards, but I still saved 10x what an average American saves. And that’s what’s so great about living frugally. Even on an off month, the savings rate is still very solid. Kind of like shooting for Mars and landing on the Moon. A failure against the goal, but a relative success.

    Thanks for stopping by!

    Cheers.

  21. Wisp,

    Couldn’t agree more in regards to the airline expense. That was the first time I can ever recall being so giddy to book a flight and spend that much money. 🙂

    The online income isn’t quite what I was making before, but I honestly don’t mind. I’m doing something I really enjoy, and I feel I’m helping more people this way. I was simply selling auto maintenance and repairs before. Now, I’m selling freedom. I feel a lot better about that, especially since it can radically change people’s lives.

    Thanks for the support. Really appreciate it.

    Best wishes!

  22. Gremlin,

    Thanks!

    And you’re right. Freedom is a lot cheaper than a lot of people make it out to be, and I’m glad I can prove it. 🙂

    I’ve still got a lot of great ideas, and I’m super excited to keep sharing the journey and spreading the message.

    Take care.

  23. That’s quite the frugal budget. Well done! I’m interested to know how you will budget and how you share finances when you are back with your girlfriend. Does she have good job prospects for the area? I noticed you slipped in that there’s a possibility of going back to Florida. (It hasn’t even snowed yet! – y/k 😉 )

  24. Brian,

    Well, taxes aren’t an expense. Taxes are a reduction of gross income, resulting in net income. Much the same as when I had my day job, the income you see here is net. I pay quarterly estimated taxes to account for dividend/online income, which I documented here:

    https://www.dividendmantra.com/2014/03/the-joys-of-quarterly-estimated-taxes/

    However, I set up my payment plan earlier this year before I was making as much online income as I do now. I took an overall income hit, but I also know I’ll probably owe quite a bit when I do my taxes. However, anything I owe reduces gross income accordingly. I typically owe every tax season, and so my February or March budget usually takes a hit, showing much less net income, as you can see earlier this year:

    https://www.dividendmantra.com/2014/03/incomeexpenses-for-february-2014-2/

    The overall yearly average always reflect that, and always reflects savings of net income.

    I hope that helps!

    Cheers.

  25. KeithX,

    Thanks! It was a tough month, but I also keep in mind it’s about 10 times what the average American saves. However, I hope to bounce right back in September. 🙂

    I don’t think $2k is typical for me. This was actually an expensive month as I recognized a plane ticket expense. I think the budget is going to morph as I end the year and start 2015. I’ll end the $300 amortization of my car expense starting in 2015, so that’ll free things up. So you take away that and the plane ticket and I would have had expenses closer to $1,400. But rent is also going to go up at some point here, as I’m renting a room from family on a very temporary basis. I expect this living arrangement to end by the end of October, after my girlfriend comes up and we decide what’s next. Overall, I think I can come under $2,000 for the foreseeable future, but one-time expenses may cloud things, especially until I get a more permanent living situation going in the next couple months.

    I hope that helps! Thanks for all the ongoing support. Much appreciated. 🙂

    Best regards.

  26. Debs,

    I did kind of slip that in, didn’t I? 🙂

    Well, to be honest, Claudia loves Sarasota. And so do I. If I stomp my feet and beg I know she’ll move up here, sight unseen. But you have to pick your battles, right? And I’m not sure this is a battle I want to pick. Furthermore, I don’t even know if it’s a battle I’d like to win, after some of the events that have occurred since I’ve been up here. I sometimes feel like a round peg trying to fit into a square hole up here, which is a really odd feeling. But the more we talk, the more the conversations have tilted toward us continuing on in Florida. However, we’re both really looking forward to celebrating five years together and envisioning our new adventure together.

    Thanks for stopping by!

    Cheers.

  27. Another great month DM. 34% savings is still pretty great.

    Quick question about the $300 amortization – Since your purchase was a cash purchase, I don’t understand why this affects your cash flow.

  28. August was the second time now that dividends have exceeded expenses for me – I think going forward even with the upcoming KMP to KMI conversion/cut I should be positive for Feb,May,Aug,Nov. Other months still aren’t covered, but in the 70-80% range so getting closer.
    Saving of work income is now steady/automatic for me at~65% (I’ve got a recurring direct transfer set up to the brokerage account). So at this rate I should be covered with a reasonable margin of safety in 2-3 years.

  29. Great job DM! Ho hum month for me. I took home net of 7600 in pay, and expenses were about 4000. I never seem to hit 50 % savings rate. Life in DC is sick expensive. I don’t count div income as income as I reinvest all of it, but it was probably a bit more than 1/3rd of expenses. This is pretty much the story each month… wash, rinse, repeat. Best DD

  30. Very nice month! Even with the extra expenses this month, it was still a very solid savings percentage. $439 of dividends is awesome! I can only imagine how much that will be in a few years, as your portfolio is growing. Great job!

  31. Being able to save 35% of your income is a powerful thing! People seem like 10% is a great sacrifice, so I would consider your savings year a success regardless of whether you hit 50 or not. Who would have expected that you would be outside of Florida? Doing something more appealing to you?

    Plenty of much bigger successes this year than hitting a 50% savings target.

    Plus, your savings rate is down because your income is down! Not because your spending habits have changed significantly.

    Take care!

  32. This is actually a pretty interesting topic. One’s diet is a personal thing but do you think you’d “splurge” a bit more on fresh, healthy foods if you weren’t trying to limit expenses? I’m fairly health conscious and my grocery bills are rough because I tend to stick around the periphery of the supermarket. I keep telling myself it’s OK because I want to give myself the best possible chance to experience my financially independent years in good health and shape.

    That said, the “optimal” diet as preached by the interwebs seems to change on a regular basis. I believe carbs are out of fashion lately while fats have made a big comeback.

  33. DGJ,

    Thanks! 34% is still very solid. I need to remind myself that, because I always strive to kill it! 🙂

    The $300 amortization doesn’t affect my cash flow per se. My cash flow was definitely impacted when I paid cash for the car last December, but the budget is reflecting the expense through the amortization (like a car payment). So the cash flow was $300 better than the budget above would have you believe. However, the cash flow was $3,900 worse than last December’s budget would have you believe. So it all balances out.

    Cheers!

  34. Vawt,

    Thank you! I’m really fortunate that the community supports me so much. I’m incredibly grateful.

    I work hard to create valuable content here, so I just hope that you readers continue to enjoy and appreciate it for years to come. 🙂

    Best regards.

  35. pacer45,

    Wow, that’s just fantastic. 70-80% coverage of your expenses via dividend income is just awesome, my friend. I aspire to be in a similar spot a few years or so from now. Must feel pretty good!!! 🙂

    Keep up the great work there with the savings rate. Very impressive!

    Cheers.

  36. DD,

    Thanks for stopping by!

    I can imagine it’s expensive out there in D.C. Although, that substantial income probably helps out quite a bit! 🙂

    You came really close to a 50% savings rate, which is admirable. And I bet if you included your dividend income you would have easily gone over. I include my dividend income in these reports because even though I’m reinvesting it right now it’s still income. It’s taxed as income, so I count it as income. And it would be awfully weird to never include it for years, and then all of the sudden switch to including it as my only income source 12 years into the journey. Besides, it isn’t the only income source I’m investing, so I count it all. Money is money, baby!

    Best wishes.

  37. Henry,

    Thanks! It’s been a really amazing ride thus far. 🙂

    I’m probably working 40 hours per week on all of this, when you count writing for the blog, freelance writing, emails, research, comments, etc. But it sure doesn’t feel like work. I’m really enjoying every minute of it. I wake up every day anxious to get out of bed and get the day started now, whereas before it was pure drudgery to get out of bed.

    Take care!

  38. Agent Dividend,

    Thank you!

    I also can’t wait to see where the dividend income is in a few years. I’m really looking forward to hitting $1,000 per month on a regular basis. At that point, I’ll be on the home stretch. In the meanwhile, it’s just slow and steady. 🙂

    I’m sure you’ll find similar success. Stay consistent and keep with it. Big things come from small beginnings.

    Cheers!

  39. ILG,

    Yeah, I’m in a great position right now. I try to never lose that perspective. I may not have saved as much as I wanted, but the fact that I’m still saving while doing what I love for a living is truly wonderful. I’m blessed.

    The drop in income has definitely made the goal much more challenging. But I think if I can end the year with a savings rate anywhere near 50% while undergoing all of these personal and professional changes will be a relative success. And next year might be even easier as I’ll already be writing and I should have a steady routine going by then.

    Appreciate the kind words and support! Glad to see you blogging again. Thought you retired. 🙂

    Best wishes.

  40. Jason,

    That’s exactly how I feel every morning. I’m excited to get out of bed and start the day.

    So glad you’ve got this platform. It will bring you to financial independence by itself, not even counting the 170 grand you have in investments.

    Talk soon my good friend,

    Kraig

  41. Ken,

    Well, I’m probably a bit weird in this aspect. But I honestly don’t eat the way I do to save money any more. I did when I first started out when I was eating plenty of ramen noodles while also avoiding restaurant visits. But I don’t really restrain myself much any more. I largely eat what I want, just in smaller portions to not only save money but also to stay relatively healthy.

    But I’m not the kind of guy who enjoys a good stew with vegetables. In fact, I really dislike the taste of pretty much anything green. The occasional green bean is okay, I suppose. And I’ve had broccoli that I didn’t hate. Other than that, I’m not a fan of vegetables at all.

    I like stuff like pizza, cheeseburgers, grilled sandwiches, pasta, sushi, steak, enchiladas, drunken noodles, fried chicken, etc. That’s not to save money. That’s what I like to eat, irrespective of costs. But I don’t want to die of a heart attack before I get to financial independence so I moderate myself. Most of the week is very light eating. Then on the weekends I splurge a bit (both in terms of calories and cost). I balance it that way, and it works for me. But it might not work for you.

    However, I also don’t believe that the prevailing health advice du jour is necessary what we should all be worrying about. I think people’s food choices are looked at with a microscope when they really shouldn’t be. There’s a lot more than what you eat that determines your health, lifespan, and mood. Exercise, genes, luck, and stress are all pretty big fators that I think people don’t discuss often enough. I exercise regularly and avoid stress to offset my taste buds.

    I look at Warren Buffett as yet another example. Guy loves cheeseburgers and Coke. I think he came right out and said he despises vegetables at one point. He’s 84. Steve jobs, on the other hand, was kind of a health nut (he was a fruitarian for a while, as I understand it). He died of cancer at 56. You just can’t predict some of these things.

    Cheers!

  42. Kraig,

    I definitely hear you, bud. Every day is an opportunity. It’s a chance to change your life, and the world with it. I’m really grateful to be in this position.

    The blog might bring in enough income to support my lifestyle one day, but I still plan to get the Freedom Fund to the point where it’s generating ~$1,500 per month in dividend income. Having flexibility and options never hurt anyone. 🙂

    Keep up the great work over on your end too. Really glad things are working out so well for you. Life is good!!

    Take care.

  43. Hey, it sounds to me like a great month! you managed to do what you like, even planned a getaway with your girlfriend and still were able to save some money! Congrats Jason! I think posts like this one, can be very encouraging to many people, who still working unhappily their 8-5 jobs but dreading to quit! I am very excited and happy for you! 🙂

  44. Jason
    Every time I read this blog and others it always inspires me to save and invest more. We still have an expensive lifestyle but we have an above average savings rate for our income bracket. Living in hawaii with the highest cost of living is challenging, I told my wife 8 to 10 more years at our current savings rate and we won’t ever have to worry about money again.

  45. Your doing a very good job considering you recently quit your job. I hope to be in your position in a few years. You are one of the people who have inspired me to try to achieve financial independence. I currently have a savings rate of around 70% but this will fall as I move into my own place in the future.

  46. Hello DM, and thanks for sharing your journey while you are at it. It is very inspiring to follow.

    I have recently read a blogpost in Sweden where the blogger, 4020, is talking about investing like a business. He also talks about how Buffett during many years only invested in one or two companies. Per year.
    http://40procent20ar.blogspot.se/2014/09/investing-businesslike.html (you might want to use Google Translate 😉

    What is your view on this? Focused portfolio versus diversified and so forth… Obviously we can´t easily replicate Warren B:s fenomenal results but 4020 is also talking about patience and the virtues of being able to wait.

  47. I fully agree with what you said in your post. “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.” I think more people need to understand this, by cutting your spending you will be surprised at what you really need. Great job. Thanks for sharing!!

  48. Hope things go well with you and the woman. Hopefully things work out and you settle into a new place. I wouldnt worry to much about a lower savings rate until then in your time of slight uncertainy. Your online income looks solid and keep pumpin product out!

  49. Happy,

    Thanks so much. I do hope this is inspirational to many out there. It’s great to look upon my journey and say, “Hey, this guy quit his job, And he’s STILL saving almost 40% of his net income.”

    The journey to complete financial independence – where writing is fully optional – is still going strong, but it’s definitely more enjoyable now. I’m really fortunate!!

    If you can find something you really enjoy, be enterprising. Discover a way to monetize it, even if it means less income than before. You can figure out a way to save, even if the savings take a hit in the short term.

    Thanks for stopping by!

    Cheers.

  50. Charles,

    8-10 years sounds fantastic, Charles. Sounds to me like you guys are doing very well, and much better than I am. 🙂

    I understand Hawaii is crazy expensive. On par with some of the most expensive locales stateside. Never been there, but would love to go sometime. I’m obviously a fan of tropical places, as I voluntarily and purposely moved to Florida from Michigan five years ago…and might soon be heading back. I suppose Florida is a poor man’s version of Hawaii…of sorts.

    Best regards.

  51. Sindre,

    Wow. A 70% savings rate is very impressive. I’ve been able to hit that high of a rate many times on a monthly scale, but never a yearly average. Great stuff!

    I’m really glad you’ve found some inspiration in what I’m doing. Financial independence is still the name of the game, but to be able to do what I really want in the meanwhile is priceless. I suppose these monthly budgets prove out that it’s possible to monetize your passion and enjoy the journey a bit more. 🙂

    Thanks for stopping by. Best of luck with your journey!!

    Take care.

  52. Sensim,

    Well, operating a very concentrated portfolio can increase both risk and potential reward. Only you can answer for yourself how much risk you’re willing to take on. The problem arises when a company doesn’t perform as expected, or you end up flat out wrong. If you own only 10 companies and one has a major issue, you might be out 10% of your wealth and/or income. Can you withstand a 10% hit in retirement?

    I’ve discussed my views on (income) diversification here:

    https://www.dividendmantra.com/2014/04/why-i-eventually-want-to-be-invested-in-50-companies-income-diversification/

    I think diversification when used intelligently is a great way to ensure growing income in (early) retirement. However, diversifying just for the sake of such is a bad idea. I personally think there are more than 10 outstanding companies out there, which is why my portfolio has almost 50 positions. Others might disagree.

    Best regards!

  53. Brian,

    Couldn’t agree more.

    It was hard for me to wrap my brain around that before because I never found a way to monetize anything I really enjoyed. But now that I write for a living I see the truth behind that. I have found my calling, and I can only hope that others out there are so fortunate.

    Cheers!

  54. Financialforager,

    Thanks!

    Saving more is more effective than earning more. The math bears that out. It’s unfortunate that so many people are focused only on earning more, when saving is so powerful. I’m not saying people shouldn’t go out and try to make the most they can, but if they haven’t yet optimized their lifestyle for saving they will probably end up wasting away that excess income, bringing them no closer to freedom.

    Appreciate the support!

    Best wishes.

  55. Aspenhawk,

    Your encouragement and support is always much appreciated! 🙂

    It’s a high bar to hurdle, but I’m going to give it my best for the rest of the year. I’m optimistic!

    Best regards.

  56. Aspenhawk,

    Your encouragement and support is always much appreciated! 🙂

    It’s a high bar to hurdle, but I’m going to give it my best for the rest of the year. I’m optimistic!

    Best regards.

  57. A-G,

    Thanks!

    I think things will go very well in late October. This reconciliation has been wonderful for both of us, and we’re both very excited to see each other. I think the odds of me going back to Florida are very high, which is a good thing. I flourished down there, whereas it’s been difficult back here in Michigan for numerous reasons. I suppose you just don’t know until you try.

    Appreciate the support. Plenty more product is coming, my friend. 🙂

    Cheers!

  58. DFG,

    Absolutely. Great point there. I’m extremely blessed in that after undergoing a massive lifestyle change I’m still able to save considerable portions of my income.

    I kind of lucked into all of this, but I do believe that success is where hard work and luck meet. And I certainly put in a lot of hard work there. 🙂

    Thanks for all the support. I’m hoping to finish 2014 off strong while writing away, which will set me up for an even better 2015!

    Appreciate you stopping by. Stick with it over there!

    Best wishes.

  59. I’m so glad everything looks ok to youy. I just made a graphic of the moving average for 12 past months and gives a rather linear line point to… financial hapiness. Your progress is really amazing.
    U’ll keep reading your blog.

  60. Trader,

    Thanks for the readership and support! 🙂

    All signs are pointing to happiness for me as well. Every new day just keeps getting better than the last.

    Glad things are going well for you as well. Keep it up!

    Best regards.

  61. Dan,

    Thanks! Not as impressive as some of my past budgets, but I’ll take it. The fact that I can still save a substantial portion of my income while truly doing what I enjoy is just wonderful. I couldn’t be any happier with the way the journey is going thus far. 🙂

    I hope your journey is proving to be just as fruitful.

    Cheers!

  62. Drew,

    I really am. Success is where hard work and luck meet, and I’ve had my fair share of both.

    Appreciate the support. I’m working hard to create great content and inspire others. Stay in touch!

    Take care.

  63. Thanks for the encouragement, being able to cover expenses some months definitely does make it feel like seeing some light at the end of the tunnel.

    I’m 38 now so you definitely have time to meet or exceed those levels before you reach my age.

  64. Not sure about your specific situation but for people in high costs areas willing to live somewhere else after reaching FI/retirement then your current percent doesn’t matter as much as the actual $ savings.

    Just as an example if you plan to live somewhere else where the equivalent monthly expenses would only be 2400 then your ~3600 of monthly savings covers 1.5 months of expenses instead of 0.9. It would be the equivalent of someone saving money at the same location they plan to retire having a savings rate of 60%

  65. Glad to hear you are enjoying the process Jason! Also $400 in dividend income is 25% of your expenses? looks like your a quarter way into being financially independent. Hope you and your fam jam is doing good.

    best wishes

    Ace

  66. Nah =) Working on my house and my job got very busy!

    One of those months where if you aren’t working, your sleeping!

    Keep it up, in a few months we’ll see that 50% rate!

    Take care!

  67. Even if you don’t manage to save 50% of your income, you still saved more (WAY more) than the average American. And that dividend income is just going to keep growing!

    Inspiring, as usual, and a really impressive August. 🙂

  68. I’m really glad this new venture is working out for you. It takes some big cajones to step out of the rat race like you did. Hats off!

  69. Ace,

    Thanks so much. I’m definitely enjoying the journey even more than I was before. And that’s simply because I’m not spending 50 hours per week doing something I really don’t enjoy. Looking back on it, I probably would have ended up taking a pay cut for something more enjoyable whether or not I was blogging. It just would have been a traditional job. Either way, I just didn’t want to do it anymore.

    Yeah, I’m about 1/4 of the way there right now. The progress might slow a tick with less income, but I’m still chugging along.

    Everything is good here. Looking forward to seeing my SO in October, and then we’ll plan the next step from there. 🙂

    Appreciate you stopping by. Hope all is well with you!!

    Best wishes.

  70. Seraph,

    Thank you. I’m glad you find these posts inspirational. I know it can be kind of the nuts and bolts behind the process, but I love sharing what I’m spending on just as much I enjoy reading what other people are spending their money on. Always interesting to see where conscientious people are spending their hard-earned cash.

    Thanks for stopping by!

    Best regards.

  71. Josh,

    Thank you! It was a really big jump for me, but I knew that ultimately the risk was low because I could always go back to working at a car dealership. I might not have gone back making as much as I did when I left, but I never wanted to go back anyway. I didn’t want to do it until I felt like I could make it work, because I knew that once I was off the wheel I wouldn’t want back on.

    Appreciate the support very much. You readers are absolutely wonderful. I do my best to create great, unique content, and I hope to be in a position to keep writing for many, many years. 🙂

    Thanks again!

    Best wishes.

  72. 45% for the year sounds pretty awesome to me, considering the changes you’ve gone through. Stretch goals have positive impacts, even if you don’t quite hit the mark, right? Cheers!

  73. I’m impressed at how much money you’re making without a regular ol’ paycheck–nice! And, I think your savings rate is awesome even if it’s not quite where you’d hoped it would be. There’s always next month! Glad to hear you’ll get to spend some time with your significant other–long distance is so hard (Mr. FW and I were long distance for a year before we got engaged).

  74. Jason,

    I hope you do write a book. You have helped so many people–me included. (OR get a job as a regular contributor on MSNBC–you keep it real for most folks). Good luck with the family situation and with your girlfriend. No family is perfect. Which state is best for your girlfriend’s son? I personally would choose that state. Thank you again, Margaret

  75. Makes plenty of sense my friend! I would say that as your freelance abilities and demand for your writing goes up, so should your rates for writing. While your quantity can hit a limit due to time, your ability to charge more shouldn’t as your reach and authorship adds value and impact elsewhere. Food for thought!

  76. Awesome month! So glad to see that the online gig is working out well for you. That’s some solid income right there, and you have the dividend stream which only continues to get fatter! 🙂

    Enjoy it! You’re basically living the dream of financial independence already since you love what you’re doing!

  77. DB40,

    Thanks. It’s been a really great year, with or without 50%. I’d love to hit it, though, and keep the streak alive, but I think I’m going to come up a little short. But shooting for Mars and ending up on the Moon still gets you into outer space. 🙂

    Thanks for stopping by!

    Best regards.

  78. Mrs. FW,

    Thanks! I’ve been writing for years now, so I kind of jumped off the conventional job train just as this train was starting to build momentum. I figured the worst that could happen is that I’d end up back at a job again, so the risk was minimal.

    It’s been tough to keep the 50% streak alive this year with all of the challenges. I think September is going to be a great month for savings, but I predict it to get worse after that. I think I’ll come very close, but just short…especially with the way the holiday season usually goes.

    And I’m excited to see my SO this October. We’ve been chatting a lot about future plans and we’re both very excited. That weekend in late October will determine both of our futures, so it’s going to be great to get things rolling. I can imagine how difficult it was for you and Mr. FW to have a long distance relationship for a year. That had to be tough, but it looks like things definitely worked out for you guys in the end. 🙂

    Cheers!

  79. margaret,

    Thanks for the kind encouragement there. 🙂

    I’d LOVE to write a book one day. And not even for the money, because books are really tough to generate a lot of income from. Rather, I’d love to just kind of put a manual out there, and kind of put my stamp on something permanent like that. I think I could put something together that is really inspirational and could motivate others to get their financial situations changed around.

    I have some great ideas in my head on what I’d like it to be about, but it’s just really tough to find the time. The more I write online, the less time I have to put a book together. But I think I’ll eventually get one done.

    Appreciate the well wishes there with the family. Claudia and I have discussed her son’s future quite a bit, and that’s a major factor. We both agree he’ll probably be better off in Florida. He’s had a rough time meeting friends over the years, and just over the last year he’s developed some friendships. So neither of us really has a desire to see him have to cut his new friends loose. In the end, I’ll very likely end up back in Florida at the end of next month. Which is certainly fine by me. No state income tax, beautiful beaches, palm trees, blue skies, and no snow. 🙂

    One of the very first posts I ever wrote on this blog was about why I moved to Florida. And those reasons still stand. I just thought I could kind of bring the success I had in Florida back home to Michigan and somehow enrich all of our lives. But it wasn’t to be. My girlfriend advised me that it wasn’t a good idea, based on how much everyone changes over time. Unfortunately, I didn’t take her counsel as seriously as I should have. I’ll never make that mistake again.

    Thanks again for the support!

    Best wishes.

  80. Jason,
    Your cash flow is looking really great! It was a great move to go for self employment. 🙂
    Saving 34% of your income is amazing. Great job. I’m sure you’ll continue to build your online income as well. You really should go to FinCon. It’s a great way to connect.

  81. W2R,

    Ahh, I didn’t even think about it like that. Great point there. I imagine rates will naturally increase over time, leading to a bit more income. At least, I hope so. Let’s hope the pen stays mightier than the sword. 🙂

    Thanks for all the support.

    Best regards!

  82. FI Fighter,

    Thanks, man. Yeah, it’s been a wild ride this year. I can’t believe how far I’ve come in such a short period of time. I’m truly loving every minute of it. Almost seems like a dream sometimes, where I’m going to wake up to a blaring alarm clock at 6 a.m. and have to march down to the dealership.

    Congrats to you on your big pay raise after taking that new job. Sounds like things are really rocking out for you over there. Might delay the plans a little bit, but it’ll solidify your base. 🙂

    Best wishes!

  83. Curious, how much time did you “work” this month? Compared to your old job of 50+ hours a week and commute time..
    Your “true wage” must have went up splendidly!

  84. Joe,

    I definitely want to go to FinCon. This year wasn’t to be because I wasn’t making much online money at the beginning of the year when I first decided not to go, and then I had a move in there as well. If I was still down in Florida I could have just drove there. Oh, well. Live and learn! But I’m definitely planning on going next year. And Claudia (my SO) wants to go as well. She’s more stoked than I am. 🙂

    Appreciate the support, Joe. I have a long way to go to catch up to you, so keep up the great work over there!

    Best wishes.

  85. dividendfun,

    You know, that’s a good question. I should track my hours on a log to really find out. If I had to guess, I’d bet I spend 40 hours per week doing this. Between writing for this blog, freelance writing, emails, comments, managing back-end stuff, and research, it adds up. But it would be nice to know exactly where I stand as far as a wage goes. That might just be a good project for October or November to figure it out and report back!

    Cheers.

  86. Dividend income from a reliable stock produces about 3-4% in dividends but an immediate annuity produces about 6% return, and more when interest rates rise, so I am wondering what your thoughts are about purchasing an immediate annuity upon retirement with some of savings rather than all in dividend stocks.

  87. Jan,

    Well, there’s a lot more to it then that.

    Notice you said “3-4% in dividends” when talking about dividend stocks. But then switched it to “6% return” when talking about annuities.

    There’s a lot more to dividend stocks then just the dividend. There’s also capital gains, which is the other part to total return. An annuity just gives you the income in exchange for capital. Big difference there. If I was really after 6% yield and didn’t care a bit about the underlying capital I could very easily generate that kind of yield through a plethora of REITs, MLPs, BDCs, telecoms, etc. But I want safety of capital, and I still want that capital to grow. More importantly, I want the income to grow. 6% might sound good today, but it won’t sound so good 10 or 20 years from now when inflation has eaten away my purchasing power. 3-4% income today that is growing will eventually far surpass 6% income sitting still. It may take a while for that to happen, which is why it’s important to start early. Moreover, one should diversify their holdings and yields so that the overall income the portfolio is producing both today and in the future is sufficient to live off of.

    Lastly, annuities are typically loaded with fees. That alone makes them a poor investment. You’re simply collecting much of your capital back (as you surrender it at time of purchase) along with a little bit of appreciation. Very poor substitute for a high-quality portfolio of investments where both your income and your wealth are rising.

    I hope that helps!

    Best regards.

  88. Thanks for such a thoughtful reply. I’m outside of the US and have to pay 30% withholding tax on dividend income. However it’s still probably a good idea to participate in the dividend stocks along with growth stocks. There’s no withholding tax on selling stocks, just on dividend income.
    Thanks for your informative website.

  89. Jason – I know your not at your goal of 50% but you should really be proud of the 45.9% savings rate you’ve achieved thus far. Many would do anything just to reach that kind of savings rate, myself included! 🙂 My wife has been working on a side hustle that seems to be gaining some traction so maybe 2015 will be our year to get back to 50% savings rate, something we haven’t done since we starting having kids and she stopped working full-time to be a stay at home mom. 🙂

    Wishing you continued success! AFFJ

  90. AFFJ,

    Thank you for all the ongoing support. I really appreciate it.

    I’m definitely blessed to be in this situation. Not only for a high savings rate thus far this year, but also to be still saving money while truly doing what I enjoy every single day. Every day is a gift! 🙂

    Although, my budget is just for me. So it’s probably misleading to compare it your budget where you’ve got multiple people to include. I imagine at some point there will be more than just me in these budgets (if/when I get married), but this just represents one person’s income and expenses. The key is that you guys are happy, healthy, and moving forward. And kudos to you guys for still shooting for 50% even with some obstacles there. Keep up the great work!!

    Best regards.

  91. Thank you! I share your view.

    I am slowly building a diversified portfolio myself. I have started with investment company stocks with built-in diversification and I am adding more companies step by step. I allow these investment company stocks to have a larger portion of the portfolio than I would otherwise allow. I also keep index funds of a part of my investments.

    I agree that a freedom fund / pension fund must withstand a hit. If too much is allocated in a single stock or just a few it can hurt badly.

    Have a nice weekend!

  92. No because we pay no taxes in Bermuda – we have no tax return to fill out.
    I will check with Charles Schwab (account in US) about it though.
    Interesting info about how it’s done in Norway. Thanks

  93. I was already sold on dividend investing before I found your site a few months ago. However, I still stalk you on here as it is useful for me to keep getting fresh ideas 🙂

    1) You mentioned that you have a payment plan already setup for taxes, I noticed because that was one of the questions I had for you. The follow-up to this was I know that in Florida there is no tax income for dividends. What about where you live now (both state and city) and has that been a factor in deciding where you live?

    2) Maybe a bit too personal, but approximately how many months of expenses do you have socked away in a savings account? I ask because you spent $1,276.5 on purchasing stock in DE (not accounted for in this expenses listing) yet your savings was $1,109 so your savings account dropped by over $150 this past month.

  94. dumbvestor,

    I appreciate stalking! And I hope you find some inspiration here. 🙂

    As far as your questions go:

    I’m currently staying in Michigan right now, which has a state income tax a little north of 4%. No city tax where I am. That did factor into my decision. In fact, it factored fairly heavily into my decision to leave Michigan five years ago as I sought out Florida for its sunshine, beaches, and lack of state income taxes. But I’m most likely (99.9% sure) going to be going back to Florida, which means no state income taxes on dividends.

    I currently have a bit more than $7k in my bank account. Although, the cash flow wasn’t quite how it looks on that statement. The $300 for the auto payment is just an amortization of an all-cash car purchase late last year. So my cash position actually saw a very minor net increase. That varies from month to month, obviously.

    I hope that helps!

    Cheers.

  95. Thanks for the reply!

    I guess I was just… confused that your income annualized = ($3,100 * 12) = $37,200 and yet you are saving noticeably more than me who makes $50k/year haha. Although, when you look at the income listed is post-tax versus mine as pre-tax, you are sharing rent, and eating costs are much lower than mine it makes more sense. Even so, it is still…. confusing that at my math I have roughed through shows I need to wait until ~25 years to retire off of 3.5% yield and you are succeeding on doing it in less than 15 despite having similar $ expenses. My best guess goes back to your recent frugal posting about you made HUGE progress early on as the chances of me having $170k after 5 years are remote at best.

    Hopefully you continue to inspire people and I will probably bug you a bit more in future posts 🙂

  96. dumbvestor,

    Well, keep in mind it’s not what you make. It’s what you keep. That being said, my net income in this particular report probably doesn’t include all I’ll owe in taxes. I set up my quarterly estimated taxes earlier this year when I was making much less in online income. That always gets reconciled in February or March when I do taxes, so the year-end totals are accurate net savings. You’ll usually notice a dip in my savings rate early in the year because of this.

    Appreciate the support. And you’re not bugging me at all. I live and breathe this stuff. 🙂

    Best wishes.

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