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 potential income to save, but spending less means you need less passive income 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 first month of the year is off to an incredibly amazing start. Online income was once again fantastic. This really exceeded my expectations since I set up a more aggressive quarterly tax schedule, though this month was aided by a couple of payments that just so happened to coincide with one another. In addition, I continue to write more than I ever thought I could. The only unfortunate aspect about writing for a living is that it isn’t really scalable. I’m probably about maxed out right now in terms of content production. But this income is largely due to the support of everyone in the community and those that hire me for freelance writing. As such, thank you all very much!
January’s dividend income was also fantastic. This income covered a healthy chunk of expenses, even factoring in a more-expensive-than-usual month. Generating well over $400 is really a dream come true, especially considering I have more than seven years still ahead to complete the journey to financial independence. I couldn’t be happier with the progress thus far.
Other income was an anomaly this month, though I’m very happy about that. I signed up for a Discover it credit card a few months ago only because they were offering $150 in cash back if I spent at least $750 over the first three months. Spend I did, though not on anything out of the ordinary. The $150 in rewards hit my account this month, so that’s mostly what you see here. It pained me to use a competing company since I’m a shareholder in Visa Inc. (V), but I wasn’t about to pass up $150!
*The Everything Else category includes expenses I don’t have a regular budget for. My laptop finally crashed after almost six years of usage. I think the heavy use over the last year or so after moving to blogging full time must have took its toll. Luckily, I had a nice thumb drive that backed up all essential files. The crash took place during a very busy workday, so I had to be quick about finding a replacement. I searched all over town for a few hours, looking for a computer that was affordable and also still had Windows 7 (I didn’t want Windows 8). I ended up spending $400 plus tax, which wasn’t bad. I could have done better if I had had more time to shop around or look online, but it is what it is. I would have lost far more in income than what I would have saved by taking any longer to get a replacement.
This month was unfortunately and unexpectedly expensive. The laptop certainly didn’t help, but I also spent too much in a few other categories.
Namely, I spent a lot on food. In fact, this might be the most I’ve ever spent on food in any one month since I started tracking my expenses back in 2010. There were a couple of reasons for this. First, my buddy, Kraig, came down from Minnesota to catch some sun and meet up. Claudia and I took him out for dinner one night, so that was an unusual expense. We had a great time, though, and it’s great talking in person to someone who’s like-minded and gets what this is all about. It’s hard to find people in our everyday lives that really understands the joy and value in this lifestyle.
However, the majority of my food expenses were actually related to feeding five people for a week. My sister and brother-in-law stayed with us for more than a week near the end of January. It was great to see them, but buying groceries for five people hurt the wallet. In addition, they were on vacation, so they wanted to hit the town. We ended up going out to eat three times (Yikes!) while they were here, which obviously adds up quick.
Other than that, everything else was mostly in line.
I will say we had a huge win for the budget this month. Claudia and I took her son and two of his friends to Epcot on a beautiful Saturday afternoon toward the middle of January. As a Walt Disney Co. (DIS) shareholder, I was looking forward to seeing just how busy one of their parks is. Well, it was absolutely packed. Go Disney, go!
Tickets are $100 per person. Say what?! We weren’t about to spend $500 to hang out at an amusement park, folks. Even as a shareholder, I’m not shelling that kind of cash out to spend a few hours at Epcot.
Well, check it out.
Our win came in the form of the whole trip being almost free. Claudia has a good friend that works there, and that person was able to get all five of us in for free. Score! No tickets, no parking, no fuss. Other than gas to and from and some cash for lunch, it was free. We spent about $40 on food that day and gas was really minimal. About as frugal as it gets, I imagine.
I managed to save 41% of my net income this month. It’s a slow start to the year, but not bad considering I had to buy a computer. Factor that out and I would have saved almost half of my net income. Regardless, I’m pretty happy with that result. I have a brand new laptop which will hopefully serve me well for another 5-6 years and I was still able to save a healthy chunk of my net income. Plus, I hosted friends and family from out of town and even took a daytrip to Epcot. Not too shabby.
One of my goals is to save 50% of my net income throughout 2015, averaged monthly. So far, I’ve hit rates of:
So the average is 41% since I’ve only got one year recorded. This puts me a bit behind, but I still have 11 months to catch up and surpass my goal. I knew this year was going to be tough since it’s my first full year writing for a living, so I have no conventional job income to rely on. In addition, I likely have a hefty tax bill waiting for me which will further slow my progress. However, I’m excited to power through it all and see exactly what I’m capable of.
Looking forward, I expect expenses to be high until the summer. Claudia and I will be getting married, though we plan on a very inexpensive wedding. I also still have a trip to Omaha to fund, which will include a hotel stay, food, and possible transportation costs (I already paid for the plane tickets in December). And there’s those pesky self-employment taxes as well. But I expect to have a very strong summer and fall, which will help the average out. We’ll see how it goes. Please follow along so we can save together!
Full Disclosure: Long V and DIS.
Did you start the year off strong? Have a great month for savings?
Thanks for reading.
Photo Credit: bplanet/FreeDigitalPhotos.net