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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Online income was unfortunately heavily impacted by taxes. I earned a lot more online income than I initially expected in 2014, which led to a tax bill this year. A first world problem I’m glad to have, but it still reduced my net income. However, I’m still excited by the fact that I even broke a profit at all. I owed north of $4,000 in federal income taxes, so that really took a bite out of the gross ( you see net here). In addition, I was a resident of the state of Michigan for a few months last summer, so I owed Michigan for the “privilege” via state income tax. They haven’t cashed that check yet, so that’ll reduce April’s gross to the tune of $422. Otherwise, I’m really incredibly grateful for what was otherwise a record-breaking month for gross online income. Thank you for all of your support!
Dividend income was also a record, which really helped since my net online income was lower than normal. The hard work I’ve put in over the last few years is really starting to make a dramatic impact on my monthly budgets and I can actually already start to see the finish line. It’s hazy and still far away, but it’s definitely there. If earning almost $1,000 in tangible passive cash flow in one month doesn’t make you a believer in what’s possible, I don’t know what will.
Other income was related to the sale of my car. I’m going to spread the profit out over the next nine months so as to smooth any month-to-month variances out. So this will provide a nice boost to my monthly savings rates for the rest of the year, just like it was a drag on my monthly budgets last year.
*The Everything Else category includes expenses I don’t have a regular budget for. I didn’t spend much in this category last month; not so true this month. First up, I applied for a passport so we can visit El Salvador in December for Christmas (Claudia’s from the country). I also recognized the costs to do my taxes with TurboTax. Lastly, I picked up a VersaCart. Now that we’re car-free, we needed something to move our groceries from the store to the apartment. So far, this thing is working out great.
You’ll notice amusement was much higher than normal. This is due to the aforementioned spring break activities, including taking in a spring training baseball game and a local play. Definitely a lot of fun. I don’t know if I find enough value in those kinds of activities to make them a regular occurrence, but living frugally and taking advantage of special events only occasionally means I appreciate them that much more when we do go.
I also spent a lot more on food this past month. I’ve been visiting this deli/coffee shop across the street quite frequently lately. It’s been amazing how much more productive I am there compared to staying home. I lack distractions, and there’s something energizing and inspiring about being out in the world. I notice I can write twice as much or more in the same amount of time in comparison to staying home and writing. It’s funny, because I’ve always been an introvert through and through. But since quitting my job, I have a renewed appreciation for society. Once the undercurrent of tension that exists because you’re in a role to serve others disappears, it’s a lot easier to interact with people without getting bummed out and jaded.
Anyway, I spent about $75 more on food this month than I normally would have. The me of 2010 or 2011 would have balked at that, but I don’t feel the need to scrimp on every penny now that I’m largely living the life I always wanted. In addition, this is a lot cheaper than paying for some kind of co-working space, plus I get pretty decent food in exchange for the money – this is a quasi-business expense at this point. The deli isn’t great, but it’s within walking distance. Works for me.
Other than that, everything else was pretty normal. I spent a tad more on public transportation because I lost a buss pass at one point. Still getting used to using the bus once again. You see some remnants of the expenses of car ownership up there due to the fact that I owned a car for the first week or so of the month. Hopefully, that’ll be the last of anything car related for a good while.
Business expenses were once again extremely low. I still have some credit on file with my host, Liquid Web. All I had to pay for this past month was the domain registration renewal.
I managed to save 24.7% of my net income this month. Disappointing for being such a low absolute number, but it’s relatively great considering the size of the check I had to write this month for my tax liability. I’m fortunate in that I sold my car when I did. That greatly helped my cause this month, as did the absolute monster month for dividend income. Without the aid of those income sources I would have had a negative savings rate.
One of my goals is to save 50% of my net income throughout 2015, averaged monthly. So far, I’ve hit rates of:
I’m now at an average of 37.4% for the year. My worst start in five years, but things are looking up. May will likely be my last real expensive month of the year, as I have a wedding and trip to Omaha to pay for. But I honestly think the rest of the year will provide a huge tailwind for the savings rate average. Coming back to hit 50% will be extremely difficult and unlikely, but I bet I come really close. The fact that I’m even saving this much without a traditional full-time job is still just amazing to me, so I suppose I’m still letting that sink in a bit. This will be my first year ever without a regular paycheck to rely on, so it’s going to be a test.
May will probably be another low number, but I think it’ll be a lot higher than what I posted this month. However, the summer is shaping up to be fantastic for the savings rate. No major expenses on the horizon coupled with continued strong income from multiple sources should give me just the boost I need. Stay tuned!
How was your budget for March? Any unexpected expenses? Is your savings rate on track?
Thanks for reading.
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