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 with which 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 May 2015:|
|Expenses From May 2015:|
|Rent & Utilities||$533|
This was the best month I’ve ever had in terms of online net income. Generating almost $5,500 in income in one month after taxes while doing something I truly love to do is just a dream, and an amazing one at that. My freelance writing output is roughly the same as it’s been for the last nine months or so, but what’s happened here is that the blog is getting slightly more popular every month (almost 350,000 pageviews in May) and you readers are helping me out tremendously when you sign up for products and/or services that are recommended here on the blog. As always, I only recommend what I personally use and/or find a lot of value in. Trust me, I get affiliate and sponsorship offers almost everyday, and I turn 99% of them down.
In addition, I’ve started up a coaching service. I took on a few clients in May, and that helped the bottom line a bit as well. I’m doing my best to add value and, so far, the clients I’ve worked with have been very happy. It’s just a way to connect one-on-one and help where possible. If you’re ever interested in connecting, contact me.
I’ve discussed how I generate income online before; all that’s really changed since then is that I write a lot more and the blog has grown quite a bit (so all income categories have increased). Of course, the coaching and the book will start adding to that as well (I should see my first royalties from the book in June), so I may revisit this topic at some point in the near future. Thank you all for your continued support!
Dividend income was once again tremendous. But how could earning hundreds of dollars for doing nothing else other than being alive be anything but tremendous? As you can see, May’s dividend haul was well below my average. Expenses, as you can also see, were also well above average. Yet the dividend income still covered a healthy chunk of those expenses. That portends good things ahead.
Other income was related to the sale of my car. I’m going to spread the profit out over the course of the year 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. This was almost completely related to the money spent on the hotel stay in Omaha for the 2015 Berkshire Hathaway Inc. (BRK.B) annual shareholders meeting. I also spent just under $29 for a pull-up bar that hooks up to a door frame. Great investment as it allows me to continue my frugal fitness routine at home without the expensive gym membership. I will say, however, that a $10/month gym opened up not far from our apartment. I continue to think about joining, but I’m rocking out at home, so I’m just going to keep doing my thing.
Food was quite high this month. And that was largely due to more overall food spending while we were in Omaha in early May. We don’t eat out too often – maybe two restaurant visits per month, on average – but we ate out exclusively while in Omaha. I was lucky just to have Claudia on board with making Omaha our quasi-honeymoon. She would have probably caused bodily harm had I suggested eating sandwiches or something while we were there. In addition to the eating out in Omaha, there were three weekends on which I purchased groceries this month. We alternate paying for groceries and I got hit with three visits this month.
Transportation was also extraordinarily expensive here. And that’s because we had to rent a car from the airport to get back home to Sarasota after flying in from Omaha. I expect transportation spending to be in the very low single digits looking forward.
Other than the trip to Omaha with the related expenses, most everything else was normal. If you back out just the hotel and rental car spending, personal expenses were only $1,686. I consider that a pretty solid result, even with the higher food spending. Travel is expensive, but it was obviously worth it.
You’ll also notice that hosting expenses have increased. Due to the aforementioned increase in traffic, I’ve had to boost the capabilities of the blog, which costs more money. A wonderful trade-off, however.
I managed to save 64.5% of my net income this month. That’s what I’m talking about! I feel like the moves I’ve been making recently are starting to pan out. I’ve been working harder than ever to produce great content for you readers while also doing what I can to cut expenses – like living without a car, gym membership, weekly restaurant visits, or frilly purchases that will only drain my wallet and long-term happiness in exchange for fleeting euphoria. I’m starting to get back to the savings rate I’m used to. The fact that I’m doing it without the steady paycheck from the old full-time job is still incredible to me. I’m really fortunate. This is the first time I’ve eclipsed the 60% mark in almost a year. I used to save more than 60% easily and routinely, so it feels good to get back to the old me.
One of my goals this year 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 45.2% for the year. Still behind my goal, but I think I’m going to make incredible progress toward that over the next few months. June should be really strong for dividend income, which will only further help my case. And I don’t have any major expenses planned for the foreseeable future, so it could be a really strong summer of savings. The only upcoming expense that might be out of the ordinary is an eventual dentist visit. I had a root canal performed last year and I know I have a few small cavities that have to get checked out. I’m not delaying that out of fear of spending money. Rather, I just hate going to the dentist. I could have $1 billion in the bank account and I’d actively avoid going. Such is life, though.
Looking at the near future, I think June will be even better than May. It’s quite possible that I’ll eclipse 70% for the first time since I was relying on the paycheck from the car dealership. I just continue to work hard and think about the long term. Stay tuned for that!
How was May for you? Did you stay under budget? Hit your savings target?
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