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 July 2015:|
|Expenses From July 2015:|
|Rent & Utilities||$537|
This is by far my most impressive report for income… ever. I truly can’t believe that it’s come about one year after quitting my full-time job. I never would have thought I’d be able to report higher income after no longer pulling down the crazy long workweeks that saw me down at the car dealership for most of my waking hours. Yet here I am.
A number of events coalesced at just the right time in order for the online income to come in so high. I received royalties for book sales recorded in May, which was the first full month it was available. So that certainly helped my case, bringing in approximately $1,100. Affiliate income was among the highest I’ve ever recorded. And strong traffic here at the site – 365,000 pageviews for July – led to fairly high advertising income. Of course, I also remain incredibly busy on the freelance front. But I couldn’t do any of it without you readers, so thank you all for your continued support.
Dividend income was once again incredible. Collecting more than $400 for what amounts to the me of months or years ago putting in a little research and making good decisions with capital puts the me of today in a pretty great spot. I was able to cover almost 1/4 of my personal expenses, and that was during a month where neither dividend income was particularly high nor were expenses particularly low. Good things lie ahead here.
Other income was mostly 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. I spent $40 on a dental exam. I was advised in late 2013 that I had a few fillings that would probably require attention at some point in the near future. Well, the near future has arrived. I found a coupon for a dentist that’s within walking distance. Had a full inspection performed with multiple X-rays. Looks like I have four upper teeth that will have to be taken care of. I also spent $50 on a yearly subscription for a VPN service. I find this necessary now that I’m writing more away from home.
I spent a lot more on health insurance than usual this month. That’s due to signing up for a discount dental plan. I spent $118 on that plan, which gives me 15 months of coverage. The return on investment is great. I have four cavities which require fillings, with some teeth featuring multiple surfaces that need to be taken care of. The dentist quoted me almost $2,000 for the work. With the plan, it was knocked down to about $750. I’ll then have another year or so of coverage in case something else pops up. August’s budget will feature this dental work, unfortunately.
Otherwise, most other expenses were more or less in line. I continue to spend more than I ever thought I would on coffee, but it’s become a situation where I almost need to write at the local coffee shop rather than at home. I’m so much more productive than ever before, which is manifesting itself in the form of up higher online income. So I don’t regret the extra spending one bit.
I managed to save 77.9% of my net income this month. I’m absolutely thrilled with that result. This is the 15th time I’ve saved more than 70% of my net income in any one month. A great milestone in and of itself, but this is also the highest monthly savings rate I’ve ever recorded. It took some killer income to get there, no doubt. But I still managed to keep the expenses mostly in check, choosing not to inflate my lifestyle. Personal expenses of around $1,750 is a pretty solid number for me right now. The quality of life is really high and I don’t feel like I’m sacrificing anything at all. Meanwhile, that still allows for me to hit my savings goals.
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 savings rate of 54.1% for the year. That’s a great savings rate, in my view. Gives me a nice margin of safety heading into the end of summer.
I can already see that August’s income will be significantly lower than that which I recorded in July. In fact, I have a sneaking suspicion that it’ll be a very long while, if ever, before I reach this level of income again. But that’s okay. Feels great to hit it even just once. And I’m in the fortunate position where it’s not necessary for me to earn some crazy level of income to hit my long-term goals. Of course, I’ll never shy away from any opportunities to boost that income as much as possible now that I’ve got the expenses mostly on lockdown. But I don’t need to earn significant income to get where I’m going. And that feels great. Either way, I’ll just continue to work hard and climb the mountain of freedom with just as much enthusiasm and excitement as I’ve ever had.
Did you have a great month of savings for July? Anything unexpected? On pace for your goal this year?
Thanks for reading.
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Note: Affiliate link included.