Friday, October 4, 2013

Income Update - September 2013

 I'm a big proponent of tracking every single penny that comes into your hands if you're really wanting to make a change to your finances.  Mental accounting is too difficult to keep track of and the mundane everyday expenses get forgotten.  Once you keep a detailed history you can see that you're really spending $400 per month on restaurants or $100 on coffee or whatever little expenses that are fine by themselves but add up quickly to destroy a budget.  This is why I like to keep track of all of my expenses to help keep myself accountable and looking to see what areas I'm just plain doing poor in.  If you want to improve your finances, then please track everything for a 3 month span and then take action to make positive changes.

My minimum expenses for September came in at $1,640.97 which was my highest for the year so far, which is not good at all as that was well above the $1,408 that I had been averaging per month so far.  Most of that was due to the fact that we were pretty much living in a house with no refrigerator for the week that I was home during the middle of the month and so we ate out almost every meal for a week.  That's a sure fire way to blow a budget.  I'm not trying to make excuses but at least there's a valid reason for it.  My grocery expenses came in much higher that I would have liked but a lot of those expenses weren't actually grocery expenses.  I had misplaced several receipts due to moving and therefore I couldn't break out the expenses better.  My average minimum expenses are now at $1,434.18 which is well over my $1,400 per month goal for the year.  Due to the increased housing costs this goal is pretty much shot but I'm still going to do my best to see how low I can get these.  As expected, my total expenses increased pretty significantly as well up to $1,799.28.  This is well above the $1,560 average through August and increased my average total expenses up to $1,587.  I'll be getting as many of the expenses that I can control back in check but September was pretty much a lost cause due to the week of eating out.

As mentioned in my September dividend update,  I received $451.04 in dividends last month.  Adding in the $3.30 in interest income plus my first Google Adsense payment of $120.90 and my total potential retirement income for September was $575.24.  My expense coverage ratio just from dividends and interest was great at 27.69% of my minimum expenses, and including the Adsense payment my passive income covered 35.05%.  This was higher than June 2013's coverage of 30.49% and September 2012's coverage of 11.89%, so I'm quite pleased.  If my expenses were in better check then it would have been much better.  My FI income, monthly income based on the 30 year US Treasury bond of 3.68% using my net worth excluding traditional retirement accounts, came in at $564.31 which covered 34.39% of my minimum expenses from September.


*Minimum Expenses are only the expenses related to rent, utilities, car, food, minimum payment on debt and other necessities. In other words, the required amount of replacement income I would need for financial independence.
*Total Expenses are the total monthly outflow of money.
*Potential Retirement Income is income received from dividends, interest, cash back from credit card purchases and any other source of income not related to my job.
*FI is my liquid net worth invested at the 30 year treasury bond yield at the end of each month divided by 12 to get monthly income.

Monthly Income
Category Amount
Paycheck $9,063.76
Expense Check $1,889.28
TOTAL $10,953.04


Monthly Expenses
Category Budgeted Amount Actual Amount Subtotal
Rent $480.00 $480.00
Utilities $221.50 $180.33
Gas $175.00 $209.28
Car Insurance $95.00 $95.00
Groceries $200.00 $270.82
Restaurants $125.00 $209.08
Entertainment $0.00 $0.00
Cell Phone $100.00 $96.46
Other $10.83 $21.64
Miscellaneous $55.00 $136.67
Gifts $0.00 $0.00
EXPENSES SUBTOTAL $1,699.28
SAVINGS
Trip $0.00 $0.00
Roth IRA $0.00 $0.00
Emergency Fund $6,500.00 $6,263.05
Gifts $75.00 $75.00
House $2,815.71 $2,815.71
Car Maint/Repair $100.00 $100.00
SAVINGS SUBTOTAL $9,253.76
TOTAL $10,953.04

I've updated my Progress page to reflect September's changes.

How did you do on your budget for the month?  Is there anything you're going to focus more on in October due to September's spending?

6 comments:

  1. WOW that's a nice monthly Income.

    Last month I went on vacation, so I was spending a lot. So this month I am watching where every dollar goes and investing the rest.

    ReplyDelete
    Replies
    1. FFDividend,

      The income was great last month but it's quite variable on a month to month basis so I just take advantage when I get the chance to.

      Where'd you go on vacation to? Hope you had a great time there. I'm looking forward to a vacation with my wife sometime next year.

      Thanks for stopping by!

      Delete
  2. PIP, that is a great monthly income! Is your company hiring? lol
    I did the same (tracking every single penny) for the first 6 months of this year and found that we were spending $300-$400 at restaurants each month. Since then, my wife and I have decided to cut down on eating out, which has cleaned up our finances quite a bit.

    ReplyDelete
    Replies
    1. Roadmap,

      Well it does come with the caveat of having to be away from home a lot. Plus the O&G field pays quite well.

      Just keeping mental notes when you're first starting out with improving your personal finances will get you nowhere. Mental accounting is just too easy to forget where you spent money and then all of a sudden your budget is completely blown and you're only half way through the month. After you track for a while then it becomes easier to stay on target. Even in the months where I didn't track my expenses that much during the month they ended up being +/- $50 of normal.

      Thanks for stopping by!

      Delete
  3. Now that is a huge savings rate! Well done! Where do you live and how do you keep your desires to live i up a little at bay?

    Sam

    ReplyDelete
    Replies
    1. Sam,

      Got to love 80%+! I live in Texas so my cost of living is low and work in the O&G industry so my income is high. That's a great combination to have.

      I'm a lot like you were early in your career where you just honestly didn't have the time to spend the money you were making. Because of that I'm doing my best to make sure that I'm saving as much as possible. Even if I had more time my base expenses would still be pretty low. When your idea of a good time is grabbing some beers and camping that's pretty low cost. The only real splurges that I have would be on vacations, but that's still limited due to the lack of free time. I envy your travel goals for next year.

      Thanks for stopping by!

      Delete