Thursday, November 7, 2013

Income Update - October 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.

October was just flat out horrible for my budget.  My minimum expenses for October came in at $1,595.79 which was a welcomed decrease from September.  Unfortunately that was still well above my average minimum expenses of $1,434.18 through September.  Grocery expenses were way out of line for October.  While I was home I made a lot of grocery purchases and stocked up with some essentials for the house and while at work I just purchased a bunch of junk.  That's a sure fire way to blow a budget.  There was so much that was going on in October with both work and the new house that I didn't get to keep track of my expenses very well.  I think I only updated my spreadsheet twice during the month instead of as the expenses are incurred.  My average minimum expenses are now at $1,450.34 which is well over my $1,400 per month goal for the year.  I don't expect to be able to get the expenses back down under the $1,400 level due to the increased housing costs that will start showing up in November but I'll do my best to keep them as low as possible.  Consequently, my total expenses increased pretty significantly as well up to $1,968.42.  This is well above the $1,587 average through September and increased my average total expenses up to $1,635.  Some of that was due to the debt payment that I have on the refrigerator that we purchased for the new house.  It's at 0% interest for 12 months so we're going to take about 11 months to pay it off with a $300 monthly payment.  Luckily I have the cash flow to be able to pay it off in full if I deem that to be the best use of the money and I would do that immediately it we weren't getting 0% financing.

As mentioned in my October dividend update, I received $128.15 in dividends last month.  Adding in the $0.98 in interest income brought my total potential retirement income for October to $129.13.  My expense coverage ratio just from dividends and interest was decent at 8.09% of my minimum expenses.  Despite the increased expenses, October's coverage was higher than July 2013's coverage of 6.82% and October 2012's coverage of 1.77%, so I'm quite pleased.  My FI income, monthly income based on the 30 year US Treasury bond of 3.64% using my net worth excluding traditional retirement accounts, came in at $588.26 which covered 36.86% of my minimum expenses from October.

*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 $8,533.41
Expense Check $1,851.10
TOTAL $10,384.51

Monthly Expenses
Category Budgeted Amount Actual Amount Subtotal
Rent $480.00 $480.00
Utilities $222.00 $222.63
Gas $175.00 $160.15
Car Insurance $95.00 $95.00
Groceries $200.00 $325.23
Restaurants $125.00 $82.66
Entertainment $0.00 $0.00
Cell Phone $95.00 $92.12
Other $338.00 $338.00
Miscellaneous $55.00 $172.63
Gifts $0.00 $0.00
Trip $0.00 $0.00
Roth IRA $0.00 $0.00
Emergency Fund $4,949.51 $4,766.10
Gifts $50.00 $50.00
Investing $3,500.00 $3,500.00
Car Maint/Repair $100.00 $100.00
TOTAL $10,384.51

I've updated my Progress page to reflect October'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?


  1. Man, crushing the income this year. For a bad month you still had a great savings rate! Looks like you are socking away a ton into your emergency fund. Just replenishing after the home purchase?

    1. w2r,

      The income has been great this year, especially the last few months. I was more than happy to walk away with a high savings rate after some increased expenses, of course most of that was due to the high income. Yeah, the EF needs to get funded more now that we have the house. Plus I already had to take out $3k from the EF due to the water line issues. So more restocking is needed. I should hopefully get it fully funded after this month, or at least be able to back off on the savings for it. Of course, it's not exactly the worst time to be needing to build the EF as the markets aren't giving us great opportunities.

      Thanks for stopping by!

  2. Pursuit,

    Wow. That income is crazy! You're absolutely killing it. I'd LOVE to earn an income like that.

    I also had a horrible October expense-wise Food was way up because I took my entire family out to dinner to celebrate a parent's and sibling's simultaneous birthday. I also had to factor in the rest of my costs regarding the recent purchase of my Frugalmobile.

    Although, even with your higher expenses you still had a ridiculous savings rate. I don't think I'd be beating myself up too much if I were you. :)

    Best wishes!

    1. DM,

      The income is great but it's definitely a trade off. I have to be away from home between 60-75% of the year on average, usually on the high end. That's pretty tough. The key is that I'm using the money wisely. So many people that I work with have all sorts of fun toys. Now don't get me wrong I'd love to have a 4-wheeler or two and a boat, but what I don't understand is why you would have them when you're working because most of the people are on the same lack of schedule as me so they don't really get to use them. I'll just save and invest that money to get my freedom, then go after the 4-wheelers.

      Thanks for stopping by!

  3. PIP,

    It is so funny that your blow out month is still over 80%. We had blow out month and spent over $3000 on one off miscellaneous purchases/gifts. The next few months will hopefully be heading in the right direction and in the new year we should be kicking ass and taking names. Keep it up dude, high income high savings means the finish line gets moved an awful lot closer.


    1. KM,

      No real complaints about a bad expense month still netting an 80% savings rate. I did end up spending about $3k to deal with the water line issue at the house but that came out of savings. Starting with the new year I'm going to revamp my spreadsheet and savings calculations to only account for money that is being saved strictly to invest. It'll bring down the savings rate but it seems like it'll give a clearer picture of what the savings rate is. A high income is just a tool. It can magnify financial moves both positive and negative. We were approved for a $750k mortgage. While I'm flattered, I politely declined that much mortgage. Don't even bother taking names, just make sure you do the ass kicking next year.

      Thanks for stopping by!

  4. I wish I had your horrible months lol. You could easily ratchet up the lifestyle and put off investing for tomorrow like everyone else. And you have the financial heal as everyone else.
    Great dedication at keeping your expenses down.

    1. PMU,

      Horrible months like the one I just had will suit me just fine. Every now and then I'll look back at my savings rate and see how much stuff I could finance away if I was like the average American. I've been averaging around $7,000 in savings each month so I could have some crazy awesome toys that I was shackled too.

      Thanks for stopping by!

  5. Wow! I have no words!
    An paycheck above $8,533.41 is unbelievably!
    With this money you can buy a lot of shares... :-)

    Where or what you are working in order to get this big salary? :-)
    Really great!!

    Best regards!

  6. Tremendous! I am so impressed that with such a high income, you are so adroitly avoiding lifestyle inflation. I'm adding you to my blogroll.

    Stop by and catch my monthly updates. I'll be celebrating the acheivement of reaching the first leg of my three-leg journey of paying off $177,650 of rental real estate mortgages next month. Over $50k will have been dedicating to debt paydown since January of this year.