Monday, December 9, 2013

Income Update - November 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 wife and I purchased a house back in September and while October was pretty quiet with the new expenses rolling in, November not so much.  As expected, my minimum expenses for November saw a large increase all the way up to $2,351.98.  Ouch!  Food expenses came back down to my target levels which was a welcomed sight, but the base expenses due to the house increased significantly.  My average minimum expenses increased from $1,450.34 at the end of October all the way up to $1,532.31.  There's not a whole lot of room for me to decrease these going forward except by decreasing food costs and then around July or August of next year the debt payment of $300 due to the refrigerator we purchased will come off the books.  There's no way I'll hit my $1,400 average minimum expenses goal for 2013 as they will just increase from here.  I'll have to adjust this goal for 2014 as the house expenses will continue to eat up a larger portion of my income.  But that goal was set without planning on a house purchase which skews the numbers significantly.  Obviously my total expenses increased as well and came in at $2,448.67 for the month.  This is well above my average of $1,635.30 through October and my new monthly average is up to $1,709.24.  All in all it was a decent month as far as expenses go when you back out the house expenses as I was on or under budget on the expenses that I have control over.

As mentioned in my November dividend update, I received $136.10 in dividends last month.  Adding in the $1.93 in interest income brought my total potential retirement income for November to $138.03.  My expense coverage ratio just from dividends and interest was decent at 5.87% of my minimum expenses for the month.  Due to the increased expenses and lower dividends, November's coverage was lower than August 2013's coverage of 12.05%.  However, it was still an increase and November 2012's coverage of 4.53%, so I can live with the year over year progress.  My FI income, monthly income based on the 30 year US Treasury bond of 3.81% using my net worth excluding traditional retirement accounts, came in at $651.16 which covered 27.69% of my minimum expenses from November.


*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 $9,069.78
Expense Check $2,134.95
TOTAL $11,204.73


Monthly Expenses
Category Budgeted Amount Actual Amount Subtotal
Mortgage $911.84 $911.84
House Insurance $127.92 $127.92
Property Taxes $371.08 $371.08
Gas $175.00 $145.81
Car Insurance $100.25 $100.25
Groceries $200.00 $203.02
Restaurants $125.00 $106.25
Debt Payment (Fridge) $300.00 $300.00
Cell Phone $10.81 $10.81
Miscellaneous $55.00 $96.69
Gifts $0.00 $0.00
EXPENSES SUBTOTAL $2,373.67
SAVINGS
Trip $0.00 $0.00
Roth IRA $0.00 $0.00
Emergency Fund $4,250.00 $4,250.00
Gifts $75.00 $75.00
Investing $4,427.83 $4,431.06
Car Maint/Repair $75.00 $75.00
SAVINGS SUBTOTAL $8,831.06
TOTAL $11,204.73

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

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

14 comments:

  1. I track every penny with Mint, but it doesn't always stand out as much as tracking it yourself would. Perhaps I should change my methods.

    ReplyDelete
    Replies
    1. WE,

      I think the key is that you're tracking it. I used Mint for a while a few years back but got tired of having to change the categories and it had an issue with pulling some of my information in. So I opted to just track it myself. I always feel lost when I don't have my spreadsheet.

      Thanks for stopping by!

      Delete
  2. Pursuit,

    Your expenses have crept up a bit with the house, but I wouldn't worry too much with that monster income. You're killing it in that regard! How are you guys enjoying the house, by the way?

    Keep up the fantastic work. Your savings rate is just insane. :)

    Best wishes.

    ReplyDelete
    Replies
    1. DM,

      It's not an issue as long as my income stays high but I hate having such a variable income. I might take home $11k or it might be $4k. It's hard to plan based on that.

      The house is awesome and I still need to get some pics up. Maybe the next time I'm home but it might have to wait until the following one as it looks like I'll be home around Christmas and well sorry, the blog is taking a backseat to that.

      Thanks for stopping by!

      Delete
  3. Great job in November Mr. PIP ^_^ I spend over $2,500 a month on average and I'm still single, so you are doing just fine with your new budget :D Props to you for being brave enough to get into a 30 year treasury :) Hope you got a good coupon on it. I'll try to keep my December spending to a minimal, but we'll see. I still have to do all my Christmas shopping lol.

    ReplyDelete
    Replies
    1. Liquid,

      I think the 30 year is the best route with rates still very low despite it being locked up for 30 years. Especially given that inflation makes each dollar you pay in year 30 less than that paid in year 1. I hear ya on the Christmas shopping. Luckily I was able to get most of mine done this past weekend while I was home. Have a great rest of 2013!

      Thanks for stopping by!

      Delete
  4. Just curious, in your area, is it more affordable to buy or rent? I'm just wondering since property taxes are pretty high...

    Agreed, even though you spent more than you wanted to, your massive savings this month is still INSANE! ;)

    Hope you are enjoying the new digs!

    ReplyDelete
    Replies
    1. FI,

      As far as rent vs mortgage comparison we have a lower mortgage payment for a much nicer house, but the property taxes are very prohibitive as an owner. Although we have no state income taxes so it's probably a wash when it comes to your total tax picture. My income the 2nd half of the year has been awesome and I'm hoping to keep it around this level for a good part of next year and get a raise too.

      The new house is great and now that we have all our furniture in and almost everything settled I'll try and get some pics up. If only it wasn't so cold so we could enjoy the great backyard. I'm thinking of putting something up around the gazebo to try and trap and focus the heat from our chimenea to make it much more enjoyable outside.

      Thanks for stopping by!

      Delete
  5. You are so right. It's easy to forget how those small charges can add up over time and ruin your budget.

    ReplyDelete
    Replies
    1. Tammy,

      It's never been the big things that I screw up on. Whenever my budget has been out of whack it's always been due to $5 here, $9 there... Glad to have you as a reader, I think this is your first comment. Good luck on getting out from under that debt. It'll be a huge burden lifted once you do.

      Thanks for stopping by!

      Delete
  6. I love Mint for this purpose, it makes the process so easy. Looks like you're making great progress though, keep it up!

    ReplyDelete
    Replies
    1. First Million,

      Mint was useful because it automatically compiled everything but I found my spreadsheet to work best for me.

      Thanks for stopping by!

      Delete
  7. Wow, great job with the savings! Those numbers are great!

    ReplyDelete
    Replies
    1. Dividend Warrior,

      I figure the best thing to do is control what you have control over. The returns I can earn in the market are only partially controlled by me, but the amount I have to invest is fully in my control.

      Thanks for stopping by!

      Delete