December is typically a horrible month for most budgets as there's lots of get togethers, nights out, and of course all the gifts and travel with Christmas. Gifts weren't much of an issue for me during December as I save throughout the year but the extra driving and larger meals to cook sure did bust the budget for the month. Minimum expenses came in at a whopping $2,545.32 for the month. That's not good at all, although an increase was expected due to all of the increased levels thanks to our house purchase. Food continues to be the largest category that's not related to the house. Due to lots of driving and being busy with work I wasn't as diligent with keeping up with my spreadsheet as the month went on so some purchases got categorized as groceries when they weren't. The joys of shopping at Walmart, where you can get anything and everything all in one trip. Total expenses increased to $2,646.19 which is honestly just wya too much money. I've had 5 straight months of increasing expenses, and that trend needs to get broken. My average minimum expenses increased from $1,532.31 through November to $1,616.73 for the full year. This is well above my goal of $1,400 or less, but the house has a lot to do with that. Average total expenses increased as well from $1,709.24 at the end of November to $1,787.32.
There's some room to cut my expenses, but a large portion are relatively fixed and related to the house. I'm working on eating healthier and cheaper, mainly by avoiding pre-packaged foods. So hopefully that will have the double bonus of fueling my body better as well as reducing my food expenses. A big thorn in my side is the $300 per month payment for the refrigerator that we purchased to go with our house. We didn't have one, so the purchase was a necessity and I just didn't have the time to search for better deals through Craigslist or some other avenue. Getting rid of that $300 would help to reduce December's expenses by over 11%. We were able to get 0% financing for 1 year, so it's user friendly as there's no interest expense on that. If the markets continue to provide little value, I'll be tempted to use some excess cash flow in February to pay off the balance and get that expense done with. Of course, we'll be snowballing at least a portion of that payment into the other payments we have for the furniture, so the expense wouldn't be completely gone. What do you think would be the best route to take?
As mentioned in my December dividend update, I received $535.16 in dividends last month. Adding in the $1.87 in interest income brought my total potential retirement income for December to $537.03. My expense coverage ratio just from dividends and interest was solid at 21.10% of my minimum expenses for the month. This was a big dropoff from September's coverage of 35.05%, although that's attributable to the much higher expenses. My FI income, monthly income based on the 30 year US Treasury bond of 3.96% using my net worth excluding traditional retirement accounts, came in at $709.35 which covered 27.87% of my minimum expenses from December and was slight increase over November's 27.69% mark.
Overall it was a pretty successful month as far as budgeting and saving as much as possible. There's still some work to be done and I'm hoping to refocus with the new year underway.
*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.
|Category||Budgeted Amount||Actual Amount||Subtotal|
|Debt Payment (Fridge)||$300.00||$300.00|
I've updated my Progress page to reflect December's changes.
How did you do on your budget for the month? Is there anything you're going to focus more on in January due to December's spending? Got some new goals for 2014?