Wednesday, April 9, 2014

Income Update - March 2014

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.

March's spending was pretty much par for the course with the previous 4 months and I'm hoping to finally make some progress on lowering my expenses.  Nothing really stands out as being way excessive but as usual my grocery and restaurant budget came in a bit high.  Well, a lot high actually as groceries were about 25% over budget and restaurants were about 15%.  It normally works out to where one is over budget and the other comes in under but March was not kind as far as food expenses.  It's a shame that my goal of $2,350 in average monthly expenses is pretty much already dead after just the first quarter, but I'm still going to try and find ways to lower my expenses as much as possible.  The biggest opportunity is going to be food because an average of $327 per month so far this year seems way high considering I'm buying mainly for myself throughout the month.

Total expenses for the month came in at $2,662.21 which was my lowest for the year so far, but still essentially a flat month.  My average total expenses have been in a pretty tight range so far this year with just $18 from March's low to February's high with January falling in between.

Passive income expense coverage was pretty solid considering the relatively high expenses thanks to a great month of dividends.  I received $565.55 in dividend during March and another $2.76 in interest bringing my potential retirement income to $568.31.  That was good enough to cover 22.64% of my total expenses for the month, excluding my trip savings/expenses.  That's my highest monthly coverage since the new expenses related to our house started rolling in back in October.  That was well above Feburary's 8.55% mark although April should tick back down to high single or low teens coverage.  My FI Income, monthly income based on the 30 year US Treasury bond yield of 3.54% using my net worth excluding traditional retirement accounts, came in at $701.60 which covered 27.95% of my expenses from March.

*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 Income 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 $7,973.36
Expense Check $1,165.84
TOTAL $9,139.20

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 $151.83
Car Insurance $163.25 $163.25
Groceries $200.00 $243.94
Restaurants $100.00 $114.81
Bars $0.00 $29.49
Debt Payment (Fridge) $300.00 $300.00
Cell Phone $10.81 $10.81
Gym Membership $40.00 $40.00
Miscellaneous $55.00 $122.24
Gifts* $75.00 $75.00
Car Maint./Repair* -- --
Trip* $1,500.00 $1,500.00

Emergency Fund -- --
Investing $5,109.30 $4,976.99

TOTAL $9,139.20
*Savings that is earmarked to be spent.  
**Expenses shown above are only expenses that I paid for.  My wife and I have split our expenses up due to my job having me out of town most of each month.  The current split is around 60/40.

Overall I wasn't excited about this month but I wasn't really all that disappointed either.  My two main goals moving forward are to decrease my food expenses and to get back on the trackin' wagon by keeping my budget up to date throughout the month.  For the last 6 months of so I've been reconciling my budget at the end of the month instead of during the month so expenses have probably crept up a little due to that.  Although it's good to see that even with the expense creep, they are still coming in at pretty much the same level.

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

Also, I'm starting a newsletter that I hope to get going over the next month or two so go on and be the first to sign up to receive new posts to your email and newsletter!

How did you do on your budget for the month?  Is there anything you're going to focus more on in April?


  1. PIP,

    Looks like a great month! I know circumstances vary from individual to individual, but I personally would pay off my house the second my cash/investment balances exceeded my mortgage balance. I paid off my house in 2010 and the peace of mind it has given me is unbelievable. You will also be amazed how quickly you can build your savings balance back up once you no longer have a mortgage payment.

    Just my $.02.

    1. MDP,

      I've gone back and forth on it but for now it's not a priority for me. We've got way too much to go to knock it out in just a year or two so I'd rather focus on building up the asset side of the balance sheet and our passive cash flow. Once FI is really in the cross-hairs then our plan is to rethink the strategy of paying down the mortgage before being done. I'm leaning towards yes but it'll really be dependent on what our situation looks like at the time.

      Thanks for stopping by!

  2. Another solid month JC. It's great that you have made so much progress. I'm looking forward to your newsletter as well. Are you going to do a free monthly like mine, or something more frequent?

    1. Income Surfer,

      Given my weird work schedule and lots of writing to do I'm leaning towards just a once a month newsletter. I just don't feel like I have enough time to give full attention to a newsletter that's more often than once a month.

      Thanks for stopping by!

  3. I did pretty well this month! This month I'd like to focus more on cooking from scratch and incorporating healthy and inexpensive ingredients. Like making a beef stew and adding potatoes, carrots, celery, onions, etc. To that effect, I bought a slow cooker! I've recently gotten the idea that I want to start a garden and canning... strictly out of frugality.

    Also this month, I will be changing my cell phone plan which is a large drop in expenses!

    1. WE,

      I'm still working on trying to cook more but it's just very difficult while I'm at work. Absolutely horrible cookware/appliances. When I'm home though I cook almost every single meal. A CrockPot/slow cooker is a great way to make healthy, home cooked meals and I really need to utilize the one that's here at work more often. Gardening is great, well at least in my view. I find it pretty fun and exciting to watch something grow from just a little seed into a full on plant that grows vegetables.

      I'm looking forward to December when my contract is up and I'll most likely be moving over to a much cheaper cell provider.

      Thanks for stopping by!

  4. You're making good use of that income. Investing more than half of your money is fantastic, in any month. Way to go!

    1. Done by Forty,

      I figure I might as well save as much as I can. Especially since this was a short term plan anyways. You have to save/invest to move up so the high income just speeds the process up.

      Thanks for stopping by!

  5. Great job, JC. Those dividend payouts are impressive! I'm buying stocks for the first time* this month, so I'm looking forward to getting those into my portfolio. There's so much to learn and I can't wait to get started.

    *since I took financial advice from a professional comedian (story for another day)

    1. Addison,

      The dividends sure were nice for March although it'll be a big drop to April. No worries though as they keep moving in the right direction.

      I wouldn't mind hearing that story. I followed a hot stock tip back in my college days and well, I'm still working so it didn't exactly go gangbusters.

      Thanks for stopping by!

  6. PIP,

    Looks like your doing a great job keeping your expenses down! I may give this a try once my expenses settle down from the initial costs of purchases for my house

    Keep it up!

    1. ILG,

      The numbers looked awesome before our house purchase. Well they're still awesome but it was a lot better before the purchase and higher expenses. I'm still happy with the purchase though because it's a great neighborhood and my wife and I love the house.

      Thanks for stopping by!

  7. Great month JC!!

    I got your comment on my site...thanks....but I just switched hosts and recently lost it :( along with a few others.

    Sorry about that....but just wanted you to know since I did respond.

    Keep up the killer savings!


    1. Mark,

      I'm doing my best to keep it up and hopefully increase it some in the future. I've got some more travel in July to save for but other than that there's not much to really eat away at the savings so almost all the excess will go straight to the FI Portfolio or savings account for a rental property.

      I'm thinking of making the swap to WP and self-hosted so if you have any tips/pointers, feel free to pass them along.

      Thanks for stopping by!

  8. Agreed with you on the mental budgeting. Its too hard to remember EVERY dollar you spent. Gotta keep track of it and then you can start seeing where your money goes.

    1. PMU,

      Unfortunately I've fallen off the wagon a bit but I've still been reconciling everything at the end of the month. I'm up to date though so far through April and hopefully I'll have some lower expenses to show for it.

      Thanks for stopping by!