Friday, July 11, 2014

Income Update - June 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.

Well so much for improvement.  May's lowest expenses quickly shot back up to about on par with the average for the rest of the months.  Total expenses for the month came in at $2,666.21 which was a relatively large ~$140 increase from May.  But like I said it's about even with my monthly average which now sits at $2,638.12.  That's also well above my goal of $2,350 for the year although if you back out the debt payment then I would be under that target.  Fuel expenses were very high during June due to lots of driving while at work and while I was at home.  I'm not too concerned with that because I know the fuel expenses would drop once I reach FI but it's a bit of a sore spot to see the expenses come up $50 over budget.  Food continues to be my largest semi-voluntary expense.  Voluntary because I get to choose what I eat but involuntary because well I have to eat.  Overall I came in about $45 over the combined grocery/restaurant budget which isn't horrible but still higher than I'd like.  So I'll be focusing more on food expenses during July to try and get those back in check.

Even though expenses shot way up compared to May I still did quite well on the passive income coverage since dividends received set a personal best at $605.00.  Adding in the $3.07 in interest brought my total passive income to $608.07 for the month which covered 24.34% of my expenses.  This was a solid 7.5% increase from March's coverage.  As a dividend growth investor seeking financial independence I'm primarily concerned with the expense coverage that my dividends can provide and it's great to see them continuing to rise.  My FI Income, monthly income based on the 30 year US Treasury bond yield of 3.34% using my net worth excluding traditional retirement accounts, came in at $718.01.  That was about a $25 increase from the end of May which came almost purely from an increase in net worth as the treasury yield only changed from 3.31% to 3.34%.  My FI Income for June covered 28.74% of my expenses.


*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 $4,789.76
Expense Check $1,775.36
TOTAL $6,565.12


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 $229.88
Car Insurance $163.25 $163.25
Groceries $200.00 $246.16
Restaurants $100.00 $97.11
Bars $0.00 $0.00
Debt Payment (Fridge) $300.00 $300.00
Cell Phone $10.81 $10.81
Gym Membership $40.00 $40.00
Miscellaneous $55.00 $168.16
Gifts* -- --
Car Maint./Repair* -- --
Trip* $0.00 $0.00
EXPENSES SUBTOTAL

$2,666.21
Emergency Fund -- --
Investing $4,110.22 $3,898.91
SAVINGS SUBTOTAL

$3,898.91
TOTAL $6,565.12
*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 65/35.

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

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

10 comments:

  1. 59% savings rate is awesome!

    ReplyDelete
    Replies
    1. KeithX,

      I really like that for the most part my expenses are pretty much the same so it makes it easier to be consistent on the savings front as well. A high salary and relatively low expenses is always a good combination.

      Thanks for stopping by!

      Delete
  2. 25% of your expenses covered by passive income and close to 4000 invested for the month is great.
    Congrats.

    ReplyDelete
    Replies
    1. DGJ,

      The 25% coverage is obviously the most exciting part. And I'm ready to go on and put that $4k to good use if I can find some good values in the markets. Hopefully we'll get some more soon as they've been a bit choppier so far in July.

      Thanks for stopping by!

      Delete
  3. Pursuit,

    Man, another killer month! Hit almost 60% savings, which is really amazing. You're pretty much on cruise control.

    Keep up the fantastic work, bud.

    Best wishes!

    ReplyDelete
    Replies
    1. DM,

      Yeah, most months are fairly straightforward and steady as she goes on the expense side which is really good because even the months where I don't track my expenses that closely they end up being in the same ballpark.

      Thanks for stopping by!

      Delete
  4. Great month PIP...Practically 60% savings rate and almost $4,000 invested in month are awesome accomplishments. Keep up the intensity!

    By the way, I am also the math nerd in the family and actually enjoy tracking every dollar we make and use. :)

    Wishing you continued success! AFFJ

    ReplyDelete
    Replies
    1. AFFJ,

      It's pretty fun to see where you stand. And even better to compare it to where you think you're spending. That's the true test to see if you have a good grasp on your income/expenses.

      Now I just need to get that $4k invested! Saving it is great but I've got a huge stockpile of cash and need to get some of it put to work. Between my brokerage account and savings needed to be transferred over I've about about $25k that needs to be put to work.

      Thanks for stopping by!

      Delete
  5. grats on a very focused month. Your dividends are rolling in. Your gas amount is pretty high. I am guessing u drive a truck???

    ReplyDelete
    Replies
    1. A-G,

      Actually I drive a Honda Civic. I just drove a whole lot of miles in June plus gas was pretty expensive. Unfortunately the gas stations all know that you have to stop and get gas so they tack on a "we're the only gas station in 50 miles tax". I can't blame them for it but it sucks. Also I didn't track my expenses all that well and think I mis-categorized some other expenses as gas but they really weren't. Oh well, it'll all work out in the long run.

      Thanks for stopping by!

      Delete