Wednesday, November 5, 2014

Income Update - October 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.

October wasn't a great month for expenses but I did finally see an improvement back below $2,600 for the month.  Total expenses for the month came to $2,591.59 which was about $50 less than my YTD average through September.  The worst categories continue to be food and miscellaneous.  The miscellaneous category and restaurants were both pretty bad this month because of the issues with our son Lucas.  When you live on a hospital couch that really limits your healthy cooking/eating options.  But I got to spend time with my wife, who is catching the brunt of the problems, and of course spend time with Lucas, well kind of.  October was a nice reprieve from the increased expenses of the last few months but unfortunately I expect November to be a return to higher expenses.  Hopefully not but it's what I realistically expect.  My average monthly expenses through October are now at $2,636.54 which is a $5 decrease from September.

Dividends and passive income didn't match September's record month but it was still really solid and my highest total for the first month of a quarter.  I received $232.72 in dividends and another $2.85 in interest for a total of $235.57 in passive income.  Passive income sources covered 9.54% of expenses which was a 0.8% increase from July.  There's still a long way to go to reach 100% but I'm working on it slowly but surely.  As a dividend growth investor seeking financial independence, my goal is to eventually have enough dividend income coming in on a monthly basis to cover all of my expenses and allow me to consider early retirement.  So it's great to see that the long-term trend is higher.  I also earned $159.13 from my online activities, well it was earned in previous months but paid out in October.  Adding that to my passive income sources brought my non-day job income source expense coverage to 15.98%.

My FI Income, monthly income based on the 30 year US Treasury bond yield of 3.06% using my net worth excluding traditional retirement accounts, came in at $685.33.  That ended up being a $15 decrease from September due to the decline in the 30 years Treasury yield from 3.21% to 3.06%.  My FI Income for October covered 27.75% 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 $7,588.44
Expense Check $1,235.59
TOTAL $8,824.03

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 $161.29
Car Insurance $224.83 $224.83
Groceries $200.00 $190.67
Restaurants $100.00 $131.66
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 $121.49
Gifts* -- --
Car Maint./Repair* -- --
Trip* -- --

Emergency Fund -- --
Investing $6,307.55 $6,232.44

TOTAL $8,824.03
*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.

Overall it was a decent month for my budget and a much welcomed normalization of total expenses after the last few months were well over budget.  I'm hoping that November will build on the progress from October but I'm not going to be surprised at an increase in expenses either.

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


  1. Good to see your expenses come back down a little. I know things are tough when you're dealing with the health of your child. Hopefully things continue to trend in the right direction for you!

    1. w2r,

      October was a good month on both fronts, budget and Lucas. I'm hoping that carries over into November.

      Thanks for stopping by!

  2. JC,

    I'm glad to see you're not beating yourself up over expense numbers when the unexpected in life happens. Your savings rate is still mighty enviable and you should feel proud considering everything that is happening! Great month all around and I'm sending good vibes your way on all fronts!

    I also really enjoyed your SA analysis of UTX. Spot on as usual, keep it up because I've always been a big fan of yours and can't wait to read more!

    1. Ryan,

      Yeah these past few months I haven't been too concerned. A modest increase in expenses considering all that was going on was fine by me. Glad you enjoyed the UTX analysis. I really like the company and wish I had purchased some when it dipped in early October. I was ready to but my capital wasn't. Another opportunity will come though and hopefully I'll be ready for it.

      Thanks for the good vibes. We need as many as we can get. Although we're in the home stretch for the first phase now and whenever Lucas decides to come I know he'll be at a better starting point.

      Thanks for stopping by!

  3. Hope you guys are alright and out of the hospital quickly man. Great savings rate man. Dont beat yourself up to much on the expenses as your income is quite high and you invest more than you spend. At this rate you are going to crush your net worth year after year.

    1. A-G,

      We're in the home stretch right now with a little over a week left and then it's a wait and see game. Hopefully we won't see him for a couple weeks but there's just no telling when it'll be. I'd like to get the expenses lower but I'm not too worried about them. Of course there's always room for improvement! I'm a little behind where I'd like to be for the year for my net worth but I knew it was a pretty aggressive goal. Closing in on a milestone though.

      Thanks for stopping by!

  4. The numbers for October look impressive, as your investment rate to spending is phenomenal. I wish Lucas the best and good health!

    1. Agent,

      That's the benefit of having a high income. Huge savings rates that really speed up your progress. Hopefully everything goes well for Lucas. They'll be doing a procedure probably next Thursday or Friday and then hopefully we won't be meeting him for another few weeks.

      Thanks for stopping by!

  5. Hi JC,

    It looks like a good month for you on the whole on the basis of how much you were able to invest - congrats!

    I track to the penny as well and while reducing spending by $5 a month doesn't seem like a lot, you'd need $2000 of capital at 3% yield to earn that $5 a month.

    Best wishes,

  6. Pip,
    I find that keeping track of expenses on Personal Capital app helps me to spend less. Its easy to use and does all the work for you.

  7. I'm impressed with the detailed tracking you manage to do on the expenses side. I've attempted detailed tracking in the past, but it just didn't work out with a spouse that is a little hand wavy on details. The drawback, of course, is that its not possible to say what percentage of expenses my passive income is covering. I can only say it is still well below 100%...

    Best wishes with Lucas' recovery!

  8. Great month JC. Sorry to hear about your son and grandfather. Wishing Lucas a quick recovery!

    Your savings/investment rate is phenomenal! As others have already mentioned, don't beat yourself up too much for life's unexpected twists and turns. Your still in a very elite category of individuals who save/invest 70% of their income. Way to go...keep up the great work!!

    Wishing you nothing but success in your personal journey to FI! AFFJ