Budget Check & Cash Flow Update - August 2018

Budget | Cash Flow | Personal Finance
Budget Check & Cash Flow Update - August 2018

The saying goes that cash is king.  While that's true, a more accurate saying when it comes to finances is that cash FLOW is king.  Whether you're retired, still working or just starting out the only way you can improve your financial house is to have positive cash flow.  

If you're in the accumulation phase then that positive cash flow allows you to save and invest to build up your future cash flow.  If you're already retired, or FIREd, then congratulations because I'm sure your cash flow is well above what you need.

We've been fairly lax in regards to our budgeting, but the time is right to really get things moving forward.  One of our big goals for 2018 is to focus on our monthly spending.  When it comes to personal finance it's rather simple income - expenses = savings and savings x investing = financial independence.  There's obviously two main levers there and while we'd all like to increase our income, many times reducing expenses is some of the low hanging fruit that you can go after to increase your savings.

Budget Check

Total income for August came in at $7,467.48.  Expenses saw a huge jump again up to $8,118.65; however, I'm excited to see that because that was due to extra debt payments.  During August we made $5,000 of extra payments on the A/C that we had to replace and that debt will be gone during September.

Unfortunately that led to use being cash flow negative to the tune of $651.17 for the month, but I'll gladly take it.  As soon as the A/C debt is gone that will be $300 of cash flow that we can put towards the car loan that we have, *Ooops!*, which I expect to also be paid off before the end of the year.  With negative cash flow for the month that meant we had a -9% savings rate and -14% savings rate based solely off my work income.

Excluding the $5,000 in additional debt payments things look a lot better.  Expenses would have dropped down to $3,118.65 which is still high, but in the neighborhood of recurring monthly expenses this year.  That would have pushed us up to $4,348.83 of savings for the month and a 56% savings rate based on work income alone.
Budget | Cash Flow | Savings
Budget Check August 2018
*A few notes about the budget check.  All income is only income that I receive and does not include my wife's income likewise for the expenses.  We've found it's easiest for us to just keep separate accounts since I'm gone most of the time for work.  Also, pre-tax withholding for the 401k (I currently withhold 6% in order to get the full 5% employer match) and the ESPP through my employer (8% post tax withholding) are not included in the above savings amount.  

Non-Work Cash Flow

Each month I like to examine the state of our non-work cash flow.  Since our goal is to become financially independent the monthly cash flow has to come from somewhere in order to cover our expenses.  

Truly passive income, dividends and interest, totaled $316.48 during August which was about a $20 increase from May.  *Dividends are from my taxable accounts only.  

Based on August's spending the passive income for August covered 4% of expenses.  Excluding the extra debt payments and the passive income covered 10% of expenses.

Thus far in 2018 I've totaled $4,077.59 from income outside a traditional day job.


August finally saw our debt reduction plans kick into gear with $5,000 of extra payments.  Those extra payments brought one of the debts down from $6,200 to $900.  Even better is that during September the 1st debt will be completely gone.  Even better than that is that it will free up $300 extra per month to put towards the car loan that we have.  

Last month I thought that it'd probably take us until the end of the year to fully pay off both of these debts; however, now with an end in sight and a solid income to help support the debt reduction I want to get even more aggressive on the debt pay down.  We currently owe in the neighborhood of $8,325 on the car loan after the extra payments we've already made during September.  That means we have to average $4,162.50 in total payments per month during October and November to be done before December.  That might be a bit tight but I think it's very doable.  And what a Christmas present that will be!

Make sure you sign up to receive new posts to your email so you don't miss anything.  And be sure to follow me on Twitter @JC_PIP to get up to the minute news of purchases for my portfolio or if you prefer Pinterest or Facebook I'm on there too.

How is your monthly cash flow situation?  What are you doing to increase your savings?  Are you focusing more on increasing income or reducing expenses?