Wednesday, April 8, 2015

March 2015 Income and Expenses


The amounts below are cash amounts and are net of taxes, insurance, 401k contributions, HSA, etc. In other words, the amounts are what get deposited and withdrawn from my accounts.

Day job (take home pay) --- $12911.59
Dividends/Interest --- $2024.95

Total net income --- $14936.54

Expenses --- $2986.81

Savings $11949.73 --- Rate  80.00%    Savings/day job income --- 92.55%


Historically March is a better month than February, but this month I made less income from my day job. The good news is my passive income came in really strong. Expenses were better than expected and came in under $3,000 for the first time this year. This allowed my overall savings rate to reach a new high for the year at 80%. Not much to complain about here.

My passive income covered 67.8% of my total expenses. Needless to say this was really cool. I truly believe if I did not have my day job, I could have covered 100% of my expenses with just passive income. It is amazing how much money is spent for the privilege of going to work each day.

March was also one of the few months I can remember in which I truly had no outlier expenses. Food was normal, we dined out a few times, auto expenses were minimal, and work related lunches came in under $200 so I am certainly pleased with the results.

For the first time in my life after constant nagging ongoing encouragement from my wife to get a lawn service, I capitulated. While I cringe at the thought of paying someone $100 a month to do something so easy, I must admit I love coming home looking at a nicely manicured lawn and not having to worry about finding time to do it myself. I will really appreciate having this service during the July-Sept months, which are nothing short of brutal here in Houston. Now if I could just get her to hire a weekly maid service, everything would be perfect. :-)

Going forward, I think 65% will probably be the norm as I have several home improvement projects on the horizon. I also plan on at least one vacation that could be a budget buster. We'll see.


April Outlook

Looking ahead to this month's expenses, the elephant in the room will be taxes. I have already sent a $6,200 check the U S Treasury which is more than double all of March's expenses. Technically this is a 2014 tax expense, but it affects my bank account right now. Hopefully the rest of the month is as calm and uneventful as March.

I also look forward to receiving my first ever Adsense deposit. I am sitting on about $95 earned for the year so I should hit the $100 mark and I believe this will trigger a deposit for next month.

YTD Savings Rates

Jan --- 46.72%
Feb --- 67.78%
Mar --- 80.00%

DEFY MEDIOCRITY


37 comments:

  1. Awesome job MDP! That is some serious 1 month fuel to add to the snowball.

    cheers, AA

    ReplyDelete
    Replies
    1. AA,

      Thanks, buddy! The fire demands more coal and after the Shell drop today, I will be looking to add shares next week.

      MDP

      Delete
  2. Boy that's a lot of money you can set aside to buy even more dividend stocks! Congrats on having an excellent month.

    ReplyDelete
    Replies
    1. Tawcan,

      Thanks a lot! I think this may be my best month ever. April will not look as good, but at least the taxes are out of the way.

      MDP

      Delete
  3. Congrats! $13,000 in AFTER tax income is huge!

    ReplyDelete
    Replies
    1. The Professor,

      It is and I count my blessings daily. At the end of the day I would rather make $3500 a month sitting in may hammock than $13,000 working 10-12 hour days 6 days a week. Eventually I will get there.

      MDP

      Delete
  4. Given you high rate of savings and investment, you will reach the dividend crossover point in no time.

    You may have covered this somewhere before, but do you max out your 401 (k) or do you just put the money to get the match? Given your high level of income I would assume that any dollar you put in the 401K reduces your taxes by 35 cents. Not a bad ROI depending on circumstances of the 401K of course.

    ReplyDelete
    Replies
    1. DGI,

      I am actually in a difficult situation in that I fall under the highly compensated employee restrictions. I would love to contribute $17,500 and receive all the match from my employer, but the last three years I have had distributions forced on me which kills my tax benefits, matches, and obviously my savings rates. Oh well I just keep adding to my taxable accounts and deal with life's little inconveniences as best as I can.

      MDP

      Delete
    2. What are the "highly compensated employee restrictions"? And what do you mean by forced distributions?

      Delete
    3. GYFG,

      Here is a cut and paste summary I found.

      Every year, the IRS requires all 401k plans (except safe-harbor plans, as described below) to take a discrimination test. Most easily pass it. Still, just under 40 percent of plans polled by the Plan Sponsor Council of America reported refunding or restricting HCE contributions in order to pass the test. And, 16.7 percent of plans reported returning excess contributions.

      The reason for the test is "Congress didn't want these considerable tax breaks to be only enjoyed by the HCEs. This is the way they encourage employers to let everyone play in the pool," said Martha Priddy Patterson, analyst with Deloitte & Touche LLP's Human Capital Advisory Services group.

      The test requires that employees be split into two groups: highly compensated and nonhighly compensated. For the 2013 and 2014 tax years, highly compensated employees are those who earned more than $115,000, or owned more than 5 percent of the business. (The compensation limit is based on the previous year's compensation, while the ownership limit is based on the previous or current year.)

      The test is as follows: the average contributions of highly compensated employees, as a group, cannot exceed the average contributions of nonhighly compensated employees, as a group, by more than about 2 percent. (Age-50 catch-up contributions are not included in discrimination testing.) If the HCEs exceed this threshold and the employer fails to correct the imbalance, the plan could lose its tax-qualified status and all contributions and earnings would have to be distributed to all plan participants. In addition to the 2 percent spread, the contributions of all HCEs as a group may not be more than two times the percentage of other employees' contributions.

      Consequently, HCE contribution levels are based on the contributions of non-HCEs. By setting up this carrot-and-stick system, Congress made it in the best interest of highly compensated employees to encourage non-HCEs to contribute to the plan.

      Delete
  5. Good job. That's a pretty hefty savings rate! The lawn service will make your life easier. It sort of feels odd to pay someone to do it, but I'm sure you'll adjust. I've debated my wife about the same issue. We still take care of it all ourselves. We share expenses for a lawn service at the family lake house - but split among the 9 partners, the cost/person is easier to stomach. And who wants to mow the lawn on a weekend away? (Much less while at home.)

    ReplyDelete
    Replies
    1. BGH,

      Yeah, I actually like working in the yard as a form of escape from the daily grind. I guess with the grass and weeding handled, I can focus on smaller yard projects, like flower bed maintenance or maybe starting a small garden.

      MDP

      Delete
  6. 80% is amazing. Once we have the mortgage gone I could see months that might get close to that number. Only need to wait another 7 years, but it will be here in a blink of an eye.

    What caused the job income to go down in March?

    Also, rad that you will get your first Adsense check.

    Cheers!

    - GYFG

    ReplyDelete
    Replies
    1. GYFG,

      I think the biggest factor was I had an unusually good month in February. I can't wait to get the payment from Google! Also I answered your HCE question from a few comments above.

      MDP

      Delete
  7. MDP. Your killing it bud. Just ripping it up. Keep it up bud. You're doing fantastic. Well do it up and make the most of 2015! I know it. Cheers my friend.

    ReplyDelete
    Replies
    1. DH,

      It's a long slow grind uphill, but in the end it is worth it. Each day the finish line become a little closer. The first quarter is in the books and now it's time to focus on quarter number 2.

      MDP

      Delete
  8. MDP,

    Wow. Huge income there. Very, very awesome. And your expenses are really low for someone with such a large income. Great job keeping the lifestyle inflation in check! :)

    You're off to a great start this year. Really fantastic savings rate.

    Best regards!

    ReplyDelete
    Replies
    1. DM,

      You hit the nail on the head about lifestyle inflation. It tries to creep into our lives every day and that is almost another battle in itself. I can't wait until I have my first month where my passive income exceeds my expenses. It is still in the distance, but gets closer every day.

      MDP

      Delete
  9. Your google adsense can cover the one month lawn mower expense! :)
    Great job on the high savings rate, and passive income is phenomenal! Keep it up!

    ReplyDelete
    Replies
    1. FFF,

      That great perspective with the Adsense payment. It's like a free month's worth of lawn service. Thanks for the ongoing support!

      MDP

      Delete
  10. Amazing numbers. Congratulation! Every Tuesday I look forward to seeing what you invested in since I also use weekly sharebuilder investment. It helps me focus on keeping at it. Thanks.

    ReplyDelete
  11. Incredible savings rate MDP! It's awesome to see some one like yourself making a fantastic salary and working hard to save as much as possible. Had my parents done the same, they would be living a much better life. Instead, my dad lost his job and they are fighting to stay afloat. Things change in a hurry, always stay prepared!

    Keep up the great work!

    ReplyDelete
    Replies
    1. ADD,

      While I have been at my job for 20 years, it's somewhat unstable. I have seen many people with similar jobs inflate their lifestyles and then crash and burn. I did it myself during my 20s, but have now learned to be more frugal than most. I am still amazed by how many coworkers I have that still spend much more than they earn in both good and bad times. Some people never learn.

      I am sorry to hear about your parents, though it is not entirely surprising as I mentioned it is all too uncommon.

      MDP

      Delete
  12. MDP,
    Amazing numbers! If you continue at this rate you will achieve FI in no time.
    I completely agree with you on the Texas heat. I don't look forward to mowing during June to September here in Dallas.
    Div4son

    ReplyDelete
    Replies
    1. Div4Son,

      Hopefully sometime in the next four or five years. There is still a lot of water between me and my FI island. I'm taking it one month at a time.

      MDP

      Delete
  13. That is one sweet monthly savings rate and income from work and dividends! And on top of it you're building your 401k as well, very nice!

    ReplyDelete
    Replies
    1. DW,

      Thanks. Yeah I like the idea of adding to both taxable and my 401k. It never hurts to diversify across several asset classes and time frames.

      MDP

      Delete
  14. Nice numbers sheesh!!! Im blown away!

    ReplyDelete
    Replies
    1. @brokeworkingguy,

      They blow me away as well. I have always made under $100k up until 4 years ago. I still consider myself a middle class guy even with the higher income.

      MDP

      Delete
  15. Great savings rate! There's no way we can achieve 80%, so your's is both awe-inspiring and intimidating :-) Thanks for sharing and best of luck in your journey.

    ReplyDelete
    Replies
    1. Ferdi S,

      Never say never. It may take some time, but you can get there. It took me a long time and a lot of sacrifice, however the journey has and continues to be worth it.

      MDP

      Delete
  16. You have a very high day job income. And with such a great savings rate, you'll reach FI very soon.

    Keep up the great work!

    -- MU

    ReplyDelete
    Replies
    1. MU,

      If everything goes according to plan (which rarely happens) I will be there within 5 years. What will I do then?? That's the question I hope to find an answer to while I get there.

      MDP

      Delete
  17. You killed it in March plain and simple. I don't mind mowing the lawn, and I probably would have caved with a house cleaner as I find that to be the most annoying task. Let us know if and when that occurs as well!

    ReplyDelete
    Replies
    1. FF,

      I completely agree. I love being outdoors and view the time I spend mowing, weeding, etc. as a form of escape from the chaos of the everyday life. With that said, I do appreciate having one less thing to worry about each week. I now can spend time on other areas like flower bed maintenance and one more day of morning jogging.

      MDP

      Delete
  18. MDP,

    This is awesome. 80% is crushing it BIG time. Cannot say anything less. I wish that I could have hit over that amount. I've been pretty solid over 60%, but I know between April through July I will be very low due to going to a "crap ton" of weddings with being in a few of them as well. I'm going to try and control everything, we'll see.

    Nice job and keep buying the cash flowing assets.

    -Lanny

    ReplyDelete
    Replies
    1. Lanny,

      Thanks I think anything consistency above 60% is exceptional. My monthly savings rates fluctuate greatly due to tax bills and home improvement projects. Overall though I am quite pleased with the progress.

      As far as the weddings go, as long as you are not one of the people getting married, I think your expenses will level out by the end of the year. :-)

      MDP

      Delete