Thursday, March 12, 2015

February 2015 Income and Expenses


February is a short month, but historically is better income-wise than January. This proved to be the case again this year. I don't know if the warmer weather last month helped, but I'll take it. There have been early indications of layoffs in some of the smaller oil service companies around Houston. While it is good to be aware of potential economic storms brewing, everything seems to be chugging along nicely for us. Fortunately Houston is a much more economically diversified city than it was 30 years ago so I still feel good about the rest of the year going forward.

Anyway, here is the basic summary from last month.

Day job (take home pay) --- $13170.83
Dividends/interest --- $903.12

Total net income --- $14073.95

Expenses --- $4533.98

Savings --- $9539.97   Rate --- 67.78%


Overall I like the looks of my savings rate this month. My goal is still to get normal expenses closer to $3,200 while working. Then once I leave the working world they should drop closer to $2500.

The bulk of my expenses came from two areas.
  • Walmart & HEB --- As best I can tell my wife spends more on Keurig cups than actual food
  • Academy --- Replacement treadmill and a new exercise bike

The so called grocery expenses totalled $1200 and the exercise equipment came in at $900. It seems like every month $500-$1000 in unusual expenses pop up. I always, in my mind, plan for stuff like this. There is always going to be landscaping in the spring, taxes, medical emergencies, random vet bills, hot water heaters that break, leaky roofs, car problems and maintenance, eyeglass, birthdays, etc.

Trying to plan a budget without accounting for $750 in the "other expenses" column is wishful thinking in my book. What I can do is work on the regular recurring expenses that tend to drift up and up over time. I just noticed that my Direct TV bill came in at $170 this month. I wanted to cancel the premium channels, but my wife reminded me a new season of Game of Thrones begins next month. Now that's an emergency if I have ever seen one.  I actually like watching the series and it gives us extra time to spend together. This is a perfect example of an area I can cut back on in a couple of months.

When the season is over I am cancelling the premium channels right away and saving about $50 a month. Next year I will resubscribe to HBO. There are many holes in my budget that if I focus on them I could squeeze a few hundred in savings here and there.

Guilty pleasures that won't go away are keeping the AC at 68 in the summer, eating at Saltgrass and Benihana quite often, and keeping some Crown Reserve at the house.

Life is too short to avoid some of the finer things and if I want the AC at 68 so I can get a good night's sleep on a hot Houston evening in July, so be it.

Anyway looking ahead to March I hope to receive enough passive income to cover almost all of our bills. I have never had a month in which I saved 100% of my day job take home pay. This could be that month.

Stay tuned.

DEFY MEDIOCRITY




33 comments:

  1. @MDP, agree on the "other" expenses. Here in the UK I always end up spending an additional unforeseen £500 per month. My dividend income will cover my expenses soon in a years time. I'm planning to do a dummy run, bank my monthly salary (we get paid monthly in the UK) and see if I can live off my dividend income. Because March, June, Sept, Dec are the biggest dividend paying months I think in practice you need to build a 3 month cash buffer from which you live off. The other problem we have in the UK is that most companies pay 2 dividends per year which are not equal weighted. Luckily my portfolio is also stuffed with blue chip USA stocks. Regards, Jon, UK

    ReplyDelete
    Replies
    1. Jon,

      Thanks for stopping by and commenting! The unexpected expenses are everywhere and they seldom give you a month off. That is actually good as I now keep a mental budget over and above my normal one.

      I also like the idea of a trial run before leaving your job. I have thought about doing the same thing in a couple of years. I will most likely have a large cushion between passive income and expenses before I pull the plug.

      As far as the quarterly payers go, my income is starting to smooth out a bit, but the majority of my income still comes from March, June, September, and December.

      MDP

      Delete
  2. So based on your annual dividend income in 2014 & my estimates for purchases and dividend increases in 2015, and your estimated expenses in retirement at $30K/year, you seem to be covering close to 66% of your expenses from dividends alone.

    I would think that if all else is equal, you can probably become FI by the end of the decade.

    Good luck in your investment journey!

    Dividend Growth Investor

    ReplyDelete
    Replies
    1. DGI,

      From my taxable account I would say that I am covering about 50%. At some point though my 401k will be used help cover expenses so as a whole you are correct. The end of the decade is my plan, maybe even a year sooner. A lot depends on my job and many things can go right or wrong over a five year period.

      MDP

      Delete
  3. "As best I can tell my wife spends more on Keurig cups than actual food"

    Sounds like you need to start a position in GMCR, lol. Good job on the savings rate- 68% is great!

    ReplyDelete
    Replies
    1. Jack,

      Well I do own shares of KO, so I guess that helps pays for the coffee a bit. :-) If only I could get her to go back to Folgers breakfast blend. That would save me a ton of money each month. That is probably a battle that I will not fight. :-)

      MDP

      Delete
    2. Totally forgot that KO has a stake in GMCR. Rumor has it that KO might eventually collaborate with GMCR, if not already, to bring DIY home soda. It will be similar to the krups system, which will use soda syrup.

      Delete
  4. MDP,
    Congrats on a great month. A savings rate of over 65% is wonderful. These are interesting numbers and I need to look at mine as well to see where I stand.

    Regarding HBO, you can cancel the channels and subscribe to the standalone HBO Go which is launching in April I believe. It is $15/month and gets you HBO access through devices that support HBO Go. It is Apple TV exclusive for the first 3 months, but then opens up for other devices like PC, Roku etc. This is targeted at cord-cutters who want to disconnect their cable subscription entirely and are interested in a-la-carte.

    DGJ

    ReplyDelete
    Replies
    1. DGJ,

      Yeah these cable packages can really create a tangled mess. They hook you with the free 90 trial and then it is surprising difficult to cancel them. I don't watch a lot of TV, but it seems the shows I enjoy are all on premium channels....except for The Walking Dead.

      MDP

      Delete
  5. Hello from the old World


    Your income excellent
    Your savings rate superb

    You from Houston and in Houston you can shop at the cheapest Supermarket chain of the World.
    It is Aldi and Aldi is German Supermarket.
    Your savings rate is awesome but if you want to save on your groceries try Aldi.
    Aldi is cheaper than Walmart and they offer first quality products.
    See the webpage below
    https://www.aldi.us/en/weekly-specials/fresh-meat-special-buy

    If you have time left, visit a Aldi store in Houston and see yourself and please compare the prices with Walmart.

    Warm regards,

    George T
    The Netherlands

    ReplyDelete
    Replies
    1. George T,

      I haven't heard of Aldi, but I will be sure to check it out. If it is the same price as Walmart without the crowds, that would be a benefit in itself.

      MDP

      Delete
  6. Awesome month! I have a lot of those one-time non-recurring expenses coming up through April. So my savings rate for the month will suffer until then.

    I hear you on the air conditioning. I need my beauty sleep and in the summer here it can be in the 80's at night, which is miserable for sleeping. 68 is the perfect temp, sometimes I will even boost it down to 65, because I like it cold when I sleep.

    Do you have a bunch of quarterly dividends hitting next month that would make you think you will be able to cover your monthly expenses in April with just your passive income?

    Cheers!

    ReplyDelete
    Replies
    1. GYFG,

      There is nothing like sleeping in a cold room with extra covers. Every time I get the summer electric bills I cringe a bit, but it's a small price to pay for an enjoyable night's sleep.

      My biggest dividend months are March and September because most of my companies pay during these months along with BBL which pays only during these months so the payout is larger than traditional quarterly payers.

      MDP

      Delete
  7. Great savings rate despite the higher than target expenses. I like that you don't limit some indulgences. Makes the lifestyle much more sustainable!

    ReplyDelete
    Replies
    1. BGH,

      Absolutely right about a few indulgences. Staring at a balance on a computer screen can only bring so much pleasure. I love eating out and having a premium whiskey every once in a while.

      MDP

      Delete
  8. Great savings rate, certainly helps to have such high income. Good to know that Houston is much more economically diversified now than 30 years ago.

    ReplyDelete
    Replies
    1. Tawcan,

      During the 80s oil bust, Houston was rocked pretty hard. Since then energy companies, while still prevalent, don't dominate the economy like back in the 70s and 80s.

      MDP

      Delete
  9. MDP,
    Can't blame you on GOT! We are a huge fan, I got my wife hooked. I heard HBO is planning to have a srteaming like service like Netflix, it should save us some money switching from netflix to hbo to netflix again.
    Great job on the high savings rate!
    FFF

    ReplyDelete
    Replies
    1. FFF,

      Love GOT! I just watch the last couple of episodes from last year just to refresh myself. I am without a doubt cancel HBO after the season. There are other shows I enjoy on the premium channels like Ray Donovan, but I'll live without it.

      MDP

      Delete
  10. Nice month, MDP! Glad to hear your job is stable and safe so you can keep entertaining us with these massive numbers! I got a Keurig for my birthday and right away I saw that it's way more expensive to buy those cups. I got one of those reusable self-fill k-cups and have saved a ton of money and still been able to enjoy the machine, they have them at most corner stores. I also completely relate to needing A/C, it gets so hot in both our areas over the summer! I can't sleep when it's hot at all. Keep up the awesome work and wishing you a great tomorrow & weekend!

    ReplyDelete
    Replies
    1. Ryan,

      I have been meaning to try mesh cup that a friend told me about. Then I can go back to Folgers. Quite honestly my wife has picked up so many different flavors that its becoming confusing trying to remember which cups I like. On the decaf side, I love the Houston flavor and its easy to remember.

      Strangely enough I think that my AC gets used just about every month of the year. My wife and I love it really cold. Hell sometimes it comes on when its 60 degrees outside. Crazy shit now that I think about it.

      Anyway keep fighting hard over there!

      MDP

      Delete
  11. See all the love you get MDP, that's being a go getter and being solid. Keep it up and you'll be FInancially independent in no time. I already see it for you already bud. Keep it up. I'll be beside you. Take care bud.

    ReplyDelete
    Replies
    1. DH,

      Thanks, my friend. FI is definitely within my sights. There are a few mountains to climb still, but I am eager and optimistic about our futures! Keep hustling yourself!

      MDP

      Delete
  12. MDP, Your monthly income continues to blow my mind. I suspect that whatever time frame you have for ditching work will come sooner than expected. And $4,500 in monthly expenses isn't bad considering the unexpected stuff that comes up. That's bound to happen every so often so we need to be ready for it.

    Best,
    DWC

    ReplyDelete
    Replies
    1. DWC,

      The income numbers are still a bit unbelievable to me as well. Fortunately for me I had many years making a third of my current salary so I am grounded and thus bank everything I can. Things can change quickly in this world.

      MDP

      Delete
  13. MDP,

    That is some insane income right there. That's some serious fresh capital. Keep it up!

    Great job on the savings rate. Even if you don't substantially reduce your outlay you're still saving a very healthy chunk of your income.

    Best regards.

    ReplyDelete
    Replies
    1. DM,

      Yeah I focus as much if not more on my savings rate than my income. Jobs can come and go and so can incomes. If I can maintain a relatively low spend rate, then this hamster can hop of the wheel within a few years.

      MDP

      Delete
  14. MDP

    Great saving rate, for me it is hard to get to those rates due to my alimony payments

    ReplyDelete
    Replies
    1. FF,

      No doubt alimony can be a hurdle when trying to save. On the other hand sometimes it can free up other expenses that you used to have. :-) Keep fighting hard!

      MDP

      Delete
  15. Mdp, great numbers and savings rate. My goal is 50% which is hard during the tax season (federal and property etc). I also have regular large expenses that is difficult to budget for.
    Div4son

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    Replies
    1. Div4son,

      50% is a fantastic goal! Essential you buy yourself a year of freedom for every year you work. The large expenses are a nuisance and I try not to dwell on them, but it can be frustrating when an unexpected hurdle is thrown in your path.

      MDP

      Delete
  16. MDP, great numbers and savings rate. Such a high savings rate will definitely expedite your FI plan. My saving rate is only about 33%.

    ReplyDelete