It is time to update my income and expenses. As I previously noted when I first started tracking that I consider everything that contributes towards growing my net worth as savings. So this would include the principle portions of debt repayments, while not including the interest, or insurance and taxes on my home. With that said there was a point made that I do not depreciate my vehicles or amortize them in some fashion other than an adjustment to net worth. This is true… but I am also not including dividends inside my retirement accounts as income, maybe it is currently more skewed that depreciation is greater than that income, but I would hope in the future that this will change. Anyways, this is a system that works for me and you need to determine a system that works for yourself and helps keep you on track, that is the main goal in my opinion.
Income
- Paychecks: $4,550
- Interest & Dividends: $21
- Credit Card Rewards: $51
- Other: $1,485*
Total Income: $6,107
Expenses
- Health Insurance: $124
- Health costs: $35
- Mortgage Interest and Escrow: $721*
- Car Loan Interest: $23
- Student Loan Interest: $65
- Water & Sewer: $37
- Electric: $37
- Natural Gas: $20
- Internet: $30
- Cell Phone: $25
- Life Insurance: $44
- Trash: $0 (this is paid every 3 months)
- Dining Out: $56**
- Entertainment / Hobbies: $187***
- Personal / Household: $44
- Gas: $237
- Clothing: $0
- Meals: $117
- Snacks & Beverages: $33
- Car Repairs and Maintenance: $39
- Home Repairs and Maintenance: $2715****
- Car Insurance and Registration: $54 (registration for one vehicle)
- Vacation $0
- Gifts: $19
- Misc: $0
Total Expenses: $4,662
Savings Rate 23.7%
During my you only live once post I mentioned that overall I am happy with my spending for this month, which you may wonder why I am happy with only a 23.7% savings rate? Well.. $2,500 of that was purely related to 1/2 of a deductible for damage to my house during a hail storm in the spring. Once that is completely taken care of I will have a post related to that and we will see if a $5,000 deductible is really worth it or if it better to pay a higher premium for better coverage. If I hadn’t of spent that $2,500 I would be looking at a savings rate of 64.6% this month, so now you can see why I am happy with my overall spending. However, there are a few categories that can use some improve and a few that I want to highlight.
*Other income includes: depositing some change I had into the bank, mileage reimbursement, Hyundai EPA debit card, and the majority of it comes from an escrow refund. My monthly escrow amount has now decreased by about $83 a month with that first change effective in August (so my mortgage interest & escrow will take a significant decrease starting next month). I planned on using all of this income as a one-time debt payment and did so against my wife’s student loans. We are on track to get her highest interest rate loan gone during October and then to start focusing on saving in our ROTH IRA’s as all loans after that are 5% or less.
**We actually dined out 3 times this month, more than what I like to. Our ignitor in the oven went out on June 30th. So July 1st I went to get the part and we grabbed out dinner that night. The other two nights occurred when visiting family in Columbus.
***This includes hosting fees for this website (prepaying gives you the best deal) as well as a few other misc scrap booking supplies for the wife. I think now that she has her machine and a few things to work with we should be good in this area for awhile. I hope.
****As mentioned $2,500 of this is for part of a deductible. The other part of this includes supplies to paint my chimney and materials to work on my back garage door as I referred to in my goals post.
Overall I am happy, we did spend a bit on gas due to traveling out of state. I think biggest areas for improvement are eating out a little less and buying less snack like stuff (in this category I include only “optional” food purchases, like juice, soda, chips, etc.) Most of this occurs usually when we are traveling or out late. This month isn’t looking much better yet but I think I just need to be more intentional in this area.
What about you, are you happy with your savings rate for July?
Photo Credit: adamr/freedigitalphotos.net
We took a hit in July with a new computer purchase, but aside from that it was an average month. And just like you I need to be a little more intentional in the food area. The first few days of August have been better, I just need to keep it up!
Hi Autumn,
Yea the snack & beverage category can be a killer, that is why I specifically separate it out from the rest of my food so it is right there in my face telling me to stop being stupid! I can probably reduce it if I just plan ahead a little bit…
Kipp
I think you did great! A 20+ percent savings great, especially since you were paying an insurance deductible in there!
Thanks Holly! I agree it went well, August will be bad as well when I pay the other half, but I am not overly worried about it. That is what emergency funds are for…
Sounds like you had a great savings rate, especially if you take out the deductible hit. Good luck in August!
Thank you Michelle. I think that there are areas to improve, and I know August will not be great with the remainder of the deductible being paid. But, I guess I can’t complain too much having a new roof and siding on my house, and I don’t even need to pay the entire bill for it!
Anything above a 20% savings rate isn’t bad Kipp. Building wealth is a long play, so if you maintain and slowly increase that level, you’ll get there. Our July was a bit over budget due to some expenses I had to outlay for school, gas, and travel. We got back on track over the second half of July, but still need to chill out in August.
I know August will be rough as the second 1/2 of that deductible will probably be paid (they just have a few minor things to finish). But even with that I think I can keep the year at 50%, it may be a little difficult, but I think I can do it.
Looks like July went well for you–congrats! And, as you mention, being intentional in thinking about expenses is really the key. Once we started doing this line by line monthly scrutiny, we really buttoned up our little drips and drabs here and there. But you’re doing awesome!
Thank you for the encouragement Frugalwoods! BTW I loved that pic with your dog “did you buy me any treats?” It looks like you did very well on your expenses as well! Keep up the great work!
Thanks so much! Frugal Hound WISHES someone would buy her more treats
Wow, that’s a phenomenal income! Keep up the great work. I’m sure your savings rate will be much higher on an average basis.
Cheers!
Hey Henry,
Well, the other category is basically all one-time income type things, but this month being an extra pay money will probably surpass that amount just slightly. Yea average-wise I am still over 50% this year so I am happy.
Thanks,
Kipp
Looks like a good month Kipp. Keep up the great work!
Thank you Brian! After August, I hope I can pump up the savings rate up to 60% to finish out the year! We shall see how that goes, never know what life will throw at you!
Looks like you have a great system to track things. It’s a bit confusing seeing the car interest as an expense and not the car payment amount? I agree that one should not add the retirement dividends as income. Keep it up as 20+ savings rate is awesome.
Hey EL,
I mark the interest on all debt as expense, while the principal portion decreases the balance owed.
You could mark the entire amounts as an expense, but then you would have to back out the principle amounts of debt payments when calculating net worth. So if the principle portion doesn’t effect your networth, then why would it be an expense? I wouldn’t consider putting an extra $1,000 towards debt as an expense, it is just decreasing cash and decreasing a liability. Much like moving that same $1,000 from cash to an investment account. That in itself doesn’t change my net worth, however the compounding from less interest paid on the loan or the future compounding of the investment will eventually change my networth.
If I were to not include the debt on my networth statement (and make it more of an invested assets type thing) then yea it would make sense to me to expense everything.
Been reading your blog and looks great. Progress is commendable.
? – is your income net (after taxes, retirement contributions, etc, or gross
Best of luck
Hi MidwestFabs,
Thanks for the compliment! Income is based on my Net, but I add back in Retirement contributions (including any employer matching). I also take out charitable donations, that is the one area I choose to keep private.
The reason I use net income is because the Simple Math Behind Early retirement (post from Mr Money Mustache) uses your net income plus retirement contributions as a guide towards financial independence time frame.
Thanks for stopping by!
I think biggest areas for improvement are eating out a little less and buying less snack like stuff (in this category I include only “optional” food purchases, like juice, soda, chips, etc.)
This one ends up being a tough one for me, it’s my “leak” like a great poker player who plays craps and loses it slowly.
The plus side is that we need to know our weaknesses and leaks to improve, and at least we aren’t oblivious. I am not for the cold turkey approach, I am more for cutting back gradually of finding innovative ways to reduce the expense. An example, for alcohol I now ferment juice so that will reduce the costs in this category. Also, pop/soda, we now are only consuming 1 2-liter a week between my wife and I. A big improvement. But the high cost of this area seems to stem from coffee and grabbing drinks while driving. Need to work on that!
Thanks for sharing your income and expenses for the month. I look forward to following that dividend income progress. I’m sure over the months and year over year you’ll be amazed at how the income will grow. Till next time!
No Problem, I will be getting some more dividend stocks once the ROTH transfer is complete, then after that probably around October or November once we get a single student loan out of here. I can’t wait to get rid of it
Kipp,
Great job overall! Too bad about the hailstorm, but these things happen. Don’t let them get you down!
Almost 65% is an excellent savings rate and something to be proud about.
Keep it up!
NMW
Thanks No More Waffles! Yea 65% would have been without the deductible, I just need to keep this month tight as well to get through the second payment (once they are actually done that is). It looks like you had a phenomenal savings rate yourself!
Congrats! That’s a hefty savings rate. Mine has taken a dive due to moving to a new city and adjusting to the absurd cost of living. I’ll get back there soon though… I hope.
Jay
Thanks Jay. I hope you are able to find ways to save in your new town! Even if your savings rate % is down, if your dollar amount is up and you plan on moving back after financial independence it may still be helpful move, so the percent isn’t necessarily everything if you are planning on moving!