Since 2014, I have been tracking my monthly income and expenses. You can see a breakdown of every penny I earn and spend. For perspective, this budget is for a household of two in a small US city. By documenting my journey, I aim to demonstrate the feasibility of saving a significant portion of your income and provide some ideas and inspiration for your own budget.
Below are my income and expenses for August 2018. You can see all my monthly budgets here.
Income
Wages remain my primary source of income by far, although dividend income is now enough to live on.
Here is a chart of my dividend income by month for the past 13 months:
Total dividends for the trailing twelve months: $17,619.82, up 17.44% from a year ago.
Here is chart of my dividend income by month and year since inception of the blog in 2014.
Expense
Tax remains my top expense by far. Since tax is proportional to my earned income, there is nothing I could do about that. After-tax expenses came in at $310.71, average for me. The $0 housing cost this month is not a misprint; see my previous post for details.
Food expense was $41.35 this month, which is low even for me. I was too lazy to go shopping this month and reduced my food stockpile. Pinto beans and oatmeal help keep me and my budget slim.
The $173.22 expense for 6-month car insurance was a huge 36% increase over 6 months ago. Moving to a bigger city, due to work relocation, was the culprit. I figure this is still well below average so I won't waste time shopping around, yet.
$21.20 for electric bill is probably rock bottom for me. It mainly keeps the fridge running. I rarely even turned on a light this month. The $24.24 for water bill includes a mandatory garbage collection fee from the city. Still, it seems high considering I used only 1 CCF this month.
The $15 "other expense" is for a mandatory top-up fee after downgrading my first month plan of a freedompop hotspot. I got a "free" freedompop hotspot last month, thinking it could help me use the internet when I don't have wifi access. That turned out to be a mistake. The "free" hotspot comes with an intro 2GB monthly plan that can be downgraded to a free 250 MB monthly data plan, but downgrading triggers a $15 top-up fee, as I unhappily discovered. That did not use to be the case when I got my phones from Freedompop before. Freedompop is getting more desperate trying to make money, it seems. It probably doesn't bode well for the future of free phone and internet service.
Total after tax expenses for the trailing twelve months: $7,206.54, down 27.57% from a year ago. This marks eight straight months of decreases in ttm expenses. I expect this downtrend will continue as my housing expense went down and I continue to find ways to cut costs. It will probably bottom out around $4-5k, which is my currently projected annual expense.
Dividend to expense coverage ratio = 2.44, making another all-time high!
The chart below shows my TTM dividend (red line) versus TTM expense (blue line) since I started tracking in 2014. One is financially independent when the the dividend (red) line exceeds the expense (blue) line, which happened around June 2015 for me. Given that my expenses have gone down significantly, dividends have become too much of a good thing now. Any excess dividends above the amount needed for expenses incurs excess taxes and becomes a drag on my returns. I think an ideal dividend to expense coverage ratio is around 1.5, which allows room for error without incurring too much tax liabilities. With approximately $5,000 annual expense, $7500 annual dividends would be plenty. I am currently in the process of turning over my portfolio to replace high dividend stocks with zeros to bring this ratio down to ideal. My currently projected annual dividends is in excess of $20,000, so I have a long way to go.
My after-tax saving rate (calculated as after-tax expenses divided by after-tax income) was 97.51% this month, far exceeding my 90% saving rate target. I am confident I will meet or exceed my savings goal this year.
Thanks for reading!
Below are my income and expenses for August 2018. You can see all my monthly budgets here.
Wages remain my primary source of income by far, although dividend income is now enough to live on.
Here is a chart of my dividend income by month for the past 13 months:
Total dividends for the trailing twelve months: $17,619.82, up 17.44% from a year ago.
Here is chart of my dividend income by month and year since inception of the blog in 2014.
Expense
Tax remains my top expense by far. Since tax is proportional to my earned income, there is nothing I could do about that. After-tax expenses came in at $310.71, average for me. The $0 housing cost this month is not a misprint; see my previous post for details.
Food expense was $41.35 this month, which is low even for me. I was too lazy to go shopping this month and reduced my food stockpile. Pinto beans and oatmeal help keep me and my budget slim.
The $173.22 expense for 6-month car insurance was a huge 36% increase over 6 months ago. Moving to a bigger city, due to work relocation, was the culprit. I figure this is still well below average so I won't waste time shopping around, yet.
$21.20 for electric bill is probably rock bottom for me. It mainly keeps the fridge running. I rarely even turned on a light this month. The $24.24 for water bill includes a mandatory garbage collection fee from the city. Still, it seems high considering I used only 1 CCF this month.
The $15 "other expense" is for a mandatory top-up fee after downgrading my first month plan of a freedompop hotspot. I got a "free" freedompop hotspot last month, thinking it could help me use the internet when I don't have wifi access. That turned out to be a mistake. The "free" hotspot comes with an intro 2GB monthly plan that can be downgraded to a free 250 MB monthly data plan, but downgrading triggers a $15 top-up fee, as I unhappily discovered. That did not use to be the case when I got my phones from Freedompop before. Freedompop is getting more desperate trying to make money, it seems. It probably doesn't bode well for the future of free phone and internet service.
Total after tax expenses for the trailing twelve months: $7,206.54, down 27.57% from a year ago. This marks eight straight months of decreases in ttm expenses. I expect this downtrend will continue as my housing expense went down and I continue to find ways to cut costs. It will probably bottom out around $4-5k, which is my currently projected annual expense.
Dividend to expense coverage ratio = 2.44, making another all-time high!
The chart below shows my TTM dividend (red line) versus TTM expense (blue line) since I started tracking in 2014. One is financially independent when the the dividend (red) line exceeds the expense (blue) line, which happened around June 2015 for me. Given that my expenses have gone down significantly, dividends have become too much of a good thing now. Any excess dividends above the amount needed for expenses incurs excess taxes and becomes a drag on my returns. I think an ideal dividend to expense coverage ratio is around 1.5, which allows room for error without incurring too much tax liabilities. With approximately $5,000 annual expense, $7500 annual dividends would be plenty. I am currently in the process of turning over my portfolio to replace high dividend stocks with zeros to bring this ratio down to ideal. My currently projected annual dividends is in excess of $20,000, so I have a long way to go.
Savings
My after-tax saving rate (calculated as after-tax expenses divided by after-tax income) was 97.51% this month, far exceeding my 90% saving rate target. I am confident I will meet or exceed my savings goal this year.
Thanks for reading!
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