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 September 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: $17,755.29, up 14.64% 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. Tax will go way down once I retire.
After-tax expenses came in at $192.31, lowest ever recorded so far!
The only housing expense this month was $2.11 gasoline for the lawn mower. See my previous post for more details on my housing expense.
Food expense was $114.05 this month, higher than usual for me. I stocked up on nonperishable food.
$21.20 for electric bill is near rock bottom for me. The $19.25 for water bill includes a mandatory garbage collection fee from the city and 0 CCF usage, which is rock bottom. I shower at work and abide by the adage "if it's yellow, let it mellow; if it's brown, flush it down."
I had no discretionary spending this month, which kept overall expenses low.
Total after tax expenses for the trailing twelve months: $6514.16, down 35.57% from a year ago. This marks nine 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 = 2.73, 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. I project my overall expenses will bottom at approximately $5,000 annually, so that $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.
Below are my income and expenses for September 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: $17,755.29, up 14.64% 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. Tax will go way down once I retire.
After-tax expenses came in at $192.31, lowest ever recorded so far!
The only housing expense this month was $2.11 gasoline for the lawn mower. See my previous post for more details on my housing expense.
Food expense was $114.05 this month, higher than usual for me. I stocked up on nonperishable food.
$21.20 for electric bill is near rock bottom for me. The $19.25 for water bill includes a mandatory garbage collection fee from the city and 0 CCF usage, which is rock bottom. I shower at work and abide by the adage "if it's yellow, let it mellow; if it's brown, flush it down."
I had no discretionary spending this month, which kept overall expenses low.
Total after tax expenses for the trailing twelve months: $6514.16, down 35.57% from a year ago. This marks nine 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 = 2.73, 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. I project my overall expenses will bottom at approximately $5,000 annually, so that $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 98.68% 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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