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 December and full year 2018, as well as those of 2017 for comparison. You can see all my monthly budgets here.
Income
Wages remain my primary source of income by far. Wages this year has gone up 53.62% compared to 2017 due to timing of bonuses. Dividend income, on the other hand, has increased 14.83% this year compared to 2017, and is more than enough to cover all my expenses (excluding tax from work income). Other income include nonrecurring items like cashbacks, incentives, surveys, etc.
Here is a chart of my dividend income by month for the past 13 months:
Total dividends for the trailing twelve months: $18,472.77, up 14.83% from a year ago.
Expense
Expenses were kept low this month, limited mostly to essentials. $40 paid to boss at work for office party, basically a form of extortion. Other expenses included $100 for biennial maintenance of certification fees (yet another form of extortion; see the theme here?) and $3.63 for lubricant for the bike.
On a year-to-year basis, student loan repayment went down due to consolidation of my loans at 2.5% for another 10 years in May 2017, which decreased my monthly payment from $160.47 to $35.70.
Food expense dropped 25% to $909.35 from $1,211.61, due to a combination of substitution for lower cost food (e.g. pinto beans, oatmeal and peanuts, and occasional foraging), decreased consumption, and timing of bulk purchases.
Car related expenses went up mainly due to increased driving from moving. This expense should drop next year as I don't anticipate much driving.
Cell phone expense dropped and should go to zero as free service from freedompop is good enough.
Electric costs dropped 26%, due to reduced usage in the new home (more efficient fridge?) and a number of credits (Tax Cuts and Jobs Act Refund and Vogtle Settlement Refund).
Water and gas/heating are new expenses for 2018 due to moving to my own home from a previous apartment where those expenses were covered or nonexistent.
Clothing/laundry costs dropped by half due to minimal need for new clothes and cutting out laundry costs by using more hand-washing instead of machine washing and cheaper detergents.
Donation went up significantly from $45 in 2017 to $181 in 2018, due to a much more aggressive new boss demanding $40 for office holiday/retirement parties. She does not make it seem optional, and I know she can make life miserable if I were to say no. The amount of food and gifts she buys each time never seems to justify the amount of money she collects from everyone. She gets all the credits and keeps all of extra unspent money, while I and others pay for everything and more and not even get a word of thanks. I hope she is gone soon, or I may simply not care anymore and simply refuse to donate to her, as I am getting fed up by this sort of shameless extortion.
Total expenses for the trailing twelve months: $5,814.72, down 39.9% from a year ago.
Dividend to expense coverage ratio = 3.18, making a new all-time high! This also marks the first time dividend income is more than 3 times expenses for the trailing twelve months.
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 should 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 around $20,000, so I have a long way to go.
Savings
My after-tax saving rate was 98.21% for the month of December and 97.09% for the full year of 2018, far exceeding my 90% saving rate target. Yay!
Thanks for reading!
Below are my income and expenses for December and full year 2018, as well as those of 2017 for comparison. You can see all my monthly budgets here.
Wages remain my primary source of income by far. Wages this year has gone up 53.62% compared to 2017 due to timing of bonuses. Dividend income, on the other hand, has increased 14.83% this year compared to 2017, and is more than enough to cover all my expenses (excluding tax from work income). Other income include nonrecurring items like cashbacks, incentives, surveys, etc.
Here is a chart of my dividend income by month for the past 13 months:
Total dividends for the trailing twelve months: $18,472.77, up 14.83% from a year ago.
Expense
Expenses were kept low this month, limited mostly to essentials. $40 paid to boss at work for office party, basically a form of extortion. Other expenses included $100 for biennial maintenance of certification fees (yet another form of extortion; see the theme here?) and $3.63 for lubricant for the bike.
On a year-to-year basis, student loan repayment went down due to consolidation of my loans at 2.5% for another 10 years in May 2017, which decreased my monthly payment from $160.47 to $35.70.
Food expense dropped 25% to $909.35 from $1,211.61, due to a combination of substitution for lower cost food (e.g. pinto beans, oatmeal and peanuts, and occasional foraging), decreased consumption, and timing of bulk purchases.
Car related expenses went up mainly due to increased driving from moving. This expense should drop next year as I don't anticipate much driving.
Cell phone expense dropped and should go to zero as free service from freedompop is good enough.
Electric costs dropped 26%, due to reduced usage in the new home (more efficient fridge?) and a number of credits (Tax Cuts and Jobs Act Refund and Vogtle Settlement Refund).
Water and gas/heating are new expenses for 2018 due to moving to my own home from a previous apartment where those expenses were covered or nonexistent.
Clothing/laundry costs dropped by half due to minimal need for new clothes and cutting out laundry costs by using more hand-washing instead of machine washing and cheaper detergents.
Donation went up significantly from $45 in 2017 to $181 in 2018, due to a much more aggressive new boss demanding $40 for office holiday/retirement parties. She does not make it seem optional, and I know she can make life miserable if I were to say no. The amount of food and gifts she buys each time never seems to justify the amount of money she collects from everyone. She gets all the credits and keeps all of extra unspent money, while I and others pay for everything and more and not even get a word of thanks. I hope she is gone soon, or I may simply not care anymore and simply refuse to donate to her, as I am getting fed up by this sort of shameless extortion.
Total expenses for the trailing twelve months: $5,814.72, down 39.9% from a year ago.
Dividend to expense coverage ratio = 3.18, making a new all-time high! This also marks the first time dividend income is more than 3 times expenses for the trailing twelve months.
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 should 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 around $20,000, so I have a long way to go.
Savings
My after-tax saving rate was 98.21% for the month of December and 97.09% for the full year of 2018, far exceeding my 90% saving rate target. Yay!
Thanks for reading!
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