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 March 2019. You can see all my monthly budgets here.
Income
Wages remain my primary source of income by far, although dividend income is now more than enough to live on. Other income include interest and miscellaneous non-recurring income.
Here is a chart of my dividend income by month for the past 13 months:
March is a quarterly high month for dividends.
Total dividends for the trailing twelve months: $18,424.72, up 11.43% from a year ago.
Here is chart of my dividend income by month and year since inception of the blog in 2014:
Here is a summary of dividends collected since 2014:
After-tax expenses came in at $377.34, higher than usual this month due to 6-month car insurance premium payment of $156.85, as well as higher than expected food expenses, as I replenished my stash of nonperishable grocery items.
Student loan repayment is $35.70 per month on a graduated repayment plan on just under $6k outstanding at a fixed 2.5% interest rate, which is way below my personal rate of return, so I am in no hurry at all paying this off.
$18.58 for electric bill is near rock bottom for me. I avoided switching lights on and maximized use of daylight. The fridge accounts of most of my electric usage.
The $17.79 for water bill includes a mandatory garbage collection fee from the city and 0 CCF usage, which is rock bottom.
Total after tax expenses for the trailing twelve months: $3,748.68, down 59.74% from a year ago. This marks twelve 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 pretty soon, as I approach my currently projected annual expense.
Here is a summary of expenses (not including tax) incurred since 2014:
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 $4,000 annually, so that $7500 annual dividends would be plenty. My currently projected annual dividends is around $20,000, so I have a long way to go.
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. I really need the stock market to cooperate by plunging into a big bear market so I can save on my tax bill. The recently inverted yield curve, which typically foretell a bear market coming, should help.
Below are my income and expenses for March 2019. You can see all my monthly budgets here.
Wages remain my primary source of income by far, although dividend income is now more than enough to live on. Other income include interest and miscellaneous non-recurring income.
Here is a chart of my dividend income by month for the past 13 months:
March is a quarterly high month for dividends.
Total dividends for the trailing twelve months: $18,424.72, up 11.43% from a year ago.
Here is chart of my dividend income by month and year since inception of the blog in 2014:
Here is a summary of dividends collected since 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 $377.34, higher than usual this month due to 6-month car insurance premium payment of $156.85, as well as higher than expected food expenses, as I replenished my stash of nonperishable grocery items.
No housing expense this month. My home is pretty low maintenance, the way I like it! My only major home related expense is the annual tax bill due in October which was $708.14 last year.
Student loan repayment is $35.70 per month on a graduated repayment plan on just under $6k outstanding at a fixed 2.5% interest rate, which is way below my personal rate of return, so I am in no hurry at all paying this off.
Food expense was $12.94 this month, which is much lower than typical for me. I mostly used my stockpile of food in my pantry and foraged wild plants in my yard.
$18.58 for electric bill is near rock bottom for me. I avoided switching lights on and maximized use of daylight. The fridge accounts of most of my electric usage.
The $17.79 for water bill includes a mandatory garbage collection fee from the city and 0 CCF usage, which is rock bottom.
And that's it. No other expenses. I bike to work and most places, saving a lot on gas, so most months I don't have transportation related expenses.
Total non-tax expenses this month was $85.01, the lowest ever recorded.
Total non-tax expenses this month was $85.01, the lowest ever recorded.
Total after tax expenses for the trailing twelve months: $3,748.68, down 59.74% from a year ago. This marks twelve 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 pretty soon, as I approach my currently projected annual expense.
Here is a summary of expenses (not including tax) incurred since 2014:
Big drops in housing expense accounted for the big drops in annual expenses from 2014 to 2015 and from 2017 to 2018. My housing expense is now near rock bottom so I don't expect any more big drops in annual expenses in the future.
Dividend to expense coverage ratio = 4.91, a new 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 $4,000 annually, so that $7500 annual dividends would be plenty. My currently projected annual dividends is around $20,000, so I have a long way to go.
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. I really need the stock market to cooperate by plunging into a big bear market so I can save on my tax bill. The recently inverted yield curve, which typically foretell a bear market coming, should help.
Savings
My after-tax saving rate (calculated as after-tax expenses divided by after-tax income) was 99.43% this month, highest ever recorded (!) and easily exceeding my 95% saving rate target. I am confident I will meet or exceed my savings goal this year.
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