Income & Expenses For March 2021: Saved $11,321.15, 99.19% of After-Tax Income

Since 2014, I have been tracking my monthly income and expenses. You can see a breakdown of every penny I earn and spend. 

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 2021. You can see all my monthly budgets since 2014 here and here.

	2021-Mar
Income
Wages	$3,116.19
Dividends	$1,612.35
Other Income	$607.99
Total Income	$5,336.53
Expense
Federal Income Tax
Federal Tax Pmt/(Refund)	-$6,209.00
FICA-SS	$131.38
FICA-Medicare
Housing
Student loan repayment	$0.00
Food	$49.76
Gasoline
Car Insurance
Car Reg/Tax/Maint
Cell phone
Electric	$3.05
Water	$24.65
Gas/Heating	$12.65
Clothing/laundry
Donation
Amazon sale costs	$2.89
Ebay fee
Other Expense
Total Expense	-$5,984.63
Surplus/(Deficit)	$11,321.15
Before Tax Saving Rate	212.14%
After Tax Income	$11,414.15
Ex-Tax Total Expense	$93.00
After Tax Saving Rate	99.19%

Income

Here is a chart of my dividend income by month for the past 13 months:

Total dividends for the trailing twelve months: $9,259.24, down 42.52% from a year ago. This is wonderful, as I continue to switch from high dividend paying stocks to lower or non paying ones to reduce my taxes.

Here is a summary of my dividend income by month and year since inception of the blog in 2014:

Dividend Summary
Year	Amount	Change
2014	$9,843.75
2015	$11,888.42	20.77%
2016	$13,391.84	12.65%
2017	$16,086.72	20.12%
2018	$18,472.77	14.83%
2019	$15,795.49	-14.49%
2020	$11,084.65	-29.82%
2021 YTD	$2,321.95
Total	$96,563.64

Expense

I filed my tax return early this month as I expected a tax refund primarily due to stimulus payment recovery: I did not qualify for the stimulus based on my 2019 income, but got the full amounts based on my much reduced 2020 income. I also got the third stimulus payment later this month.

No student loan repayment this month, as COVID put student loans on forbearance status and no payments will be made till at least October 2021.

Food expense of $49.76 is slightly below average, as I made only one shopping trip this month.

The utility bills are typical.

After-tax expenses came in at $93, well under control.

Total after tax expenses for the trailing twelve months: $2,575.79, down 17.89% from a year ago. This ttm figure had been hovering around $3000, so the current downtrend in expenses is encouraging. My current expense ratio, the ratio of my ttm expenses to my net worth, is just 0.10%. Importantly, it remains far less than the 4% SWR. This should allow my net worth to continue to compound near market return.

Here is a summary of expenses (not including tax) incurred since 2014:

Expenses Summary
Year	Amount	Change
2014	$13,872.71
2015	$9,515.82	-31.41%
2016	$9,587.84	0.76%
2017	$9,675.34	0.91%
2018	$5,815.72	-39.89%
2019	$2,968.67	-48.95%
2020	$3,043.83	2.53%
2021 YTD	$337.52
Total	$54,479.93

Big drops in housing expense accounted for the big drops in annual expenses from 2014 to 2015 and again 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 = 3.59 this month, still quite high.

Here is a summary of my passive income (dividends) to expense coverage since 2014:

Coverage Summary
Year	Amount	Change
2014	0.71
2015	1.25	76.07%
2016	1.40	11.80%
2017	1.66	19.04%
2018	3.18	91.04%
2019	5.32	67.51%
2020	3.64	-31.56%
2021 YTD	6.88	88.91%

Interpretation: 

Below 1: Not financially independent; keep working! 

Between 1 and 1.24: Financially independent, but not much margin for error.

Between 1.25 and 1.75: Sweet spot for financial independence: passive income adequately covers expenses, with room for error, but not too as to cause tax drag. 

Above 1.75: Too much passive income, which becomes a tax liability: try to convert some passive income generating assets to zero dividend growth stocks to maximize return without excessive tax drag.

The chart below shows my TTM dividend (red line) versus TTM expense (blue line) since I started tracking in 2014. The dividend (red) line overtook the expense (blue) line around June 2015.

Given that my expenses have gone down significantly, dividends have become too much of a good thing. 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. 

My overall expenses are bottoming out at approximately $3,000 annually, which means $4,500 annual dividends would be plenty. My currently projected annual dividends is around $7,700, so I still have a long way to go.

I will continue to exchange more high dividend paying stocks for low or no dividend paying ones as the bear market continues, to minimize my capital gains taxes.

I have now tracked my monthly net worth for over 3 years and have accumulated a lot of data to display my expense ratio in a chart. My annual expenses is far below 4% SWR and has been steadily trending downward, a good sign.

Savings

My after-tax saving rate (calculated as after-tax expenses divided by after-tax income) was 99.19% this month, well above my 95% savings goal.