I track both my income and expenses monthly. I started this process over two years ago to provide a better picture of my financial standing, and do this in tandem with a monthly net worth update. This process paints a fairly clear picture of my financial status and helps me identify the savings I’m adding to my net worth snowball as well as the growing interest my net worth snowball is accumulating.
April 2013 Income:
$4,157…Net Income
$ 1,532…Extra Income (Tax Refund)
$1,421…401k Contribution
$7,110- Total Income
April 2013 Spending
$ 315… Housing
$ 96… Utilities
$ 268… Groceries
$ 217… Restaurants & Bars
$ 126… Entertainment
$ 249… Transportation
$ 0… Travel
$ 70… Cell Phone
$ 0… Clothes & Shopping
$ 0… Gifts
$ 33… Gym/Fitness
$ 0… Drugstore & Dr.
$1,374- Total Spending
81% Savings Rate!
$297,343 ….May 1, 2013 Net Worth
I am pleased with my financial progress for April. I managed to save 81% of my net income for the month, squarely in line with my 2013 goal of 80%. This was made possible by the somewhat unexpected and sizable tax refund I received. I typically do not plan for or want a tax refund, but it happened this year and helped pad my April income. My spending levels for the month climbed from March’s results under $1,300 up to $1,374. The 81% savings rate ranks as my 6th highest rate in my 28 months of tracking. What I’m really proud of is I’ve now surpassed my 80% goal in three of the first four months of 2013. Meanwhile, my net worth continues teetering around that elusive $300k milestone at the month’s end. Despite the continued bull market, my individual brokerage account has been lagging due to some heavy exposure to commodity stocks which have been battered of late. This has held me up from surpassing the $300k mark, but I should cross it soon in May.
My net income was a hearty $7,110 in April. Unfortunately, I can’t expect to sustain this savings rate since it was padded significantly by an unexpected tax refund of $1,533. I like to end up with a zero balance at tax time rather than give Uncle Sam a free loan, but some investment losses and sales tax writeoffs helped me procure these extra funds. I am also now back to a salaried position where I won’t be making any of the extra overtime pay which helped me gain higher than normal wages the past four months. Now I just get to watch my hourly rate plummet as I continue working long hours well past 50/week. If anything, this gives me more inspiration to continue chugging along toward FI. Looking forward, my net income (including 401k contributions) should normalize back down towards the $5,500-$6,000 levels. This means I’ll need to tighten my belt on spending to keep hitting the 80% savings marks I’ve been eclipsing this year.
My monthly expenditures for April crept upwards to $1,374 this month. The biggest culprit for this climb was the entertainment category which accounted for $126 this month. I attended and purchased tickets for a multitude of events ranging from tickets for my girlfriend and I to catch a pro baseball game at the beautiful Safeco field, to a pub crawl charity fundraiser, and spring wine tasting. My restaurant and bar expenses also jumped back over the $200 mark in association with these events as food and drink purchased at these events accounted for over 1/2 of the restaurant category spending.
On a net worth basis, April was lukewarm as net worth crept up 0.3% despite injecting over $5,700 in fresh savings capital. As mentioned above, my individual brokerage took a couple low blows as my commodity stocks and miners were abused. I will continue monitoring their status and may buy some more of these beleagured stocks as Mr. Market continues punishing them.
My net worth will soon have a 3 for the leading digit! Hopefully I’ll cross this $300k milestone promptly in May. My net worth now stands at nearly 17 times my 2012 spending levels and would require me to maintain a 5.9% withdrawal rate of my net worth to fund my current lifestyle with annual spending around $17k. 4% is considered the standard safe withdrawal rate across many personal finance circles, so I have some more ground to cover before financial independence. Based on a 4% withdrawal rate and $17,500 2012 spending, I would need to have a net worth of about $440k to be financially independent. I remain very excited and confident about my prospects of achieving this milestone before age 30.