Hello All,
I've been reading the blog and the forum for a while now and my favorite discussions have been spawned from these forum member journal threads. So, I figure it's my turn to share.
I introduced myself here, but to recap: I'm a software engineer living in Kansas, I'm in my mid 20's, and my main discretionary spending is drinking with friends.
One of my main goals (pre or post ERE, whichever comes first) is to be location independent. I want to have the option to move elsewhere easily and at short notice. For that reason, I am reluctant to throw down any physical roots. That means no real estate or mortgages and no heavy/bulky possessions that cannot be easily sold. Maybe these restrictions are borne of ignorance (maybe it's easier than I think to get a mortgage then sell it later?), but it's how I see it now. The other main goal is, of course, to not need a fulltime job to meet my expenses. That's my definition of ERE.
I keep a normal journal and I do track my progress towards ERE in a way there, but I'd rather have my plans and progress laid out for public scrutiny. Please, do your worst!
B's Journal
January 2011
For my first journal post I'll explain the accounts I have and list their balances.
So far the tool I've been using to track my spending and income has been mint.com. It's not perfect and many times I find myself manually entering saving amounts or changing spending categories. That said, it is at least handy for consolidating the data in my financial accounts.
Spending:
My spending budget is $825, but in January I went over and spent $895. The details can be seen here, a screenshot from my mint.com budget page:
SpendingBudget.png (Google Docs)
I over-spent in Gas & Fuel because I had to cover for someone in my carpool and ended up driving roughly twice as much as I usually do. This is something that has changed since my introductory post; my office location is now out-of-town, about 30 miles away. However, I typically only need to drive one week out of the month because of a carpool I joined.
The other overspending is simply due to not being careful enough. I'll get there.
The -$24 in Utilities is due to fact that on average, my util spending is $100 a month, but some months it is much lower/higher, and the bills come at weird times. So, I set up that budget to roll over.
I do most of my spending on credit, for the benefits and to protect myself in case I am charged incorrectly. I always pay the maximum balance so I don't think its worth listing independently here.
My checking account tends to grow a bit faster than it should. This tells me I don't have my savings rate / spending rate tuned correctly yet. Currently I have about $4330 in it.
Saving:
I have a "main savings" account which I consider to be my ERE "nestegg". In January month I deposited $2905.25 and was paid $5.83 in interest. The current total is:
$8274.52
Investment Accounts, etc:
Brokerage:
I have about $5000 in a brokerage account that I'm using to get my feet wet. I know it can be an expensive way to learn, so when I opened the account I kissed that $5k goodbye. The current value of the account is $5070 or so. A few months ago I spent a lot of time messing around in this account. Made some money, lost some. Now it is almost dormant. I'll have to review my activity when I do my taxes.
Employee Stock:
My employer allows us to save up to 10% of our salary for it's Employee Stock Purchase Plan. I was only recently able to enroll and so far I have $466.0 socked away for it. In about 6 months, they will issue us stock for 85% its value. I plan to sell it the same day and make a cool 15%.
Roth IRA:
$9,545
401(k):
$3,754
Total Net worth: $30,520
Cash: $12,570
Explaining my accounts and tracking my progress for January at the same time made this a bit meandering. In the future my posts will be more concise.
For my first journal post I'll explain the accounts I have and list their balances.
So far the tool I've been using to track my spending and income has been mint.com. It's not perfect and many times I find myself manually entering saving amounts or changing spending categories. That said, it is at least handy for consolidating the data in my financial accounts.
Spending:
My spending budget is $825, but in January I went over and spent $895. The details can be seen here, a screenshot from my mint.com budget page:
SpendingBudget.png (Google Docs)
I over-spent in Gas & Fuel because I had to cover for someone in my carpool and ended up driving roughly twice as much as I usually do. This is something that has changed since my introductory post; my office location is now out-of-town, about 30 miles away. However, I typically only need to drive one week out of the month because of a carpool I joined.
The other overspending is simply due to not being careful enough. I'll get there.
The -$24 in Utilities is due to fact that on average, my util spending is $100 a month, but some months it is much lower/higher, and the bills come at weird times. So, I set up that budget to roll over.
I do most of my spending on credit, for the benefits and to protect myself in case I am charged incorrectly. I always pay the maximum balance so I don't think its worth listing independently here.
My checking account tends to grow a bit faster than it should. This tells me I don't have my savings rate / spending rate tuned correctly yet. Currently I have about $4330 in it.
Saving:
I have a "main savings" account which I consider to be my ERE "nestegg". In January month I deposited $2905.25 and was paid $5.83 in interest. The current total is:
$8274.52
Investment Accounts, etc:
Brokerage:
I have about $5000 in a brokerage account that I'm using to get my feet wet. I know it can be an expensive way to learn, so when I opened the account I kissed that $5k goodbye. The current value of the account is $5070 or so. A few months ago I spent a lot of time messing around in this account. Made some money, lost some. Now it is almost dormant. I'll have to review my activity when I do my taxes.
Employee Stock:
My employer allows us to save up to 10% of our salary for it's Employee Stock Purchase Plan. I was only recently able to enroll and so far I have $466.0 socked away for it. In about 6 months, they will issue us stock for 85% its value. I plan to sell it the same day and make a cool 15%.
Roth IRA:
$9,545
401(k):
$3,754
Total Net worth: $30,520
Cash: $12,570
Explaining my accounts and tracking my progress for January at the same time made this a bit meandering. In the future my posts will be more concise.
February 2011
Income After Taxes:
$3620 Salary
$ 7 Interest
$3627 Total Income
Saving:
$1817 Automatically deposited into my main ERE savings account
$ 466 401(k) Contributions (Not counting employer match)
$ 466 Employee Stock Purchase Plan
$2749 Total Saving
Expenses:
$375 Rent
$140 Utilities
$143 Fuel, other Car expenses
$103 Alcohol, Bars
$273 Food
$ 16 Haircut
$ 2 Comic Book
$1052 Total Expenses
It's been a hectic month. More later...
Income After Taxes:
$3620 Salary
$ 7 Interest
$3627 Total Income
Saving:
$1817 Automatically deposited into my main ERE savings account
$ 466 401(k) Contributions (Not counting employer match)
$ 466 Employee Stock Purchase Plan
$2749 Total Saving
Expenses:
$375 Rent
$140 Utilities
$143 Fuel, other Car expenses
$103 Alcohol, Bars
$273 Food
$ 16 Haircut
$ 2 Comic Book
$1052 Total Expenses
It's been a hectic month. More later...
February 2011 (cont...)
Over-spending
Time to point out the obvious:
Income - Saving = AvailableForExpenses
Plugging in February's numbers:
3627 - 2749 = $878
However,
Actual Expenses = $1052
So I overspent by $174. As I mentioned in the January post, my checking account usually grows instead of shrinks, so it is okay to go over every once in a while (also, there is the buffer that credit provides).
Although I have the buffer of the checking account and credit, it's important to track why and on what I overspend. This month it was clearly bars and alcohol and food. Due to some social drama I was obliged to go out with friends more often than usual. It's not something I'm worried about, I consider it okay to treat your friends on rare occasion, with some of them it's the only way to show them you care.
Saving Rate:
My savings rate is fixed at 2749/3627 = 75%, and my expenses will fluctuate from month to month, but I believe on average they will be slightly lower than 25% of my income. In a few months that assumption will be thoroughly tested.
Tracking:
I've decided to stop using mint.com's budget feature for tracking. The Tends feature is clearly intended for tracking, while budget is more like goal-setting.
Outlook:
Fuel prices are going up and my fuel needs are not likely to decrease. A fuel budget of $100 is no longer reasonable, I can expect it to be around $150 in coming months. The good news is that with spring, the cost of keeping the apartment warm will go way down.
I didn't mention much about my investments or their performance this month because I haven't kept a close eye on them. Between work, social life, and side projects I haven't had the time. Maybe when I have less on my plate I will be able devote more to investing. Or maybe I need to come up with a good auto-pilot strategy. This month (March) I'll set some time aside to reevaluate my haphazard attempts at investing so far. I may do as akratic has and just hold on and wait to hit "go" on investing.
Over-spending
Time to point out the obvious:
Income - Saving = AvailableForExpenses
Plugging in February's numbers:
3627 - 2749 = $878
However,
Actual Expenses = $1052
So I overspent by $174. As I mentioned in the January post, my checking account usually grows instead of shrinks, so it is okay to go over every once in a while (also, there is the buffer that credit provides).
Although I have the buffer of the checking account and credit, it's important to track why and on what I overspend. This month it was clearly bars and alcohol and food. Due to some social drama I was obliged to go out with friends more often than usual. It's not something I'm worried about, I consider it okay to treat your friends on rare occasion, with some of them it's the only way to show them you care.
Saving Rate:
My savings rate is fixed at 2749/3627 = 75%, and my expenses will fluctuate from month to month, but I believe on average they will be slightly lower than 25% of my income. In a few months that assumption will be thoroughly tested.
Tracking:
I've decided to stop using mint.com's budget feature for tracking. The Tends feature is clearly intended for tracking, while budget is more like goal-setting.
Outlook:
Fuel prices are going up and my fuel needs are not likely to decrease. A fuel budget of $100 is no longer reasonable, I can expect it to be around $150 in coming months. The good news is that with spring, the cost of keeping the apartment warm will go way down.
I didn't mention much about my investments or their performance this month because I haven't kept a close eye on them. Between work, social life, and side projects I haven't had the time. Maybe when I have less on my plate I will be able devote more to investing. Or maybe I need to come up with a good auto-pilot strategy. This month (March) I'll set some time aside to reevaluate my haphazard attempts at investing so far. I may do as akratic has and just hold on and wait to hit "go" on investing.
Regarding your ESPP:
"In about 6 months, they will issue us stock for 85% its value. I plan to sell it the same day and make a cool 15%."
You might want to factor in the difference between long-term capital gains tax and short-term capital gains tax. Selling shares that you hold less than 366 days will force an additional 10% in capital gains tax (for the 25% tax bracket).
If your company's stock price isn't erratic, you might consider keeping the shares for more than one year.
"In about 6 months, they will issue us stock for 85% its value. I plan to sell it the same day and make a cool 15%."
You might want to factor in the difference between long-term capital gains tax and short-term capital gains tax. Selling shares that you hold less than 366 days will force an additional 10% in capital gains tax (for the 25% tax bracket).
If your company's stock price isn't erratic, you might consider keeping the shares for more than one year.
March 2011
Income:
$2,688.90 Salary
$8.77 Interest
$2,697.68 Total Income
Expenses:
$799.61 Auto Maintenance
$229.35 Fuel
$2.50 Parking
$479.67 Food & Dining
$375.00 Home
$163.22 Bills & Utilities
$87.32 Gifts & Donations
$17.44 Health & Fitness
$15.00 Fees & Charges
$2,169.96 Total Expenses
A terrible month for spending! Main culprit: My car needed maintenance and I had to drive too much. Next offender: food. Went out to eat with DGF too often. Health & Fitness was a trip to the pharmacy.
I've still not made any changes in terms of investment. I have $11,911.48 in my main savings account, and I'd like to have about that much liquid in case of an emergency. However, I should probably stop dumping any more cash there and start an investment strategy.
I consider the month to be a failure, even without the car problems. Also, we are under some severe deadlines at work and I'm spending about 10 hours a day at work, and almost 2 commuting. It's getting hard imagining doing this for 4 more years, let alone 40!
@Chris: Thanks for the heads up, I'll consider holding on to it.
Income:
$2,688.90 Salary
$8.77 Interest
$2,697.68 Total Income
Expenses:
$799.61 Auto Maintenance
$229.35 Fuel
$2.50 Parking
$479.67 Food & Dining
$375.00 Home
$163.22 Bills & Utilities
$87.32 Gifts & Donations
$17.44 Health & Fitness
$15.00 Fees & Charges
$2,169.96 Total Expenses
A terrible month for spending! Main culprit: My car needed maintenance and I had to drive too much. Next offender: food. Went out to eat with DGF too often. Health & Fitness was a trip to the pharmacy.
I've still not made any changes in terms of investment. I have $11,911.48 in my main savings account, and I'd like to have about that much liquid in case of an emergency. However, I should probably stop dumping any more cash there and start an investment strategy.
I consider the month to be a failure, even without the car problems. Also, we are under some severe deadlines at work and I'm spending about 10 hours a day at work, and almost 2 commuting. It's getting hard imagining doing this for 4 more years, let alone 40!
@Chris: Thanks for the heads up, I'll consider holding on to it.
-
George the original one
- Posts: 5406
- Joined: Wed Jul 28, 2010 3:28 am
- Location: Wettest corner of Orygun
B - don't be too hard on yourself. You're measuring the progress and you'll make adjustments as time goes on. The saving rate is still more than 50% (assuming total income is after taxes, the same way others are tracking it), so if 1 month in 6 goes awry, it's not going to slow the march towards ERE by much.
Or... another way of saying it... if I could be prompted into giving up the luxury of my mortgage payment, I _might_ be able to achieve a 50% saving rate, so I'm jealous!
Or... another way of saying it... if I could be prompted into giving up the luxury of my mortgage payment, I _might_ be able to achieve a 50% saving rate, so I'm jealous!
@csdx - That's due to the fact that the paychecks are cut every two weeks. Some months I get 3 paychecks. Also, I made a mistake for Income in March, that figure is after 401(k) and ESPP contributions. I'll go back and correct that soon.
@George the original one - Yes, that's after taxes (and as I said above, after some investment contributions). Thanks for the encouragement! I also have to remember that the car related expenses will be much lower (or zero) in ER.
Mint.com isn't really good to track income, since I have to add my automatic contributions. Looking back, I think there may be some problems with my February numbers as well. The good news is that the cashflow from my salary income is completely predictable. I shouldn't need a tracking tool anyway.
@George the original one - Yes, that's after taxes (and as I said above, after some investment contributions). Thanks for the encouragement! I also have to remember that the car related expenses will be much lower (or zero) in ER.
Mint.com isn't really good to track income, since I have to add my automatic contributions. Looking back, I think there may be some problems with my February numbers as well. The good news is that the cashflow from my salary income is completely predictable. I shouldn't need a tracking tool anyway.
March 2011, Corrections(*)
Income:
$3620 Salary (was: $2,688.90)
$3628 Total Income
And yes, my income figures are after taxes. I also left out the usual investment contributions:
Saving:
$ 905 Automatically deposited into my main ERE savings account
$ 466 401(k) Contributions (Not counting employer match)
$ 466 Employee Stock Purchase Plan
$1371 Total Saving
(*) It seems there is a time limit to EDIT posts. This'll do.
Income:
$3620 Salary (was: $2,688.90)
$3628 Total Income
And yes, my income figures are after taxes. I also left out the usual investment contributions:
Saving:
$ 905 Automatically deposited into my main ERE savings account
$ 466 401(k) Contributions (Not counting employer match)
$ 466 Employee Stock Purchase Plan
$1371 Total Saving
(*) It seems there is a time limit to EDIT posts. This'll do.