January 2013 Progress Report 7

Vacation Photos 015

 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 calculation. 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.

 January 2013 Income:

$6,173…Net Income

$1,292…401k Contribution

$7,465- Total Income

January 2013 Spending

$ 375… Housing

$ 151… Groceries

$ 181… Restaurants & Bars

$  99 … Entertainment

$ 166… Transportation

$  70… Cell Phone

$ 198… Gifts

$  66… Gym/Fitness

$  20… Drugstore & Dr.

$1,326- Total Spending

$280,716 ….January Net Worth

Overall this was a great month financially. I was able to save 82% of my income which is my 4th highest monthly savings rate since I’ve begun tracking income vs. expenses, and exceeds my yearly goal of 80%.

The income component was higher than normal thanks to the extra pay period resulting in five checks this month rather than my usual four.  I also received some compensation for extra hours worked which padded my income total.

My monthly expenditures for January were less than my 2012 monthly average by $140. However, it still has room for improvement as this month contained some out of the ordinary expenses including higher than usual spending for gifts as I purchased both Birthday presents and Valentine’s presents for my girlfriend as well as making purchases for another family Birthday. Also, the entertainment category carried extra expense from a beer and wine tasting event I travelled to. The event itself was costly, but it allowed me to visit with many old friends and make some valuable memories.

January established a great financial foundation for 2013. Looking forward, February will prove more challenging financially as I have a weeklong vacation planned which will be pretty costly. I will be sharing some of the ways I’m looking to cut costs while vacationing on a future post.

On a net worth basis, January was also a prosperous month. My net worth climbed over 5.6% to exceed $280k which is my 3rd highest monthly jump ever. Much of this gain is attributed to the large monthly gains of the stock market as both the S&P 500 and Dow Jones soared over 5% in January. It’s always exciting to see when my net worth increase from investment gains is greater than my monthly savings amount. These instances really demonstrate the power of compound interest and reinforce the priority of saving.

My net worth will soon have a 3 for the leading digit! I’m hopeful this will happen in the first quarter of this year. My net worth now is equal to nearly 16 times my 2012 spending and would require me to maintain a 6.2% 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 achieving 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 am very excited about my prospects of attaining this figure before age 30.


7 thoughts on “January 2013 Progress Report

  1. Reply Dividend Mantra Mar 2, 2013 5:19 am

    Great job!

    You’re really frugal. You’re not spending much more money than I am, and I consider myself relatively extreme.

    Your housing costs are crazy low. I thought I was doing well in that category. Your spending level here is supreme.

    Everything else looks really good, and your income is off the charts. I would LOVE to see income like that.

    I actually “spend” closer to ~$1k per month, but my student loan payments always bring this up closer to $1,200.

    Best wishes!

  2. Reply Net Worth Snowballa Mar 2, 2013 7:29 am

    Thanks for stopping by DM!

    It’s great to have you check out my site as I’ve followed and admired your blog for the last couple years.

    Yeah, housing has probably been the one area I’ve been the most extreme with as I’ve shared houses with groups of friends and now share a modest duplex with my girlfriend. I’ve focused on transportation recently by buying a 10+ year old commuter that has averaged 42 MPG. I’m jealous of your ability to go car-free with the public transportation/scooter route but I need to travel often for work. Hopefully now I can pare down my restaurant expenses a bit, but like you I enjoy some tasty but moderately priced restaurant meals and usually pick up the tab for my girlfriend as well.

    I’m pretty excited about my income as well as this was my highest monthly net income ever. Unfortunately, my work also often entails 55+ hour work weeks, but all the more incentive to keep building up the portfolio for FI!

    Thanks for your positive feedback and keep up the great work on your site!

  3. Reply JC @ Passive-Income-Pursuit Mar 2, 2013 5:06 pm

    Man your housing costs are off the charts or rather under the charts. I need to get my spending back on track in March, but it will naturally come back down because there was a big expenses for my cell phone because they waited to charge my first bill for an extra half month. Keep up the great work!

  4. Reply Mr. 1500 Mar 2, 2013 7:42 pm

    Yeah, $375/month is awesome. I assume you rent? If so, would you ever buy a house? Why or why not?

    In many places I’ve lived, the property taxes alone come out to over $375/month, so nice work.

    This is something I’ve often debated: Do I rent put all the money that would have gone into the home into investments or buy and sink all that money in? I usually buy, but we usually get a fixer upper with cosmetic issues like pink toilets or crappy kitchens at a discount. If you do the work yourself, you can save a lot of money and make a bit on the sale.

    • Reply Net Worth Snowballa Mar 3, 2013 1:59 am

      Mr. 1500,

      I do rent, and am happy with the decision thus far. Like you said, many of the homes in my area feature property taxes exceeding my rental rate. I think long-term investing in the stock market will provide greater benefits than real estate investing. Also, my work situation poses some uncertainty as far as location and I basically need to be prepared to move within a few days notice. Additionally, my location is ridiculously expensive as <1,000 SF fixer-uppers exceed $300k and condos that look like a bargain feature HOA fees of $400 and up monthly.

      That being said, eventually when I achieve FI, I would like to purchase a modest home. Then I won't have to worry about having to move and rent out my place from a distance and will be able to choose a location with more reasonable property values and tax rates. Additionally, I'd like the room for a shop and home gym setup.

      I find your method of buying a fixer upper appealing, and probably the ideal way to go when purchasing a home. I've witnessed some friends employ these methods as a lucrative side-hustle and I might explore some renovation projects/rentals in a few years for a little income and portfolio diversification.

  5. Reply CashRebel Mar 7, 2013 3:11 am

    You are saving 82% of your paycheck!?!?! Way to go! I can only dream of stats like that. You’re going to cross the $300K mark really soon. How far from financial independence are you?

    • Reply Net Worth Snowballa Mar 7, 2013 5:04 am

      Haha, thanks for the kudos, CashRebel, and for stopping by.

      It was a banner month, and I’ve upped the ante to shoot for an average 80% savings rate this year after hitting 76% last year.

      Well, based upon last year’s spending levels, I am around 64% of the way to FI with my current net worth assuming 4% safe withdrawal rate ($280k current vs. $440k for 4% SWR). However, a big chunk of my net worth is tied up in retirement accounts that I likely won’t touch until 59, so I’ll most likely exclude those from my net worth figure when preparing for full-fledged FI.

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