Andy Hough

2012 Recap

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Since this is the last day of the year it is a good time to look back on how I did in 2012. This year definitely had some ups and downs. I will start with the negatives and then the positives so this post can end on a high note, just like 2012.

I set three goals for this year and didn’t meet any of them. My first and biggest goal was to lose 50 pounds. At one point I did manage to get to about ten pounds lost, but I am going to end the year only about 6 or 7 pounds lighter than I started. Although I’m glad I lost a little weight, I could have done much better. Since I’m still eating lots of junk food and rarely exercising, it is not surprising that I lost so little weight. I need to improve this in 2013.

My second goal was to increase my online income. That goal was seriously derailed by the Google updates in the spring. They seem to have hit my sites harder than most people were affected. I not only lost my Page Rank, I also lost a serious chunk of traffic. I have slowly rebuilt my traffic, but the income is still nowhere near what it used to be. Considering the relatively small amount of work I did put into my sites this year, I am grateful for the money I did make. My blogs did still bring in about $15k. That will likely be less in 2013 unless I put a lot of time and work into making more money online. That isn’t in my plans for now since I’ll be concentrating on making money offline for at least the first few months of 2013.

My third goal was to write a book. This goal should have been easily achieved. For some reason, I have a lot of resistance to actually sitting down and writing a book. I always find something else to do other than write the book. I need to overcome this resistance and get the book written. I’m not making writing a book a goal at this time, but I probably will make it a goal sometime in 2013.

The biggest negative of the year and probably the biggest failure of my life was my divorce. I’ve already shared all I am going to share on that topic.

Positives in 2012

The biggest positive would probably be that I was able to acquire a law related job. The new job that I’m starting on Wednesday pays almost double any of the jobs I’ve had in the last few years. I was able to pay off my van and save a little money in the last few months of the year. I should be able to save much more money in 2013.

I also got to experience living in a van for a couple of months and was able to do some hiking on the Appalachian Trail. Although I didn’t do either one of those activities for as long as I would have like, I’m happy that I did get those experiences. I plan to do more hiking in 2013. I don’t plan on living in a van in 2013, but I could change my mind.

Getting to work as an extra on the movie, Devil’s Knot, and meeting Reese Witherspoon, was a cool experience. I’m looking forward to the release of the movie in 2013 and seeing myself on the big screen. I might try to work as an extra again in 2013 just for fun.

At Tight Fisted Miser I was able to improve my Alexa ranking and make it into the Wisebread Top 200 Personal Finance Blogs. Perhaps those two things will help me earn more money online in 2013.

Although 2012 wasn’t a great year, I think I ended it better off than when I started. 2013 has the possibility of being a great year. It will be up to me to ensure that it is a great year.

2013 Goals: Save 50% of Income and Live on Minimum Wage

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The end of the  year is coming up soon and many people are setting goals for the new year.  I will be setting a couple of goals for 2013 as well.    My intention is to set a couple of year long goals now and make some smaller goals during the year.  That was what I intended to do this year but I didn’t follow through.  I’ll have a post on my 2012 goals before the end of the year.

As you can probably guess from the title my goals for 2013 are to save 50% of my income and live on minimum wage.  These are both financial goals and are goals that I am capable of attaining.  These goals are mostly in my control, so as long as I don’t get lazy or lose focus it should not be too difficult to achieve these goals.

The goals of saving 50% of my income will be the most difficult.  I had a negative savings rate this year.  My circumstances have improved though and I will be making more money in 2013 which will allow me to save a lot more money.  I’m currently working a part-time job and will start a full-time job next week.  The full-time job pays over twice the hourly rate of my part-time job so that will be a nice boost to my income.  I have another part-time job scheduled to start in late January.  That job has full-time hours available so I will work as many hours as I can.  Once I’m working all the jobs my monthly income should be double or triple or possibly more than my average monthly income in 2012.

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Maxing My Credit Card Cash Back

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If you have been reading the blog for a while you have probably noticed that I have a cash back category in my income statements each month. The amount varies but it isn’t unusual for me to make $50 or more in cash back. This amount comes from both cash back credit cards and online cash back shopping portals. Some may think that cash back isn’t worth the hassle. With interest rates for savings being in the 1% range getting 1% to 15% cash back on purchases you’re going to make anyway is a great deal. Plus, it isn’t really that much of a hassle to get cash back.

Although, I am doing pretty good at earning cash back I think I can do even better. Obviously, I don’t want to just increase my spending to earn more cash back as that would eliminate any benefit from the extra cash back. There are some strategies I can implement to increase my cash back earnings that don’t require me to increase my overall spending. First, I’m going to detail how I currently earn cash back.

Discover Card – This card earns 5% cashback on a rotating set of categories each quarter. They also have occasional promotions where they will offer 2% cash back on certain days. Black Friday was a 2% bonus day and allowed me to earn over $60 in cash back. If you make a purchase outside of the bonus categories you receive 0.25% cash back on your first $3000 in purchases and 1% on purchases after that. Purchases that get 5% cashback do not count towards your $3000 in purchases.

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When There’s More Month than Money – $100 Cash Giveaway

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Running out of money before the end of the month is a situation many people find themselves in. There are several things you can when there isn’t enough money at the end of the month.

Prioritize Your Bills

If you don’t have enough money to pay all of your bills then you should pay the most important ones first. The two most important things are food and shelter. It should be obvious that you pay your rent or buy groceries before you pay your credit card bill.

Sell Your Stuff

If you have anything of value worth selling then you should do so. This can provide you with the money needed to get through a short term financial squeeze.

Borrow Money

If you have family or friends that are willing to lend you a hand then you should consider this option. Do not take out a payday loan as that will most likely ultimately lead to you being in even worse financial straits. You could also consider checking out Activehours.com to get a loan. They are the sponsor of this giveaway. Their aim is to compete against payday loan companies by providing loans with no fees or interest. Instead they ask for voluntary donations. It is an interesting idea, but I haven’t been able to check out the site myself since it is blocked on the library’s internet.

Assess Your Finances

You need to determine what caused you to run out of money before the end of the month. Was it a one-time thing due to numerous unexpected expenses or is it likely to be a repeating thing. The above steps won’t be much help if you repeatedly run out of money. If you are repeatedly running out of money you need to either increase your income or reduce your expenses or do some combination of both.

Of course, it is easier to say that you should increase your income or reduce your expenses than it is to actually do it. Reading a book like, The Total Money Makeover, can get you started on improving your expenses. You can also get lots of ideas on how to reduce your expenses and find alternative sources of income here at Tight Fisted Miser. Plus, there are lots of other personal finance blogs with helpful advice.

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November 2012 Safe Withdrawal Rate – 86.22%

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If you have been reading the blog for a while you may remember that I used to track my monthly investment income. The idea was that once I got my monthly investment income to $1000 a month I would have enough money to be financially independent. This was hypothetical investment income and I decided the numbers didn’t accurately reflect how close I was to being financially independent so I discontinued tracking my monthly investment income. If I had continued tracking I would have seen my income go way down due to various factors that resulted in me withdrawing money from my investments.

I’m now at a point where I am able to contribute to my investments. For now, my investments consist of the dividend stocks in my broker account and my Roth IRA which is currently invested in a TIPS fund. I have decided on a new way to track my progress towards financial independence. I will be tracking my safe withdrawal rate. The way I will be doing this is by tracking my trailing 12 months expenses divided by the amount of my investments.* For this first calculation I am going to take last months expenses time 12 to determine my trailing 12 months expenses. This is because I don’t think my expenses in the previous months accurately reflect my current spending since my living situation has changed dramatically this year. Eventually, the 12 months trailing expenses will be based on my actual expenses.

The generally accepted rule is that you need to get your safe withdrawal rate down to 4% in order to be able to safely retire. I am setting that as my goal. In order to reduce my safe withdrawal rate I can increase the amount I put in my investments and/or reduce my living expenses. The return on my investments will also be a factor, but if I am contributing 50% or more of my income each month it should not be that much of a factor.

My November 2012 safe withdrawal rate is 86.22%. That is obviously not a safe withdrawal rate at all. On the plus side, starting with such a big number should allow me to see measurable progress quickly.

*I’m not 100% sure this is the correct way to determine my safe withdrawal rate. If the calculation should be different, please let me know.