Andy Hough

March Savings Rate – 77.72%

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In March I made $2959.78 and saved $2300 for a savings rate of 77.72%.  That savings rate is artificially high due to my having some extra money in my checking account at the end of February that was added to my savings in March.  Plus I took advantage of two different bonus offers from Motif Investing and Kapitall that added $100 to my savings and will eventually add approximately $100 more.  If you would like to sign up for Motif to get the $100 bonus leave me a comment and I’ll send you an email with a referral link. You do have to invest $1000 and make at least one trade to get the bonus.  Also, I will get a $100 bonus for referring you.

My safe withdrawal rate decreased to 39.05% from 42.89% the month before.  This is the first time I have gotten my SWR into the 30s.  It would be nice if I could get my SWR into the 20s before the end of the year.  As the SWR gets lower it gets harder to make progress though.  I’ll need to keep my income up, my expenses low, and my savings rate high for the rest of the year to get the SWR down to the 20s.   My ultimate goal is to get my SWR down to 4%.  That goal is probably many years from being met. The 4% SWR translates into having 25x your annual expenses in savings or 300 months of expenses in savings. Once I reach that point I will consider myself financially independent.

I now have 30.72 months of expenses saved compared to 27.97 the month before. Since I am only working half of this month I won’t be able to add a lot to savings.  I do believe that I will still be able to get my SWR down a bit and my months of expenses saved up a bit.  May and June of last year were both big expense months.  I’m hoping that May and June of this year will be low expense months.  I base my average monthly expenses and my SWR off of my trailing twelve months of expenses.  So replacing two bad months in my trailing twelve months with two good months will help lower my average monthly expense quite a bit and it will also help improve my SWR even if I don’t manage to save much money in the next couple of months.

March Income – $2959.78

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Here is a breakdown of my income for March.

Online Income

 $425.20
Interest

$4.74

Dividends

$62.87

Cash Back

$21.66

Job

 $2433.31

Mystery Shop

 $12.00

Total

$2959.78

March was a good month for income although not as good as February. That isn’t too surprising since I didn’t get a $1000 tax refund in March like I did in February.

My online income continues to chug along without much effort on my part.  I’m making about $450 a month this year which isn’t anywhere near as much as I used to make online, but it is still good money considering how little time I devote to it. If I remain unemployed once I come back from my hike I will see what I can do to increase my online income.

My passive income such as referral income from sites like Mr. Rebates and dividends is pretty small, but it adds up over the year.

My last day of work is the 16th of this month.  I will still get two full paychecks this month.  The job loss will not affect me until next month.  I’ll get my final paycheck of the tax season in May, although it will only be for a few days.  Since my bills are low and I’ve saved a lot of money during the tax season I don’t need to worry about money for a while. Once I return from my hike, which I’m guessing will be sometime in mid May, I will concentrate on getting my income back up to its current level.

March Expenses – $884.89

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Here is a breakdown of my expenses for March.

Household $400.00
Entertainment

$129.55

Transportation

 $147.65

Food

$124.17
Phone

$26.81
Health

$56.31

Total

 $884.89

My March expenses were nice and low.  This is the second month in a row that not only did I make my normal goal of keeping my expenses under $1000 a month, I managed to keep my expenses under $900 for the month.  I’m not sure how long I can keep that up. Since I now have to pay $105 a month on my student loan I doubt I will have any more months under $900, but I think I can still manage some sub $1000 months.

This was another month where I didn’t have any unexpected expenses or any semi-annual expenses during the month.  I don’t have any semi-annual bills due this month and I’m hoping I won’t have any unexpected expenses.  If I manage to avoid those expenses it will be another low cost month.

We did take a three day vacation to Big Cedar Lodge near Branson at the end of the month.  This slightly inflated my transportation and entertainment expense, but it was actually a very cheap vacation.  Some of the expense probably could have been counted as a travel expense, but it was easier to just add the expense to the transportation and entertainment categories.

I am starting my Appalachian Trail hike later this month so I will likely have some travel expenses this month. I have quite a bit of free travel credit on my credit cards though so I should be able to erase those expenses.  I’m expecting my April expenses will be very similar to my March expenses except for the addition of the student loan bill.

 

My Student Loan Repayment

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My law school loans have been on income based repayment. Since my income has been so low since graduating law school my monthly payments have been $0. Last year I had a good year for income and as a side effect of that my law school loan payments are no longer $0. For the next year I will have to pay $105 a month towards my law school loans. Some people were quite upset when I posted a couple of years ago about my student loan payments being $0 and not being concerned about my student loans. This might make them happy. Although I liked the $0 payments, since the reason for the new higher payments is that I’m making a lot more money than I used to I can’t complain. I’d rather have the higher income than the $0 payments. You can learn about the different repayment plans at fafsa.ed.gov.

The $105 a month payments will not even touch my principal. The payments will be all interest. That will at least give me a little bit of a tax deduction. My loan balances have steadily been rising ever since I graduated and these payments will probably barely slow the increase in my balances.

There is a pretty big drawback to using the income based repayment plan. Using an online repayment calculator at my present rate I would end up paying over $95,000 in interest by the time my loan is forgiven after 25 years. At that time I would still have a remaining balance of over $255,000 that would be forgiven. The calculator makes some assumptions about my income growth and the change in the poverty line which could change the results quite a bit. Also, the calculator is based on 25 years remaining and I only have about 21 years remaining now. A different calculator showed I would have about $200,000 forgiven. It is pretty scary to see that after making $95,000 of payments my remaining balance could be almost twice as much as my original loans. To make matters worse the forgiven amount is counted as taxable income. If the top tax rate at that time is 40% I would end up with an $80,000 tax bill.

If I were to have my loans forgiven under the public service loan forgiveness program the forgiven amount would not be taxable income. You have to have 10 years of public service to qualify for that program. Working for the government or a non-profit is considered working in public service. I have about 1 year of working for the government or a non-profit since graduating from law school. It now looks like working nine more years for the government or a non-profit would be very financially beneficial. The loan forgiveness would add about a $9000 a year benefit to any non-profit or government job. That makes them a lot more attractive. Or I could wait and see if they decide to make the 25 year forgiven loan amounts non-taxable as well. Given the current amount of federal debt I seriously doubt that will happen.

Now that I have completed my initial degree, I plan to continue my education. Not only will this allow me to improve my earning potential, but I will also have the chance to earn scholarships that will help me to pay for my schooling. Some universities offer a 25% tuition scholarship for their alumni. If I am eligible, this credit will allow me to have 25% of my next degree paid for, whether it is a doctorate, a graduate certificate, or even a second bachelor’s degree. From my perspective, I might as well take advantage of every benefit that is provided for me because it will make me more employable.

March 2014 Goal Update 2

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I thought I would post one more update on my goal progress for the month. The next goal update after this will be a post in early April reviewing how I did on my March goals.

My goal of exercising twice a week is still being met. If I had set a goal of exercising three times a week I’d be failing this goal. My exercise hasn’t exactly been intense either. I am meeting the goal I made though. Now that I know I can meet this exercise goal I can set a more difficult exercise goal in future months.

I’m also meeting my goal of posting a post on Bank Bonuses every day. These posts are done in batches and then scheduled ahead of time which makes it fairly easy to meet this goal. The posts are about deals so I don’t have to put much original thought into them. I just write about whatever the deal is that I’m posting about that day.

My goal of selling, donating, or trashing 31 items is not going well. So far I’ve trashed a couple of items and sold a couple of items. I managed to lose money on the items I sold since I underestimated how much shipping would cost. I probably should have donated those items instead. I’ve put a couple different lots of comic books on Craiglist and have gotten very little response. I don’t have much else to sell other than comic books so it doesn’t look like I’m going to meet this goal. I did have one person tell me they would buy the comics on the first if I still had them. If that happens and I count the comics individually rather than as a lot I’d meet the goal. That isn’t what I intended when I made the goal though so I think I’ll count the comics as a lot. I’ll have to figure a better way of selling them after this month.

As you can probably tell by the lack of posting here I am not meeting my goal of writing 300 words a day. I’m way behind on this goal and I don’t think there is any chance of me catching up on it. I do have a three day vacation next week, but I want to spend it recreating rather than writing. And I doubt my girlfriend would appreciate me spending all of our vacation on the computer so the vacation won’t be a time to catch up. I’m going to set a writing goal again later this year. Once I’m not working I won’t have any excuse for not meeting an easy writing goal.

It looks like I’m going to get half of my goals accomplished this month. That is better than getting nothing accomplished, but I know I can do better. We will see if I can improve by the end of the month.