March Expenses – $980.89

by

Here is a breakdown of my expenses for March.

Household

$378.73
Entertainment

$56.68

Transportation

 $181.06

Food

$169.15
Debt $15.33
Phone

$26.81
Health

$120.97
Electric

$16.10
Internet

$15.96

Total

 $980.89

My March Expenses were up from February but they are still reasonable.  I did manage to keep the monthly total under $1000 although it was closer than I’d prefer.

Food was the only category I feel like I spent too much on.  I would be okay with the total if it was for healthy food purchases.  Since it was mainly for fast food, soda, sweet tea, and junk food I need to do better.

I expect my expenses will be about the same this month. There probably won’t be much change to my expenses until this summer.  To meet my goal of keeping expenses  under minimum wage I just need to keep my spending under $1274 a month.  That should be easy unless I get crazy on spending money on traveling later this year.  My stretch goal of keeping spending under $1000 a month appears to be easily attainable at this point as well.

April Food Experiment

by

My eating habits for the month of March have been bad. I’ve had fast food and/or sweet tea/soda almost every single day. I was wanting to keep my food budget under $100 for the month and I’ve already spent over $150 for the month with a day to go. I wouldn’t feel bad about the money spent if I had spent it buying healthy food. Most of my food expense has been for junk food though. There has only been a couple days this month that I didn’t buy food. I need to get much better at eating the food I have rather than going out and buying whatever I crave at the moment.

My goal for April is to buy as little food as possible. Since I already have a lot of food in my apartment, my purchases should mainly be limited to fresh fruit and vegetables. I am going to allow myself some junk food. My work does cause me some anxiety and sometimes I really need a caffeinated beverage to make it through the work day. I will get a drink if I really need one,but I’m going to try to keep that at a minimum. I’m only working the first half of the month so I won’t have the work excuse for the last half of the month. Also, when I go out with friends or family I can buy food although I will try to keep it relatively healthy. Mystery shops won’t count since I’m not technically buying the food because I’m reimbursed. That may sound like a lot of excuses to buy food, but I think that will be just enough to allow me to stick to my no buying food in April experiment.

I have had quite a few food challenges or experiments before and haven’t been too successful with them. To help motivate myself I’ll be updating how I’m doing every weekend. And to provide more motivation and too keep me honest I will be sharing exactly what I eat for the month. You can visit myfitnesspal.com/tightfistedmiser and click on diary to see what I’m eating. I was tracking my food earlier this month but got tired of documenting how bad I was eating. Maybe if I know that everyone can see what I’m eating I’ll be motivated to eat a little better.

Earning More is Better than Spending Less

by

This might be a strange thing for the writer of a frugality blog to say but I believe it is true. If you want to get ahead financially increasing your income is more important then reducing your spending. I have been able to keep my spending at a very low level for years but I haven’t been able to save much money. This year since I started working my better paying full-time job in addition to my part-time job I’ve managed to save well over 50% of my income. I’ve long thought that if I could just get a decent paying job it would be easy to save money. Now that I have a decent job I’ve found out that I was right. It is easy to save money now. I’m not really making that much money either. At my current rate I’d make a little over $40,000 for the year which is about the average annual salary in the United States.

My views on this subject might be somewhat skewed by the fact that I have always found it easy to keep my spending at a low level. When I read articles on how to save thousands a year by cutting cable and skipping lattes they weren’t any help to me because I never developed wasteful spending habits in the first place. I suppose if you are a spendthrift then it would probably be better to learn how to control your spending rather than increase your income since a spendthrift will likely just increase their spending to match any increase in income. For most people though, increasing income is better than reducing spending. There is a limit to how much you can reduce your spending. There is no limit on how much you can increase your income. I think the big advantage that cutting spending has over increasing income is that it is much easier to cut spending. My job will be ending next month and I doubt I’ll be able to get my income back to its current level any time soon. It is easy for me to find ways to make a little extra money but I’ve had a hard time finding ways to make decent money. That is something I will work on for the rest of the year.

February Safe Withdrawal Rate – 62.54%

by

February was a great month on my progress towards financial independence. My SWR went down to 62.54% from 80.47% the month down. My goal is to get my SWR down to 4% at which point I’ll consider myself financially independent. I’m seeing big declines in my SWR right now because I’m saving over half of my income and I’m reducing my monthly expenses. The way I am determining my SWR is by tracking my trailing 12 months expenses divided by the amount of my investments. Since I don’t think the preceding 12 months accurately reflect my expenses going forward I am using my monthly expenses starting in November 2012 to set the average so every low month of expenses makes a big change in the average right now. The big drops in my SWR will slow down once my trailing 12 months average is closer to my current monthly average.

My goal is to save 50% of my income each month and I managed to crush that goal in February. I made $4499.91 and managed to save $3400. That amounted to a 75.55% savings rate. I’m not going to be able to match that this month since I have a $1500 tax bill but I’m still aiming to save 50% of my income. My full-time job ends on April 15th which will make it much harder to maintain my 50% savings rate. I do have a three week job lined up to start as soon as my full-time job ends. It doesn’t pay as well as my current job but I should still have a chance at saving 50% if I manage to sell a few things from my apartment as well.

The 4% SWR translates into having 25x your annual expenses in savings or 300 months of expenses in savings. I have 19.18 months of living expenses saved now. I managed to save almost 5 months of living expenses last month. I won’t be able to do that again this month but I’m sure I’ll add at least another month of living expenses. Seeing my SWR go down every month and my months of living expenses saved go up every month is keeping me motivated.

My $1500 Tax Bill

by

I did my taxes last night and I did not like the results. I owe about $1500 on my federal and state income taxes including a $22 penalty on my federal tax for not having enough taxes withheld during the year. I knew I would owe taxes this year but I didn’t think it would be so much.

If you’re self-employed you should pay quarterly taxes. I’ve been able to get away with not doing that until now because my self-employment income was relatively small and my total income was very small so that with credits and deductions I owed very little or got a refund. I thought about paying estimated taxes in 2012 since my online income had increased quite a bit. After the Google hit in spring though I figured my income wouldn’t add up to much and my tax bill wouldn’t be too high. I did claim zero exemptions on the W-2s for my jobs and contributed to a traditional IRA to help reduce my tax bill. That wasn’t enough though and now I’ve got to pay $1500 all at once. It definitely hurts more to make one big payment then to have it taken out gradually over the year. Luckily, I do have a decent paying job so coming up with the money won’t be a problem. I just won’t be able to save any money this month.

This should be a lesson learned that I should pay my taxes quarterly. However, I do expect my online income to be smaller this year and I am having more withheld from my jobs so I once again do not plan on paying estimated taxes. If my online income increases substantially this year then I will reconsider whether I should pay estimated taxes.