My December 2012 safe withdrawal rate was 104.5%. That is obviously not a safe withdrawal rate at all and is quite a bit worse than my SWR in November of 86.22%. There were two reasons for SWR being much worse for December.

The first reason is that my expenses in December were too high at $1580.99 for the month. In order to reduce my SWR I need to reduce my living 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 just using November and December’s expenses to determine my average monthly expenses for now. With only two months making the average, one bad month throws off the average quite a bit. January should be a low expense month and skew the average downward.

The other reason my SWR is worse is because I saved very little money in December. I managed to put $65 into my IRA. In order to reduce my SWR I need to increase the amount I put in my investments. Starting this month I have a goal of saving 50% of my income. It looks like I will achieve that goal this month and that will help lower my SWR.

The common 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. I have a long way to go, but starting this month I expect to see significant progress in reducing my safe withdrawal rate.

Here is a breakdown of my income for December.

My income was down quite a bit in December.  This wasn’t surprising since I no longer had income from my attorney job and my new job didn’t start until this month.  My income was at least slightly larger than my expenses.  My income should increase this month since I have started my new, better-paying job.  I’m not sure how the paydays will fall for the new job, but I think I will only get one check and that it will be for less than a full pay period.  February will be the first month that I will have two paychecks from new job reflected in monthly income statement.  That will allow me to start the year with a growing income trend at least.

I was hoping to start working another new job at a CPA firm this month.  Unfortunately, since the job I just started and the other job I was going to start are both in the tax preparation field I will not be allowed to take the CPA firm job.  I will still be working 65 1/4 hours a week between the two jobs I do have.  Perhaps, the third job would have been too much.

My sources of passive and alternative income didn’t add up to much, but every little bit helps.  I  managed to get a total of $97.57 in cash back this month.  Most of that was from buying my new car with my credit card.  I did get a little bit from Mr. Rebates as well.  I’ll be getting more from Mr. Rebates next month since my referrals did more shopping than usual in December.  I’m hoping to max my cash back this year.  If you sign up for Mr. Rebates it can help max your cash back also.

Here is a breakdown of my expenses for December.

My December expenses were quite a bit higher than my November expenses. Ideally, I would keep my monthly expenses below $1000. I came close to that level in November with expenses coming in at $1113.82. My December expenses came in at $1580.99. The high amount was mostly from my transportation expenses. I paid sales tax and licensing on my new car and six months insurance for both my van and car in December. Some of the insurance money will eventually be refunded once I’m able to sell the van. My gas expense for the month was $208.96 compared to $571.96 in November. That is a significant improvement, but I would like to do better. I had three trips from KC to SW Missouri in December and shouldn’t have any this month. That alone should result in a significant drop in my gasoline expense.

My food expense was also higher than I would prefer. One reason it was high was from eating fast food too often. The other reason was that I bought a lot of groceries when I moved into my apartment. I’ve barely made a dent in my groceries so I should have a much lower food bill this month.

The household bill will be a little larger since I will be paying a full month’s rent. I will also have to pay my first electric bill. I expect it will be about $25-$30 since I haven’t been using much electricity.

In order to meet my goal of living on minimum wage, I will need to keep my expenses below $1274 a month. I shouldn’t have any large expenses this month so I should easily keep my expenses below that level and perhaps I might get them below $1000 for the month.