Strap yourselves in people, as this one is a little longer than normal.......enjoy!
One of the main reasons I started a Blog was to publicly record all of my Income and Expenses each month.
There were two main reasons why I decided to do this:
- Accountability - Just knowing that I'm going to be writing down all the pounds and pennies that I spend each day is reason enough not to go crazy with my spending. It also encourages me to invest as much money as I can to boost my monthly saving rate. The act of writing everything down will motivate me to spend less and save more. I have a Goal of saving more than 50% of my monthly wage every month and spending less than £950 per month for the rest of 2014.
- Evidence - I want to prove that anyone can become financially independent, including someone like me on a fairly average salary (under £30,000 pa). You'll be able to see what I spend every little penny on, every month. You'll also see what I earn every month and what percentage of that I'm able to invest with. I want this Blog to represent a real-time document of how someone can go from earning less than £10 in one year (2013) in dividend income, to earning enough passive income to cover all monthly expenses and spending (2022?).
Income
I will rarely have the same wage every month as I have a commission based job. I might also be eligible for bonuses at certain times of the year, which will impact on the total of my wage. My wage figure will be the net sum I'm paid after tax, national insurance, company pension, salary sacrifice for pension, and student loan. I will only include one figure for my wage but I will mention if my commission is high/low and I will also let you know if I've triggered a performance based bonus.
Expenses
The first two expenses are fixed amounts. 'House Bills' is an account where Miss FFBF and I pay into each month (£495 each*) to cover mortgage payments, council tax, water, TV licence, telephone, electricity, and broadband. 'Food Account' is another joint account we use to pay a fixed amount (£100 per month**) for food shopping.
*Update - Miss FFBF and I have managed to reduce our combined Telephone and Broadband bill and our contribution for June 2014 will reduce to £470 each. Good times!
**Update - Miss FFBF and I have decided to challenge ourselves to cutting this amount in half (£50 per month) from June onwards and see how we get on. I paid £100 in May to level out our joint payments, and I'll make my first £50 payment next month.
Here's a breakdown of my Income and Expenses for the previous month:
| Income from May 2014 |
|
| Wage |
£1,627.42 |
| Dividends |
£55.29 |
| Ebay |
£28.80 |
| Topcashback |
£1.94 |
| Peer-to-Peer Lending |
£23.28 |
| Interest from Savings |
£8.67 |
|
|
| Total Income |
£1,745.40 |
|
|
|
|
| Expenses from May 2014 |
|
| Mortgage/House Bills |
£495.00 |
| Food Account |
£100.00 |
| Mobile |
£8.30 |
| Petrol |
£5.00 |
| Birthdays |
£26.35 |
| Groceries |
£13.60 |
| Alcohol |
£5.99 |
| Coffee Shops |
£9.10 |
| Fast Food |
£4.50 |
| Bike Maintenance |
£47.37 |
| Car Service |
£88.00 |
| Bike Pedals |
£11.66 |
| Broadband (Annual) |
£66.00 |
| Car Insurance |
£76.33 |
| Cinema (2 x showings) |
£9.00 |
| Total Expenses |
£966.20 |
May was a very modest month for Income, whilst the Expenses were quite high due to a lot of one off spends/bills. Let's look at it all in a bit more detail, and I'll start with Income.
My wage was slightly below average overall, no great shakes there. I had a really solid month for all of my 'extra' income streams though. Excluding my wage, I earned just shy of £118 this month. That's just over 7% of my monthly wage. I'm encouraged with how quickly the extras are starting to impact my overall Monthly Income. I don't think any of them on their own are overly significant, but together they accumulate to a nice sum of money for doing very little.
My Dividends were my highest month so far, but it certainly wasn't a 'one off'. As I mentioned in my Monthly Dividend Post for May, June is set to get even bigger. May did feel like the first significant dividend paying month for me. I've been spending a lot of time researching, analysing data and investing in companies over the last 6 months and it's nice to see that it's starting to pay off...... literally!
Ebay was very good to me in May. Miss FFBF and I have recently finished off 2 boxsets we've been near the end of for some time - Breaking Bad and Desperate Housewives. Once finished we listed all the seasons we owned on Ebay and we managed to sell a couple straight away.
Top Tip - Guilt Free Boxset Watching
We tend to buy these boxsets second hand on Ebay. My preference is to buy DVD's listed under 'Like New' as condition. You can usually sell them back on Ebay after you've watched them for 'Like New' and you get your money back or even make a little bit of cash. By using the Ebay sniper I talk about in this post you can usually buy the item below market value and then you can sell it for an above average price and make a very small margin. You're then able to watch as many boxsets as you want guilt free as it isn't costing you anything, or you can even make small margins from.
Now back to Income...
The interest from Cash Savings and Topcashback were fairly low, so nothing major to report there. My Peer to Peer Lending income has passed it threshold in May (£20 minimum), so I was able to withdraw some cash from it to invest in Dividends with. I will write a Post on my experience of using P2P lending at some stage, as I've been doing it longer than dividend investing, and for me it's been very positive. I could go into a lot more detail here but I think I'll save all my thoughts for that future P2P post. Stay tuned folks!
Right, now onto Expenses. As I mentioned earlier these were a little high this month, and I was a bit disappointed that the total crept over the £950 per month Goal I set for myself.
However, when I took the time to review what I had spent my money on, I was a bit more reassured by seeing where the money went.
The 'birthdays' amount was higher than normal as it was Miss FFBF's birthday. We had several chats leading up to her big day on what she wanted, and she said not to bother with anything. She's easily pleased (which proves why she's still with me!), and really isn't materialistic, so she rarely desires anything. I couldn't agree to getting nothing, but she agreed that I could take her out for a meal. So, on the weekend we went for a lovely long bike ride and I paid for lunch at a pub. I agreed for my birthday that she could do the same for me as I didn't really want anything either.
Groceries, mobile, petrol, alcohol, coffee shops, and fast food spending were pretty standard for me in May.
Bike maintenance was a new category for me. I have 2 x bikes which I haven't serviced yet. I've been recommended to take them to a bike shop and put them through a service by a few people now. It makes perfect sense, as I want to keep them both running well for many a year, but I didn't want to sum up the cash for someone to tighten up wires and nuts, when I could read up online and watch Youtube clips and learn how to do it myself. So I spent some time reviewing how to do it online, and found there is so much information out there. I don't know if you lovely readers have heard about the internet, but I strongly recommend it. It's amazing what you can find on it!!
I took some money from my account and bought some supplies for my bike. I bought some puncture proof tyres, bike oil, WD-40, and inner tubes. I got out the spanner, allen keys, and rags and got to work. After several hours, I managed to tweak the settings for my bikes, and they were serviced to a level I was happy with. I'm hoping that the bike maintenance category won't feature too heavily over the course of the year now that I've made this initial investment, but I'll just have to see how well my service works out.
I decided to buy some different pedals for my racing bike. This was more of a luxury than out of necessity. I currently have a set of SPD pedals on the bike (which are pedals that require shoes that clip in), these pedals are highly effective, but a bit impractical, so I've tended not to use the racing bike as I don't want to carry around a spare pair of shoes. As I was on a bike maintenance spending spree, I decided to treat myself and buy a pair of pedals that have clip on straps so I can wear regular shoes. I can now spread the commuting between the 2 bikes, this should balance out the wear and tear between the bikes, and it adds a bit of variety for me. It's kind of like having a sports car! I only take the racing bike out on nice days due to the skinny racing tyres.
Now onto 'Car Service'. Miss FFBF started her new job in May and it involves driving around our local town visiting patients. The car hasn't had a service in 2 years, so she wanted to ensure it was in good nick before venturing out in 'her' new car. I agreed to pay for half of the service, my cut was £88 which was a little higher than I was expecting to pay. I wasn't too keen to pay for it initially, but I'd prefer that Miss FFBF felt safe and secure. I'm also happy to help out financially, as I currently earn a little bit more than her.
I talked about my great Broadband and Telephone deal in a post recently here. I explained how the deal would save us money, which it will over the course of 12 months, but it did involve a short term loss by paying for the year in advance, my contribution was £66.
Car insurance, wow more bills! Miss FFBF and I searched several comparison websites, cashback websites and private companies to see where the best deal was. We ended up going with Direct line, and similarly to the Broadband & Telephone bill, we paid for the 12 months in advance. My cut for this was £76.33.
To top off the spending for the month, we bought 2 x cinema tickets at a local town hall cinema viewing for '12 years a Slave' and the 'The Railway Man'. We watched 12 years a slave on the weekend (which I would highly recommend!), and we're due to watch The Railway Man next Tuesday. (On a side note, my Grandad helped to build the Bridge Over the River Kwai, so I'm really looking forward to seeing a recent portrayal of the conditions and challenges he faced back in his time as a POW)
As you can see from the table above, I spent just over the £950 month Target I set myself this year. I spent £856.36 in March, £922.86 in April, and £966.20 in May. The average is now £915.14 for 2014. I've managed to reduce some of my bill payments over the last 3 months, so I'm hoping to benefit by having lower monthly expenses over the course of the year. I feel confident that I can achieve my Goal of spending less than £950 per month this year.
Now down to the nitty gritty............ Saving Percentage! For May 2014, I managed to save/invest 73% of my income exactly. I have a goal to save more than 50% of my income for 2014, and after 3 months my average is now at 76.5%. I'm delighted with my monthly performance, not to mention my quarterly performance. May wasn't a spectacular month for high income or low expenses, yet I managed to save almost 3/4 of my income. If I'm able to keep to this figure by the end of 2014 I'll be a very happy man, and I'll have a very healthy looking portfolio compared to the one I had in 2013.
I've received a lot of positive and encouraging comments recently, and I just wanted to thank you all for your amazing support. I'm quite new to blogging and DGI, but I have thoroughly enjoyed my time doing both. The support and motivation I get from everyone has helped drive me to where I am so far, so thank you all!
I hope you all had equally good months for saving and investing. Thanks again for reading!
How was May for you? Did you manage to make any significant savings? Were you able to make any substantial investments?
Labels: Income & Expenses
