May 2013 Money Making, Saving, and Investing Report
Welcome to my May 2013 Money Making, Saving, and Investing Report!
This is the first of many reports I plan to write once a month to detail my progress at making more money, saving more money, and investing. Here I will show you what I’ve had success with and where I’ve not been so lucky.
In my monthly reports I’ll include charts and graphs so you can see how I’m doing. I’ll also include a detailed breakdown of income, expenses, and investments to highlight important things I’ve learned each month.
Why?
Derek, why are you doing this? It is too personal or no one really cares about your details… Well, there are a couple of reasons:
- I’m doing this to help motivate people to make more money, save more money, and invest for the future.
- I’m also doing this to force myself to take a much closer look at household’s money to make adjustments for maximum efficiency.
- Talking about money in this amount of detail is taboo in my culture, and I’d like to change that by being as transparent with folks as possible.
- It might open up advice others can give me on how I can make/save/invest even better!
Please understand that my wife and I have both put in a lot of work to obtain highly technical degrees (Mechanical Engineer and Physical Therapist), and we’re pretty well compensated for these skills. It has taken us a lot of hard work and sacrifice (four years of college for me and 7.5 for my wife), and some outstanding luck to for us to make it this far in our careers (10+ years in workforce). But I’m interested in seeing if I can take where we are to the next level. The good news for all of us is that if we put our mind to it, practically anything is achievable.
Hopefully these reports will inspire and help everyone here to have a more open discussion about money. That’s my goal! Let’s get started with the details…
Money Making (Income)
Salaries (after taxes) — $9,034.27
MoneyAhoy.com Income — $2.56 (estimated)
- Google AdSense Ads — $2.48 (estimated)
- YouTube Ads — $0.08 (estimated)
Dividend Income – $0.00
TOTAL INCOME = $ 9,036.83
Money Saving (Expenses)
First, let’s look at some graphs!
May 2013 Routine Expenses
May 2013 Routine Expenses – Pie Chart
May 2013 Savings Breakdown – Pie Chart
A couple of things to note for this month:
- I’m counting our housing principal as savings (not as an expense). To me, it is just very illiquid form of saving money that we would theoretically get back when we go to sell the house.
- I included several expenses that we have eliminated on the chart just to illustrate this fact.
On the expenses front, a couple things jumped out at me:
- Childcare expenses are huge for us! We have two younger kids at a normally priced day-care for the area. This is a largest expense and may represent the best opportunity for improvement. We have already been looking around for alternatives that will help us save here.
- Groceries is pretty high for just a family of four. We need to more closely analyze what we are purchasing to see where we aren’t getting the best bang for our buck.
- We are living in an expensive house, so the interest and taxes are going to be much higher than “normal”. We will need to cut back in other areas to hit our savings stretch goals. We’ve casually discussed the idea of downsizing to save even more, but think we can make other sacrifices to enjoy this luxury. However, nothing can be off the table 🙂
The savings pie-chart was a little eye-opening to me as well. Here are the things I noticed:
- The amount we are saving into our 401Ks looks “healthy”.
- The amount going into home principal is also good (thank you 15-year mortgage)!
- That light purple section (16.1%) is too big!!! We need to shift the amount we are putting into retirement or investing accounts each month to balance things a little better since we have our emergency fund set.
- Overall May 2013 Savings Rate (total savings / gross income) = 54%, this feels pretty good as a starting point.
Special expenses for the month:
- Vacation (10-year Wedding Anniversary) – Cruise Excursions – $508.00
- Soccer Trophies – $24.89
- Mother’s Day – $42.61
Notes on special expenses:
- We are going on a cruise without the kids for our 10-year wedding anniversary. It killed me to do it because this isn’t exactly the cheapest vacation by a long-shot, but my wife has always wanted to try one. We have been actively trying to get the price of it down as much as possible, so we’ll see where the final total ends up.
- I waited too long to get organized with the kids to get/make a gift for Mother’s Day. As a result, we paid the price by having to select something nice quickly. Hopefully, this will teach me to plan ahead more so that we can get her an even better gift for less!
TOTAL EXPENSES = $ 5,366.50
Investing
I’m just getting started investing outside of our 401Ks (vs. trading – which I’ve got a fair amount of experience with). Because I was a little heavily invested in stocks, I wanted to get into bonds some to balance things out a bit. Yes, I know everyone and their brother thinks bond prices are going to be crashing soon due to rising interest rates if/when QE is tapered.
Anyways, I bought: 100 shares of JNK @ 41.012 (with $5 commission) — $ 4,106.20
- It pays a monthly dividend that works out to be ~6.4% APR.
- A disadvantage is that these dividends are unqualified because the income is from bonds, so they are taxed as ordinary income vs. the lower 15% rate.
- This is basically a junk bond ETF by SPDR Barclays
TOTAL INVESTING = $ 4,106.20
Actions Plans for This Month
- Try to find less expensive day-care alternatives
- Scrutinize grocery bills – there are several things than I fancy that I can probably substitute out for lower cost items
- Plan to sell Camry and get a Corolla (36 highway mpg vs. 26 highway mpg)
- Determine when student loans will complete (consider paying off early if they extend into 2014?)
- Get cheaper car and home insurance combo through GEICO vs. State Farm
- Discuss eliminating phone damage insurance
- Consider increasing Wife’s 401K contribution up to the max allowable by the IRS ($17,500 for 2013)
- Discuss what would be a good savings rate target to aim for going forward
Check back in next month to see how well we did with our action plan!
Hey Derek!
Interesting. What came while reading:
– Little bit surprised that while saving for retirement so heavily you still have student’s loans. Personally I would get rid of them first.
– Instead of Corolla you might consider VW Jetta TDI – 46mpg 🙂
– For insurance I saved a lot combining my home/auto WITH State Farm.
– We just canceled our TV with Verizon while bumping Internet speed to 75/35 by paying $5/m more. All we stuff we want we watching from internet now plus local channels of-the-air. Saving $120/month.
– Another way to save TONS of money is to DIY everything from repair to construction. That’s our main money saver by far.
Sergei,
-They are my wife’s student loans and they are pretty close to paid off. I think the actual interest works out to be only ~$200 a year (close to 2% interest). In hindsight, we should have just paid these off years ago and saved the ~$1,000 in interest. But, with the rate so low we didn’t bother…
– On the Jetta, I have heard horror stories on the maintenance costs and parts costs. That is the main thing steering me toward Toyota. How has your luck with the Jetta been?
– We currently have our insurance home/auto combined with State Farm. I think we are paying about double on the car insurance what we can find on the open market. Not sure about the house. I figure it is worth a good look to see what is out there.
– That’s GREAT about canceling the TV and going internet only. Did you see the 3-part series I did on this? As a way to consider saving even more if you are open to suggestions, 75 Mbps really is a ton of speed. We have 6 Mbps and can do Netflix HD on a single TV/unit. Do you really need all that speed? Are you using multiple devices all at the same time?
– Great thought here on doing everything yourself. One area where I’ve spent probably close to $700 over the past several years is paying to have someone come out and purge the lawn sprinkler system for winterization. I never took the time to go out and get an air compressor. It seems kinda stupid now when I look back on it. I definitely made the cheap choice here vs. the frugal choice. I could probably score a top-of-the-line one for that amount of money.
Thanks again for the comments Sergei.
Derek,
your whole subject on managing money is a very valid point.
It’s amazing how much difference you can make just managing you money wisely. Lot’s of people don’t do it I can often hear them saying – “Good for you, you are rich dude…” The thing is, most of these people have household income higher than mine, but I can see how they simply wasting tons of money. My income comparable with yours but I have 2 kids in colleges right now (it cost me about 30K cash a year) and still have enough to buy only organic food (I know, I know, but still…) take a cruise once a year (for all 4 of us) and explore some beautiful places in second vacation every year (like Hawaii or Europe). I’m also supporting saying “I’m not that rich to buy a bad quality things”. I think we deserved the best ! 🙂
As for Jetta, I don’t have one, I’m thinking to lease Passat as I might need to pass my car to my son this summer.
For the internet, as a software engineer I just have to have good bandwidth I think 🙂 It’s only $5 more than base. But I have pretty large gigabit network in my place with more than 20 devices and servers connected.
Sergei,
Exactly, it is amazing to me how people can actively spend more than they make and not realize they have a problem that will catch up with them sooner or later.
I’m hoping by the time our kids go to college everything will be computer based and tuitions will be much, much lower. But, I am saving like that will NOT be the case. Hopefully we’ll have enough saved to cover half the cost; from there we need to decide if the kids should cover the other half, or if we’ll have to shell out the cash like you 🙂
That is awesome that you are able to take so many cool vacations! I think we’d like to tour the world one day when the kids get a bit older.
I guess I’m a Toyota boy at heart. I would take a lot to persuade me otherwise as they have been such great generic plain cars with no real issues.
I didn’t think about the software engineer aspect when discussing internet options. I guess that makes sense for you 🙂 And 20 devices? Good lord you are wired!
My observations and opinions:
-When shopping for insurance be careful to be frugal and not cheap. The premium may be better but if you get into an accident or break down…you’ll see how much your insurance company really pays.
-I’m considering cutting the cable and landline…seems to be a culture shift by many folks.
-Groceries? Buy in bulk from Costco, especially on staple items. I buy their rotisserie chicken for $5 and I get at least 3 meals out of that bird! My wife and I, when we go out to eat during the week usually go to a place where I can get leftovers to take in for lunch. So my dinner expense may be $20 but I get 3 meals out of it. I only get 30mins to eat so I have to pack.
-I’ve also taken advantage of 0% APR balance transfer deals. Some give you over a year to pay it back and if you’re carrying a balance, that’s money saved in interest payments.
-Overall, and this is my opinion, you can’t take the money with you and you only live once. You have to live a little…take the cruise and have FUN! Don’t lose out on million dollar experiences to save a dollar.
Rob,
– Yeah, I’ve heard GEICO is ok at servicing claims, so I figured I’d give them a try.
– We cut cable and landline about 3-4 years ago and it has been great. We’ve saved thousands and it hasn’t hurt us one bit.
– We do buy in bulk from Costco and BJs, and we never really throw anything away. So, I’m not really sure where it’s going… Will need to investigate further. We love to pack leftovers for lunch, saves so much vs. going out to eat all the time. Good point.
– We always pay off the credit cards each month. It is just easier than carrying cash, one check to write each month, and 2% rewards cash back!
– Good advice, we are always trying to balance between spending and saving. I think its the experiences with loved ones that are worth the most, not material things!
Awesome, thanks for being so transparent about this. I’m thinking about being open and transparent on my blog also about the same kind of things – it’s useful to track this stuff and make it public.
Yeah, my wife was really against it at first because of all our close friends being put off. But, if you know someone’s profession and name, you can pretty much estimate just about all of this stuff.
Hopefully it will provide inspiration to some folks to save more and challenge me to save more as well! Thanks!
Wow, I love your very organized approach to keeping track of your cash. It’s been awhile since I’ve charted everything out with my bills. I should definitely do that again. Last time I did that, it was very eye-opening to see that cell phones and car insurance were our biggest bills. I’d never really realized that before. So that’s what we’re working on fixing now.
Nick,
Thanks! I highly recommend setting up a google docs spreadsheet with all expenses, bills, income, savings, etc. From there setup some easy charts. Once you set it up, you can update your monthly info into the next column in about 15 minutes. This will help you track how things are changing over time and let you see where all your money is building or leaving.
It is a monthly ritual I’ve setup for myself to get better control of all our family’s finances.
Good luck on your journey!
Have a feeling your blog will do well, Its a great spin on some other good income sharing blogs.
Just fyi you are right on jettas, at least from my experience with our dealership. Believe it or not older saturns have done our lot well with few issues after they leave the lot. Gas mileage around –40–mpg and have run forever, too bad they are done with. One exception to the above statement is the saturn vue has had horrible problems. I lost a few bucks on those things. Transmissions in them are junk.
Depending on your 401k size you might be able to roll it into something fully self directed with checkbook control. Gives you great flexibility but its upto you completely to invest. Some of my investors for residential rehabs use it this way. Im trying to setup the car dealership to allow investment through self directed methods as the returns I can yield to investors is fairly large, and both are cash hungry businesses.
Keep up the good work
Rookie,
Thanks for your kind words. I would have never guessed Saturns would be high quality cars. Good to know.
I’ll have to look more into the fully self directed 401K thing. Thanks!
Hi Derek,
Glad to find that you are also a ME. May I suggest you trade the Camry for Prius instead of Corolla. You will save more money on gas and a more modern car. The lift-up back will give your more room for family use too. Perry
Perry,
I’ve always heard that the replacement costs for the batteries were a killer. Any idea how much this normally runs?
If we calculate it out I’m not sure a Prius would come out on top unless that batteries would be cheaper than ~$700 per year of car ownership (60 mpg vs. 36 mpg) based on the number of miles I drive each year.
Check out the warrant on the batteries. I had the 2005 Prius since Nov. 2004. The main battery has no problem. The panel battery had one cell replaced last month of $320 total. Perry
Great Job, Derek, I think you are on the right track. I got a COROLLA 2005, and I tell you it’s the best car I have ever owned in terms of reliability and efficiency- You will save great on mileage and repairs, if any. In fact, my goal is to own the car for as long as I can and perhaps pass it on -)
We have two kids under 5, and we are on to the third one this year. I now have to think about a used Sienna Van, which I plan to pay cash for.
As per day care, depending on your profession, the best approach is to have one person work part time, in my case my wife is an RN, so she picks up hrs whenever she can to a minimum of 10 shifts a month when im home. We have no day care expenses except for playschool, about $120 per month.
Dennis,
Thanks for the insights. I’m right there with you on the Corolla. I can save about $730 a year on gas costs vs. my camry (hate to get rid of it). So, I can upgrade to a 6-7 year newer Corolla (2003 vs. 1997 Camry) and still save money in the long run by giving up a little space.
Our goal one day is for the wife to go part time. The only bad thing on this is that we’d lose the 401K advantage and company matching. All the benefits are through my job. I’ll need to run all of the numbers overall and see how it works out. In her field, she can get $10 – $20 an hour more doing part time as needed (PRN) vs. full-time, so it can be very lucrative.
Thanks for the prompting, you’ve got my gears turning on ideas for the part-time route.