My June 2013 Money Making, Saving, and Investing Report

Welcome to my June 2013 Money Making, Saving, and Investing Report!

This is the second 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.

To see last month’s report (May), click here.

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:

1. I’m doing this to help motivate people to make more money, save more money, and invest for the future.
2. I’m also doing this to force myself to take a much closer look at household’s money to make adjustments for maximum efficiency.
3. 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.
4. 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…

 

Actions Plans for This Month – Set in May

Green = complete

Orange = some progress

Red = no progress

 

• Try to find less expensive day-care alternatives
  • We looked at several different options, and our current daycare keeps coming out the cheapest (good problem to have, I guess).  The only cheaper alternative would be to find a private friend/neighbor to watch our kids going forward.  Because our daughter is starting pre-school next year, my wife has concerns about this.  For now, I’ll keep this one open, but inactive.
• Scrutinize grocery bills
  • My wife has done an awesome job here so far.  We went from $987 to $663 this month.  We can certainly get it even lower, but that is a good ~30% reduction.  We’re also trying to increase our protein consumption and reduce are carb intakes, so it will be interesting to see how this changes our expenses.
• Plan to sell Camry and get Corolla (36 highway mpg vs. 26 highway mpg)
  • I’ve spent a fair bit of time figuring out what I want to do here.  I made this related post: Frugal Guide for Buying a Used Car.  I’m targeting a 2003 Corolla with an annual cost of ~$500 (see the post to understand how I’m calculating this).  The right vehicle hasn’t come up yet, but I’m checking Craigslist several times a week to see if anything pops up.
• Determine when student loans will complete (consider paying off early if they extend into 2014?)
  • My wife’s student loans don’t finish their payment schedule until November 2015.  This works out to be about $8 of interest per month.  For now, I’m just going to leave this one alone and work on reducing some larger expenses.  I plan to revisit this one down the road.
• Get cheaper car/home insurance combo through GEICO vs. State Farm
  • Going through GEICO, we’re able to save $353.50/year on vehicle insurance and $223/year a year on home insurance for a total of $576.50/year.  Two things prevented me from pulling the trigger on this during June, but I plan to make some sort of change to GEICO in July:
  1. This comes at a substantial deductable increase ($250 -> $1000 for cars & $1000 -> $2000 for house) which is freaking my wife out.  We need to talk through it more before we can decide
  2. My wife’s van got rear-ended while it was parked causing $1,296 worth of damage!  The driver who hit it has his insurance covering it, so that is good.  I want to wait until this is fully repaired before switching insurances in case something crazy happens.
• Discuss eliminating phone damage insurance
  • Wife is OK with dropping this, now I just need to do it!
• Consider increasing Wife’s 401K contribution up to the max allowable by the IRS ($17,500 for 2013)
  • We increased my wifes 401K contribution each month to max out the deduction!  It only took about 15 minutes of paperwork, YAY!!
• Discuss what would be a good savings rate target to aim for going forward
  • We decided to start with a savings goal of 60% of gross income by the end of the third quarter.  We’ll see what happens.

So, overall I’m 4 for 8.  Not all that great, but given that we took a week of vacation and had the van rear-ended I feel like we made decent progress towards the goal.  Let’s get into the specifics.

 

Money Making (Income)

Salaries (after taxes) — $8,684.64
MoneyAhoy.com Income — $5.16 (estimated)

• Google AdSense Ads — $4.96 (estimated)
• YouTube Ads — $0.20 (estimated)

Bonuses — $ 250.00

Dividend Income — $58.64

TOTAL INCOME = $ 8,998.44 ( down $38.39 vs. last month <mostly due to increased 401K contributions>)

 

Money Saving (Expenses)

 A couple of things to note for June:

• 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 of importance for this month:

• Bonus: My wife eliminated Starbucks expenses for the month! Awesome!!!!!!
• Childcare expenses went up even more from last month (summer goes up $67 a week for our son since he’s out of school)!
• We were able to reduce our grocery expenses by $324 in June, my wife kicks butt!!!
• Gas was a little lower because we were on vacation for a week.

The savings pie-chart was a little eye-opening to me as well.  Here are the things I noticed:

• There was no savings to our bank accounts this month due to three main reasons:

1. cruise vacation ($380 spent while on the trip)
2. almost doubling the amount my wife is putting into her 401K to hit the cap
3. increasing the amount invested into the stock market each month because emergency fund savings are sufficient

• Overall May 2013 Savings Rate (total savings / gross income) = 49%, this is down from the 54% from May.

Special expenses for the month:

• Vacation (10-year Wedding Anniversary) – Cruise Tips, Airport Meals, Parking, Gifts, etc. – $380.00
• Soccer End of Season Party – $22.01
• Home Depot, Target, Dollar Tree – $196.43

 Notes on special expenses:

• The cruise we went on for our 10-year wedding anniversary was fun, but it was EXPENSIVE.  I plan to write a post this month on just how un-frugal it was.  We had a great time, but we could have enjoyed ourselves just as much for probably half the cost…
• We spent >$47 at the Dollar Tree?!?  Need to look into this more!

TOTAL EXPENSES = $ 4,999.75 ( $366.75 less vs. last month) 

 

 Investing

I went with a normal boring investment in a market index fund this month.  See the post Investing In Market Index Funds is Best to understand why.  It isn’t fancy, but it gets the job done.  I picked up the shares on the last trading day of the month for about the average monthly price, so not bad.

I bought: 12 shares of SPY @ 160.98 (with $5 commission) — $ 1,936.76

• This is the S&P-500 Market Index Fund
• It pays a monthly quarterly dividend that works out to be ~2% APR.
• The dividends are qualified, which means they are taxed as long term capital gains at the lower 15% rate.

 TOTAL INVESTING = $ 1,936.76

 

Actions Plans for July (many rolled forward from June)

• Try to get Grocery bills a little lower (>$50 lower)
• Plan to sell Camry for ~$900 and get 2003 Corolla (something close to $500 per year)
• Get cheaper car/home insurance combo through GEICO vs. State Farm – could save ~$576/year
• Eliminate phone damage insurance – save $126/year
• Try to increase MoneyAhoy.com income to > $8.00/month through ad revenue (views plus clicks)

 

Check back in next month to see how well we did with our action plan!