Another month flew by, just like that! Even though most of us enjoyed a great Christmas dinner with friends and family not too long ago, that time has come and gone, with New Year’s receptions at the office heralding busy work schedules once again. Hopefully that gives everyone the opportunity to recover from the often expensive December festivities. Let’s see how my January turned out, shall we?
As most of you know I set a savings goal of 70% on average for the entire year in 2014. Having reached that magical threshold without too many problems, I decided to stick to it in 2015 even though I no longer live with my parents and, as a result, spend more money on housing and other living-related expenses. It won’t be easy, but if I don’t challenge myself I’d better call it quits now and abandon the financial freedom dream.
It’s true that I sometimes still feel like a fish out of water when it comes to the whole idea of financial independence, but having others in our community who show that saving a large portion of your income is a sure-fire way to success helps to keep my motivation up. I have decided that I’m tired of being a caveman and I’ll do everything within my power to bask in the sunlight of financial freedom.
On top of that, some of the events that transpired in January showed me yet again the importance of enjoying the road to financial independence and possibly early retirement instead of waiting until I cross the finishing line. Even though it’s way out of my comfort zone, I decided to sign up for dance classes with a couple of friends, for example. And those turn out to be good fun!
Let’s dive into January’s numbers.
|Paycheck||€ 2,022||As expected|
|Dividends||€ 9||Pretty good for a slow month|
|Other||€ 656||Side hustlin' and a lot of interest on my savings account|
With almost €2,700 in income we can classify January as a solid month. The real difference compared to a normal month lies in the fact that my savings account with a 3.15% interest rate deposited the accrued interest on the first of January. That money will now start working on its own at 3.15%, thus yielding me even more interest payments next year.
Dividend income wasn’t nearly as good as in December’s income and expenses report, but I was still pretty happy to put up my post yesterday detailling my dividend income. Only €8.66 might be a laughable amount of money now, but over time that amount will grow to an unstoppable snowball. Furthermore, those dividends now already cover my Google Play Music subscription as you can see in the list of expenses below.
|Rent||€ 350||As expected|
|Utilities||€ 70||As expected|
|Telecom||€ 20||As expected|
|Groceries||€ 99||Below my goal of €100|
|Restaurant||€ 42||Date night|
|Health insurance||€ 90||Health insurance for the entire year|
|Clothing||€ 10||Socks on sale|
|Sports||€ 80||Dance class|
|Subscriptions||€ 8||Google Play Music|
Staying under €800 wasn’t easy this month because of one time expenses like health insurance, for example. Even though €90 is no small amount, I happily pay that much because it covers my butt for an entire year for everything you can possibly imagine. As you can see, high taxes do have their advantages in the form of excellent and cheap healthcare. Other rare expenses included the aforementioned dance classes and a date which I payed for.
When considering the above, I’m thankful for the interest in my savings account because it pushed me to a savings rate of 70.5%. I made it by the narrowest of margins without losing out on quality of life, as so many people fear they have to do to reach financial independence. It feels good to be able to continue my excellent progress from last year.
January’s savings amount to €1,897, which is almost as much as the monthly net salary from my dayjob. It’s crazy to think that my passive income almost completely covered my living expenses this month. Just like every other month, I made a contribution towards my personal pension fund which has a limit of €930 in 2015.
On top of that, I also bought into Swiss pharmaceutical company Novartis (VTX:NOVN). The Swiss healthcare giant recently announced its 2014 earnings and is set to continue its excellent past performance. Because Novartis rewarded investors with higher dividends every year since its inception in 1996, I thought it a good time to jump in on the fun by purchasing 12 shares.
The graph below details my savings performance in 2014. As you can see, January was right on track with most other months.
You can imagine why I’m a happy camper. Having a high savings rate is the number one success factor in the financial independence game. The more you save, the faster you’ll have your money working for you, thus compounding your returns year after year.
I hope everyone else had a great start to the new year and was able to put away a big chunk of their January income. Be sure to share how you did in the comments as I love reading your success stories and learning from them. Did you find ways to reduce your expenses or maybe even boost your income?
Thank you for your support.