It’s that time of the month again! – No, not that time. December has come and gone, with lots of fresh income, but also more expenses than usual. The conventional wisdom that the Winter Holidays take a huge bite out of everyone’s budget turns out to be true, at least in my case. Thankfully there’s a nice year-end bonus to balance things out.
Last week I already offered you guys a glimpse of what December’s savings rate would look like and I’m happy to say not much has changed. Overall December was pretty great. Not only did I discover that I actually like my overly busy job, I also got to visit my best friend in Dublin for four days. To top things of our office closes between Christmas and New Year’s Evening, so I had one entire week to recharge my batteries.
I finally had some time to enjoy my new graphics card, also known as November’s big splurge. Alas, one of my computer screens decided to give up the day before Christmas. It wasn’t meant to be. This gave me lots of free time to work on this blog, however. As a result, I have a rather steady stream of upcoming posts lined up. I’ve also been reading up on improving my website’s visitor experience – that’s you! – so I’ll most likely try some things out over the course of the coming weeks.
Let’s take a look at December’s numbers.
|Paycheck||€ 2,967||Much higher than usual thanks to a year-end bonus|
|Dividends||€ 39||December's dividend income was plain awesome|
|Other||€ 385||Side hustlin' and interest on my savings account|
Apparently, December turned out to be my biggest month of the year yet! Any monthly income that starts with a three is excellent in my book, but raking in almost €3,400 topped my wildest dreams. Who knew a big bonus at the end of the year could make such a difference? Everyone except me, probably, because I didn’t even know how much it would be until it hit my bank account.
Dividend income was moreover top notch the last couple of weeks, like I wrote about on Saturday. It’s incredible to see December’s dividends stand at 2% of my regular paycheck already. I’d say only 98% more to go, but that’s only the case when the difference between my income and expenses is effectively zero. So let’s see how much I spent last month.
|Rent||€ 350||As expected|
|Utilities||€ 70||As expected|
|Telecom||€ 20||As expected|
|Groceries||€ 131||Stocked up on lots of beer that was 25% off|
|Public transport||€ 51||Bought a train pass for the coming weeks|
|Clothing||€ 18||New scarf|
|Holidays||€ 157||City trip to Dublin|
|Games / PC||€ 42||Steam sales|
|Subscriptions||€ 8||Google Play Music|
|Entertainment||€ 35||Beers with friends and theatre|
|Gifts||€ 50||Gifts for Christmas|
At just onder a thousand Euros I’ve had a pretty expensive month in absolute numbers, but relatively speaking it could have been much worse. Most of December’s expenses were one-off items, such as a ton of museums and restaurants in Dublin, a bunch of games on sale, Christmas gifts and a huge batch of booze because everything was 25% off. Together these things account for almost €300 of money spent, which isn’t too bad.
All in all it’s great to see December’s savings rate end up at 72.5%. That’s completely in line with the average performance of previous months, so my bonus actually proved to be an excellent counterbalance against my spendthrift. I’m also happy to see my savings rate jump back over my goal of 70% from November, when I managed to save only 60%.
And what happened to the €2,456 of savings? I invested them in another batch of high-quality dividend growth stocks. Like many other investors did before me, I finally pulled the trigger on six shares of International Business Machines (NYSE:IBM). British healthcare and household products manufacturer Reckitt Benckiser (LON:RB) is now also part of my portfolio. I bought these companies with my bonus money right before putting December’s net worth update online.
When my normal paycheck hit, I quickly deployed some more capital in US-based telecommunications provider Verizon Communications (NYSE:VZ) and British distiller Diageo (LON:DGE), whose Guinness brewery I was happy to visit while in Dublin. On top of that I doubled my position in Unilever (LON:ULVR), a company boasting magnificent long-term potential with a great product line-up. Because oil and commodities kept falling the past few weeks, averaging down on BHP Billiton (LON:BLT) also seemed like a smart idea, so that’s what I did.
If you’re interested in my past performance, look no further. I’m happy to say that I’m doing much better than I had hoped when I started living on my own in August.
- January: N/A
- February: N/A
- March: 87.4%
- April: 65.3%
- May: 78.6%
- June: 72.9%
- July: 76.7%
- August: 65.3%
- September: 72.3%
- October: 70.0%
- November: 60.0%
With 2014 now being history, it feels great to say I managed to save 72.7% of my net annual income. According to the almighty savings rate table that means I should be able to retire in just under eight years, which sounds surreal to be honest.
Ultimately it also sounds like everything I’ve ever wanted, so that’s why I decided to stick to my 70% savings goal for 2015. Financial independence by 40 sounds great, but if it can be done by the time I turn 35, I definitely won’t say no. That’s why I hope I get to enter lots of income and very few expenses next year in the budgeting spreadsheet I created.
How did you do in December? Did the Christmas gifts and dinners leave a big crater in your 2014 budget? I hope everyone was happy with his achievements in December, but also with his average savings rate throughout the entirety of 2014. Whatever the case may be, let’s topple last year’s savings rate and make 2015 our most frugal year yet.