It’s my favourite time of the month again! Nothing gets my little financial independence heart beating more than tallying up my income and expenses at the end of the month. That’s because the difference between those two numbers remains the best indicator of how long it will take me to achieve financial freedom. Was I able to improve my savings rate? Let’s find out.
The past few months my savings rate has dropped a bit because of a number of reasons. First, I bought an expensive road bike and a whole bunch of accessories, maintenace items and clothing. So far this semi-experiment has only cost me money, but I’m hopeful that it’ll make me money in just under two years’ time.
Second, I’ve noticed my overall spending went up a little bit compared to last year. That’s no surprise when considering that I still lived at my parents’ for the majority of 2014, but that’s not the whole story. Apparently, social activities increased quite a lot over the past few months – something to keep an eye on, although I’d never forgo hanging out with friends just to save more.
All in all I’m still happy with where I’m currently at. Writing these reports is a good way to reflect on how I’m spending my income and thus making my dream of one day living financially free possible. On top of that, they also show you guys the though-process that goes into my spending and saving. I don’t want to proclaim everyone should go completely car free though, rather I want to show the financial consequences of that choice.
As most of you know, I use my own Excel spreadsheet to keep track of all things money. Feel free to check it out and see if it helps you too.
Let’s get down to the cold, hard numbers!
|Paycheck||€ 2,081||As expected|
|Cycling||€ 96||Renumeration for cycling to work|
|Dividends||€ 110||Another good month|
|Other||€ 155||Side hustlin'|
September’s income continued the stable trend of the past months, where my salaried income hovers around €2,000 and my side hustles bring in anywhere between €100 and €200. On top of that there’s the generous cycling renumeration I receive from my employer and which will in time pay back for the race bike mentioned earlier.
However, my dividends hit the second highest number since I started my journey towards financial independence. I can’t stress enough how impressed I am by the free-of-work income that’s rolling into my account each and every month, especially because September’s dividends make up almost 5% of my total monthly income already.
|Rent||€ 350||As expected|
|Utilities||€ 70||As expected|
|Telecom||€ 18||Reduced compared to previous months|
|Groceries||€ 99||Right on target|
|Restaurant||€ 58||Higher than usual due to social obligations|
|Public transport||€ 18||Train tickets|
|Bike||€ 162||Winter clothing at 50% to 75% off|
|Clothing||€ 32||Had my shoes repaired|
|Sports||€ 5||Wall climbing|
|Subscriptions||€ 8||Google Play Music|
|Entertainment||€ 19||Beers with friends|
Even though I’m happy with my income level, I try to focus more on my expenses since the impact I can have on them is much larger. As most of you know, I aim to save 70% of my income on average for 2015 – doable, but not an easy feat by any stretch of the imagination. Keeping costs low enough to reach that number hasn’t been easy this year, as I’ve explained above.
In September I fell short once again with a savings rate of 65.0%! And once again the cycling experiment is to blame because I had to buy warm clothing to get me through the colder autumn and winter months. It’s a good thing I got most of the clothes at 75% off during a clearance sale because warm bibs and shirts are ridiculously expensive.
Now, don’t get me wrong, 65% remains an incredible number, even for a single earner in his twenties with no dependants. If I fail to reach my goal because I’m spending money on a hobby – one that is furthermore likely to make money in a couple of months – you won’t hear me complain at all.
In absolute numbers my financial independence stash grew by a solid €1,587. Most of that amount went straight into 25 shares of Caterpillar Inc. (NYSE:CAT), which manufactures construction and mininq equipment among other industrial machinery. Caterpillar saw it’s share price decimated because of the economy’s cyclical nature. Even with solid fundamentals, much of what ails the company right now is outside of its control, but that doesn’t mean its long-term prospects are in danger – a perfect moment to scoop up a high-quality and high-yielding stock, in my opinion.
The graph below shows the past performance for this year, but also a year-over-year comparison since I started blogging.
This year I’ve saved 65% of my income on average, which is unchanged from last month. Even though the 70% threshold seems within reach, it’s still a long way off – the higher your savings rate, the harder it will be to increase it even more. However, a year-end bonus at work and a tax refund could provide a nice push towards the end of the year, so it’ll be close finish.
Here’s to a good last quarter for all of us!