I’ve been looking forward to this post since I started last month. This is my first monthly income/expense/net worth report!
As previously mentioned I discovered FI in September 2017. It took me a while to get started as I was dealing with multiple moves (back to SoCal from Washington D.C., then selling our housing and moving to Monterey and now purchasing our new home in Silicon Valley).
Let’s start with the good news.
Income (a little background)
Our income has increased drastically over the years. Lady Kit and I started dating in high school, and stayed together through college (and lived like broke college students…because we were). After graduating I had an entry level job and she worked as a Vet Tech while applying to Vet School.
During Vet School we were back to a single income household (along with tuition costs of $50,000 a year). When Lady Kit graduated in 2016 she started her internship with a gross salary of $38,000 a year. While this was better than being unemployed it launch us immediately to FI especially since it required us to be living in separate locations therefore doubling a lot of our expenses (housing, utilities, food).
In 2017 was when we finally felt like we made it. She was now grossing over $100k and I was making close to this. We had plans for me to relocate to her and once again we would be sharing a lot of expenses.
Income Statement (June 2018)
I separate out our W-2 income from our contribution to our retirement plans because personal capital doesn’t show this in the cash flow section.
Lady Kit’s 401K contributions are $3,000 a month because we want to max out her 401K before she leaves her current job (she doesn’t become eligible to participate at her new job until next year). I have to pace contributions to my TSP over the year because my employer doesn’t do a true up. Again, just to clarify our retirement contributions come from our W-2 income (but it is pulled out pre-tax).
Our W-2 income is reported post tax (and hopefully our deductions are set right so it will cover Lady Kit’s 1099 income as well).
I’ve kept our refunds and reimbursements as income because they balance out with our expenses.
Most of our investments are in VTSAX so we don’t have a lot of dividends or other passive income.
Expenses (June 2018)
At some point our expenses will level out. I have been trying all year to have a month of expenses under $5,000 (which equals $60,000) a year. We have not managed this, and at this point I doubt it will happen as we close on our house Friday and our housing costs will increase from $1,500 to $3,126.81.
On the bright side there were some one-offs in here and some categories that should decrease after we move.
Home moving expenses should drop off (we’ve been paying $204.71 to store our POD) and we had one time expenses for a home inspection and appraisal.
We did pretty well on food this month. I still want to get our groceries under $360 and I think this is doable. Our restaurant category is still higher than I would like, but this included some meals out as we visited relatives. Overall food was 10.69% of our expenses.
We are moving closer to work so starting in August once the move is done I expect our fuel costs to drop dramatically. We spent $668.46 on gas which accounted for 12.15% of our spending.
In Personal Capital we have a category for general merchandise which basically translates as amazon. This is kind of a catchall category as we do most of our non-food shopping through Amazon. This also includes bird food, a new leash, a new collar, two e-collars, and poop bags (which should be in pets, but at this point I am too lazy to separate it out) as well as protein powder and vitamins (should be in grocery). This still ended up being only 4.54% of our expenses and included $26.50 in refunds.
Pets, Utilities, Business Expenses
These all remained fairly stable though I expect our utilities to drop a little bit as we negotiate prices at our new home. I do plan on utilities being higher in July as we’ll be paying for both places while we move.
The early months of the net worth chart may not be 100% accurate as I was in the process of starting new accounts, learning about FI, and getting everything set up. There are also some major shifts in which categories contain money.
We sold our house in January so home equity disappeared and we dropped the proceeds from the sale into our Roth IRAs and into a Vanguard Brokerage account.
I kind of lost this battle as the stock market hasn’t done very well and I needed to pull out money from the brokerage account for the down payment on our new house. What did learn, this is called timing the market and it is bad (I think this cost us about $3,000)!
On the bright side our net worth has been more or less steadily climbing even with the cryptocurrency gambling (I’m not adding any more, just letting it ride).
At this point we have maxed out 4 of 5 retirement accounts for the year (two IRAs, Lady Kit’s 401k, and our HAS).
Finally June saw an uptick in home equity again as I included the earnest money for our new house. Additionally the house appraised for $50,000 more than we are paying for it, so instant win on paper for us. This puts us marching along toward our goal to be half-millionaires by the end of the year.