February was a great month. Hopefully, it was also a trend setter. For the first time since I started tracking my income and expenses 3 years ago my non-salary income managed to exceed my expenses. Better yet, I’m sitting on a boatload of uninvested cash that’ll increase my passive income once I get it invested. More on that later.
Expenses ($3047) ($2747)
My goal is still to get expenses down below $2500/month, which really shouldn’t be that difficult considering my house is paid for. And had it not been for an unexpected $600 dental procedure for my wife, we would have met that goal. Here are the numbers:
Prop Tax+Ins $200
Cell Phone $80
Gifts & Donations $33
Shopping (clothes, books, etc) $187
Cord Blood Registration $0
Auto Insurance $0
Home Improvement $126
Library Fines $0
Groceries and restaurants dropped from $800 to $629, a good improvement but still not enough to meet my goal (especially considering February is a short month). We tracked this expense very closely because I was flabbergasted by our expenses in January, and I learned a few things. First, we had gotten completely lazy with our meal planning. This led to buying too many things in small quantities which tends to be more expensive. Second, we didn’t have any “filler” meals. What I mean by this is that we didn’t have any cheap meals that mostly consisted of cheap staples such as beans, rice, eggs, and lentils. I’m all for enjoying good food, but simply having one or two dinners a week using inexpensive ingredients like these can drive monthly expenses down quite a bit. Plus, those staples can still taste pretty damn good if you prepare it well.
I also learned that we’re wasting entirely too much food. Rather than eating leftovers for lunch the next day, I would normally fix a sandwich to take into work. Then, a few days later, we were throwing out a tupperware container of that previous dinner. This was convenient while I was building up my hot compost pile for my garden, but it’s certainly not financially wise. Just recognizing this has resulted in an immediate improvement. I’m targeting closer to $500 in March for groceries, so we’ll see.
Utilities remained high. This covers our gas, electric, water, sewer, and garbage. It appears about $200 of the $279 goes to gas and electric. It’s cold here so the large bills aren’t too surprising, but I still want to improve. The warmer months coming up will have an immediate positive impact, and we rarely run AC in the summer here in Colorado. Still, I’ll be taking some time to see what improvements we can make to be more efficient. We’ve already replaced all the old wood-framed windows, but I think there are still quite a few leaks around my house letting in outside air, and I know the attic can be greatly improved with some insulation. With that all said, I’ll be limiting how much I invest into the house because it appears we won’t be here for more than one more winter.
Our internet bill was $63, but this included an initiation fee for the new service after we cancelled our cable (which doubled as internet). In the future it’ll be about $35/month.
As I mentioned above, we had a very expensive and unexpected medical expense. Dental, to be exact. Not sure there’s much I can do here, other than monitoring my wife to make sure she’s flossing every night. That’s probably healthy for our marriage, right?
“Shopping” remained upwards of $180 this month. It turns out my wife spends a lot more money on clothes for her and the kids than I realized (considering I’m wearing a free marathon t-shirt from 2006 right now and it’s one of my newer shirts, I think I’m off the hook for this category). I’ll keep an eye on these expenses, but I’m not going to push on it right now. When it comes to frugality for the entire family, I find it’s healthiest to pick my battles. We certainly aren’t dressing our kids in Abercrombie (is that still a popular and expensive brand?), so we’ll just keep an eye on it and see if there are opportunities to drive this expense down a bit.
The last major expense was gardening, where I spent $222. This included all of the costs for my small indoor aquaponics setup, as well as a 4’x8′ raised garden bed I built. I’ll be spending a bit more in March as I’m setting up an outdoor barrel aquaponics system, but that shouldn’t be more than $200 since I’m in the process of purchasing most of the material on Craigslist. That should all pay for itself in the first growing season with fresh and organic vegetables.
In the end, I’m happy with our expenses this month. We’re one unexpected medical expense away from being under our $2500 monthly target, and there were still several areas I hope to improve upon in the coming months.
Income (not including my full-time salary) $3,446
Now the fun part… Here’s a list of my diversified income portfolio and nano-businesses.
Hard Money $0
Lending Club $131
Real Estate Private Equity #1 $208
Real Estate Private Equity #2 $0
Realty Mogul $0
Nano-business “o” $670
Nano-business “w” $125
Nano-business “e” $886
Nano-business “d” $160
App Development $3
Our income was great this month considering I didn’t get nearly as much done as I’d hoped.
Dividends – Dividends dropped a bit in February. This is because I sold $50K of a dividend stock that has doubled since I bought it in 2012 nd I consider overpriced now, and I’m in the process of reinvesting in some other companies. Dividends should go up a few hundred dollars in March.
Rental House – We finally sold our rental house for $190K, which has left quite a bit of cash sitting idle as I figure out where to invest it. Put another way, between the house sale and the stock sales, over 25% of our total assets are sitting in cash right now and not making us any money. Once that gets invested, even if only in 3-4% income earning investments, that should increase our monthly passive income by $1000 or more.
Hard Money – No additional investments on hard money this month. I had a deal lined up, but ultimately decided to walk away from it. The numbers looked OK, but the deal seemed rushed and it made me nervous. So I took Warren Buffet’s advice when he said “Rule #1: Never lose money. Rule #2: Never forget rule #1.” There’s no rush, I’ll get the money invested when the time is right.
Real Estate Private Equity #2 – I’m on the wait list for this investment. It’s a minimum investment of $100K, with an expected return of 11%-12%. Assuming I don’t change my mind during the 3-4 months of sitting on the wait list, that will net us about $1000/month. Along the same topic, I’m also in the process of investing in a 3rd real estate fund which should return about 10%. I’ll add that to the tracker once the money is invested.
Realty Mogul – It appears that I’ll be getting my first 10% monthly check of $42 on March 15th. That’s a 3-4 year investment, so it should show up from here on out.
Nano-Businesses – Our nano-businesses had a great month. My wife’s solo business made almost $700, which is awesome considering it’s fun for her and doesn’t take up much time. Usually just a few hours here and there when the kids are at school or in bed. We also made over $800 on our new business that we do together, which is also awesome considering we spend less than an hour each night after the kids go to bed and we have a good time doing it. I would gladly spend more time doing it, but there’s only so much it can scale right now due to some limiting circumstances.
We made more than we spent even after excluding my salary, so I’ll declare success. And there are still some significant rooms for improvement. Specifically, getting our medical expenses stabilized and getting my massive stash of cash invested in income earning investments. My goal remains to have a 50% savings rate after quitting my job, which I think may be a stretch in the short term, but definitely possible after I quit my full time job and have more time to spend on cost-reducing and income-earning hobbies (you know, the things I mentioned in my last post).
How are y’all doing in your own journeys?
As always, don’t forget to check out and comment on the progress of other readers.
[UPDATE]: I initially reported $3047 for my monthly expenses, but it turns out the dentist had made a mistake and charged us $300 more than they were supposed to. So expenses for February were actually $2747.