Monday, April 16, 2012

How much freedom do I buy with each paycheck?

This was the question I asked myself over the weekend. Despite being in the woods, camping out, and having fun on a lake, I was still thinking about my financial situation.

After plugging in some future scenarios into excel, I achieved this chart.
The green line is the percentage of expenses that are covered by dividend investments (replotted against right side Y-axis for clarity)
The light blue line is the age at which, if reinvested, my dividend investments would pay me more then my current salary.
The purple line is the age at which my investment income is twice the amount that I currently need
The red line is the age at which my investments, if reinvested till that age, would cover my current expenses.
I had to take so many assumptions that it isn't worth the effort to try and explain all of them. Inflation and tax rate changes are not included.

The information in this chart is exciting.
  • The most important piece of information is that financial independence is achievable, with 21 more paychecks invested I could search for employment that makes me happy and not worry about what was going to happen. Assuming that my expenses stayed exactly the same and that the dividend/interest payments of the companies I am invested in stay the same. 
  • Investing and compound interest is very important and very powerful.
  • 10 paychecks invested will cover another 30% of my expenses plus it reduces my freedom point by 7 years.
  • 15 paychecks invested will cover another 45% of my expenses and reduce freedom point by 11 years
If only I had been investing this heavily when I was first hired....

Monday, April 9, 2012

Oh the things I keep...

Such stupid things... I keep working at my trimming down my pile of stuff and it feels great. Sunday I went through my box of van parts and decided that I could function perfectly well without half of what was in the box. The problem is that I don't want this stuff but who else would want it? The other half is stuff directly related to the performance and operation of the van and so, for now, I will keep it around.

My Katadyn reverse osmosis water purification system is now on craigslist. Hopefully some survival person sees it and is interested. I could put it on ebay and sell it but I really don't want to deal with shipping it.

After the camping trip this coming weekend I will think about putting my tent on craigslist. The idea of carrying around a 12lb tent is not as appealing as i had thought. It is too big for my needs.

I've copied one third of my DVD collection onto my laptop and I'll be needing to get that external hard drive soon, currently 60% full. Once they are all copied, I will put them on the company bulletin board and sell them off.

I am mailing two boxes of stuff back to CO. One box contains detailing supplies for my Mini and the other is a box of kitchen towels for my mother.

I've made some progress on paperwork that I thought I couldn't get rid of, turns out that I can. Everything from financial statements to old school document are now on my google docs folder and my laptop. I am losing physical clutter and gaining digital weight. Which one would you want to keep?

Had to refill the propane tank on Easter Sunday.

Monday, April 2, 2012

3/31/2012 - Monthly Financial Breakdown

Well, another month has passed and this means I need to do a financial breakdown. This past month was Ok ....Lets see how it went. How much is Van dwelling in my VW Westfalia saving or costing me?

Previous Monthly Financial post here

If I sum up total expenses from 3/1/2012 through 3/31/2012 I get -$927
A rough calculation would put my yearly expenses at $11,130. So close...
lets take a closer look.

*Note: I had to pay my taxes, cost of $920 which I did not include in the expense analysis because if I was living off of my budget goal I would be paying a lot less if not zero taxes.

Regular Food costs: -$125 or -$31 per week (Normal)
Fun Food Costs:  -$167 or -$42 per week (Normal)
Fuel: -$113 or -$28 per week (Normal to Low)
Van: -$104 (New coolant tanks, belts, and propane)
Travel: -$310 (Flight to CO and hotel for marathon)
Insurance: -$50 per month   (I pay in 6mo intervals to reduce the premium but still counted as monthly)
Clothing: -$0 (Nothing new in March)
Misc: -$58 (Running Gels, Sports Drink formula, and cord for my camera's remote flash system )
Storage:  -$32 (plus a sunk cost of 15 per month for mailbox)
Gifts: -$15 (One wedding gift)

Things that were not necessary this past month: Travel and fun food,
The fun food expenses were eating out with friends and solo burritos, I am tempted to not put my solo burrito meals in the fun food. The new coolant tank was not needed but I did not trust the old plastic tank to keep working forever.  This brings my luxury expenses to $477 and necessary to $450 Yikes!! Without the luxury, my yearly is at $5400... :)

Ok, clean out the unusual stuff and do a monthly for the rest
Regular Food and fuel: -$400 (Seems my food and fuel costs have been slightly higher then estimated)
Storage and box:  -$47
Insurance: -$50 
Clothes: -$0
Van:  -$100 (I don't anticipate any large projects for next month)
Fun: -$300 (I need to watch my fun costs)
Yearly expense estimate with the new numbers: $10764

Just under my 11k mark again but still disturbed by fun expenses. Food with friends and Travel are what killed this month's budget but I can hardly be angry about it because it was really fun. 

I am optimistic about next month's expense sheet, should be interesting to see exactly what another almost normal month will look like.

Note: Gave away/donated many items. Still have mattress, vacuum, van parts, and lots of clothes

Here is the status of my dividend income:
I have a running total of yearly expenses which I base my numbers off of so if my monthly goes up my dividend income against it decreases in value.
Since I re-aligned my investment strategy I've been putting extra cash into dividend paying stocks and other investment opportunities.

 Last post it was at 17.97%. Previous Monthly Financial post here

Current level is now estimated at 23.5%
Note: I did receive a bonus this year and the whole thing went toward purchasing more stock which accounts for the significant increase in my dividend level vs last month. 

Progress at a snail's pace but improving, My plan for April and the rest of the year is to push hard on dividend stocks and trim expenses.