2015 Quarter 4 Financial Update

2015 has been an Amazing year for us, overall we clocked in at a savings rate of 40.9%, exceeding my 33% goal for the year.  Our total income increased by 25%, making it possible to achieve that savings rate, and we were able to keep unplanned expenses in check to under 10% of gross income. As an added bonus this website started making some money and is on track to actually be in the black in 2016! Since I started this blog I have guarded my personal info, but I think sharing my details may be helpful to others by showing in more detail what I am doing and where I am at financially.  Last month I revealed my total net worth figure, and today I am revealing a total breakdown.

Financial Update: Income:

Our total income for the year came in right at $73,200:

The vast majority of the increase comes from me working more total hours.  Last winter and this winter I worked at my local nuke plant as a night shift supplemental supervisor for snow removal.  This job fits perfectly between the Fall and Spring outage season and is at home.  My hours varied from 40 hours per week to 52 hours per week on this job.  I also was able to get a short 10 day job at the end of the last ice condenser outage in the spring. Replacing weeks where I typically had 0 hours with 40 – 52 hours made a huge difference. Last year our total income was around $57,000.

Mrs. C. took a major reduction in income mostly due to us now having custody of our nephews. Mrs. C. was previously able to work M – F during school hours, but now that we have two kids who aren’t in school she works 2 days per week and I watch the kids when I am home (I have one of those 2 days as my day off) or her mom watches them for her.  The Social Security money we receive for the boys from their mom’s work record about evens out the hours reduction.  Once both kids are in school she will be able to work more hours, but that is 2.5 years away.

Extras:

We received a tax refund of around $2,000 in March, thanks to over payments last year. I now claim exempt on Federal withholdings and expect to have a slightly larger refund this coming March thanks to our large retirement contributions and having 4 kids. In calculating our savings rate I will subtract this money.

I received $4,700 in Per Diem this year. I’m not really sure the best way to account for it, since it is non-taxable money that is given to employees to cover extra expenses while working on the road. I am tempted to not claim it at all when calculating my savings rate, however it is cash coming in that I did not have expenses on the road to counter, so the amount I am able to save should be added to my income. I typically am able to save about half of this, so that gives our budget an extra $2,350.

Subtractions:

Although we pay no Federal Income tax, we do pay payroll taxes and state income taxes. Combined these rang in right at $6,000.

Financial Update: Savings Rate:

To calculate our savings rate we took our gross income, subtracted out income taxes paid, and added in tax returns received and 1/2 Per Diem.

  • Gross Income: $73,200
  • Payroll + State Taxes: – $6,000
  • Tax Return + $2,000
  • 1/2 Per Diem: + $2,350
  • Net Income: $71,550

Here is a breakdown of our total savings for the year

  • Purchase of railroad property: $3,500
  • Monthly extra on house:            $2,050
  • End of Year Extra on House:      $5,000
  • HSA Contributions:                     $6,520
  • IRA Contributions:                      $8,400
  • Increases in Savings Balance:    $8,000
  • TOTAL                                         $33,470

This works out to a 46.7% savings rate, However, although we saved this much we also took $4,200 in withdrawals from our HSA for medical expenses throughout the year, dropping our savings rate to 40.9%. 

I’m most proud of being able to pay down a large chunk on the mortgage.  I track this using both my House Payment Spreadsheet and Personal Capital.  Personal Capital does a great job of illustrating the changes over time on a graph, Look at that BEAUTIFUL giant dip in December!

Personal Capital Mortgage

Expenses:

Although we have a budget of $3,000 per month, on average our base spending is considerably less, this gives us a buffer for paying for unexpected expenses out of cash flow.  This year, like virtually every other year we had several unplanned expenses:

  • Van Timing Belt Replacement and Valve Adjustment: $1,000
  • Replacing Dishwasher: $350
  • Replacing Fridge: $800
  • Repairing Oven: $420
  • Replacing A Vehicle: $750
  • Non Routine Dental Work: $3,500 (came out of HSA)

We all have unplanned expenses, we don’t know what the expenses will be, but we know they will happen, which is why an emergency fund is so important. I can’t tell you what special expenses we will have next year, but I bet I will have at least a few thousand dollars worth!

 

Financial Update: Net Worth:

This is the first full Net Worth Breakdown I have published, our current net worth is $184,000. (I round numbers because it is easier, I have the real numbers, but for now I don’t really care to track every penny)

Q4 2015 Net Worth

 

Action Economics:

Earnings:

This website is actually starting to make a bit of money! In the future I think I will only report actual cash received.  The vast majority of this income is fro the Amazon Associate program, while about $35 is from Google Adsense and $40 from spreadsheet sales. For now here are my monthly earnings:

  • Jan – July Combined: $16.75
  • August: $10.23
  • September $25.76
  • October: $22.51
  • November: $54.73
  • December: $123.34

I’m sure the large spike I had in November/ December can be attributed to increased Christmas shopping. I project that in January earnings will be back to $20 – $30 a month, which is still enough to cover the blog’s expenses. As far as on a cash accounting basis I have received $98.50 thus far, which means Action Economics was in the red for 2015.

Traffic:

This year I wrote 67 articles with a total of 87,118 words.  I’ve adjusted to a one post a week schedule, which is working out well for me so far. For the year we had over 47,000 page views, with visits from 134 countries.

Our biggest article has been the one I wrote on Building A Monkey Bar Set This article accounts for just under 40% of our search traffic now. We are consistently hitting over 5,000 page views a month, and each month we are seeing a decent increase in total traffic. Including an end of year share on Rockstar Finance, For December we cleared 8,700 page views.

Throughout the year I did three guest posts; In January I wrote Side Hustle #56 I Get Paid To Empty Septic Tanks for Budgets are Sexy,  in June I wrote My Semi-Retired Summer for Root Of Good, and in December I wrote 5 Reasons Why A 20 Year Mortgage Is A Great Option for Credit Sesame.

Goals for 2016:

Increase Earnings by 11% to an even $80,000: This will be accomplished by continuing to work the jobs I already have lined up, as well as seeking increases in pay for my current roles. This summer Mrs. C. may be able to work more hours which would give us a decent boost. If our taxes, my per diem, and our tax return stay in the same ballpark this would give us around $77,000 net.

Increase Savings Rate to 50%: This will only happen if I achieve the above mentioned goal of increased income.  We are comfortable with our current spending level and although it is possible to lower it some more, right now the areas we have that we can tighten up won’t make a huge difference.  Spending under $36,000 a year for a family of 6 is pretty darn good.  With a $77,000 net income we would be able to save at least 50% as long as we kept our expenses under $38,500, which I think is doable. If I miss this target, no big deal so what if my savings rate ends up being “only 40%”?  Goals are good to have and psychologically hitting the 50% marker is huge.

My major challenges to meeting this goal are current planned one time large expenses. For 2016 we are planning on:

Getting Braces for Kid #1:  He has a consultation with an orthodontist next week.  We went to a different orthodontist last month who told us his case was more complicated than what he is used to dealing with.  I am projecting the total cost to be in excess of $5,000. From most of what I have read the majority of orthodontists offer payment plans, with a large deposit upfront.  This makes sense because the xrays and installing the braces are a large up front cost, but the rest of the cost is over time for adjustments and check ups. I would estimate the year 1 costs at around $3,000.

Root Canal for Mrs. C: Mrs. C. has at least 1 more root canal/crown left, this will be around $2,000. This will be paid out of the Health Savings Account.

Trip To Universal Studios:  We had planned to do this last year, but with us getting the little kids last spring it wasn’t do-able.  The plan is to take a week and go down there, spending probably 2 days at the park. I am estimating this will cost between $2,000 and $2,500.

Pave the End Of Our Driveway:  We have a basketball hoop at the end of our driveway, but the concrete is so weathered, it is constantly breaking up small chunks and rocks.  My guess is we are looking at $1,500 to $2,000 on this.

With these challenges I think a 50% savings rate is possible, provided we have no other large expenses pop up.

Increase Action Economics Income:  I would like to see monthly income in excess of $100 per month on average for the year.  I think this is a reasonable goal and will keep the blog in the black, as well as give me a bit of extra motivation.

Buy Adjoining railroad bed chunk: The current owner of the railroad bed property adjacent to mine is interested in selling it, but we have not been able to come to an agreement, we are just too far apart on price.  If he comes down in his ask to closer to what the true value of the property is we might be able to make a deal.  Right now he wants about 3X what I am willing to pay.  It’s no big deal whether I have it or don’t, but it would be cool to have a bit more acreage and a longer walking trail.

So there you have it, another great year in the books!  How has 2015 been for you and what are your 2016 goals? I look forward to sharing my journey over the next several years.  

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. Check out the Action Economics archives section for all past posts.

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