Quarter 2 was a rough one for us. We had a decent income for the quarter, but we had a TON of expenses come out, which greatly reduced our savings rate for the quarter.
Financial Update: Income:
Our total income for the quarter clocked it right at $22,671, which has us on par for hitting our $80,000 year target:
I finished up working the Ice Condenser outage at DC Cook, then I went to Salem and worked a short Nozzle Dam job there in late April and early May. Mrs. C. has continued to work her normal 2 -3 days per week during this quarter. At the end of the quarter our son had a liver biopsy and Mrs. C. took a couple weeks off of work for that.
I received $1,330 in Per Diem for quarter 2. I counted half this amount in the income above because this is the amount I was able to save over my actual work related expenses. My primary employer pays us a $20 per diem to assist with extra expenses from the job (transportation/food). My other employer covers hotel/rental car expenses and pays us a $50 a day per diem.
I am still claiming exempt on federal withholdings. This keeps me from loaning too much money to the IRS. With having 4 kids and making large contributions to tax deffered accounts I expect zero tax liability. I will most likely receive a refund of somewhere between $1,000 and $2,000 for this tax year.
Financial Update: Savings Rate:
I’m kind of at a loss here on how to calculate our savings rate. I guess I will go with the most conservative method and list our van purchase as a reduction against savings, which will lower our savings rate dramatically.
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. Social security income for our nephews is included in our gross income total.
- Gross Income: $22,671
- Payroll + State Taxes: – $2,819
- Net Income: $19,852
Here is a breakdown of our total savings for the quarter
- Monthly extra on house: $600
- HSA Contributions: $1,560
- IRA Contributions: $1,950
- Increases in Savings Balance: -$11,000
- Taxable Account $300
- TOTAL -$6590
This works out to a -33% savings rate. We had a great income, so what the heck happened? We had several long term large expenses come out this quarter. We acquired some adjoining land to our house (with cash), we paved the end of our driveway (with cash), we had to replace our van unexpectedly (with cash, see a pattern?) and we took a trip to Universal Studios, once again, with cash. How much did all of these things cost:
- The 4.25 acres of railroad bed: $3,000
- Paving the driveway: $2,150
- Replacing the van: $10,000
- Our trip to Universal: $1,500*
This is a total of $16,650 in one time major expenses. Although all of this is spending, the vast majority of this spending did not reduce our net worth. The paved driveway is a plus if and when we ever sold our house. The extra land is in my opinion worth more than the $3,000 we paid for it. Over 4 acres of wooded land with a creek! The elephant in the room, the van purchase, also did not reduce our net worth. We could still sell the van for around $10,000 today. The only loss of net worth that occurred was the approx. $2,500 value of our previous van, which we were able to sell for around $700. The van will depreciate over time, but it will still hold its value for a long time.
When adding in the first quarter income and savings with the second quarter, we have a total income of $41,8523 and savings of $7,120. This is a savings rate of 17%, which is still pretty good.
If we view the land purchase and the van purchase as transfers of savings instead of spending, then there is a vastly different picture of $41,853 in earnings and $20,120 in savings, just shy of the 50% mark.
*Note: This was our cost to Universal. The total cost of the trip was much greater, but other family members generously helped with the cost of the trip.
I started a taxable Betterment account to start taking advantage of historically low Long Term Capital Gains tax and the instant diversification Betterment offers. So far I have put in only $100 per month, but once the house is paid off I will be diverting all the extra money I was putting on the house into my Betterment account.
We also had a write down of a $400 loan, it was sketchy that we would get it back at the time it was made, but at this point I’m fairly confident we will never see that money again, which is OK, it went to a good cause and in retrospect we should have gifted rather than loaned the money.
So far this year I have only put $200 per month extra on the house. At the end of the calendar year I will make a large payment on the mortgage like I did last year. With the unexpected van purchase, it will be less than what I had hoped for, I’m shooting for at least a $10,000 – $12,000 reduction in principal. I love seeing that large drop on my Personal Capital Chart. I’m planning on this years end of year extra house payment being at least twice the size of last years.
I will start to discuss this on a cash basis vs. accrual, so most of the dollars reported here were actually covered in my last financial update:
- April: $76.96
- May: $95.71
- June: $252.09
The majority of the earnings are from Amazon Associates. I made $5 from spreadsheet sales this quarter. June looks REALLY good, but a big part of that is that I received a payment from Google Adsense, which covers the entire time Action Economics has existed.
This quarter I published 20 articles with a total of 24,232 words. The last couple months I’ve been trying to publish 2 articles a week, but I don’t think I will continue this pace. I typically build up my articles that are ready to publish during the summer to get me through my long work season of September – May. I only have about a half dozen articles written ahead right now and I need to build up at least a dozen articles before the outage season starts.
This quarter we had 40,194 page views and visits from 138 countries and are seeing significant month over month growth. Action Economics was featured on Rockstar Finance twice, for the articles Stack Your Money And Act Broke, and Muhammad Ali’s Money. Stack Your Money And Act Broke was subsequently picked up and shared by Life Hacker.
Our biggest article is still the one I wrote on Building A Monkey Bar Set This article accounts for just under 45% of our search traffic now. My post Living Large on $50,000 A Year: Why It’s not so hard for median earners to get ahead has risen sharply and now accounts for about 20% of search traffic. For the quarter 204 articles were found at least once in search engines, which isn’t bad for having published only 214 articles.
Goals For The Rest Of 2016:
Increase Earnings by 11% to an even $80,000: I’m on track for this and MAY exceed it. As long as Mrs. C. and I keep doing what we are doing we should be in good shape.
Increase Savings Rate to 50%: Our expenses detailed above sunk this ship. I will still track my savings rate to include the land and van acquisitions as spending, but I will also keep tabs on the savings rate excluding these one time, long term investments. With the van and property excluded, I think we will hit 50%.
Look Ahead To Quarter 3 and Quarter 4:
Quarter 3 will start off slow with us burning into savings a bit to get through the summer. I go back to work at the end of August and will be at my home plant for the entire season. This is supposed to be a longer outage than normal, so it will be nice to not have to try to travel at all. I should be able to roll directly from my outage job with the Ice project to my winter job with Facilities for snow removal. There are no major purchases on the horizon (at least that we know of), so the rest of the year with no surprises should allow for us to cross the $50K mark in our retirement accounts and put at least $10K on the house.
That’s it for my second quarter, how has the second quarter of this year been for you?