January 2013 Monthly Expenses

by FI Fighter on February 3, 2013

in Monthly Expenses

January_2013

The goal for 2013 is to average an 80% savings rate throughout the year. With the short-sale approval being triggered this month, I had a feeling that 2013 might get off to a slightly more jittery start than I would have liked. Now that January is in the books, let’s see how I did.

Short-Sale

By winning the short-sale in mid-January, the clock started immediately ticking down on when I needed to finalize the loan. I have 40 days total, or until the end of February to close. Last time around, the deal didn’t get signed until the last hour, so I’m hoping to do better this time. That is, I don’t want this one going down to the wire again. Quite frankly, I’m really busy at work right now, so I can do without any additional stress, or headaches.

To get the process started, I’ve been selling stocks throughout January. When the month began, I had 24 positions in the dividend portfolio. This has been reduced down to seven. Over the course of the year, I will work to build this back up, so I’m not too concerned with the dwindling stock portfolio at this point.

Expenses for Rental Property #2 were also high this month. To close the deal, the lender requires a lot of forms and documents. The HOA package ended up costing me $404. Further, an additional lender specific questionnaire was needed, so this tacked on another $205. What really hurt was the $711 appraisal that I needed to pay. For some reason, investor property appraisals cost about twice what an owner occupied property would cost. I can’t say I’m a big fan of all these different rules…

Expenses

Monthly rent was increased by $50 this month. I don’t think this is too big a deal since I’m counting on Rental Property #2 being able to offset any differences in my own rent. Rental Property #2 should go for a higher market rate than what I was able to get for Rental Property #1, back during last Summer, since the housing market keeps on surging ahead. If I can generate monthly net cash flow of ~$400+ from each property, I’ll be more than thrilled.

Food expenses were about normal, but I am expecting my bill to dip over the next few months. I’m starting to exercise more vigorously this year (partly to offset work stress), so I invested in some supplements this month. I also did some heavy shopping at Costco this month. Hopefully by buying in bulk now, I can reduce the grocery bill over the next 2-3 months.

Lastly, I spent some extra funds in the “Other/Fun” category. The web hosting/domain hosting for this website were due to expire next month. Since I don’t like keeping tabs of this (too many other things to worry about), I decided to spend a bit extra and register both for the next few years. By doing so, I now have one less thing to worry about, and hopefully I’ll be locking in a lower rate, which is something I’m expecting to increase gradually over the years.

Results

My savings ratio was only 38.92% this month. This was due to the aforementioned expenses attributed to Rental Property #2. In total, I spent $1320 on forms and documents. Talk about crazy, right?

After removing expenses for both rental properties (which cannot be avoided), my true savings rate jumps back up to 65.59%. This is still 15% lower than my target, so I know I’m not performing up to the standard, yet.

The good news is the grocery bill should come down next month. There also won’t be anymore web hosting/domain bills to worry about, for awhile. Lastly, once Rental Property #2 is good to go, I’ll receive some much needed cash flow to help supercharge the savings rate again. I’m confident the savings rate will continue increasing as the year progresses. By the end of the year, I will do my best to ensure everything averages out to 80%.

January_2013_Expenses

Here are the dividend payouts for the month:

January_2013_Dividends

{ 22 comments… read them below or add one }

1 LeighNo Gravatar February 3, 2013 at 11:03 pm

Where is the money to invest going? Cash for rental property #2 or your dividend portfolio? Ouch on those fees for the new rental property… Buying property sure does nickle and dime you sometimes!

How are you only spending $15/month on internet?! I want to know your tricks! Mine is costing almost $50/month now. I tried asking for a promotion via live chat and that didn’t go anywhere.

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2 JC @ Passive-Income-PursuitNo Gravatar February 4, 2013 at 7:06 am

Except they like to move the decimal on those nickels and dimes.

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3 FI FighterNo Gravatar February 5, 2013 at 8:45 pm

Leigh,

Right now, I’m not saving any money for investing. I need every paycheck to go towards the downpayment + closing costs. I probably won’t have spare cash to invest with until end of March, or early April.

My internet expenses are low b/c the bill is divided up. No, it isn’t just $15/month, sadly.

Best wishes!

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4 JC @ Passive-Income-PursuitNo Gravatar February 4, 2013 at 7:11 am

Considering all the extra expenses related to the short sale I’d still consider a 39% savings rate a win. You’re still about 10 times the average savings rate in the US. At least you were having to sell off your stocks in a month that was up. It would have been much worse to have the short sale approval go through during a horrible month.

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5 FI FighterNo Gravatar February 5, 2013 at 8:47 pm

JC,

The savings rate is much lower than what I typically strive for, so it that sense, it’s a bit disappointing to see the closing costs eating away so much of my net income.

You are definitely right about selling at a good time. I would probably be reduced to tears if I had to sell when the market was pulling back. So, although it does suck to see all the stocks I sold continue surging, it beats taking a loss any day.

Cheers!

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6 MartinNo Gravatar February 6, 2013 at 9:57 pm

I agree, 39% is very impressive number. I recently did my own calcs and got to 22.91% savings rate. Originally I was depressed seeing you guys saving 20, 30 or even 40 to 50% of your income not realizing that I was actually doing well myself. FIF, great job!

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7 Greg@ClubThriftyNo Gravatar February 5, 2013 at 4:40 am

Good job on the savings…and congrats on winning the short sale! We love real estate.

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8 FI FighterNo Gravatar February 5, 2013 at 8:52 pm

Greg,

Thanks! I’ll love real estate even more once I finalize the loan, make repairs, and rent out the place. Can’t wait until it starts generating positive cash flow. Hopefully soon.

Best wishes!

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9 Brick By Brick Investing | MarvinNo Gravatar February 5, 2013 at 6:17 pm

I can’t wait to see how this second property boosts your finances! I’m sure it will make all of your hard work these past couple weeks worthwhile!

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10 FI FighterNo Gravatar February 5, 2013 at 8:53 pm

Marvin,

I sure hope so! I’m really hoping the extra “dividends” each month will help supercharge my savings so that I can buy even more stocks. Can’t wait to rebuild!

Cheers!

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11 MartinNo Gravatar February 6, 2013 at 10:00 pm

I agree with Marvin. Once settled down, update the table for us. The rental income of 2200 monthly (is it monthly?) is huge! I wish I had it. That is my inspiration to get my dividends and options income to these levels or even higher. Then I can suspend contributing to my savings and just reinvest and use my money to travel for example. There is so many places around the US I have never been, gosh…

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12 FI FighterNo Gravatar February 10, 2013 at 6:24 pm

Martin,

I’m anticipating about $2100 or so, maybe $2200 if I’m lucky. We’ll see. Yes, I am definitely looking forward to having extra cash to travel in the future. I’m diligently saving now so that I can really enjoy later. Traveling is something I really want to do. For now, I’m just traveling domestically. But you’re right, even then, there are a ton of places I still want to see. Life is too short, we gotta make the time!

Cheers!

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13 IntegratorNo Gravatar February 6, 2013 at 4:55 pm

I like the 80% savings goal. That’s a sure way to accelerate your investment earnings. We used to hit that level a few years ago. 2 kids have since sent our savings rate down to about 50% 🙂

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14 FI FighterNo Gravatar February 10, 2013 at 6:27 pm

Integrator,

Yeah, I definitely want to reach early FI sooner than later. Since it’s difficult to build up more offense for me, the logical approach would be to keep improving the defense. 70% is about my sweet spot right now. 80% will take more effort, but I think it should be doable.

I’m sure having kids will quickly drain savings, no matter how much you make. Good for you for taking care of the savings earlier. I’m attempting to do the same, b/c I have no idea what the future holds in store…

Best wishes!

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15 Dividend MantraNo Gravatar February 6, 2013 at 7:23 pm

FI Fighter,

Great job man. Saving almost 40% of your net income during a month in which you went out and bought a property is astounding. Most people have a hard time saving 10%. You quadrupled this and also bought real estate in the process. Crazy!

Keep up the great work. Look forward to hearing about the new property’s progress and the rebuilding of the stock portfolio.

Best wishes!

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16 FI FighterNo Gravatar February 10, 2013 at 6:30 pm

DM,

Thanks! Yeah, after the deal is finalized, I’m hoping to get back on track to 80%. There are just too many fees and expenses during this process that really make it difficult to minimize expenses.

I’m really looking forward to rebuilding the dividend portfolio. In a few months, hopefully this bull run will be reaching its apex and prices will start falling again. Cash flow should free up in April for me, so that would be perfect timing 😉

Cheers!

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17 The Keichi OneNo Gravatar February 9, 2013 at 9:10 pm

Well done FI Fighter!

Your savings rate really surprises me! It’s great to see such a high earner taking the reigns and creating control for himself.

Keep up the good work!

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18 FI FighterNo Gravatar February 10, 2013 at 6:32 pm

Keichi,

Thanks! I’m doing my best to stay the course and keep focus. You’re doing great yourself! Early FI is looking more and more realistic everyday 🙂

Take care!

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19 writing2realityNo Gravatar February 11, 2013 at 12:57 pm

FI – Great job! Big fan of your combination of the DG model with rental real estate! I hope that once I can get clear of a few financial obligations this next year, I should hopefully be able to start back down that path myself!

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20 FI FighterNo Gravatar June 9, 2013 at 8:33 pm

writing2reality,

Sounds like a great plan! I love the combination of dividend growth stocks + rental properties. That’s a potent 1-2 punch in my book!

Cheers!

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21 Financial IndependenceNo Gravatar June 7, 2013 at 3:33 am

Why would you rent and own properties at the same? Is it tax efficient? As to pay for the rent you need to pay taxes of those money.

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22 FI FighterNo Gravatar June 9, 2013 at 8:32 pm

Financial Independence,

I believe it’s a good idea to own rental properties but not your own personal residence. I haven’t gone into details about this, but this would make for a good future post!

Yes, definitely not having to pay for taxes, repairs, HOA, etc. and the freedom of mobility of not owning your own personal residence are some of the reasons why I choose not to own my own home.

Take care!

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