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.
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…
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.
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%.
Here are the dividend payouts for the month: