2014 in Review
Category : Uncategorized
To give you an idea of where I started in 2014, first I need to give a general picture of 2013 and where I started once I graduated from college.
In March of 2013 I took an engineering job, and from that point to the end of the year I made about $40k after taxes. After living expenses and paying off my student loans, I was left with about $25k cash at the end of the year.
In January of 2014, I quickly started investing this $25k in blue-chip dividend growth stocks. Through 2014 I added another $43k to my investment portfolio. On average, I was investing $826 a week. This strong steady flow of cash into my portfolio allowed the amount of passive income that I receive generate to sky rocket. The amount of money I was collecting each month in dividends started pretty low ($18.90), but by the end of the year it was a couple hundred bucks ($315.87). That is some serious growth there. The best part is, each month I don’t actually pull the dividends out. I reinvest them in more dividend growth stocks. That’s a guaranteed $200-300 that I’ll invest each month, and I don’t have to work to do it! You can view my portfolio here.
I track my expenses through mint, and each month I try to break my expenses up into their pre-formed categories. I especially like the pie chart, it provides a pretty good visual of where my money is going. Month after month, I find that most of my money goes towards Food & Dining and Auto & Transport.
The chart below is a breakdown of how much I spent on each category in 2014.
|Food & Dining||$4,817.56|
|Auto & Transport||$3,512.03|
|Health & Fitness||$2,044.19|
|Gifts & Donations||$544.61|
My Food & Dining expenses don’t need to be nearly that high. I spent alot of money in 2014 buying food from restaurants during my lunch break at work. Because I would frequently work long hours, I didn’t feel like putting in the energy or effort to packing a lunch every day to save money. Occasionally I would do this, but going out to eat everyday was the norm and packing a lunch was the exception.
So what do I need to spend money on each month? What are my fixed costs?
Car Lease Payment: $179.77
Car Insurance: $139.00
Total Fixed Costs: $418.77
Car payment and insurance are self explanatory, but rent deserves some light shedding. Since I graduated college in 2013, I’ve paid my parents $100 rent per month. I’ve considered moving out and renting my own place, but I don’t for several reasons. First, the cost. Paying $100 rent to my parents has allowed me to save and invest thousands since graduating in 2013. Second, I don’t plan on staying in Michigan for most of 2015, so I would have to rent month to month and that will just be too much of a hassle.
The next category I like to define are my necessary variable costs:
(Groceries vary quite a bit month to month, but I can generally feed myself for $40 a week plus what I spend on eating out. As I spend less on eating out and more on groceries, I expect this number to rise by 25% of what I spend on eating out)
$On average I spent just under $30 a week on gas in 2014. When gas was over $4 per gallon I spent over $40 per week, and now that it’s dropped below $2 per gallon, I’m spending under $20 per week.
Adding both categories together, my total fixed & necessary variable costs per month:
Rounding up to $700 and multiplying that by 12, my total fixed & necessary variable costs per year:
Those are my basic costs to live. Everything I spend above and beyond that is for climbing, eating out, giving gifts, shopping, etc. I spent roughly $13,500 in 2014, but my fixed and necessary variable costs were about $8400. The difference is $5100. That $5100 is where I want to make reductions in 2015.