Friday, March 10, 2017

Income/Expenses: February 2017

One of my favorite posts of the month! It's very personal and helps keep me extremely accountable!

I think it takes a little bit of guts to share your income and expenses openly with the world. But that said, I think there is value for both of us in reading this post. I will do a similar post every month.

General Thoughts on this Month: This month we received a very large tax return, which greatly helped our income (side note - I deducted $1.9k from the return displayed here because it was directly applied to some debt repayment).  So thankfully our income was this month was high. Otherwise it was a pretty standard month. The tax return helped our savings rate be slightly over 30%. I've updated my all-time Savings Rate page here.

All of that said, listed below is a detailed display of all income and expenses for the month of February 2017.  

General Thoughts on INCOME:
1) Income was great due to an over $4,000 tax return. We only received a little over $2k of it due to some debt repayment; otherwise it was a pretty standard income month.

2) Lending Club is so slow to unwind. Still thankful for these little bumps when the loans are repaid, but it will be nice to not have to deal with this small investment anymore.

3) Dividends were terrible as mentioned in my Passive Income report.  2017 has been a relatively rough start so far in my pursuit towards $13,000 in passive income.

General Thoughts on EXPENSES:
1) The 'Everything Else' category was very high, but only because of around ~$550 in education costs, which I really can't prevent.  The only other thing of note is that I plan to cancel DirecTV after March Madness (Go Duke!), so that will help a little.  

2) This month had a little bit of travel costs in it as well. I took a weekend trip to Texas to play in a soccer tournament, so overall I think we kept costs relatively under control all things considered.

The 'Post Takeaway' - I don't talk too often about taxes on PassiveIncomeDude, but I will say a few comments briefly here, and I will separate them into three separate points:

1) First, I think one of the fastest ways to wealth (one that almost all wealthy people practice consistently) is to minimize your taxes. You have to figure out ways to legally minimize your tax burden and keep as much of the income you receive as you possibly can.  It is an obvious statement, but so many people don't actually consider how to implement this into their financial planing.  It takes some thought and I strongly recommend you to practice this concept as well.

2) Second, our effective tax rate is consistently around 3 to 4% each year.  I only share that because the primary reason why it is so low is because of real estate ownership. With mortgage interest tax deduction and depreciation you too can very easily lower your taxes.  In the USA, the government wants you to own a house. Don't go against the system.

3) What you do with your tax return (or bonus, or any other windfall you receive) is extremely important. One of the things that DiviCents does that I love is to show his readers a picture of an item of something he could have purchased had he chosen not to invest his hard earned dollars.  For example, in my case with my tax return, instead of paying down debt and investing I could have purchased this Millennium Falcon Pottery Barn Kids bed (which is awesome but probably won't help me reach my Passive Income goals) shown below: 

On the other hand, instead of the Millennium Falcon bed, $4,000 invested for 40 years at a modest 7% is almost $60,000 extra dollars in your portfolio.  

Sure very few people would actually go out and buy this bed. But I know that we all may be more tempted to not actually invest our windfalls.  My primary point is that it is the 'extra money' decisions throughout one's lifetime that can really make a difference!

In conclusion, I am thankful for the blessings we have and am trying to stay the course. I encourage you too to diligently stay the course as we pursue Financial Freedom!

What do you think of my February Income/Expenses? I'd love to hear your thoughts below.

Thanks for reading!

Passive Income Dude


  1. Well thought out post.....Looking at your expenses, looks like there is very little you could cut back on. However, there are some cheaper DirecTV alternatives. Have you considered DirecTV NOW or another streaming service that is much cheaper?

  2. Hey thanks. That's encouraging to hear that you think there isn't much to cut back on....because it FEELS that way living it sometimes! :) I'll definitely check out DirecTV NOW. The only reason we have anything at all is because we like watching sports too much! Take care,

  3. Looks like a solid month - I'm getting my taxes done in a few weeks and think I'll get a little bit back to invest with. I try to aim for a 0 return but sometimes you overpay a little bit and I did just that this year.

    1. Nice Timeinthemarket. I try to aim for zero as well, but when you have a new baby the government will always give you a refund! Though I don't think it is financially smart to do this strategy of having kids for tax refunds! :D

  4. Great work PID.

    I don't know bro, that bed looks pretty sweet! Very tempted to go buy one of them for my kid :)
    60 grand in the future sounds even better though.

    Great month.

    1. Haha, you'll be able to have plenty of those beds someday! :)

  5. Everything looks pretty reasonable to me. The only thing I can see is maybe ditch the direct TV for something cheaper like Netflix.