January 2012 Income and Expenses

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It’s the end of January, and I have officially survived a month of self-employment! Woohoo!!!!!

My income and expenses for the month were… interesting. It’s so hard to plan when I don’t know what to expect. I have a feeling I’ll spend most of the year fumbling around until I figure out a good pattern. And I will tell you now - this month pretty much SUCKED. But since several of you guys asked me to do spending roundups again, here we go.

Income

JANUARY GOAL: $1200

Private advertising: $1340

Freelancing: $640

AdSense: $49.24 (This could change slightly by the end of today, but I doubt it will)

TOTAL: $2029.24

Rollover from December

On December 31st, my checking account balance was $365.04. Added to my January income, that gave me $2394.28.

Expenses

Taxes: $405 ($1989.28 remaining)

I actually overpaid my taxes. The amount I sent to my tax account is 20% of what I made, which is what I’m supposed to (per the accountant I consulted). However, because I’m paying for a private health insurance plan (health, dental, and a small life policy through Anthem for $140 a month!), I know I’ll be able to deduct that expense. So technically the first $140 I make each month is tax free. I’ll probably continue overpaying just to be on the safe side.

Fixed expenses (car payment, insurance, utilities, phone, Jay’s allowance, etc.): $950 ($1039.28 remaining)

For some reason when I estimated this before, I said I spent $650 a month. I’m really trying to figure out where that number came from. I think I left out car insurance, and of course I added health insurance as well. So my January goal of $1200 was totally ridiculous - good thing I exceeded it!

Groceries/Household: $297.82 ($741.46 remaining)

HOLY groceries! I’m kind of shocked that I went through that much money - that’s more than I’ve spent in ages! This is definitely an area I need to get under control in February. In my defense, though, I let the cupboards get extremely bare toward the end of December when I didn’t want to fight the pre- and post-Christmas crowds. And I bought a lot more stuff now than almost all my meals are eaten at home.

Restaurants: $49.27 ($692.19 remaining)

Oh yes, the restaurant points win again! Now that I’m home in my pajamas all the time, it just doesn’t seem fun to get dressed to go buy fast food. I feel slightly better about the ridiculous grocery spending now.

Gas: $72 ($620.19 remaining)

Two tanks of gas in a month. I used to go through 5-6. I am amazed.

Cigarettes: $87.96 ($532.23 remaining)

This was actually pretty good for me! Not fabulous since I’m still smoking, but I’ll take it.

Miscellaneous: $634.08 (-$101.85 remaining)

As always, this category was another major area of failure. I really don’t even like admitting this stuff! But here it is:

  • Birthday gift for my niece - $31.80
  • Frame for my Reader’s Digest article - $28.49
  • Dog grooming (4x/year - it snuck up on me) - $140
  • Random book from Amazon - $16.84
  • Fork bracelet - $32.99
  • Misc. blog expenses - $383.96

I will be the first to admit, that’s ridiculous. It wouldn’t have been too bad if I hadn’t spent so much on blog-related stuff. Those expenses won’t happen all the time, thank goodness! I bought a few domains for as-yet-unrevealed new blogs, as well as logo design, software, and my ticket to FINCON12 (ALL tax-deductible, so it’s not as bad as it sounds). So while I had to borrow $200 from savings to make it until my next “payday” and cover the extra spending, it’s not as horrible as it looks.

Overall Outlook for Month

I wasn’t sure what my first month of self-employment would bring, and I’m actually kind of okay with the way it turned out. There is PLENTY of room for improvement, but I’m just glad I made (almost) enough money to cover my normal expenses. To handle the unpredictable income, I divide my monthly income goal in half and pay myself from savings each “payday,” then put any money I earn back into savings. So far that part seems to be working out.

Here’s what I’m budgeting for February:

  • Taxes: 20% of whatever I make, transferred to a separate bank account
  • Fixed Expenses: $950
  • Groceries/Household: $225 (shooting for a gradual decline here)
  • Restaurants: $50
  • Gas: $75
  • Cigarettes: $100
  • Miscellaneous: $150 (that almost makes me laugh when I see what I spent this month)

That means I need $1550 after taxes, or $1860 total. And a SERIOUS handle on miscellaneous spending. So we’ll see how it goes!

  • http://www.facebook.com/people/April-Stotler/594021755 April Stotler

    Well, it seems like month 1 is a go! The bills are being paid, the insurance is so far, so good, and I know that you’ve mentioned on le book of Face that you’ve got some other writing positions.

    Misc expenses aside if things continue along in this way I bet you’ll be able to start putting money BACK into your savings! (the month that happens, I’m going to pull some party poppers and do a happy dance for ya!)

    Yay Andrea!

  • http://www.newlywedsonabudget.com/ Newlyweds on a Budget

    does the dog grooming mean you paid that for ONE dog? or do you have more than one dog? I live in southern California and I pay $50 for my dog’s grooming, that includes hair cut, brushing, shampoo, ears, nails, butt, the whole she-bang….I’m just trying to figure out why your dog grooming is so expensive. i also go to a small business owner and not a big box store like petsmart.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I have four dogs. And that’s a local lady doing it - we don’t have any big box stores around here.

  • http://mymultiplestreams.com/ Jeff @My Multiple Streams

    guess I dont have to actually say the best way to save some money….

    But good job for your first month! You’ll be cranking in the money soon and then you have to decide where to put all the extra dough.

  • http://twitter.com/SmartMoneyChick Smart Money Chicks

    I have to say, I do not think you did bad at all. I am pretty impressed with the fact that you are putting money way for taxes. you are investing in new ways to make money and you had to buy a frame for your awesome Reader’s Digest Article. Keep up the Good Work!

  • http://twitter.com/sensetosave Kacie

    What about retirement? I think your spending looks great!

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      No contributions to the IRA right now - I have to get into a pattern that works. Actually, I may sit out the entire year so I can focus on building cash savings - I need to keep things liquid in case I have a month where I don’t make any money!

      • http://twitter.com/sensetosave Kacie

        I hear ya. Well, it does sound like you have a plan to get to that point soon enough, so that’s good!

  • http://www.directbanc.com/about/ Monica

    I love your honesty, and it is scary being self-employed! I think you did great and as business builds you can meet and probably surpass your goals. I think you are a very talented writer and always include the personal element which makes your posts easy to relate to.That’s a good deal on the health insurance, our family policy for being self-employed is outrageous. Wish you continued success!

  • Kristin

    Does your state have an income tax, if so are you pulling enough to the side to cover both federal and state. Just wondering cause state always seems to have a way of sneaking up on people Otherwise I think you are doing really well!!!

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      My accountant recommended 20% because neither of us think I’ll even make enough to owe federal taxes this year. She deals exclusively with people who are self-employed so I trust her to tell me the right things to do. I’m doing a lot of my own research - downloaded a self-employment guide for my state literally 20 minutes ago - so I can always adjust if I think I’m not saving enough. Good question!

      • Kristin

        As long as you have a good accountant you should be fine. You should be fine on the majority of taxes unless your business just takes off in the first year otherwise your main concern is that wonderful self employment tax. But I just wanted to make sure for your sake. I would hate to see the government add fees and penalties for not paying enough estimated tax. Uncle Sam will get his money one way or another. Good luck with everything!

  • http://www.moneyaftergraduation.com/ Bridget

    Yes!! There was no doubt in my mind that you would succeed, but it’s nice to see that you exceeded what you wanted to achieve!

  • http://www.myjourneytomillions.com Evan@MyJourneytoMillions

    Ummm I can’t be the first one to call you out on this but while everyone is praising your honesty I find it appalling you budget over 5% of your hopeful income on Cigarettes. Forget the whole health issue (since this guy can’t really call people out for drinking or smoking or most other vices lol) but when you are counting down to the penny your spending it is just insulting to everyone in your life that 5% is on such a frivolous item.

    Again, I am writing the comment because it seems to be such a large portion of your monthly budget. If you were bringing home $250K and wanted to spend $500 a month on scotch I wouldn’t say anything.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      That’s a very good point, and I appreciate you having the balls to bring it up. In a perfect world, I’d be able to just stop smoking at the snap of a finger. Unfortunately, addiction doesn’t work that way. I have tried everything from nicotine patches to Chantix to electronic cigarettes to hypnotherapy, and so far I haven’t managed to stop for any length of time. And I find it stupid to spend the money on all the “stop smoking” tools AND buy cigarettes at the same time. This is something I really don’t have a good solution for at this moment.

      However, I will say that if that category was “travel fund” or “gym membership,” I doubt anyone would be upset. Some activities are definitely more acceptable than others in the PF world. Smoking is a stupid habit and one I wish I didn’t have, but it would also be stupid to ignore the fact that I KNOW I’m going to buy them. Just saying “I’m not buying them anymore” would be a lie and I’m a big fan of telling the truth.

    • http://twitter.com/sunkcosts slug

      I hope she at least owns stock in her cigarette-maker. That’s how I justify Guinness on draft by owning Diageo.

  • http://www.broketo.ca Melissa

    Man, you are a rock star! You’re totally putting my first month of self employment to shame!

  • Serendipity Savings

    Smoke all the cigrattes and groom all of the dogs you want! Rock on with your bad self!

    • Serendipity Savings

      I can’t spell so I’ll be rocking on with a dictionary.

  • http://www.dqydj.net/ PK

    On the misc blog expenses - are they things that you will only have to pay once? I’m concerned that you went over by $101.85 after earning more than expected, and also added the $365.04 from December. Do you have enough in savings to cover overages if it happens again?

    I do think you’ll get it under control - you’re smart to build savings in a liquid account before the IRA, but eventually you should look into an IRA for yourself. Keep the updates coming; I think it’s going to be a huge year for you!

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I have an IRA already; I’m just waiting to resume contributions. My savings account is good right now. It’s not as fabulous as I’d like, but I have about 3 months of expenses and will add my tax return later in February. If I ever get below what I need to pay the bills for a month, I’ll be getting at least a part time job. As for the blog expenses, none of them were recurring. I don’t typically pay for logo design for new sites, domains for new sites, FINCON tickets, paid plugins, etc. etc. Normally my expenses are less than $20 a month.

  • http://www.earnsavelive.com/ Earn Save Live

    Congrats on making it through your first month of self-employment!

    One thing that has really helped me is to set a fixed amount of our budget for “wants.” Right now, since we’re focusing on our debt snowball, our wants are 10% of our take-home pay. I used to never use cash - it was debit/credit all the way! But using cash has forced me to be really conscious of my discretionary spending.

    I agree to hold off on your retirement contributions until you have cash in your emergency fund built up more. I think you’re on the right track here overall!

  • Anonymous

    I like your monthly recap on your expenses. You are doing a great job!! Out of curiosity, what kind of dogs do you have?

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      I have a Yorkie and three Shih Tzus. They’re my babies!

  • http://www.thesinglesaver.com/ Denise @ The Single Saver

    Thanks for posting your expenses/income. I think posts like this are soooo important for anyone who is thinking of getting into self employment. It isn’t always easy, but as this is only month one I would say you did pretty well. Those unexpected expenses will always pop up no matter how well we plan for them.

  • http://mybrokencoin.com/ Aloysa @My Broken Coin

    FINCON12 threw me out this month big time. But it is all worth it, right?

  • http://ways-to-invest-money.com/ Thomas - Ways to Invest Money

    I wish I was making that from one of my blogs but then again I am still working full time so it would just be extra savings/pay down debt money. At least you have it broken down, a lot of people dont even do that. The dog grooming seems like a fair price considering you have four dogs. Misc did kind of kill you this month though.

    • http://www.sooverdebt.com Andrea @ SoOverDebt

      Yep! I knew I would be in trouble when I couldn’t really budget (since I didn’t know what my income would be). Now that I have a general idea, I can regain some control. Or at least I’d better. I’m pretty disgusted!

  • Economically Humble

    Wow, $1340 on advertising.. incredible! You all that make money on your blogs just amaze me! Congratulations and keep up the good work!

  • http://cashflowmantra.com/ Cash Flow Mantra

    Hang in there, Andrea. I bet you can hit a positive number by the end of February.

  • http://www.myjourneytomillions.com Evan@MyJourneytoMillions

    Funny you say that. When The Wife asked about our twitter interaction and I explained the conversation she said THE EXACT same thing (without doing the math)

    I am not sure if it is a justification but I gave her this example:
    - If someone is making 20K a month (I AM NOT lol) and they spend 2K on a vice whether it be booze, cigs or hookers (errr I mean legal escorts) isn’t that less of a big deal since they could be doing the right thing with the other 9k?

    She didn’t particularly like the reasoning and you may not either but I think one can’t ignore whole numbers sometimes.

    When that line of argument didn’t work I also threw at her the fact that the post doesn’t include other items. For example my housing is probably another 2K so that brings the number down to ~4%….throw in savings and it is probably under 2%…