August 2009 Budget Breakdown
Not much has changed from my June 2009 Budget. There is one revision and a couple of expansions though.
The one revision is that there was an error in the way I calculated my monthly salary. Previously I taken my bi-weekly salary income of 1,300 and timed 2 to get the monthly salary. However, since there are actually 13 four week periods in a year, I was shortchanging my monthly salary by about 200/month. Thus my revised salary is 2,800/month instead of 2,600/month. Hence, I should be able to increase my savings by another 200/month (2,400/year) to 860/month. This upwardly adjusts the total saved per year to 38,570 instead of 36,170. Overall, the total saved per month is 3,214.
It is important to note that the definition of savings constitutes either an increase in assets or decrease in liabilities. Here are the revised numbers in budget form:
Income:
- Salary (after tax) – 2,800
- Rental Income (no tax since negative cashflow) – 700
Total Income: 3,500
Expenses:
- Rental Costs (HOA of 276, mortgage loan of 870, property tax of 150, internet of 50) – 1,350
- Student Loans – 190
- Prepayment of Rental – 500
- Savings – 860
- Discretionary Expenses – 600
Total Expenses: 3,500
The net result of following the budget over a period of one year is:
- Savings of 10,320
- Prepayment of Rental of 6,000
- Pay off of Mortgage Loan (excluding interest) about ~5,500
- Pay off of Student Loan (excluding interest of 530/yr) about ~1,750
- Maxing out 401k of 15,000
Total increase of income/decrease of debt: 38,570
For this post I will expand the calculations to figure out my absolute expenses — expenses that don’t result in increasing assets or decreasing liabilities. Basically absolute expenses are those expenses that contribute to nothing, that disappear off into the ether, that have no useful meaning or purpose.
Absolute Expenses:
- House #3 (rental): 1,350 total XP – 700 rental income – 450 mortgage reduction = 200/month
- Student Loans: 530 interest/year
- Discretionary XP: 600/month
Absolute Expenses by year = (200 + 600) * 12 + 530 = 10,130/year
Now how does this piece fit into my gross income?
Gross Income Breakdown of 62,000/year:
- Savings Total: 38,570
- Absolute Expenses Total: 10,130
- Leftover: 13,300
Leftover constitutes 21.45% of my gross income and it covers Federal/State income taxes, FICA, HSA, insurance, and probably a multitude of other taxes such as employee compensation, etc…
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