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Budget Review November 2018
November 2018 Budget
Don't quit your day job!
By and far the largest portion of our income continues to come from our "W2" jobs (aptly named above).
Fortunately both my wife and I enjoy our day jobs, so this is unlikely to change any time soon.
The great takeaway? Even on the road to financial independence, you should enjoy the journey. And although I still have other passions such as financial education and product creation, I am very happy having the bulk of our revenue coming from our day jobs.
Side Gig Earning
Even though we have no desire to quit our regular 9-5's just yet, our side gigs are starting to pay us back on investments. Here are the "other" income categories for us:
The most lucrative of these so far is my personal Etsy store, which is no surprise since it has been around for much longer the Frugal Firefly brand.
Traffic has over tripled in the last two months, due in part to Black Friday promotions. Over the next few months, I anticipate additional sales from Christmas promotions as well.
I plan to try out ads for my product on Facebook and Etsy to drive traffic to both my personal and business sites. Fingers crossed it pays off!
Ads and Affiliate Marketing
I continue to work on ways to monetize the site (without compromising my integrity in the process).
Google Adsense still does not want to approve me for display ads, so I am limited in what I can show. If anyone has any tips on how to get approved for Adsense, I'd love to hear from you. Meanwhile, I've looked for other ways to serve ads in a minimalistic way.
While I have several click-throughs from my affiliate links, there have not been any conversions yet (i.e. no one has purchased any products). My goal is to only provide links to sites and products that I fully endorse, and I imagine the limited number of links does not help me in the conversion game.
But again, this is a matter of integrity for me, paycheck or no paycheck.
Cash Back Apps
This one's new to November. While I've always dabbled in cash back apps, this month I looked for the most efficient ways to stack cash back apps for the highest bonuses.
The dollar amounts are low, but think of these as discounts on expenses you already had.
Bank Account Bonuses
While a sporadic source of income since we only do a few bonuses a year, this is also included in the "other income" section.
Auto and Fuel
November marked my last car payment on my car! We still have the car payment for my wife's vehicle, but that's one more loan down (and more cash we can use for retirement or loan payoffs each month).
Interestingly, this had quite a negative impact on my credit score.
You may be asking why getting rid of debt can hurt your credit score. In my case, my auto loan was around 5 years old. The effect on my average age of accounts was pronounced - closing the loan decreased my average age, which damaged my score. I lost 25 points when the account closed.
Even with this negative outcome, I would still recommend paying off debt whenever it makes sense.
While the actual percentage costs here were low, there is an interesting discussion to be had.
I decided to invest a small amount on Facebook advertising this month. Unfortunately, I'm not sure I understand the effect of Facebook advertising on my business at this point. It is difficult to see whether my traffic is coming from the social media platform or from other sources.
Google Analytics can help identify traffic sources, but I assume if someone sees the ad and just types in my website, Analytics will count it as organic traffic instead of through Facebook. I probably need to do a bit more research to better understand this whole process.
With more frequent ads and tools such as Facebook Pixel, I hope to develop a better understanding of cause and effect.
Life and Medical Insurance
I decided to split off my HSA contribution from this spending bucket since the HSA account is very much a savings account.
For those unfamiliar, HSA stands for Health Savings Account. It is a triple tax advantaged account. Contributions:
1) are made with pre-tax dollars, lowering your taxable burden in the immediate time frame.
2) grow tax free for the life of the account. Earnings will never be taxed, assuming they are only withdrawn for medical reasons.
3) are tax free on withdrawal when used for qualified medical expenses. In reality, even if you use the money for unqualified spending, the HSA behaves similar to an IRA (pre-tax contributions with tax implications on withdrawal). This makes it one of the best investment vehicles, period.
Retirement, Savings, HSA Contribution
Retirement and Savings took a hit this month, especially considering the HSA contribution is now rolled into this spending bucket.
However, I have a good reason for this.
We need to build up our cash reserves in preparation for large expenses in December. Property taxes, payment for our new furnace and air conditioning units, and medical bills will decrease our normal funds.
Once again, this is the value of budgeting and planning with tools like Personal Capital and Mint. We are able to predict expenses before the month they are due, and take steps to hold the necessary cash.
Check out my article on The Power of Budgeting to learn how we predict expenses years in advance.
And if you'd like to get a better handle on your budgeting and investing goals, check out our link to Personal Capital. We'll both get $20 after you link an investment account! Nothing more frugal than free money!
Our shopping budget was a bit higher this month due to Black Friday and Cyber Monday deals for Christmas presents. Nothing major to note here, otherwise.
Effective Tax Rate
Overall, our tax rate remained unchanged at 15.1%. Next month it will increase as we pay for property taxes.
Nearly 17% of our gross pay was moved over to our primary checking account in preparation for expenses next month.
Well there you have it! November has come and gone, and we were able to contribute roughly 18% to our retirement accounts while still preparing for next month's major spending.
Considering these plans, it was a fine time to apply for another credit card. For more details on that, check out my updated review of the Chase Ink Preferred card to learn how I gained over $1,500 toward travel.
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