Each month, I’ll be posting our budget as well as the income we receive from our investments. Investment income includes dividends, interest, and rent payments(if any). This has to be one of the toughest aspects of being financially transparent. It shows whether we really practice what we preach about being faithful stewards, or if we are squandering the resources God has given us. It’s a little frightening to be honest, and can be a little disheartening. Being put under a microscope is never easy, especially if you think you’re the one holding the microscope. The truth is, God already knows whether we have been good stewards or haven’t, and His grace can even forgive our lack of stewardship. It also helps to keep us in check, as far as keeping our expenses low since we will be posting how much we spend each month, but it also helps us remember a couple of things:
1. Everything we have is the Lord’s, and he has graciously given us the abilities we have to earn and be good stewards.
2. Our identity isn’t found in our possessions or lack of possessions, so we shouldn’t be afraid of posting either.
3. Our motivation isn’t to boast, and yes, it is possible to boast about not having or shunning possessions. Since everything we posses is only “ours” for a time, the stewardship of what we have is what’s most important. Our faithful stewardship is still attributed to God, because He is the one molding us, strengthening us, and our faithfulness is a gift from him anyway! All the glory belongs to him from start to finish.
Ok let’s get started:
May was a decent month. Looking at the details of the budget, most of the amount over budget was caused by 1.) allocating more money towards investments 2.) putting money towards both my wife’s and my business 3.) increasing our giving. We set our budget under the amount we collect in income. We do this to ensure that we strive to live below our means, which would prevent us from living paycheck to paycheck. This month, we were only over our budget by $740 when you exclude the amounts we were able to save and invest. This is a a little bit of a step back, but we've put a lot of our money into each of our businesses. It's still important to keep a close eye on these amounts. I know I can get carried away when it comes to investing in our personal upstarts. Embarking on a business adventure can be exciting, but I don't want that excitement to lead us into unwise financial decisions. I’m also excited that we were able to increase our giving, and will adjust future budgets accordingly. This was the first month of our increased giving, and I'm grateful to be able to do so.
As I stated before, when we don’t shop for groceries, we end up spending a ridiculous amount in eating out. This month we went on a mini vacation, turning a work trip into a time to get away. So even though we did increase our grocery shopping, we still ate out a lot more than we would normally eat out. Getting back into the workforce has been a challenge. I look forward to doing these updates but I simply haven't had the time to update as frequently as I want to. It's frustrating, really, to write an update in Jan 2016 about the month of May 2015, but that's life.
We were able to be more generous this month, which is something I want us to continue. Now, I’m not proposing that we should be consistent givers in order to appease God and get in His good graces. And I’m also not saying that if we are more generous then God has to bless us. What I am saying is that, when we don’t praise God with our finances and demonstrate that He is greater than our financial needs and circumstance, we have treated our financial security and budget as an idol. If we don’t crush our idols and bring them to God, we are bound to be crushed by our idols. I don’t want us to get into the habit of spending simply because the money is there. We need to learn to be patient with our spending, but liberal in our generosity and investing.
Now that we’ve got the painful and hard part out of the way, let’s look at our investment income as well as our savings rate. Our long term goal is to have enough income from our investments so that we can both quit our jobs and use our time more wisely and with more purpose than simply collecting a paycheck. Not saying that work is wrong, or that being an employee is unfruitful, we would just rather use our time in other ways. In order to get to that point, we need to save. Increasing our savings rate will increase the amount we can use to invest which will increase our investment income.
For the month of April, our investment income was (DRUMROLL PLEASE)…
Which isn’t much now, but since this portion of our portfolio is $5,635.16, our annualized return for this amount would be 14.9%, which is not bad. This amount was the most we have received so far in passive income, which means we’re gaining some traction towards our monthly goal of $125 in passive income per month. I’m excited to see how the rest of the year goes! 90% of the income came from interest in our lending club account, so we will definitely keep adding to that account as well as our dividend portfolio. We made more in dividend payments this month than we did for all of 2014. That's incredible and has a lot to do with our reinvestment of our passive income in our Motif portfolio. As an investor, consistent monthly passive income is our biggest financial goal. You can invest in these motifs as well by opening a Motif account and investing in one of the portfolios to the right of the screen.
Our savings rate this month was great this month at 17.7%, from last month’s rate of 18.6%. We’re hoping to increase our savings rate after reading countless articles that demonstrate how individuals, regardless of their age or income level, can “retire” in 15 years if they invest consistently and save half of their income. By retire, we mean being able to do the things we are most passionate about, regardless of the income it produces. We’d like to use our money to buy time rather than spend our time to make money.