Saturday, March 04, 2006

Income and Expenditure

The table shows my income, expenditure, and saving for February. "Other income" includes salary and this month, for example, my expected IRS refund. Retirement "other income" are the contributions to my 403(b). I also contributed $4000 to my new Roth IRA which is a transfer from current savings to retirement savings and so isn't counted under retirement income which are pre-tax contributions. Investment income for current assets is broken down into the core investment earnings - realised and unrealised capital gains, dividends, and net interest etc - and foreign currency movements. The final total saving figure should equal the change in my net worth.

The key thing is my savings rate is around 75% from total income this month. This really is the trick to building net worth fast. Of course, there have been months when total income is negative, so this isn't neccessarily a very typical figure, but certainly not unusual.

Unlike some bloggers out there I don't work hard at avoiding spending. I am single and live in a cheap area. My rent is only $600 in the nicest building in my downtown. I don't own a car. I am naturally pretty frugal I think. Things I focus on more are trying to increase investment income and maximizing tax efficiency.

I probably don't really NEED to save much aside from those 403(b) contributions in my particular circumstances. My dream is though to get to independently wealthy status earlier than I otherwise would.

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