Home > Financial Updates > Financial update – Q4 2012

Financial update – Q4 2012

Income VS Spending Q4 2012 (2)

2012 has been a fantastic year for learning about personal finance   Since starting my financial turnaround in January, 2012, I’ve been able to accomplish quite a bit.  Here are a few highlights.

  • I know where all my money is going and I now have a functioning budget
  • I started this blog to keep myself honest and help those who happen to wonder by
  • My income rose by about 7%
  • My spending has fallen by about 40%
  • My passive income rose by an alarming amount (from 0 to a little over $1,300)

In 2011, I had an after tax savings rate of 20%.  In 2012, I failed to meet my goal of 50%, but I did hit 47% (not too shabby).


How did I grow my income by 7%?  Well, I got a 4% raise, so that helped, and earned a little bit of money from doing energy audits on the side, and I got a larger tax rebate in 2012 than in 2011.  So the 7% number is a little bit overstated because of the tax rebate, but still, we are going in the right direction.

I also invested quite a bit of time and effort in my job this year.  Not only did I work hard and produce results, I was able to shape how my department will look in 2013 and beyond.  I told my boss that I could do the work that two people had originally done, and that would free up the budget so that he could hire another employee to “expand his empire”.

It should be  a win-win for everyone… assuming I can do both jobs.  This impact won’t show up on my financial updates for quite a while, but when it does, it should be sizable… I’ll let you know how it goes.


So let’s talk about the elephant in the room.  I’m not on track to retire in 10-20 years (in my 30’s) because I increased my income by 7%.  Everything is now possible because I reigned in my spending by 40%.  So how’d I do it without lowering my standard of living?

  • Transportation: I quit driving so much (went from (25,000 mi/yr to < 10,000 mi/yr) and started to take the train.  Since driving holds so many hidden costs, this has helped me cut my budget it half.
  • Food: I was pretty successful at eating out less, although I’m still struggling with this one when friends want to go out.  I was however able to take a large chunk out of my grocery budget by joining CostCo and buying groceries intelligently.
  • Shopping:  I created a rule that I’d never impulse buy something the first time I saw it.  I could easily go back the next day and get those pants if I still needed them.  It seems to have worked.  Now I only really go shopping when I’ve got gift cards I need to use, or I totally wear through an article of clothing.  I believe I still look good at work and at social events.

Net Worth

I love graphs, and this is by far my favorite graph.  I think it pretty much speaks for itself.  I didn’t get a new job in January 2012.  I just started working on my finances.

Net Worth Q4 2012

I made a little bit more money, spent a whole hell of a lot less, and started investing in assets that will pay me for the rest of my life.

My Net Worth grew by 120% this year!  This is just the beginning of my journey, but if I can keep this up for a few years, my future’s so bright I’ll need shades…


So I may not have quite have accomplished all of my goals in 2012, but I got pretty damn close.  So I feel justified in setting even stricter goals.  So here are the goals from my Goals Page.


  1. 50% Savings Rate in 2012 60% savings rate in 2013
  2. Invest $10,000 in VFINX so it becomes VFIAX  -update: I’m over $7,000 as of 12/15/12
  3. Buy a house by 2020
  4. Buy an investment rental property by 2023
  5. Retire by age 35 and become a high school Science Teacher

So hopefully I’ll get a 3% or 4% raise and get close to a 60% savings rate.  If I can accomplish those two feats, I’m certainly on my way to retiring by age 35.  Stay tuned!

  1. December 28, 2012 at 11:10 AM

    Great work ! I so wish there was a CostCo near me because they have some pretty unreal deals!

    • December 28, 2012 at 12:13 PM

      Yea, some of the deals save me 50% over other stores. it’s pretty great! Thanks for the comment.

  2. December 28, 2012 at 8:05 PM

    This all sounds awesome. Great job!

    • December 29, 2012 at 9:01 AM

      Thanks! I appreciate the support.

  3. December 29, 2012 at 6:30 AM

    I love the graphs. Just out of curiosity, though – why wait another 8 years to get into RE?

    • December 29, 2012 at 9:06 AM

      That’s a great question. As you have probably gathered, I’m still trying to figure it all out. I would LOVE to purchase an old house and fix it up myself, but I also have the urge to move to a new city within 3 or 4 years. I wouldn’t want to end up with a property in Chicago I couldn’t sell while trying to relocate to Pheonix. I’m sure this is a common issue, what do you think?

  4. December 29, 2012 at 2:00 PM

    Ahh, a move in the medium-term future does put a bit of a hiccup in it. While you could be a landlord from afar, the profits tend to decrease a bit because of it. Hopefully the PHX market will stay depressed for a while for you if that’s where you ultimately want to end up.

  5. December 29, 2012 at 4:44 PM

    Would you advise becoming a landlord if you are a renter yourself? I’ve been contemplating it, but it probably doesn’t make sense.

  6. January 7, 2013 at 10:28 PM

    120% YoY growth is so awesome to see! I love that tiny bit of passive income in your graph! That definitely keeps growing. My investments grew almost $8k on their own this year, which was a nice extra boost to my net worth beyond my savings.

    Not driving is pretty sweet. I love the exercise and it makes owning a car not really all that expensive. I spent ~$3,100 on transportation last year, if you take out the insurance deductible I paid out. I should be able to get that down to ~$2,400 next year, which isn’t so bad.

    What’s your goal for 2013? 🙂

    • January 8, 2013 at 8:13 PM

      I really like your P/E ratio on your blog (once I figured out what it was). Passive Income to Expense ratio, right? That’s what made me look at my income and split out the passive income, so thanks.

      Alright, so my 2012 transportation cost was $3,833. It was high in part because I was driving to work until April of this year. My goal is to get this down to $2,800, but it’ll be tough.

      I would really just like to get rid of my car, but I need it for work every once in a while. Have you ever thought of getting rid of your car?

      • January 8, 2013 at 9:51 PM

        Yup, P/E = passive income / expenses. I was trying to keep the column headers a similar width to the data rows 🙂

        As much as the car costs me a minimum of $2,400/year, using a car sharing program and buses would cost me at least $1,800/year, plus there are things I do now that I’ve bought the car that are inaccessible by bus. It’s not really worth getting rid of the car to me. I’d rather brownbag my lunch and save $100/month 🙂

  1. January 7, 2013 at 4:26 AM

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