I received this comment on my February 2012 Blog Statistics and Income Update from Mrs. Money Mustache and thought it would make an excellent post since some of the newer readers probably think I’m nuts:
Wow! That is truly impressive Crystal! Thanks for providing this great breakdown.
I do have a question though. You say that you and hubby “need at least $10,000 a month to cover expenses, basic savings, and taxes”. That seems like a lot!! (especially after reading about your low housing costs just now) I’m curious why your living expenses are so high. Our are less than $2000 per month (no mortgage) and that’s being generous with a lot of traveling.
Anyway, congrats and I look forward to reading more over here!
Our $10,000 Breakdown
As I wrote back, our expenses are about $3000 a month including the mortgage (so they should be $2100 a month after May when our mortgage is paid off), plus $2000 a month in savings (cash, stocks, and IRA’s…we are also opening a Self Employment Pension plan this year). My blogging expenses are between $1000-$2000 a month if I buy sites to expand with, so I went with the average of $1500. That is included with the normal blogging expenses. And we need $3500 a month for every $10,000 for taxes since self employment taxes suck.
So $3000+$2000+$1500+$3500 = $10,000.
We really aim for $15,000 since we do like the extra money as padding. We are using the extra to pay down the mortgage right now and then we’ll start splitting it like we used to between Savings (25%), Investments (35%), Vacations (20%), and personal fun money accounts (10% each).
Things I Forgot to Mention
As I was putting this together, I realized that I had never linked to our budget for Mrs. Money Mustache, so I didn’t let her know that about $350 of our monthly $3000 of expenses is health insurance and life insurance now that we have to pay that ourselves completely. I also didn’t admit that we spend way more than needed on food, so I hope she reads that post.
Overall, $10,000 is just what we need to hit to live like we do now and still cover blogging expenses and taxes. We could live on less by cutting our food budget, some splurges, or even our minimum savings targets. We would just prefer not to. 😉
EDIT May 21, 2016: Okay, so looking back, I was being all rainbows-and-butterflies positive and happy and peppy…and a little nuts. Yes, $10,000 a month is my super happy spot since it does mean we are pretty much saving 50% and living on 50%. But we have proven over the last 3 years since I wrote this that we are still very happy on around $5500 a month. $5500 is still a LARGE monthly nut, but the general breakdown is $1000 mortgage on our current home, $1000 property taxes on our two homes (current and paid off first home that is our rental), $250 for home insurance on both homes, $1000 for income taxes, $600 on health insurance, $500 on food (restaurants and groceries), $300 on my car payment, and the rest on living expenses like utilities, Ting wireless, blog expenses, pet sitting expenses, and fun money splurges. Anything we make over $5500 a month goes towards our two Roth IRA’s, our SEP IRA, and savings.
What do you have to bring in to cover your basic living expenses and taxes to live like you do now?
FYI: I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year. I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home. If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!). Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!