I openly admit (and embrace) the fact that I am the “financial nerd” between my fiance and me. At the end of every month, I really and truly enjoy updating all of our account balances to get the full picture on our financial situation. I go through every account, every credit card, open my wallet to add up the cash, and more. The numbers get typed into a spreadsheet. Assets, liabilities. Every month. It’s become a routine.
But this weekend was different. On Saturday we celebrated the end of 2005. It’s the end of the month, but also the end of the entire year! After going through my usual monthly tabulations I immediately started on some “year end” tasks in my spreadsheets and financial software. I was anxious to look back on the year and see what we earned, what we spent, and what trends would begin to emerge. After all, this was our FIRST year with real jobs in the real world. It’s exciting!! So let’s take a look.
Multiple Sources of Income
We made more money this year than in ANY other year of our lives. I know because (1) I actually kept records during college and during high school (nerd alert, nerd alert), so I have something to compare it to. But also, (2) it’s just common sense that this would be a big year for us “income-wise” since we started our first real jobs outside of college in May/June. But how big?
In total, we earned a combined $76,916 for the year. Not bad for a couple of 23 year-olds. That money didn’t all come from our new jobs though. In breaking down our overall 2005 income further, here is a chart showing income received, by source:
By far our largest income source were the wages & salary from our full-time jobs. This was expected. It represented 65% of our total income for the year. But I found it more amazing that 35% of our income earned came from such a variety of other sources. Some were one-time events, so they shouldn’t be expected in 2006. But others have the potential for growth.
Here are some highlights for each of the income sources:
- From both of our jobs, we earned a combined wage & salary of $49,926.
- Note, already included in this amount was $1,979 was from bonuses and commissions.
- In addition to our new, full-time jobs, I also included wages & salary from our on-campus jobs that we held while in college. We earned slightly above minimum wage and didn’t work many hours, so it doesn’t represent a big portion of the total amount. But it was earned in 2005 so it needed to be included.
- We received gifts of $11,388 this year.
- Big number!! Really, really big! And somewhat unexpected too.
- The majority came from friends and family as a result of our college graduation. Both of us are the oldest kids in our families, so it was a proud moment for us to graduate college first. A graduation party followed and there were many people that gave gifts. We were beyond thankful for their generosity.
- We also received some early wedding gifts. One set of grandparents in particular wanted to pay for new carpet in our 1/2 of our new duplex.
- Another good sized portion of this was from my parents, who offered to pay rent during our final year in college. A friend and I split an apartment for our Senior year. He paid half, then my parents paid the other half. This lease ended in June. I counted this as “gift” income.
- The remainder was from birthday gifts, Christmas gifts, and the occasional “gas money” or “grocery money” given to us from parents while we were in college.
- Our duplex rental property earned us $7,798 in gross rental income for the year.
- This is “gross income”, so there are still mortgage payments, insurance, property taxes, repairs, and maintenance to be paid. At some point I’ll need to do an analysis on the “true” profitability (or loss) for our rental property.
- I had a realized gain of $3,689 from selling stocks and mutual funds.
- These were originally purchased in high school and throughout college.
- I had to sell these investments because of money needed to purchase an engagement ring and to use as a down-payment for our duplex proprety purchase. What can I say, the girlfriend and a house are both expensive! 🙂
- Who needs Apple (AAPL), Buffalo Wild Wings (BWW), Dell (DELL), Google (GOOG) stock and Vanguard S&P500 Index Fund shares anyway? (note from 2016: I am NOT yet ready to add up what these investments would have been worth if I just kept them and did not sell. Sigh.)
- Through online selling I made an income of $2,726.
- I had a semi-successful venture selling some of the newly released Xbox 360 consoles on Ebay. But I also sold several miscellaneous items such as old college books through Half.com.
- I also ran a few websites that earned money from Google Advertising, Amazon Associates referral commissions, and direct online sales.
- I received $704 in rebate money.
- Some items were purchased from Staples with the intent to sell online for profit. The rebates covered 100% of the original purchase price of an item.
- The rest of the money was a result of rebates on our new cell phones and some miscellaneous electronics that were purchased.
- Dividends and interest received was $678.
- Much of this was interest earned from our money market holdings. I have been utilizing credit cards with 0% interest rates to invest in money market accounts and earn some extra side money that wouldn’t have otherwise been available.
- At some point I will have to sell those investments to pay off the credit cards, which will end this income stream.
- We won $7 from the lottery!
- Let me at least mention that I hate the lottery. I only participated because it was a company-wide pool at my office. I didn’t want to be left out if we won.
- And hey….we did win, slightly!
Monthly Income Over Time
In addition to breaking down our income by source, I thought it would be interesting to see our income received by month. Budgeting each month was quite the challenge because of the irregular flow of income throughout the year. In my perfect world, with predictable monthly salaries and rental income, it should be easy to say we will earn X amount of money in a given month. And then from that number, I could budget accordingly. Well as the chart below will show, it’s not easy to predict that number X. Each month our income was different.
Now in general it varied towards the upside — meaning we ended up with more income than the previous month. From a budgeting perspective, that meant we budgeted for the lower amount when we started the month, but because income turned out to be higher than expected, we had extra money leftover at the end of the month. Not a bad problem to have. Anything extra ended up getting marked as “extra savings” and was then invested.
Some other quick highlights from the chart:
- We still had our on-campus college jobs from January through May and earned slightly above minimum wage. While not a lot, it still provided a semi-steady income.
- My full-time job started in May/June and caused the BIG bump in income.
- My fiance started started full-time in mid-June, causing the next BIG bump.
- Several Christmas and early wedding gifts were received in December and caused a spike. I expect to see that number come back down to “normal” in January.
I will be interested to see if this chart levels off over time. I think it should. For now, we will continue to budget based on our expected monthly salaries and expected rental income. That’s about the only predictability I can find or count on right now. Anything above that (ie, profit from online businesses, dividends, interest, gifts received, and more) will be considered “extra income” and we’ll likely continue to save and invest it.
Our first year was a great one! We are extremely grateful.
I can’t help but look back on 2005 with a little bit of pride. But even more, I’m extremely grateful for the year we had. I’m grateful for wonderful jobs right out of a college, a fiance that works just as hard as I do, and an overall great start to our new life together! And when I think of $76,916 of income…..WHOAAAAA!!! That IS a tremendous amount of money! It’s almost tough to comprehend. Now we just need to make sure that we continue to save as much as we can and do not spend it all. In my next post, I’ll go over our 2005 expenses and share my findings.