Financial independence is really important to me and it’s my main financial goal at the moment. Part of that includes tracking my expenses and investments to make sure I’m on track in meeting that goal. To maintain some privacy, I’m going to list these in percentages, rather than dollar amounts.
Fixed Expenses: These costs include my association fees, phone, internet, gas, electricity, water, etc. For June, fixed expenses equated to 9% of my take home pay.
Variable Expenses: Somewhat easier to control month to month, this includes gasoline, groceries, home supplies, clothing, restaurants, entertainment, etc. For June, these made up 14% of my take home pay.
Investments: This includes any money transferred to savings accounts, Roth IRA, brokerage accounts, and my 401k. This makes up the remaining 77% of my take home pay. My employer has a 401k match, which I’ve excluded from this percentage.
To obtain financial freedom, you need to save the equivalent of 25 times your annual expenses. This assumes that you’ll be using the 4% safe withdrawal rate, which is best explained in Mr. Money Mustache’s blog.
Since I expect my expenses to go up when I retire (due to travel and likely higher medical costs), I’m using an annual expense greater than what I’ll likely spend this year. In fact, I’m aiming much higher *just in case* and to be extra certain I can retire comfortably when that time comes.
If I’m using my expected annual expenses for this year, I’m 53% of the way to financial independence. Using my much higher goal, I’m 35% of the way there. June proved to be a rough month, with all the uncertainty with Greece. Hopefully the 3rd quarter of 2015 sees some gains.