PoP Income Statement – December 2012

Welcome to our December 2012 Income Statement!

Mr. Pop and I put these income statements together for two reasons. First, we want to be transparent about our finances because we’re trying to be role models for other people who are trying to plant their own pennies (and end up with dollars someday!). Second, we do this to make sure we’re on track to meet our own long-term goals. If you’re not tracking your income statement and balance sheet, we highly recommend you start using a program like Mint to keep track of it all.

December was a busy month for us! It seemed like we went right from Holiday to Holiday, and with a marathon for Mrs. Pop, and the end of the fiscal year at Mr. Pop’s job it all added up to some serious running (pun intended) around.

Because of some of the timing of expenses on the investment properties, December, like November, tends to be an expensive month.  But unlike November’s killer income month, December was pretty typical income-wise, so it looks far less impressive.

Nonetheless, we still managed to pay off $2,500 on the HELOC and transfer $1,500 to medium term savings, so it could have been much worse.

Our holiday spending was also a bit higher this year as we increased the amount we spent on those in need because we had plenty of cash back rewards money to play around with.  So the “shopping” category was definitely high, but we feel pretty good about where the money went, so it balances out.

The Bottom Line

  • Earnings before principal paydowns and savings allocations of $2,489.

And here are the details…

Income

  • Wages and Salaries (after taxes, 401K deposits, HSA allocations, etc.): $7,040
  • Rental Income: $1,500
  • Miscellaneous Income (rebates, reimbursements, etc.): $594
  • Total Income: $9,134

Expenditures

  • Groceries: $417
  • Eating Out: $336
  • Total Food: $753 
  • Mortgage: $1,166
  • Home Maintenance and Repairs: $76
  • Total Home: $1,242
  • Gas: $474
  • Car Insurance – 6 months upfront: $733
  • Auto Repairs / Maintenance: $7
  • Total Transportation: $1,214
  • Bills/Utilities for Primary Residence: $377
  • Bills/Utilities for Investment Properties: $191
  • Total Bills / Utilities: $568
  • Interest Payments on Non-Mortgage Debt: $73
  • Car Loan Payments: $265
  • Total Interest / Car Loan Payments: $338
  • General Shopping: $671 – check out the details of our holiday spending to see where a good chunk of this went
  • Pet Supplies / Care: $12
  • Total Shopping: $683 
  • Gym / Fitness: $73
  • Medical Treatment/Visit: $25
  • Media Subscriptions: $25
  • Media Non-Subscription: $11
  • Total Health/Fitness/Entertainment: $164
  • Travel: $165
  • Property Insurance For Investment Property: $1,518
  • Total Miscellaneous: $1,683
  • Total “Everyday Expenditures”: $6,645   December is like November where our expenses typically run high in large part due to the investment properties.  Our homeowner’s insurance on the duplex didn’t increase too much, which is always nice.  Though would you believe that we’re required to have $186K in insurance coverage on our duplex that’s worth $97K!   And we’ve had to have that much coverage since we bought the duplex for $50K!  Every time we renew that I wrinkle my nose as I pay the bill knowing we’re paying for TONS of extra coverage, but we have no choice in the matter.  
Earnings Before Principal Paydowns / Savings Allocations (EBPPS)
  • EBPPS = $9,134 – $6,645 = $2,489

Principal Paydowns / Savings Allocations

  • Principal on HELOC: $2,500 (includes $1,500 that was going to be used for a tube amp!)
  • Savings for Estimated Income Tax Liability*: $500
  • Transfer to IRA Holding Account: $1,000
  • Total Principal Paydowns / Savings Allocations: $4,000

Net Income = EBPPS – (Principal Paydowns + Savings Allocations)

  • $2,489 + $1,500 – $4,000 = –$11 = Net Income

So all told, our cash accounts shrunk by $11 this month. (Added $1,500 to medium term savings, but took $1,500 out of short term savings, plus the -$11 from net income.)

* We’re up to $1,500 set aside for an estimated $2K in new tax obligations.

 

How’s your income statement looking this month?  Do you have to buy an insane amount of homeowner’s insurance when you compare it to the market value of your property?  

 

30 comments to PoP Income Statement – December 2012

  • I love the way you calculate all your income and expenses, I think this is a great idea and it should really aid you in planning financially for the future.

    My December wasn’t great for income as we made less than October and November, but at least our expenses were down to match.
    Glen @ Monster Piggy Bank recently posted..December 2012 Goal ReviewMy Profile

    • Thanks, Glen! That’s great that you were able to lower your December expenses to compensate for the lower income. Hopefully the income will be back up in January!

  • I’m with Glen.

    It’s really easy to follow how you set out these reports. It’s really easy for me to see exactly how jealous of you I’m going to be in any particular month!

    Congrats on a great 2012 and here’s a an even better 2013 with more pennies for all. Especially me.
    James @ Free in Ten Years recently posted..The hidden psychological stress of work and why I want outMy Profile

    • Haha, no jealousy. =) We’ll definitely toast to more pennies for EVERYONE in 2013 – both in earning them and keeping them around!

      If you’ve got money in the stock market, today was definitely a solid start…

  • It is good to see to that you have what you will be spending planned out like that. It’s always good to have a very detailed plan. Have a great new year!
    Brett @ wstreetstocks recently posted..Invest in 3D Printing StocksMy Profile

  • Jonathan

    As far as the insurance, consider the cost of construction – if your duplex were to burn down or be wiped out in a hurricane, what would it cost to rebuild? We insure our SFHs at $300k though the current market value is around $120k. I’m not certain what current cost of construction would be, but certainly less than $300k. Also, the insurance runs less than $400 per year so I’m not sweating it.

    Our month looked really good, though part of that is that I record credit card transactions through the statement closing period (around Dec. 10, so missing lots of holiday spending) and I also record actual bank balances as of 12/31, so there are a few outstanding checks that will clear). Anyway in addition to regular monthly income we received about $3k as a disbursement for a real estate investment we are partners in, and this month my wife is getting a large bonus so it’ll look good too.

    • Oh I know that it’s insured for reconstruction costs – but what bothers me is that there’s no requirement that any payout actually be used for reconstruction. So when the cost of construction is so much higher than the market value of the real estate, I think it seriously skews motivations.
      I look at it this way – when we bought the place for $50K, the best thing that could have happened financially would have been if it had burned down completely in short order. We would have been cut a check for $185K (after the $1K fire deductible), then had to pay clean up expenses on the lot. We would have probably $180K leftover easily and could have gone on a buying spree and ended up with 5 or 6 units instead of the two we started with.
      I think when the insurance company makes you insure for 2 or 3x multiples of the market value it just makes for a really weird incentives for illegal/fraudulent/negligent behavior, which seem like an indication of a malfunctioning marketplace. Not to mention the additional premium and hurricane deductible costs (since those deductibles are multiples of the premium) in the interim while the market value takes its time catching up to reconstruction cost.

  • Awesome breakdown! Looks like you’re doing an awesome job. Now, this is the first time I’ve seen this, so forgive me if this has already been covered, but why are you hanging on to the car loan/other loans and paying down the mortgage first? Wouldn’t you want to do it the other way around?
    Jacob @ iheartbudgets recently posted..2013 Goals And Debt MovementMy Profile

    • No prob, Jacob – here’s the link to a description of how we’ve prioritized our debts that I wrote this summer: http://www.plantingourpennies.com/2012/06/25/prioritizing-debt/
      Other than paying off ~about $32.5K on the HELOC since I wrote that post, we’re pretty much the same with the rest of the loans.

      But the quick answer to your question is this: The $73 non-mortgage interest payment is the interest for the last period on the HELOC, which is our #1 priority debt. I just record the minimum required payment in a different place on our income statement as I do the $-amounts that we throw against the principal at the end of every month.
      I don’t consider the HELOC as our mortgage for a couple of reasons. 1 – it’s against the duplex, not our primary residence. 2- we got it for the purposes of investing in another property, not for making RE improvements. It’s also our highest interest rate (variable, but currently at ~6%), so we’re paying it down as fast as we reasonably can. Also, even though we can deduct the interest here against the rental income, the marginal rate after that deduction (6%*(1-0.28) = 4.32%) is still bigger than the 4% the car loan is currently at. So, to pay the least in interest, it’s the HELOC that gets attacked first.

      I know it’s counter-intuitive for a lot of people that it actually makes sense numbers-wise for us to pay the car off slowly for now, but that was the process behind the decision. It also helps that the car is definitely nowhere near under-water, so there’s no stress about that.

      Hope that made sense! Check out the link for more detail, you budget-addict!
      Mrs PoP recently posted..PoP Income Statement – December 2012My Profile

  • Great breakdown! Our December was down, but was expected as it goes with the seasonality of our business. Thankfully the previous few months were crazy busy and were able to sock away some extra money. Things start to pick up for us in the next few weeks so January and February should look much better.
    John S @ Frugal Rules recently posted..What My Air Conditioner Taught Me About Saving MoneyMy Profile

    • Sometimes I think that the lumpiness of Mr. PoP’s income has helped keep us from lifestyle inflation. Do you feel that way when you hit the low season with your business?

  • Sounds like you did awesome. I wish I took the time to make a detailed breakdown like you guys do.

    Happy new year!
    Holly@ClubThrifty recently posted..Can You Afford to Live Until You’re 90?My Profile

    • Thanks, Holly! It’s not too hard, actually. Mint does most of the work, I just double check the classifications and the totals every month =)

      Happy New Year to you guys, too!

  • I have to make an income statement! I budget roughly for the year, but life is too hectic to have a monthly idea of income and expenses. For my flat I have no idea how much insurance I pay, it is part of the homeowners association fees, which are pretty high, I should look into it, thanks for the reminder!
    Pauline recently posted..13 money resolutions for 2013: #2 trim the fat!My Profile

    • Life does get hectic – but I feel like we’ve got a system down now that works pretty well, so the updates aren’t huge time consuming activities.

      If your insurance is built into the HOA, you probably don’t have much choice in the amount, huh? That’s part of why we hate HOAs.

  • I was just wondering how much maintenance/repairs/costs for your rental properties works out as? The Boyfriend is keen to get into real estate once we are both finished with Uni, but I have read so many horror stories about people trashing the home that the landlord spent years renovating!!
    Bryallen @ The Frugal Graduate recently posted..Hello 2013!My Profile

    • Jonathan

      In my experience, which is approximately equivalent to the PoPs’, these fears are well overblown. I know a number of people also who’ve invested in RE for decades and managed hundreds of units, and cases of tenants truly trashing a place are not at all common. You have a measure of control over that sort of thing too, based on the type of units you own and the tenant screening process.

      In a little over 2 years between three rental houses (detached), my maintenance issues have included repairing an A/C hose which was vandalized prior to a tenant moving in, replacing a thermostat, and fixing a broken sprinkler pipe. Total cost – approximately $500. Certainly there will be more issues in the future, including larger capital improvements – but if you buy right (meaning, find an investment that makes sense and is profitable from day 1) and don’t blow all your profits (i.e., keep a reserve), these things are nothing to be afraid of.

    • I think Jonathan hit this spot on. We don’t anticipate tenants trashing the place (and if they do, we have their security deposit), largely because we spend a lot of time screening tenants.

      For example, we picked tenants that when their cat bent the blinds (which some would consider minor wear/tear) they went out and purchased new blinds to be installed as they were moving out. Another tenant rented a carpet shampooer to clean the everyday dirt from the carpet when he was moving out. If you have a nice place, and pick people that are respectful of nice places, you’re pretty unlikely to have a tenant trash it.

  • I, too, love the level of detail you provide in these posts. Looks like December went really well for you!
    The Happy Homeowner recently posted..2012 Hits and MissesMy Profile

  • CF

    Awesome! And very tidy presentation also :) I do enjoy seeing what people actually put their money towards.

    Brian and I don’t track our monthly expenditures because our budget is pretty static. Our extra income gets allocated into debts/savings which we track separately.
    CF recently posted..Net Worth Update: January 2013My Profile

  • Nice way to present things! We have not done an income statement like this before.

    I was going to ask about you paying down the mortgage earlier than the car loan but I see you already answered that for Jake. I will read that post. One more question I had is is the mortgage for both your primary residence and your rentals? (Sorry if you already covered this, this is my first time on your blog).

    Happy New Year!
    Suba recently posted..Save $1000 in 30 days challengeMy Profile

    • Hey Suba, check out our networth post for december, but essentially we have a HELOC with a balance of 5K on the duplex (which we used to buy some land in late 2011), a 50K loan from my parents which we used to purchase the duplex, and about 100k on our main house. We expect the HELOC to be killed in January, and will work to pay off the 50k loan in 2013.
      mrpop recently posted..Book Review: The Journal Of Best PracticesMy Profile

  • […] discussions of happiness to the interwebs – and as a diversion from all the numbers heavy income statement and balance sheet posts of the past couple days – we bring you today’s book […]

  • I like the way you break this down. Our December budget was ok I guess. We spent more than anticipated although we still managed to put money into savings. Are your rentals all paid for then and how many are there? Forgive me if I read it somewhere already but I’m drawing a blank. Mr.CBB
    Canadian Budget Binder recently posted..Canadian Budget Binder-Personal Finance Weekly Reading List #1My Profile

    • No problem, Mr. CBB. We took out 2 loans to buy two investment properties. The first was a $50K loan from Mr. PoP’s parents. That’s still outstanding, and you can see it on the balance sheet. Then we extended a $38K HELOC on the duplex in order to purchase an undeveloped residential lot that we’re holding for appreciation. We’ve got that one paid down to $5.5K, and hope to kill it either in January or February.

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