December 8, 2010, 8:02 am

Year End Income Reviewed; Increasing to 135K

by: The Financial Blogger    Category: Alternative Income,Career,Make Money Online
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December is definitely the time of the year I like the most in terms of looking at my personal finances. This is the time when I look at what has been done in terms of income and net worth. While my net worth statement has been declining for the past 2 months, I know it will come back as soon as I receive my bonus in January so I can pay off my credit card bills.

Last year, I was all excited because I had reached the 6 figures mark for the very first time. This year, I didn’t focus much on my salary as I was too busy building my online company and spending all my income on a second car and a new house! Lucky for me, I was able to go from 106K last year to 135K this year. Here’s how it is calculated:

Still stuck in the rat race deluxe

I know, I know, I can’t complain. I am making a very good income and I should be happy about it. I would also add that this is the problem; I’m making too much at my day job to quit. Sometimes, I dream of working full time on my online company, but the trick is that I hit the 6 figure mark solely with my day job.

I was able to get a good raise once again this year and my bonus is pretty similar to last year’s. Therefore, there is not much change here. The good news is that I am able to work 4 days a week and bring in the same results as before. Thx to the Pareto Principle!

I’m not considering everything from my job as income

Last year, when I first reported my income, my partner and I had a discussion about this; reporting your global income; what do you include as income from your day job? This is how I made the break down:

Employer’s salary: what goes in my pocket (gross income)

Bonus: the check I receive in January for my performance (gross income)

Employer’s benefits: I consider only the rebate I have on my mortgage along with my employer’s stock that I receive for free (25% of my own contribution). Therefore, I don’t consider my pension plan nor my medical and dental insurance. Maybe I should but I found it hard to assess and I wanted to remain conservative.

Great increase from my online company

While I am making more at my day job, the bulk of the increase in my income has come from my company. It was able to pay more expenses and we were already able to increase my “1 day/week” pay check.

We decided to reinvest most of our profits within the company. We think that growing assets, buying more blogs and giving away iPads 😉 was the way to go. This is why my online income doesn’t show much on my personal income report. The good news is that without draining the company, my online income is about 20% of my total income for this year.

What is next: 2011 = 150K?

In 2011, I want to take care of my finances differently. I intend to pay off my debts as being my first goal. It is fun to make money and to live the good life but if you don’t concentrate on your debt, they will come back to haunt you at one point in time.

In order to pay them off faster, I would rather try to increase my income instead of spending less. I am not planning any significant expenses but I don’t think I will restrict my monthly budget either. In order to do so I plan on;

getting a small raise (there is not much to get this year in terms of a raise)

increasing my bonus (I would like to make a very fat bonus this year and I have already started my plan to do so)

– getting more online income (this will defininitely be where I have the best chance to increase my income to 150K in 2011).

My plan is to live with my existing salary and use both my bonus and any increase I can get from my day job and online income and put it towards my debt. This should make for a significant jump for my 2011 December net worth statement ;-).

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Comments

Congrats TFB, very good year! Anything that you would single out as your best shot and biggest error in terms of finances in 2010?

I have no doubt that the online income will take annother jump in 2011:)

Congratulations body!It goes up and up every year! I agree with try increasing your income instead of spending less. You must reward yourself along the way and that is a lot easier if you keep the same budget. Also, without a new house or car to buy this year or any big expenses, paying debts will be an easy thing, won’t it? 😉

by: The Financial Blogger | December 8th, 2010 (8:20 am)

Thx VeRo!

It should be pretty easy to pay off debts in 2011 indeed!

Congrats Mike, you are doing very well. Much better than I was at your age.

Alas, I too, share the pain of a 6-figure handcuff to my day job. Whatever are we to do? 😉

Yeah, I know, I should not be complaining, I have a very good situation and I am well aware that most people don’t have a job that pays that well. However, I am sure you understand how it restrain me from doing any major changes in my actual financial situation.

Increasing your income is usually more fun than giving up everything you like 🙂 (although eliminating debt payments is an easy way to cut back expenses without giving anything up) It might be time to apply the 80/20 principle… would you be able to cut out the less enjoyable parts of your job and only have a small drop in income? Or even spend more time on things that are enjoyable and profitable?

I’ve stayed away from my full potential income recently for this reason. It helps that even at a lower income I can easily cover all expenses + savings and investments. Once you have other sources of income that are big enough to address that you really have a lot more freedom. Maybe you just need to grow your business work time by one weekday per year!

@Value Indexer,

I am happy to enjoy both my day job and my company right now. I would not go back 5 days/week at the bank in order to get a promotion. I think you made the right decision as to live with a decent income but being able to enjoy life at the same time 😉

cheers,

TFB

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Cool to hear how well the year is ending up! I have been working on a few online ventures while still working full time, but am much more of the mindset that I’d rather value freedom to work on things I love rather than being chained to a desk 5 days a week for a steady paycheck. Maybe I’m just ignorant, but at least it’s motivating enough to be something to strive for! 🙂

Thanks!
Brett

by: The Financial Blogger | December 8th, 2010 (11:01 am)

@IS,

best move: working 4 days a week. This make me way more productive at my day job (i.e. it is challenging) and it gives me more time to work on my online company.

biggest error: using this salary increase to live the good life. lifestyle inflation got me big time in 2010 so I didn’t really benefit from my income raise, I just raise my payments accordingly!

Way to go! Do you feel any different from when you were making under 100K?

I think the best moment frankly is that you paid your mother back in full. That is the most honorable thing!

How much online Net Profit (not revenue) do you think you need to make before you quit your day job?

by: The Financial Blogger | December 8th, 2010 (11:22 am)

@FS,
I’d say that I feel that I will never have money problem in my life since I make 100K+. This is probably the most important thing about making money; not having to worry about it!

Yeah, paying off my parents loan was a HUGE releif for me. I would not borrow money to my family again…

I’m currently working on how much I would need to maintain most of my lifestyle and work solely on my online company. The magic number seems to be around 5K in my pockets. Now I have to consider taxes, insurance and other implications to figure out what is the magic number the company needs to make in order to make pay me… not an easy task!

Great job! I hope one day I can reach that much net worth, but it’s definitely a goal of mine. One step at a time

Congrats Mike, you are doing really great so far, and on 4 days a week, too (at least for the main job ;))

I’m with you. I’d rather find a way to increase my income than reduce my expenses when it comes to paying off debt. I think I have much more potential to increase my cash flow by putting my time into trying to earn more.

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