Reduced Budget Shortfall to Only $500

by Dual Income No Kids on January 21, 2007 · 0 comments

You don’t have to be a rocket scientist to know its hard to accumulate wealth if you are spending more than you earn. Unfortunately, this has been the case for us DINKS over the past several months. The problem got started with me leaving my job to be become a grad student and it got worse when my wife Miel needed to pay her tuition at the University of Maryland. So basically, we’ve been spending significantly more than we earned on a monthly basis to the tune of $1,800. Of course, the results of this have been predictable. We’ve seen some declines in our networth over the past few months.

Well, there has been improvement in this situation. This is on account of two reasons. First, we were moderately successful in jiggering our investments to get a higher yield of monthly payments. Second, my salary at the university has effectively doubled.

Regarding rejiggering our investments. Miel and I have about $80,000 in stocks. We sold some of our holdings and bought shares in companies in the oil and natural gas industry, mostly energy trusts and a shipping company. On a post tax monthly basis, we should be getting around $700 per month in dividends from these firms.

Similarly, the university has been good to me. Instead of earning $600 every four weeks, starting at the end of the month, I should be earning $1,200 due to having picked up a teaching gig. While $1,200 isn’t much, it sure is better than what I was getting before.

Of course the investments are risky, and the teaching gig is only for 4 months, so we’ll have to revisit this issue at the start of the summer. Otherwise, I’m happy that we’ve been able to reduce the gap in our spending by $1,300. This leaves a shortfall of only $500 on a monthly basis. Spending $500 more than you earn is nothing to sneeze at, but at least this budget shortfall is much smaller than it was just a few months ago.

Best,

James

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