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December 2017
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How Do You Save Cash Padding?

Being self-employed means that I only feel comfortable if we have 6 months of expenses saved up in easy-to-access savings accounts.  The trick is finding the money to save, right?

Our Finances

In general, we have a pretty large monthly nut compared to what we were used to a few years ago.  Between income taxes, property taxes on two homes, home owner’s insurance on two homes, the mortgage on our main home, and HOA dues on our main home, we already say goodbye to nearly $5000 a month.  We spend another $1000 a month for the rest of our bills like food, utilities, and car maintenance and splurges like lawn care.  That means that we need to bring in more than $6000 a month if we want to save anything extra.

This large monthly nut usually scares me, but I remind myself that we do own a house outright and are working on owning the one we are in.  I also remind myself that downsizing would cost us money overall right now since we spend about $2100 on our one mortgage plus the property taxes on two homes each month…but we bring in $2350 in rent since we rent out the first house and rent out two bedrooms in our current house too.

We always are able to put at least $500 away, but I like to strive for $1500 or more.  How would you sock away at least $18,000 extra a year?

Options

The only way to make a gap between how much you make and how much you spend is to either spend less or make more.

We could spend less, but even if we cut out all of the big splurges, we’d only have around $500 extra a month.  To save $1500 a month for our Roth IRA’s and to build cash reserves, we aim to make more.  Generally we either do it through our main business or through our side hustles/hobby jobs.  We can’t really control our online income from ad deals other than by doing our jobs well (it fluctuates between $4000-$7,000).  We also can’t control our rental income much either – it’s set at around $2300 a month.  So we usually try to control how much we make on the side instead.

My husband officiates sports like varsity football and softball.  I started a pet sitting business.  Between the two of us, our hobby jobs bring in an average of $1000-$1500 a month.  That’s generally what we make sure to save for our cash or investment targets.

How do you make the gap between your income and expenses?