Tallying Up My 2015 Savings Plan: December and End of Year
Previously, on Nicole’s Budget: After discovering that I needed to save a lot more for freelance taxes than I had been previously saving, I set up a series of sub-savings accounts. Every Friday, I tally up all of the freelance payments I’ve received that week and put 20 percent towards taxes, 20 percent towards debt, and 10 percent into regular savings.
I have a lot I want to discuss—a lot—about spending most of 2015 living on 50 percent of my pre-tax freelancing income. Expect most of my posts this week to be about how my savings plan changed my life, how it was only possible to do this because I was earning more than enough money (key point), and how I plan to update my savings and debt strategy in 2016.
But before we get to that, let’s look at the December numbers.
In December, I received $7,492.26 in freelance payments. Here’s what I put into my sub-savings accounts:
Taxes got 20 percent, or $1,498.45.
Debt also got 20 percent, or $1,498.45.
Savings got 10 percent, or $749.23.
This left $2,567.50 for my checking account.
Regular Billfold readers will notice that I received around $4,000 more in freelance payments than I was expecting. I was planning on December being a slow month, but I picked up a few extra gigs and—more importantly—many of my clients decided to make all of their outstanding payments before the end of the year.
So yeah, I kinda ended up with a mini-windfall this month, if you count a “windfall” as “money owed to me for work completed this year.”
I’ll tell you what I did with the extra cash later today.
Now let’s take a look at how I did this year.
Total freelance earnings for 2015: $63,571.12. This does not include the portion of my earned income that went towards Paypal or Patreon fees, which I’ll have to calculate before I start my 2015 taxes. It represents every penny of freelance income that entered my bank account this year.
In 2014, my freelance earnings came to $43,059.02 (and yes, I did a 2014 earnings round-up post if you want to read about where I was a year ago), so I increased my income by $20K this year. Technically, $20,512.10.
This year, I put $11,291.60 towards 2016 estimated taxes (including the fourth quarter payment coming due on Jan 15) and paid $5,443.00 towards 2015 taxes since my CPA and I underestimated my 2015 tax burden.
I also paid $12,806.17 towards debt this year. I have $8,364.08 to go.
Lastly, I have $3,604.18 in savings. This represents two months of basic living expenses (rent, food, bills).
Creating this savings plan was absolutely the smartest thing I did financially in 2015. What about you? What was your biggest 2015 financial accomplishment?