A few days ago, a commenter left a question on one of my posts asking what I spend my money on. I thought it was a good question, especially since my income has seen a nice little increase during the past couple months.
While it would be fun to say that I spend it on expensive cars, Rolex’s, and other forms of bling, the truth is that the number one thing I spend my money is on is taxes. I’m a very honest and by-the-book person and therefore declare every penny I earn online. Since my income is high enough to be in the highest income tax brackets, I’m penalized with the highest tax rates. This eats up a lot of my income (nearly half) right off the bat.
When you start to earn more, the IRS or the CRA (Canadian Revenue Agency) in my case, will start wanting you to pay quarterly… in ADVANCE. They do this by basing your estimated tax income for the current year on how much you paid last year. So, I actually have to pay income tax before I even claim the money (or even receive anything!).
1. Income Tax
So, as anti-climatic as it sounds, the #1 thing my money goes towards to is income tax.
2. Mortgage & Strata
I bought a brand new condo in 2007 for $214,500 (+6% GST since it was brand new) and took an accelerated bi-weekly mortgage on it. The mortgage includes insurance and property taxes and works out to around $1,300 a month.
Now that I’m starting to make more, I’ll probably be putting some lump payments to pay off the principal (since mortgages are always interest-heavy).
In addition to my mortgage I have to pay a strata fee since I live in a condo. That’s another $215 a month which is quite pricey. It’s fairly high because I have underground secure heated parking, a recreation room, and just generally a nice building which in turn has a higher strata cost.
Electricity is only about $25/month.
3. Hosting & Investment into My Sites
I don’t want to really mix up my corporation and personal income, but since I’m the sole shareholder of the company I thought it would make sense to mention this.
With Merendi Networks Inc., I pay hosting costs each month which is around $450-$500, and invest a lot of money into new projects such as a new one I’m working on right now when I expect to put $5,000 to $6,000 into the development of.
Then there’s license purchases such as vBulletin, domain renewing, logos/design upgrades for existing sites, etc. In fact, this might be #2 instead of #3.
I like to reinvest what I earn back into my work. It only makes sense to me and I’m never scared to spend money on things that could make me more money.
I spend a fair bit on food. I love food (which you may have noticed from my growing belly) and always buy name brands and the more expensive items such as sandwiches from the deli.
I also order in on occasion and pick up food (there’s a fantastic Vietnamese Pho restaurant just a few blocks away that I always get the #36 and #36 at) and eat out at restaurants with Lisa. We used to eat out at nice restaurants a TON last year, but really cut down this year which is good. I think last year there was a point in which we were eating out at restaurants almost every second day…
In addition to food there’s medical care (who said healthcare in Canada was free?!), dentist, optometrist (contacts ain’t cheap), car insurance, gas, cable TV, cable Internet, and my cell bill.
This stuff really adds up.
5. The Fun Stuff
Finally, the fun stuff. I bet some of you were expecting this to be much higher on the list, but the truth is that on average it’s much lower and usually makes up the least amount of spend distribution.
I used to play a lot more poker than I do now, and earlier this year played a lot of high-limit private home games – some of which were $500-$1,000 buy-in’s. And I used to play online a ton as well, but now I play very little poker, playing maybe 2 days a month on average. I used to play for the money, but now play more for the fun. The thing with poker, apart from the wild swings and deviation, is that it takes SO much time. You have to grind out playing hours upon hours upon hours. I can make a lot more by working on Merendi Networks Inc. which is the main reason I stopped playing.
I’ll go on the occasional trip, but don’t go on all that many. This year Lisa and I went to the River Rock Casino Resort and then to Las Vegas in September for BlogWorld. Next summer I’ll be going to the Philippines and I expect that to be a bit expensive (the plane ride isn’t cheap).
As for toys, I don’t go too wild but when I get something I usually get something nice. I just bought a beast of a new computer a little while ago as well as two 24-inch monitors. Then, even more recently, I bought a nice new bed. I’m now eyeing a 60-inch HDTV/Plasma for my living room and a 40-inch wall-mounted HDTV for my bedroom.
I’ve also been looking at upgrading my Blackberry Pearl. I’m waiting for the Blackberry Storm to come to Canada and might consider switching over then.
Lastly, I spend money on games and DVD rentals. I have a Wii (traded in my XBox360) but don’t play it anymore although I’m considering getting Rock Band II when it comes out, but primarily play PC games. I actually don’t spend a whole lot on games because I get a scary amount of gameplay time out of them. I still play Starcraft which is nearly 11 year old now.
So that’s what I spend my money on. It’s nothing too fancy, and I still have a mortgage to pay.
However, I expect 2009’s income continue to climb just as well as each year did before. For example, even if we’re conservative and assume that 2009 averages what this month of December will most likely bring in, we would expect for Merendi Networks Inc. to bring in $180,000 since it’s currently doing around $15,000/month.
So, what do YOU spend the money you make online on? Whether you make $40, $400, or $4,000 a month you must spend it on something. Do you save it? Reinvest it online? Put it in the bank and save it? Pay the bills? Or do you buy all the bling you can get your hands on?