What is your Monthly Nut Ratio? Conventional wisdom says your fixed expenses should be under 50%, leaving 30% for flexible spending and 20% for investing. What if you could increase your income or lower your payments? Maybe push your fixed expenses down to 30%, 20%, or 15%?

Some people track their net worth, savings rate, or cash flow. Maybe we should start tracking our Monthly Nut Ratio?

It’s a simple formula. Just take your fixed expenses and divide them by your monthly income.

Fixed Expenses/Monthly Income x 100 (for the percent)

Every time you pay off a credit card, car loan, student loan, medical bill, or the granddaddy of payments…your mortgage: Your Monthly Nut Ratio will move down.

Every bill you can make smaller – cell phone, car insurance, gym membership – your Monthly Nut Ratio moves down.

If you can add a side hustle, earn a raise, or create some passive income: Down goes your percent.

If you’re starting at 60%, every 10% drop will feel like a weight is being lifted. At 50%, you will breathe better. At 40%, you will sleep better. At 20%, you will feel like a freaking Rockstar.

 Every good decision you make will be instantly rewarded by your monthly nut ratio.

If you get a better deal on your cell phone bill, your net worth might not budge. But your Monthly Nut Ratio will congratulate you!

I don’t think anyone really loves paying bills. So you won’t be sad if they go away or get really, really small compared to your income. In fact, I bet you will start to feel rather rich. The less obligation is weighing you down, the more freedom you will feel.  All of a sudden, you have more financial freedom, more adventure, more room for generosity.  I know we feel that way. And here is why…

Our Monthly Nut

If you add up all of our fixed expenses, those bills we have to pay every month, it comes just under $650.

We have 3 cars, a motorcycle, a pop-up camper, a 4 bedroom/2 bath house, and 5 kids. On any given month, we might spend $3100 (March), $2445 (April), or $2200 (January), but only $650 of that was earmarked for bills. That makes us feel rich, folks.

The Breakdown

Housing Costs

Property tax: $133

Homeowners insurance: $40

Utilities: $105


Cell Phones: $66

2 Gym memberships: $60

Internet: $66 60

Netflix: $10

Car insurance: $57 (for 2 liability and 1 full coverage)


Life Insurance: $52

Dental: $60

Grand Total: $649 $643

Honestly, I LOVE having such a low monthly nut. I am much more prone to pay for something upfront vs. feeling like the payments are looming over me. Our Monthly Nut Ratio is the main reason we have been able to take a year off. Our low monthly commitment gives us a lot of choice and freedom.

The income from just one of our rentals covers almost 100% of our monthly nut.

There is synergy when you add passive income, investment income, and low fixed expenses. If you want more flexibility in your financial life, that is the magic formula. It’s not a life of deprivation. In fact, it’s the opposite. You have a much bigger percent of your income that can be used toward adventure, hobbies, or early retirement funding. Finally, your bills don’t eat all your income.

 If you could have a really low Monthly Nut Ratio, what might change in your life?

What might be different without a house payment, car loans, or debt payments? If your passive income could cover all your hard expenses, do you think you would feel like you have more financial freedom? Or would you be more likely to run out and take on more payments if you had too much cash lying around each month? (Don’t laugh, you know people totally do that!)

Have you been able to lower your Monthly Nut Ratio? Want to share it here? =) We will only cheer you on!

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