Monthly Spending – Feb 2016 Edition

So, after my last post, I read the Frugalwoods Feb 2016 spending post, and I have to admit it made me feel embarrassed.  Like, WTF are we spending all our money on???  So, the hubs and I took advantage of a morning where we both worked from home (with a sick kiddo – boo!) to review the spending and get a better idea what was going on.

First off, I’m not 100% sold on the Personal Capital spending amounts….maybe I just need to get used to it or I’m just so used to my YNAB that I’m a little attached to that, but I looked at our YNAB number to see what might be different.  For one, I do love that Personal Capital lets me designate certain transactions as reimbursements.  We have medical expenses reimbursed in this manner, and Mr. Fool uses our credit card when traveling for work which gets reimbursed (but yay miles!). So, in YNAB this shows up as “spending” and has to get backed out, where as in Personal Capital it gets designated as a reimbursement and therefore not included in spending.  So, PC 1, YNAB 0….not that I’m keeping track or anything.

Regardless, the YNAB number was $10,387….quite a bit different than PC.  But included in that number was $223 of medical and $1169 of travel reimbursements, bringing us down to $8995.  Then, we also had to put $800 of our hard-earned cash toward one of our rentals (which is totally a topic for another post) for reasons I can’t bring myself to even discuss right now, but obviously not a normal recurring expense for us.  So, if we deduct that just to get a better idea of more average spending, we’re down to $8195 – closer to the PC number.

Included in that number was also $434 for the outdoor project, $332 for the laundry room project (obviously true expenses but NOT normal monthly costs for us), $1199 in auto expenses (also a topic for another post ugh) and our semi-annual $271 car insurance payment.  I budget $50 for that a month and therefore have a little surplus left over each time which at this point I’m just letting build up a bit.

After all that we’re down to $5959 which included $1665 of a mortgage payment ($4294 net).  Still abysmal compared to others, and especially the Frugalwoods when you consider they spent $1K more than usual!  And, lest you think I am calling the $5959 our spending vs the larger number, I am totally not.  But I’m hoping it represents more accurate spending that once the projects are completed  and we don’t have auto expenses  either we can be spending that VS the larger number and therefore saving a lot more.  I also realize I haven’t even gotten into that whole “WTF are we spending our money on?” question, because technically I only talked about the things we don’t normally spend our money on.  But, I’ll save that for another post.

This summer I am SO lucky to have a job where they are going to let me work from home and be home with my kids, which is going to save us $160 a week in childcare expenses.  That money will most certainly be stashed away into savings!

Later this month we will also be getting Mr. Fool’s annual bonus check, and we have already determined that my traditional IRA will be fully funded for 2015, and we’ll see what we do with the rest.  Then in April we have a 3-paycheck month which will mean more income vs spending, and that will get saved as well.  Ideally we’ll start putting money into my IRA for 2016 right away so it’s not last minute.

I’m glad to be on this journey and realizing that we needed to get a handle on things.  We still feel foolish, but hope that 6 months from now and a year from now seeing the changes over time will make us start to feel a little less so.

Jan/Feb 2016

So, obviously one of my goals I talked about in my intro post was to get a handle on our money situation.  We have a budget, but when we thought long and hard about exactly what we spend on a monthly basis, we really didn’t know the answer.  We can ballpark it, but ballpark doesn’t work for us when we’re on a mission.  So, that was job 1.

The other thing was to compile all of our accounts into one place to get a handle on our net worth.  This was an area that, honestly, we were far less certain of.  After compiling the number for March 1, I can honestly say that I would have been off.  WAY off.  Like possibly tens or a hundred thousand dollars off.  Luckily the result was better than I expected.  And in this market I consider that a huge win.

So, I’d like to get more detailed on this in the future, but for simplicity sake I’ll do this:  Personal Capital says our spending for Feb (I didn’t start using it until mid-January and not relying on it for that month) was $85% of our income.  YIKES.  Obviously that needs to come down if we’re going to make any sort of progress getting to financial independence more quickly.  Without our mortgage  it’s 66%.  I should also add that the spending amount also includes additional amounts paid toward some debts (mortgage and student loan – our only actual debts).  THIS is why you don’t want debt, people.  It literally eats up all the payments I could instead be saving.  “Same as cash” is NOT a good deal, I don’t care if it’s zero interest!  Because both are low interest (3%) we have decided to instead start saving the additional payments starting in March.

Net worth….this month our net worth totals in at $448K and some change.  Like I indicated, better than I expected, but we still have a ways to go.  $448K isn’t bad, but if your spending is 85% of income, it pretty much sucks.  The FI formula would tell us we have a LONG way to go before FI.

So…..spending.  We are in the midst of two projects that is causing spending to be higher than normal; a laundry room renovation and an outdoor project.  Once complete spending will come down, and then we really need to have a “no additional spending” month to get a good handle on what our minimum monthly expenses really are.  One win though was bringing food spending down $300 this month.  I’ll take it.

feb2016

In summary, we suck.  We really are two fools.  Gah!  Onward toward progress!

Two Fools

Two fools, huh? Yep, that’s exactly how we feel. Foolish. We are 40ish year old professionals that should be well into enjoying our years of financial independence, yet, we’re not. And the more (most?) scary part is we really have no clue how close we are.

There’s a quote out there….”you weren’t born to pay bills and die.”  People can think what they want of it, and while we enjoy our jobs, there are plenty of people out there who do not clock into an 8 to 5 job every day (or at least, past a certain point for some) or have non-traditional jobs that keep money coming in.  This is what we’re after….freedom.  Freedom to have more time with our children and more time to travel and spend time together as a family.  Last year I spent 10 days in Italy. It was the trip of a lifetime!  Thanks to the $75 airfare (cost for using our miles) I was able to swing it.  But what if we could do trips like that more often?

We found Mr. Money Mustache a few years back and had a fire lit to get things in order, but I’m honestly not sure what happened. We are busy (but that’s a lazy man’s excuse in the grand scheme of things). Back then I was a stay-at-home mom spending my days with my kids not-yet-in-school. Currently I’m working a mostly full-time job and two part-time jobs. But this new job also was a boon to our income (yes, a 33% increase to your income is substantial, you should treat it as such and not waste it). I’ll admit we haven’t done things the way we should have all these years, but we’re ready to get on track.

So, thus this blog is born…our place to document our plans and hold ourselves accountable. We have used YNAB for years. I have signed on to Personal Capital (though the two seem to be at odds and I need to figure out where I fall on that) and am using it to track our net worth and calculate our FI date. I’m trying to ensure that every single dollar of my part-time jobs goes to pay off debt and/or get reinvested.

Look, the fact that we have any debt at this point is somewhat embarrassing. And I’ll admit, I don’t expect our journey to be near as extreme as other financial independence bloggers, but more to come on that in future posts. We have to find our own path, but now we need to commit.

So, first steps. Establish our baseline spending which we have a decent handle on, but need to do some serious tweaking to. Our food spending is high, other spending needs to be examined….so time to get serious. I need to finish loading the last of our accounts into Personal Capital and have a better handle on our total net worth. Then it’s time for action….what are we going to tackle first (I also have a good idea what this is going to be) and why? What next?

So many questions!!! Stay tuned…..