Tracking spending is a good way to stay on track for FI and make sure nothing gets out of control. It’s a way to evaluate your decisions and make adjustments for the next month, as necessary. I like to ask myself each month:
- “Did this purchase bring me enough happiness to justify the amount I spent?”
- “Can I do something differently to save more money?”
(This was originally published on 8/3/17, but I had an issue with my domain registration and this post got deleted.)
Welcome to the first Trail to FI spending report and net worth update! I guess I should call it a “debut” rather than an update since I’ve never posted it before.
It’s a little unfortunate that my first spending report is for July. This past month didn’t help out our FI progress as much as we would have liked.
A trip to Colorado and another trip to Michigan meant our spending was higher than usual. THEN add on top of that tuition for my wife’s master’s classes over the summer aaaaaannd…
It’s not good. It’s kinda embarrassing, to be honest. Here I am talking about how important it is to reduce spending so that you can invest more. I feel a little hypocritical, like I’m not walking the talk.
But it also doesn’t help to pretend that we don’t have periods of high spending. It happens, and you just gotta role with it. I want to be honest with you, dear reader, out of respect for the sacred art of FIRE blogging. You can trust that, for better or worse, I will be transparent about our finances in the pursuit of financial independence.
The other highest spending months on record (I didn’t start tracking our spending until we got married last July) have been August 2016 and January 2017. Why? Tuition: both my wife and I are working on master’s degrees. And what was the highest spending category this month? Tuition. So give me a break, Jake.
Anyways, on with the July details.
As I mentioned, we went to Colorado and Michigan in July. My wife was teaching a class for smart middle-schoolers in Colorado (at our alma mater), and I drove out to meet her and enjoy the mountains.
She has been in between jobs this summer, so our income has been lower than usual. Luckily, her new job starts in August. The drought will soon be over!
Total income: $6,371
- Total IRA contributions: $543
- Total 401(k)/HSA contributions: $1,956
- Total investment rate: 39%
Of our total income, we directly (and automatically) invested 39%. Retirement accounts are one of the easiest ways to access free money. Our taxes are reduced, and my employer contributes a portion (3%) of my salary. We contribute the maximum to both IRA’s ($5,500/year each) and the maximum to my 401(k) ($18,000/year).
And now for the fun part! (I guess?) Our total July spending was…
Total spending: $5,685
It’s not too bad when you consider $2,310 of that went toward tuition for my wife’s classes. $450 of that was spent while we were on vacation.
Here’s the break down:
Here’s a quick run down of each category.
- Tuition: Summer classes for my wife.
- Rent: We moved in June, and our rent is now a little higher. The value in this category includes water, sewer, and trash.
- Groceries: I throw anything that is bought at a grocery store or Costco into this category, so it’s not necessarily food. We did stock up on staples toward the end of the month, but this is higher than we want it to be.
- Bills & Utilities: Rental insurance, cell phone plan, internet, electricity, Hulu (we pay for Hulu and my in-laws pay for Netflix), a haircut for me, and the annual safe deposit box renewal fee.
- Restaurants: This is our biggest weakness. We eat out once per week (!), and we shoot for less than $200.
- Gas & Fuel: I’m not too worried about this, considering we were driving to and from Colorado AND Michigan from a Midwestern city somewhere in between the two.
- Health: Doctor visits and a couple of prescriptions.
- Shopping: Miscellaneous! School supplies for my wife’s class and a new toilet plunger, among other things.
- Travel: Light rail to and from the Denver Comic-Con (lit), tolls driving to both Colorado and Michigan, and Uber to the airport (but not a plane ticket – miles, baby!).
- Alcohol & Bars: we had a lot of alcohol in Michigan…
- Gifts: Birthday gifts for my nephew and mother in-law.
- Entertainment: We stayed with my aunt and uncle in Denver, so we took them out to Wonder Woman as a thank-you. This category also includes an afternoon to a local museum.
And here’s how it looks compared to the previous year:
The goal is for net income to be increasing, or at least staying steady. Next month we should see an uptick in net income, both due to higher income and lower spending.
Things to work on
Now that I’m doing these spending reports, I would like to have a better idea of what we spent money on so that I can accurately report. My philosophy has been to organize by where the money was spent rather than what it was spent on. I still plan to do that, but it would be nice to have receipts to check what the money was spent on.
Since we now have higher rent, we promised ourselves we would find ways to make up the difference. I guess we’ll start than in August…
I recently added our FI Progress where I will be updating our net worth and asset allocation each month.
And! I’m now officially on the Rockstar Finance directory! I’m basically a celebrity now.
Here’s a quick run down of how our money was allocated in July:
One big thing that sticks out is how much we have in “savings.” This is entirely cash. We are considering getting into real estate soon, so we are saving up for a potential investment opportunity. More on that later…
Here are some more charts!