2016 and Q1 2017 Expenses
I documented my asset and debt balances over the last two years in a previous post. I’m going to discuss my expenses for 2016 and the first three months of 2017 so I can pinpoint mistakes that I made and areas of focus for the beginning of my FIRE journey.
I should note that this post makes me feel very exposed compared to the last post. It’s one thing to talk about asset and debt balances but disclosing how much I make seems very taboo. Anyway, I’m taking the plunge.
My total take-home income was a little over $87k in 2016. I get paid every two weeks plus I get a bonus of approximately of 20% of my salary in early March every year. The tax line is the net tax payment/refund after doing my taxes. The taxes that were withheld from my paycheck are already excluded from my take-home pay. Withholdings for health insurance and similar benefits are also excluded.
I also included here the payments made on 401(k) loan, 401(k) contributions, and my employer’s 401(k) match since none of those are included in my take-home pay. That brings my income after taxes and benefit costs to a little over $105k in 2016.
The next grouping of expenses includes my mortgage, utilities, and auto expenses. I refinanced my mortgage in 2016 so my payments went from $1,616 for January through July to $1,484 for September - December. The August payment was rolled into my new mortgage balance as part of the closing costs. The mortgage payment includes property taxes and homeowner’s insurance. Utilities include oil heat, electricity, water, mobile phone, and internet service. I did not have a car payment in 2016 so auto expenses include gas, insurance, registration, and basic maintenance costs. I did not have any significant repair costs.
Now for the fun stuff. I spent quite a bit on travel in 2016. We went to Disney and took a 3-night Disney cruise in March 2016. We also took a second 3-night Disney cruise in October and I paid to include my mother too. I attended an art workshop that I absolutely love in both June and September. In addition, we went to Disney in February 2017 and that was paid for in 2016. That was a lot of traveling. It wasn’t a normal year by any means but I was feeling restless and planning vacations was how I burned off that restlessness.
Food costs are also way out of line. I spent almost $7k for groceries and almost $8k for eating out for two people. We eat out way too much and I’ve also been buying too much food that ends up going to waste. These two areas will be a specific focus for cutting expenses going forward.
Shopping is another number that should jump right out at you. I have been spending too much. The evidence is in my account balances but it’s also all over my house. I have already declared 2017 a year to clear out my house and I’ve made progress but I will never succeed if I don’t stop bringing new things into the house.
I spent over $6k on Kids in 2016. My daughter does get a generous allowance but most of that balance is because I was paying for a private online school for her in the beginning of 2016. She has been enrolled in an alternative public high school since September and it appears that this school is the right fit for her. She’s finishing up her Sophomore year now and has two more years.
I spent over $3,500 on home services which was a combination of cleaning, lawn, and plowing services. These are expenses that I anticipate taking over myself over the long term (for example, I’ll take over cleaning once I’ve completed the decluttering project) but will remain for now.
I spent over $2k on entertainment. I do not have cable but I do have Hulu, Netflix, Amazon Prime, and HBOGo subscriptions, as well as New York Times and New Yorker subscriptions. I did a sweep of my subscriptions at the start of this process and eliminated any I wasn’t using - Sling, a yoga subscription - and took all my magazine subscriptions off automatic renewal. Also included in here are a couple concert and show tickets also. I get a lot of joy out of those things but I do them pretty rarely.
I achieved a 17.4% savings rate for 2016. It’s above the national average but I could do so much better.
I’m just going to spike out the differences for January - March 2017.
My take-home income was over $17k in March because I received my annual bonus. A lot of the balance went towards an $8k down payment on a new Subaru Forester. I financed the rest. I noted in the previous post that I gave my daughter my old car when she got her license because she does not get bussed to her high school and it will make my life so much easier if she can get herself there and back since her school is an hour from my work (with our house in the middle). I also received a net tax refund in 2017.
Our travel expenses are over $1k in February because we went to Disney in February. They are over $3k in March. I paid for a Washington DC trip the I ended up canceling in April so you will see that reversal. I also paid for my daughter and me to attend the art workshop I love in June. I will have to post more about the art workshop at some point. It’s not something I’m willing to give up because it really feeds my soul.
Otherwise, I overspent in the same areas - shopping and restaurants, especially.
I made a lot of changes in April and I look forward to showing you how that came out soon.