Mr. Smith and I have a dream of achieving financial independence (FI). We’ve been on this path for quite some time and now feels like the time that increased accountabiity through reporting our monthly finances. Every month, I’ll report the percentages that we spent in each category, our savings rate for the month, and our progress towards our FI number.
You might wonder why I’m reporting percentages and not the actual numbers. Personally, I think that percentages make a lot more intuitive sense for most people. For example, we often general financial rules expressed as percentages such as the rule that your housing expenses should be no more than 30 percent of your gross income. In addition, I’m not quite ready to discuss our actual numbers as I think that both detracts from what we’re trying to do and I want our story to be a bit more approachable.
When working out the numbers, I pull in everything from our paystubs and go from there. I think that it is really easy to forget the cost of health care and taxes when one doesn’t include them in their montly expenses.
Without further ado, here’s where we ended up in June 2018.
Holy double rent, Batman!
One of the expenses that we incurred from moving to Denver was paying our last two months of Michigan rent. Thankfully, the June Michigan rent was the last month of paying rent in two different states. On the upside, you’ll notice that even with making two rent payments, rent only comprised 16.5 percent of our total income. Next month this will look a lot better.
Mr. Smith and I love to travel. However, we prefer to travel with points or, at the very least, pay for the trip in advance. In the month of June, we prepaid for a trip to Grand Junction, CO in September for the annual wine festival and for a much larger trip to be taken in the near future. You may recall that we recently went to a charity event that benefitted stray cats. During the live auction, we won a South African safari. We were already thinking about going somewhere in Africa for our next international adventure and this allowed us to do some good with those monies too. As part of our effort to pre-pay for travel, we save into an account specifically earmarked for this purpose.
In addition, I also spent the first week of the month in Michigan. I had some doctor’s appointments that needed to happen (oh the joys of moving when you have a chronic medical condition) and my younger sister graduated from high school. All I had to pay for during the trip was the rental car as we prepaid for the flights when I booked them and a friend was nice enough to let me use her home as a base of opperations for the week.
Our transporation expenses were a bit higher than usual this month. Again, this was due to the joys of moving as we had to pay to transfer and register the car in Colorado. Normally, our transportation expenses include the car payment, insurance, and gas.
It might surprise you to learn that we have a car payment. It’s actually our only recurring debt payment as we pay off our credit card each month. We bought our Subaru new a little over a year ago and were able to acquire financing for it at 0.9%. With an interest rate that low, we just aren’t in a hurry to pay the car off early.
Enough talking, show me the numbers!
Journey to FI
Despite some higher than normal spending, we made some excellent progress towards our savings goals. Our savings rate for this month was 22.8 percent. The majority of these monies went to our pre-tax retirement accounts (including my 403b and 457 plan, his 401k and 457 plan, and our HSA account). We saved a smaller amount than normal to our post-tax account this month due to moving and starting the new job, but we’ll be back at that next month.
How did your month go? Were you able to meet your goals?