Mr. Smith and I have a dream of achieving financial independence (FI). We’ve been on this path for quite some time. Every month, I 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 see 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.
I use Mint to generate the spending report and figure out our current net worth. It’s not perfect, but as Mr. Smith likes to say, “Don’t let the perfect be the enemy of the good.”
Going forward, I’ll discuss our top three expenses with the exception of housing and transportation. These two categories make up a fairly large chunk of our spending and I don’t see that changing any time soon. Frankly, it’s boring and I think the other parts of our spending that are variable are much more interesting to talk about.
Without further ado, here’s where we ended up at the end of August 2019.
new baby stuff
New baby stuff made up 40 percent of our spending and 25 percent of our income.
This month didn’t go how I thought it was going to go. I thought we would leisurely take our time packing our apartment, then go on a safari in South Africa, and end the month with closing on the house and moving. Sure, it was going to be a busy month. But nothing compared to what happened.
The universe had different plans for us. Four days before leaving for our trip, we were matched with the most beautiful baby boy. He was born 13 weeks early and is staying in the NICU until he reaches forty weeks gestationally and his medical issues have been resolved. We’re looking at early October for him to come home.
In my excitement, I may have gone a little nuts. I got him a bunch of preemie clothes and blankets, a bassinet, and the most awesome car seat ever. I’ve since contained myself.
Food expenses made up 23 percent of our spending and 8 percent of our income.
For the second month in a row, we were able to come under budget for our food spending. Some of this is due to us moving at the end of the month and doing our very best to eat everything in the fridge and freezer since we won’t have a fridge at the house until the end of the first week of September. (Aren’t logistics fun?)
I’m very much looking forward to going on a real grocery trip and cooking more at home. Not having a fridge has definitely caused us to eat out a bit more than usual.
Education expenses made up 14 percent of our spending and 5 percent of our income.
We put the usual amount into our 529 plan. It used to be for our future baby, but now our son has a head start on a college fund.
We also bought my sister’s books for the fall semester. She is starting her second year of university and taking some verychallenging classes (e.g., organic chemistry and calculus II). I’m sure she’ll do fine, but let’s collectively put some good vibes into the universe for her. I remember taking both of these classes and it was rough.
the actual percentages
Below are the rest of the month’s spending percentages. I only include normal paycheck spending in these figures. Costs associated with the other half of the down payment for the house and the adoption agency’s matching fee came out of our savings (discussed below).
progress to fi
As of this month, we are 40 percent of the way to our fi number. This is two percent lower than last month.
We pulled the rest of our down payment from these monies. It was nice to not need to bring the entire down payment on closing day since our builder required us to pay deposits on all of our selections for the house.
We also pulled the adoption agency’s matching fee and our home study renewal fee from here. I’ll write a post at some point about the costs of adoption. Let’s just say that it’s not cheap. We do have one more set of fees to pay once LP is discharged and officially placed with us. However, those should be the last of the adoption fees.
On the upside to all of this, we were able to have our flights for South Africa and Bali refunded. In addition, the organizers of the yoga retreat refunded the majority of that trip as well. The hit to our savings was offset by recouping the majority of our travel money this month.
How did your month go? Hopefully, it was calmer than our’s was!