Oh. Oh man, oh man, oh man. This is gonna be interesting. Haven’t run the numbers just yet, but my savings rate was terrible. Made some stupid financial decisions, and had a few expenses come up that I didn’t expect or incorrectly lowballed. Kind of don’t even want to deal with this right now. But I did promise to be fully transparent with my finances, so here goes nothing, right?
The Numbers:
After my standard pre-tax 401(k) contribution and various deductions, my net take-home pay was $5,054.46. I also got a Christmas bonus this month, which after taxes came out to $1,320.06. So, in total, I made $6,374.52.
I invested $3,100 this month, $1,000 each into BBL and NOV, and $1,100 into BLK.
My expenses for the month came out to $4,172.50. It can be broken down as follows:
- Rent: $935.00
- Bills: $860.50
- Includes: cell phone, electric, gas, cable, and my FAST Graphs subscription
- This is especially high to do my car and renter’s insurance coming due, as well as some other minor things
- Car maintenance: $7.00
- Gas: $104.50
- Groceries: $525.62
- Medical expenses: $769.81
- Discretionary expenses: $970.13
- Restaurants/eating out: $153.22
- Trip to Wisconsin Dells: $278.18
- Everything else: $538.73
My thoughts:
Well, for starters, I’m not quite sure how to calculate my savings rate. Like, I have my base income, the amount I saved, and my expenses. But my expenses were higher than my allotted spendable cash, so I had to put things on my credit card. Who knows? Guess I’ll do it the standard way of saved/investments over take-home pay. With that, I saved 48.63% of my income, which isn’t terrible, but lower than I normally shoot for.
The real problem with this month is that I spent more than my allotted spending money. I actually, for the first time in my life, had an overdraft on my checking account. A minor one, $40-50. Still a bad no-no. Paid it immediately out of savings, but still, that is unacceptable. It happened because my rent and car insurance payments were made at once, but I thought that one was already paid or something. And later on, I ran out of funds in my savings account. Got as low as possible without having a fee for insufficient funds. So yes, I put things on my credit card. And I didn’t pay it off until my next paycheck, instead of using my bonus to take care of it. Not the smartest move. Thankfully, I am debt free, but my net worth is lower than it should be as a result. The problem was twofold. The first one, as I mentioned, is that I completely forgot about my car insurance and registration. That was an extra $500 that I didn’t account for in my pre-month planning. I also underestimated the expense of my girlfriend’s glasses. It’s been a long time since she last got an eye appointment, so it was my Christmas present to her. It was a bit difficult to plan for, since when I got mine, I had a medical expenses account and discount from work I could use, so I didn’t know how the price would change without those. Of course, I lowballed it, so the total expense was a hundred or two above what I planned for. That certainly is not a problem, since I refuse to scrimp on medical expenses. Just more of a “huh” moment for me. Well, if you own stock in LUX, you’re welcome 
On a darker note: sometimes I wonder if I take my struggle for financial independence too far. The bills came due on the first of the month, so I ran out of my allotted money pretty quickly. And my bonus (which I knew about) was later than I expected. So I basically went through two weeks or so where money was constantly at the forefront of my mind – “do I have enough?”, “are there more bills I missed?”. Just a lot of stress, you know? So my girlfriend and I were in the Dells for her birthday. She knows me very well, and I keep her posted on financial matters. So she knew money was tight for me, and that I didn’t want to spend much if I didn’t have to. One night, she wants some ice cream. I didn’t want to, because I viewed it as money I couldn’t afford to spend. So I kept on bringing it up – “money is tight”, “I can’t afford this”. Just generally being an ass about it. So we get the ice cream, but I ask her to pay. So we’re driving home, and I look over, and she has tears streaming down her cheeks. I made my girlfriend cry. On vacation. The night before her birthday. Over a fucking $6 ice cream. Even now, I can barely comprehend how much of a fucking dick I was to her. I feel so shitty over it. Naturally, I apologized as hard as I could, and paid her back as a matter of principle. I still can’t take it back though. (Aside – Baby, I know you read my blog. I know I’ve said it before, but I really am sorry for being such a tool for you. I don’t regret spending money on you at all. I love you.) She said she felt guilty, a mooch for making me spend so much. Obviously, I don’t feel that she is mooching off of me at all. But it made me think of a bigger issue. Am I so obsessed with money and retiring early that it’s starting to affect me as a person? Am I taking it too far? It’s something I really need to watch out for. I need to remind myself of the things that make me happy and why I am fighting for FIRE. I am doing it so I don’t have to work, so I can spend money and time on those things and people I love and care about. This is not the first time I’ve been too cheap with money. If I keep it up, I fear that by the time I am financially independent, there will be no one left in my life to spend my time and money with. So here’s my New Year’s resolution – stop worrying about money so much. Enjoy life. Cultivate my relationships and mind. If I don’t become FIRE at 35, 40, 45, it will be okay. Disappointing, yes, but at this point, I am already golden. I could not save another dollar and still have a vary comfortable retirement, should I work until 65. Let it go, and just worry about being a good person, not just a good investor.
Well, that felt good to get off my chest. Anyway, this means that I spent $28,786.88 this year. That is an interesting number, since this is the first full year I tracked my expenses. Now, I can more accurately determine my dividend crossover point and need portfolio size. Assuming I am shooting for a 3% yield, I now know I need $959,562.67 to retire. I shoot for a 3% yield for safety, since I can sell low-yield stocks (AOS, AXP) and replace them with higher-yield ones (MMP, VZ, CBRL) should I need to increase my income. Unfortunately, a million dollars is a pretty lofty goal. And my take home pay will be significantly lower in the future. When I started, I apparently marked the wrong deductions on one of my forms. This lead to me taking home a lot more in pay, but means my tax bill will be insanely large this year, somewhere in the five-figure range. Now that that is fixed, I will be able to invest less, but I won’t have a terrible tax burden next year. The cool thing, conversely, is that I am not insanely frugal. I have hobbies and take vacations and do fun things. I am not really sacrificing anything with this number. So knowing this is what I normally spend, without excessive frugality or sacrifice, is comforting. I can be sure that my million dollar goal is it, the end, no joke, you know?
Separately, my dividend income for the month was $280.40.
Well, apparently, this was a bit more stream-of-consciousness that I thought. Guess I’m still in vacation mode from Christmas and New Years. Heh, good times. See you around!
Do you think you overdo the fight to FIRE at times? How have you messed up your finances in the past?
Disclosure: Long AOS, AXP, BBL, BLK, NOV. My Income/Expenses archive page has been updated accordingly. Image source is available here.
26 Comments
Congrats on the Christmas bonus! I wished the government gave those types of payouts, but they don’t because everyone has to be treated equally.
Henry – Living At Home recently posted…2014 Goals Review
Thanks! I certainly am fortunate, even among software developers. Sucks that the government doesn’t want to play nice, especially since there’s a lot of waste in certain areas.
Why don’t you take a look at http://www.youneedabudget.com? The program is excellent, even for people who are good at money. I use it because it takes away the issue of forgetting to budget money because your car insurance is due this month and things of that nature. If you watch the 6 short getting started videos and begin to use it the way it was designed, that will eliminate the issue of being “cheap” and not being able to afford ice cream. You’ll be able to go on vacations and do your hobbies. I don’t have my own blog, but I love finance in general and read blogs/forums about it daily. If you have any questions about it, feel free to email me about it and I can answer anything/walk you through anything.
I have heard of them, and I don’t really operate on a budget per se. But I’m actually starting to use one already. It’s part of a “contest” I am having with my girlfriend (I stay under $1800/mo, she works out 5x a week. If we both keep it up for 6 months, we will get a PS4, and maybe go on a small trip). So a site like that may be very useful. Thanks for reminding me about it, and for the offer of help!
DD,
Still a great month with over 40% of savings. Next time make sure to have enough in your checking account so you don’t have to fret over small purchases like ice cream. It’s really stupid to get into a ‘fight’ with your girlfriend over something so small and avoidable.
Financial independence is important, but people are always more important! Especially the ones you love.
All the best for 2015,
NMW
No More Waffles recently posted…Savings Rate for December 2014
That is really true. It was just a bit of a clusterfuck all around, all my doing. It’s just an ice cream, it won’t kill me. At least I’m more aware now.
Uh-oh overdraft! I hate them and despise them, but you know sh*t happens. Congratulations on the high saving rate. You know me and my wife argue at money at times as she sees me as too frugal but I just explain to her in a calm manner why I am doing this and that. We argue yes, we make mistake yes, but that what makes us human. And we learn from them.
FrugalitytoFinancialFreedom recently posted…December Dividend Income Update
I certainly got lucky that there were no fees this time, but it’s definitely something I want to avoid. I feel a bit guilty – someone as careful with money as me making such a simple mistake. Oh well, live and learn. I’m definitely the more frugal one for sure, but it was still a bit excessive, even for me.
I can relate to this post. Saving money and being extremely frugal are not necessarily synonymous to me. I like saving money, but not at the extent of becoming unhappy about it. This is my first post of yours that I’m reading, but it sounds to me like you need a budget. It’s a basic tool that you really need in order to be successful at saving and being efficient. Without it, you’re just taking unnecessary risks of not hitting goals. I used to use spreadsheets, but now I use Mint. While it’s not perfect, it does help track spending and keep you in line. Good luck and good fortune.
– HMB
HMB recently posted…Stuffing MoneyBags – December ’14
Yeah, expense tracking and budgeting aren’t synonymous. I agree that a budget may help; I haven’t operated on one, since my take-home income is so high. Like I mentioned in a previous comment, I am trying it out starting this month. I have tried Mint, but it isn’t my thing. Hopefully I can stick to my budget with just Google Sheets. Wish me luck, and thanks for stopping by!
DD,
Sorry to hear about the fight there. That’s unfortunate. I can’t say I’ve ever had a similar experience. I’m lucky in that my partner is also pretty frugal, but I’ve also always liked to keep a minimum of a few thousand dollars in liquid cash. So there’s never been an issue with covering $6 or whatever. Investing is a priority, but not over being liquid and able to live a fairly normal life.
I’m sure you’ll find your balance over time!
Best regards.
Dividend Mantra recently posted…Dividend Income Update – December 2014
So is she; she’s very frugal. This was my mistake; I didn’t keep enough liquid cash to cover this all. You are completely right; investing is great and all, but not at the expense of living a human, comfortable life. Gotta be careful in the future. Hey, at least I am young and able to learn from it!
Hi DD
A freaking 6$ ice cream!! ahaha You sounded like me… I too made my girlfriend cry in december over a stupid side order at the restaurant that I didn’t want her to take because I didn’t want to “waste” 12$ over a ceasar salad… I now have the surname “cheap” tagged on my forefront forever! She told all my family and friends about it… So yeah.. I guess that sometimes we push this FI thing a little too far. We pursue that journey for ourselves… and just ourselves in the end even though we like to think that we do it to spend more time with our loved ones. I think that Jason from dividendmantra realized that last summer when he went back to Michigan to stay with his family for a while. We have to be careful not to be too selfish somehow…
As a side note, you make so much money in the US it’s crazy! My brute salary is near 100k per year but I only bring in 4200$ net per month max after all the deductions… We pay a lot of taxes in Canada.. and then with our net we still have to pay a 15% tax when we buy stuff… Ahhh Canadians!
Anyhow, you did great. Remember that most people don’t even save 3000$ per year. So, 3k in a month is just wow! And for your little “financial mistake” well.. shit happens! You won’t do it again!
Cheers
Allan recently posted…Dividend growth stocks screener : My gift to the community!
Hey, it’s Culver’s! Definitely worth it. Seriously, sorry it happened to you as well. At least we’re learning from it and have SOs that understand and support us regardless. That is actually about what I’m going to be bringing down in the future, I think. With the proper deductions, I’ll be bringing home roughly $4,200 as well. But 15% is rough! Wow, at least you get healthcare and good things like that in exchange. Thanks for stopping by!
I’d say the biggest lesson to be learned here is as follows: Investing is a priority, however, given the available cash flow, maintaining a cash buffer even more important.
For my wife and I, we always keep between $5-8,000 as are “zero” balance in checking. Meaning, $5,000 is essentially zero in my mind, and I won’t go below that. This is above and beyond what is in the savings account. Would I like to invest that money, sure, but the downside of having to stress over little things isn’t worth it. I’d take the next couple months and build yourself a “zero” balance in your checking account. Leave it that way for a while and get used to having the cash there. Don’t spend it, just allow it to be the tool that eases your mind and allows you those spontaneous ice creams with the lucky lady.
writing2reality recently posted…Fluffing the Pillow: Refreshing My Dividend Growth Portfolio
I appreciate the advice, and based off what others have said (and I personally have considered), I agree. I am going to take a few months to just build up my savings account. Savings and investing can wait; as long as my interpersonal relationships are okay, I’ll be fine. It’s not worth investing an extra $500 if it leads to the collapse of my relationship, you know? I made a mistake, and in time, it should be remedied. There’s no investment valuable enough worth making my girlfriend cry again.
Its pretty easy to get obsessed over the saving/investing stuff, you’re far from alone in that – just takes some trial and error to figure out where it becomes too much of a good thing for you. With your job and your age/starting point you really won’t need to be all that frugal to retire early.
*I am also a programmer – also in Wisconsin.
Yeah, I know. It’s almost like saving and investing is an addiction – I do it to the expense of all else, even when it hurts. I gotta be careful in the future. God willing, I will be better about it in time. My interpersonal relationships are worth more than any fiscal investment I could make, just gotta remind myself of that during paycheck time. Good to know I am not alone as a Wisconsin dev! Wonder if I know you professionally …
I think I can pretty safely say we don’t know each other professionally… I’m in northern Wisconsin (Minocqua/Woodruff area) and work remotely for a company that’s out of state.
Ah, fair enough. I am in the southern half of the state.
I don’t have a boyfriend and haven’t been interested in relationships in a while, so I don’t really have another person to worry about in my budget…and I’m probably not the right person to offer any suggestions in that area, haha.
That being said, I’ve got a cash buffer (around $1k or so) in my checking account that I absolutely do not invest. Kind of a safety net to catch any transactions that might slip through, or call it an emergency fund if you will. Do I think about how much that $1k could make me, annually and with compounding, if it were invested in a stock yielding 3%? All the time. But peace of mind is priceless.
I also make it a point to manually input every single transaction I make. I’ve got a simple Google spreadsheet where I type out how much I spent, when I spent it, and what I spent it on. The physical act of typing it out helps with memory, and it also serves as a physical record to check back on if, say, I can’t remember if I’ve paid a bill or not.
Seraph recently posted…2014 Goals Review and 2015 Goals
Heh, it appears that I’m really the only one without a major cash buffer lying around. It appears that we learned that’s a bad thing! I do the exact same thing, regarding the spreadsheet. Guess it’s not a flawless system, especially because it isn’t really forward looking, which can cause me to miss things. And it’s not really automatically syncable with transactions from my bank account. Not perfect, but it has been useful, December notwithstanding. Thanks for sharing what you do!
DD,
Thanks for the candid story about the ice cream. My wife and I have had those types of “talks.” FIRE is obviously not worth it if those you love resent you over it.
When my wife wants something for herself or our baby that I view as a luxury–like just today we bought a snowsuit for the baby, it was $50–I do a little trick in my head.
I know we could use a snowsuit. It will get a lot of good use between our current child and future children, but $50 sure seems like overpaying; I bet I could get it for $20 if we downgraded the quality, brand, newness. So, in my head, I’m “wasting” $30, just as you felt you were wasting $6.
I just tell myself this, how long will ER be put off as a result of this $30? My rough number is $100 = one more day of work. So the snowsuit pushed me back by 1/3 of a work day. Basically three hours extra of working so that 1.) my wife feels happier today, and 2.) the baby gets a nice snowsuit so I can play with her outside more often (probably saving money and getting exercise) and won’t ever have to replace it.
That ice cream cone probably put off your early retirement by 20 minutes. Now, for average folks, those reckless purchases are thoughtless and frequent. And every day they add minutes, hours, days, and years to their working lives. However, for a discerning individual such as yourself, it’s a one-off purchase where the current happiness it will bring far outweighs the costs.
You gotta pick your battles, and you’ll get better at that as time goes on.
Really appreciate your comment, Eric. That’s a very useful way at looking at things. Hell, at my pay level, $6 is less than 8 minutes of work. The problem is I tend to be a bit more negative on these things than most. I blow it out of proportion because I think I am scared that if I slip up once on a small purchase, the next mistake will be a little larger, then turn into two, then three, and then I am screwed. I know it’s happened before. I think my thought process was “if I nip it in the bud now, my chances of making a big mistake are lessened.” I just didn’t think of the collateral damage. I really gotta remind myself of what you said: “FIRE is obviously not worth it if those you love resent you over it.” Heh, I should put that on a sticky note next to my bed as a reminder. Thanks again.
Hey DD,
Sorry to hear about your rough patches this month but I’m sure you will bounce back quickly. I know my “greed” for being frugal has made my girlfriend mad a time or two. It can be hard when people have different philosophies on money, but I got my girlfriend to make a budget for the first time ever…baby steps.
Still, over $3,000 dollars invested in the month, I’d call that a win.
-Nick
Nick Brigman recently posted…2015 Budget and Goals
Congrats to her! Thankfully, my girlfriend is already frugal, but I’m so extreme, it gets annoying. Live and learn, right? Takes getting used to for both of us. Thanks for stopping by!