So… fun fact: I accidentally scheduled two posts for Monday. I removed this one, so I could run it Thursday. But it means some of you have already read this. Sorry.
Well, I predicted last month that this one would be bad. I wasn’t wrong. And COVID didn’t even factor into it!
Two months in a row, Medicare failed to process my payment before the next bill went out, so I got two double bills ($793 each) — both of which ended up on the same credit card billing cycle. Meanwhile, I also had to pay for my business taxes, which were just under $500. And of course all of this came in a month with fewer workdays, so my check was a few hundred smaller than usual. All this meant that I had to take money out of savings to cover the bills. Ugh.
So yeah, it was ugly. But let’s see exactly how I did, shall we?
My 2012 Honda Civic currently has about 77,000 miles on it. I’m hoping to drive it well past 100,000 miles, but I’ve been saving up for a new car just in case (and to get my budget used to a car payment, if I don’t save enough before the current vehicle dies).
Each month I make a $300 “car payment” to my car fund at Ally. This is a long-term goal (more than one year away — I hope!), so it counts toward my saving rate.
Each month I put $100 into a vacation fund. I don’t currently have plans to go anywhere in 2020, which means this is currently a long-term goal.
I hope to come up with a trip at some point this year, at which point I’ll re-evaluate whether to count it. But for now, it counts toward my saving rate.
Every month I put $150 into a car insurance fund so that I can pay my annual (or, in the case of my new insurance, semi-annual) premium in full.
Since this is less than a one-year savings plan, it doesn’t count toward my overall rate.
A not-too-long-ago vet visit (and its accompanying $200 x-ray bill) made me realize I should have an emergency fund for the cat. So each month I’m putting in $50 toward any eventual vet bills. I’m actually going to increase this next month to $100 — at least until I get the fund to $1,000. But this month was bad, so I kept it lower.
Hopefully, this is a long-term savings goal, so it counts toward my savings rate.
I put $500 into my Roth-IRA each month to max it out by the end of the year. Obviously, retirement is a long-term goal, so this counts toward my savings rate.
Over the years, I’ve trimmed expenses with various frugal hacks, like cutting the cord and switching from Vonage to Ooma. (Because yes, I’m a Luddite and still have a landline — if you count VOIP as a landline, anyway.) All in all, I save about $160 a month having implemented those, and I like to make sure that the savings don’t disappear into the ether of general spending. So I set them aside and add them to my mortgage payment.
In addition, throughout the month I bank money that I save with sales/coupons/store rewards on things I would’ve bought anyway. I also add in any redeemed rewards from my Citi Double Cash card. This month all of that came to $46.54.
I count these savings toward the rate that includes additional mortgage principal.
Guest house rent
I receive $500 a month for the guest house out back. I add this to my mortgage payment each month. So this also counts toward the rate that includes additional mortgage payments.
I put $200 a month into the emergency fund. Normally, I also round down to the nearest $100 anything left over after paying the credit card bills and putting money in the accounts I mentioned above. But this month, there wasn’t anything left over at all. So just $200 went in.
Obviously, this is what I hope to be a long-term savings goal, so it counts toward my rate.
Normally, there wouldn’t be anything to contribute this month, but some money from the blog did come in from a few sources (Amazon book sales, Inbox Dollar referrals, etc.). And I put all blog income into the SEP. So $115.79 went in. At least that’s… something?
Since the IRA is a long-term investment, it counts toward my saving rate.
I realize now that I should’ve just not contributed to my car fund/vacation fund to help lower how much I had to take out of savings. But I was on auto-pilot, so I didn’t. Which means I had to take $591.92 out of savings.
Ouch ouch ouch!
So yeah…. There I knew there was no way I was hitting my goal of 50% savings (post-tax, including additional mortgage principal paid). But given that I’m still paid a very good wage (even in shorter months), the results were still hard to take.
Since different people calculate their saving rates in different ways, I use three methods: the rate based on pre-tax income, the rate based on post-tax income and the one that includes additional mortgage principal paid (and divided by post-tax income).
Post-tax with extra mortgage payment: 23.2%
To be fair, even an 11.3% saving rate is a lot better than most Americans can manage. I need to remember that and be grateful that I’m able to put away anything.
Still, it’s upsetting to bring in a high income and put so little of it away. I just keep reminding myself that next month will be much better. After all, I won’t owe an insurance premium (let alone the equivalent of four), so I should be able to save significantly more.
Speaking of which… I know that many people are forcibly out of work right now or otherwise have uncertain financial futures. Presently, all signs point to next month being a banner month for me savings-wise. So I’m thinking of skipping next month’s update. It seems insensitive to celebrate savings when so many people are facing financial trouble. Feel free to comment below about whether you think I should skip it.
How did your last month go? How are your finances amid the coronavirus shutdowns?