By the time this posts, all the checks will have been deposited and transfers scheduled. So where did my money go this month?
Quick reminder: I consider money saved if it gets put away for a goal at least one year from now. In addition, I calculate multiple savings rates at the end: savings based on pre-tax income, savings based on post-tax income and savings including extra mortgage principal paid (based on post-tax income). I figure that about covers everyone’s definition of “saving rate.”
So let’s see how I did:
My 2012 Honda Civic has about 80,000 miles on it, so hopefully it has plenty of life left in it. But I’m saving $300 a month for the eventual cost of the car (or at least a down payment).
This is a long-term goal (more than one year out), so this amount counts toward my saving rates.
I put $150 into a fund each month in anticipation of my semi-yearly premium. On my last premium I paid a little less than this, so at some point I’ll transfer the excess to savings. But given that rates tend to go up, I’ll just keep banking $150 for now.
This is for a twice-yearly payment, so it doesn’t count toward my saving rates.
I his the maximum yearly contributions last month for this account, so $0 went in this month. Instead, I held the $500 back in my business account to go to my SEP-IRA.
I’m saving up at least $1,000 (at $100 a month) into a fund for when Josie next has vet bills. Hopefully, she won’t get sick for a while, so I consider this a long-term goal and thus it counts toward my saving rates.
Obviously, these aren’t savings, but they’re a chunk of my paycheck. I pay both halves of FICA for the employee salary my corporation pays me, plus I keep back money for state and federal taxes. In all, I put aside $1,853 a month. Ouch.
Again, not savings by any stretch. But it’s a chunk of money out the window. This month, the card balances were just over $600. Considering my health insurance premium alone is almost $400, I’d say that’s not too bad. Unfortunately, it looks like I did under-contribute to charity last month, so normally the balances would’ve been a little higher. I made larger donations this month to catch up.
Guest house rent
I rent the guest house out back to a nice lady and her adorable dog. The place iss tiny, but thankfully, she seems very happy and intent on staying for quite a long time. I only charge $500 a month, so she’s getting quite a deal. But since I don’t strictly need the money, I’m not too worried about market rates.
I count the $500 both as income and, since I throw it into my mortgage payment, in the savings rate that includes extra mortgage principal paid.
This category is for money that I save from coupons, service price reductions (like when my Internet got lowered by $10 a month), store rewards, sales, etc. on things I would be buying anyway. I also put in my credit card rewards (2% cash back on all purchases).
I save a standard $160 a month from having cut the cord, switched to Ooma and a few other things. On top of that, I had $92.79 in credit card rewards. And due to some weirdness with my electric bill (I’ll explain more in my spending review), my account has a credit and didn’t get charged this month. So that $131.52 went into the account as well.
So all in all, I had a whopping $498.87 in saved savings this month. That gets added to my mortgage payment, so the amount counts toward the rate that includes extra mortgage principal paid.
In my emergency fund, I currently have a little more than nine months’ worth of my emergency monthly budget saved. My goal is to get it up to 12 months’ worth.
So each month I put at least $200 into this account. I say “at least” because, once I account for everything I’ve already mentioned in this post, I round down the leftover amount to the nearest hundred and put the difference into the emergency fund. So $1,550 would be rounded down to $1,500 and an extra $50 would go to the emergency fund.
This month, there was an additional $21.84 when I rounded down. So a total of $221.84 went into the EF this month.
This is — I would hope — at least a year away from needing to be touched. So this counts toward my savings rates.
After all of the above is accounted for, the leftover gets divvied up between savings and my SEP-IRA through my business account.
My spending was pretty low this past month, so I still had about $490 left in my personal accounts when my check was deposited. (In other words, I only spent about 60% of what I usually budget for. Admittedly, the budgeted amount is generous, but I’m still pretty darn surprised/happy.)
Anyway, that leftover money gets transferred to savings, so I didn’t see any reason to put aside any more money this pay period. Thus I kept the remaining $2,500 for the SEP. In addition, I cashed in my business credit card rewards for the first time in… Well, ever. So those were a whopping $119, plus about $73 from various blog income. (And yes, like the guest house rent, those two amounts were added into my total income for the month.)
So after subtracting enough for the monthly $12 account fee, I was able to put an incredible $2,680.78 into the retirement account.
I’m doing cartwheels in my head (because I’m smart enough not to attempt them physically). But since I overthink things, I’m also slightly frustrated.
Why? Because if I’d had just $160ish more, I’d have maxed out the SEP for the year. (Before you look up the maximum and think I somehow put away $56,000 in eight months, know that the limit is actually 25% of the employee’s salary up to $56,000. So don’t go thinking my paychecks are that impressive.)
And before anyone suggests it: No, I can’t add my personal funds because the money has to come as a company contribution. So I just need to suck it up and wait for $160 in September.
Of course, the rational part of me is reminding myself that getting so close in eight months is incredible and I’m fortunate to even have a job, let alone a high-paying one, and I should just stop whining because good lord is this the epitome of First World Problems. And it’s right, so I’ll end said whining here.
By the way, it should go without saying, but as retirement is more than a year away, the $2,500 counts toward my saving rates.
All in all
As a reminder, I shoot for 50% with the saving rate that includes additional mortgage principal paid.
In the end, the rates were:
Pre-tax rate: 38.1%
Post-tax rate: 48.4%
Post-tax plus additional mortgage principal: 63.1%
Holy smokes! These are far and away the best rates of the year. Probably ever. Honestly, I feel slightly guilty doing so well when so many people in this country are struggling. I try to remind myself that doing well means that I can afford to give more.
Anyway, I don’t anticipate a repeat of this in the near future. But of course, I don’t need to if I’m so close to maxing out the SEP. Once that happens, I’ll be a super-duper adult and use any further leftover funds this year to finally open my very first (non-retirement account) index fund. Then I’ll shovel the following three months’ leftovers into that account too.
And yeah, I’m keenly aware that I’m a nerd for getting excited about an index fund. But this is a personal finance blog, so I guess it’s fitting that I geek out about this stuff.
I know some of you dislike that I say this every month, but there’s probably going to be at least one person who’s never read one of my financial updates before — and also, it’s just good for everyone to remember in general — so it bears repeating each month: Please don’t judge yourself based on my result.
The fact is that I have a lot of things in my financial favor that are helping me sock away so much money.
Most importantly, I still have my job, and it pays very well. That’s obviously a huge leg up.
Additionally, I don’t have kids, who are adorable but expensive lil suckers, and I no longer have a spouse with expensive habits/medical conditions.
Nor do I have expensive medical conditions of my own. While my insurance could be cheaper (it’s about $420 a month including a dental/vision add-on), I consider my healthcare costs to be reasonable at under $600 a month. And I don’t have a deductible. So even when medical issues do hit, I’m not out thousands of dollars before service copays kick in.
Also, my car is paid off, and I long since paid off my student loans. The average monthly payments on those two things alone may be sucking up the better part of $1,000 from most people’s budgets.
Finally, I have an incredibly low mortgage at just under $600 a month. You can’t even rent an apartment that cheaply in most parts of the country.
So all in all, there are a lot of things working in my favor that will make my results look different from yours. And if you’re doing better than I am, awesome!
But if your saving rate/amount is below mine, just please remember that this doesn’t mean you’re doing a bad job at managing your finances. It means that everyone’s situation is going to be different, so — even when unemployment isn’t rampant — results will vary.
How’s everyone holding up financially right now? I know some of you took a hit when the unemployment bonus ran out, so I hope you’re doing okay.