Well, the money is all transferred — including into two new savings accounts I’ll explain in the post — and the credit cards have been paid. Let’s take a look and see how I did this month, shall we?
As a reminder, I calculate my saving rate at the end of the post — but I do it three ways: pre-tax, post-tax and post-tax with mortgage. So that’s why I refer to saving rates as a plural.
My 2012 Honda Civic is about to hit 80,000 miles, which means it should still have plenty of life left in it. But I’m saving $300 a month into this account each month. Best case scenario, I’ll have the full replacement cost when I finally need a new car. Worst case, I’ll have a hefty down payment and I’ll be used to this budget line item.
This is a long-term goal (more than one year away, I’d hope), so this counts toward my saving rates.
Each month I put $150 into this account in anticipation of my semi-yearly premium. Since this is a goal less than one year away, the amount doesn’t count toward my saving rates.
Obviously, this doesn’t count toward my saving rates, but $1,853 a month is a sizable chunk of each paycheck so it’s worth mentioning. To be clear, it’s that large because it includes not just my state/federal individual taxes but also both halves of FICA that my business withholds. Yay self-employment.
Also not a component of my saving rates, but this is another good-sized chunk of my check, especially this month. This last set of statements’ balances added up to just over $1,000. Ouch.
Almost $400 of that is just my insurance premium, but even so, the total is higher than normal. I didn’t go crazy or anything, though. The rest was the cost of my new bedding, an annual credit card fee and my charitable giving.
Josie has been a healthy for a while now. In fact, she passed her semi-annual exam with flying colors. So at present she’s only costing me the monthly Banfield plan premium ($33.95).
But eventually the cat will have something amiss, and vet bills add up quickly. My original goal for this fund was $1,000. But when I reached that last month, it somehow didn’t seem like enough. X-rays alone can be $250-300, and there are plenty of $75-150 tests. So I’m shooting for $1,500 instead.
This is (hopefully) money that won’t be spent for at least a year, so it counts toward my saving rates.
I started this fund a couple of months ago for a relative who came out as a trans female. Those surgeries are incredibly expensive and not covered by insurance.
She’s only 14 right now, so I decided to put aside $50 a month until she’s q8 or whenever she decides she’s ready for the operation. At that point, I’ll have at least $2,400 that I can pitch in.
If circumstances change for me — I don’t know how badly my company is being/will be affected by this recession — I might not be able to give her the money, so her mom hasn’t told her yet. But hopefully I’ll be able to surprise her.
Since this isn’t money I plan to keep, it doesn’t count toward my saving rates.
This is one of the new accounts I started. When I splurged on a new smartphone (upgrading from the 4S my cousin was so nice to pass down), I couldn’t bring myself to spend $1,000. So I got the oldest model Apple was selling retail — the iPhone 7 — for just $700.
Now that we’re up to the iPhone 12, I don’t know how much longer my current phone will take updates. So I’m putting $50 aside each month toward an eventual replacement.
Since my phone will hopefully accept still be updateable for more than a year, I am counting this toward my saving rates.
This is the second new fund I started this month.
At the semi-annual inspection, I was startled when the repairman reminded me that the current unit is now 11 years old. Most last 12 to 17 years, and those suckers are several thousand. The guy said in the winter I could probably get one for about $7,000, but in the summer demand is up and I could pay as much as $11,000.
I have enough in both savings and my emergency fund to cover the cost, but I get stressed out when I have to take large amounts out of those accounts. So I decided to create this sinking fund.
Thinking positively, I’m assuming that my current unit will last at least 15 years total. And that it’ll die/I’ll get the heads up to replace it while it’s still cool out, thus I can get a better deal. So I’m putting aside $145 a month, which will get me to $7,000 in four years.
Since this is (please, God) an expense more than a year away, this counts toward my saving rates.
Various frugal hacks I’ve implemented in the past — cutting the cord, switching to Ooma for my landline, etc. — saves me about $160 a month. I set that amount aside so that it’s officially saved and doesn’t just disappear into the ether of general spending.
In addition, I save any money I get from credit card rewards and cash back shopping at Mr. Rebates. I also put aside any money saved with coupons, sales and store rewards for anything I would’ve bought anyway. And this month (as well as the last few months), I’ve had a credit on my account with the electric company, saving me the usual $131.52 charge.
So all that added up to a big ole $396.39, which I’ll be adding to my mortgage payment. That amount counts for the saving rate that includes additional mortgage principal.
Guest house rent
I have a lovely, low-maintenance tenant in my guest house who pays $500 rent a month (including utilities). It’s pretty far below market, apparently, even though the unit is only 412 square feet. But for now I’m not overly worried about it because I don’t strictly need the money, and she’s a great tenant.
I add the rent to my mortgage payment, so this amount also counts toward the saving rate that includes additional mortgage principal.
I was able to max both of these out already this year, so $0 went here this month.
So why did I include it? To remind myself that I’m making good progress. These two accounts alone add up to a little over $20,000 in contributions this year (!!!), so I need to remind myself of this periodically — especially since I still have random bouts of mild panic about how late I started saving for retirement in earnest.
I still had more than $2,200 left after dealing with all of the above accounts and setting aside monthly spending.
In the past, I would’ve poured most of that into savings. Because I’m panicky and never quite feel like any amount of savings is enough.
But my savings account balance is pretty robust — even if it did take a $1,400 hit this month (more on that in another post) — so I don’t really need to pad it too much. That money is better put toward retirement so that I can choose how late in life I want to work.
Thus I decided to put $300 into my savings account and leave most of the rest for the solo 401(k) I’m opening.
Savings is a long-term goal, so the $300 counts toward my saving rates.
I currently have right around 10 months’ worth of my emergency budget in this account, but I’m shooting for 12. So each month, I put $200 into the EF.
To boost my progress, I also round down to the nearest $100 the amount left over after all of the above fund contributions (and the various monthly expenses) have been accounted for, then I put the difference into the EF. So $1,550 would become $1,500, and the $50 would go into the EF.
This month’s was pretty high at an additional $87.17.
Since emergency fund is hopefully something I never even touch — I prefer to take unexpected expenses out of savings — this is a long-term goal and the $287.17 counts toward my saving rates.
As I said earlier, I’ve been lucky enough to be in a position to max out my other two retirement savings accounts. But I’ve still had some money left over that I’d love to be able to add to my retirement funds. So I’m opening a solo 401(k) through my company.
But things were complicated this month, so bear with me here.
The thing about 401(k) contributions, of course, is that employees have to have the money come out of their paychecks. (Since my company maxed out my SEP-IRA, I can’t make contributions on that side.) But since I’d maxed out my SEP in September, there had been an additional $3,200 — which my company had just paid out as distributions — that I wanted to go to my new solo 401(k). But I couldn’t do that directly because, again, the money had to come out of an actual paycheck.
So with some very complicated Excel sheet calculations, I figured out I could withhold my entire paycheck this month and send part of the $3,200 to my personal bank account to cover any shortfalls.
But that made computing how much I actually saved for this category this month rather confusing. Because the whole paycheck had gone in, but that was only possible thanks to the $3,200 from previous months. And that amount had already been counted in September/October saving rates.
Like I said, complicated.
Anyway, I went back to the complicated Excel calculations and determined that (for all intents and purposes) $1,900 of this month’s check went into the 401(k) account.
There’s a little bit of the $3,200 left, so next month’s calculations will be similarly complicated. But starting in the new year, it should be far more straightforward. Thank goodness.
Since retirement is obviously a long-term goal, the $1,900 counts toward my saving rates.
So what did all of these amounts mean for my saving rates? Well, based on my total income (paycheck plus guest house rent plus some blog income), I saved:
Post-tax with mortgage: 56.4%
A great month! Though it should be noted that, my paycheck was a little higher than usual thanks to some overtime. That gave me the extra boost so that the higher credit card bills this month didn’t make as much of a dent. Regardless, I’m a happy camper.
Still, I’ll take a moment to remind you…
Comparison is the thief of joy
If your saving rate isn’t as high as mine, please remember that everyone’s financial situation is different. I have a lot of advantages that make this level of progress so attainable.
First, I have a high income. Can’t save money you don’t earn, right?
Second, my mortgage is quite low. Specifically, it’s less than $600. The national average for rent or mortgage is around $1,000. (And I think most people’s mortgage is more than $1,000.) So that’s hundreds more dollars that I can put in the bank rather than pay to the bank.
Third, I am a one-person household. While dual-income sounds alluring, it would mean one more person’s expenses to account for: food, medical expenses, gadgets, cell phone plan, car, gas, etc. And of course, I save a lot of money by not being a parent. Those lil ragamuffins are adorable, but pricey as hell.
Fourth, my medical expenses are reasonable. Aside from my $396.60 insurance premium, most months I pay less than $200 for various medicines, my dental coverage add-on, doctor visits and labwork.
Fifth, I have no student loans, which saves me (going by the national average) around $300 a month.
Sixth, similarly, I have no car payment. I was fortunate enough to have enough to pay for the Civic outright. So unlike the average American, I’m not paying $500 a month for my vehicle.
In other words, there are myriad factors that can change a person’s ability to save and to achieve higher saving rates. So if you’re putting away anything — especially right now — then let that be enough. Don’t compare your results to other people’s. Just pat yourself on the back and tell yourself good job.
Did everyone make it through November intact?