Didn’t I just do one of these? I guess when you only write one non-spending-diary post a week, a month goes by pretty quickly on the blog. Sigh. Hopefully, I feel well enough soon to go back to two posts a week.
Anyway, let’s see how I did this month.
My 2012 Honda Civic just finally hit 80,000 (and I was weirdly proud of it?), so it should have plenty of life left in it. Still, an ounce of prevention is worth a pound of cure — especially when it comes to having a large down payment ready for a new vehicle. So every month I put $300 into a sinking fund for a new car.
This month took me over $15,000, so even with car prices climbing ever-higher, there’s a very good chance I’ll have the full cost of a new car when the time comes. I’d probably still look for a lightly used one — this one had less than 25,000 miles on it and has clearly served me well — but if I don’t find that, it’ll be nice to almost or completely pay for a new one outright.
This is a long-term saving goal, so it counts toward my saving rates. (“Rates” plural in that I’m indecisive and thus calculate my saving rate based on pre-tax, post-tax and post-tax plus additional mortgage principal.)
I did switch insurance companies, and that brought my premium down nicely. I use this account to save up for my yearly payment, so $100 went into here.
Since this money will go out of the account in less than a year, I don’t count this as long-term savings and thus exclude it from my saving rates.
Obviously, this has nothing to do with savings, except inasmuch as I have to sock away the money for my quarterly FICA, state and federal tax payments. But since it’s where a large chunk of my monthly money goes, it’s worth noting that $1,853 of my check went toward this.
This month was pretty low with less than $300 total from card balances. But that’s artificial because my insurance premium took a while to get processed, so it didn’t make it onto this past month’s statement.
While this is nice because it boosted my saving rates, it also means next month the card balances will have two $400 charges. Blech. But March has an extra workday in it, so I suppose that’ll help a bit.
I put $500 a month into a Roth to make sure I max it out each year. Given that I have padding in my saving accounts, I am considering front-loading the IRA and then just paying it back to myself each month. But we’ll see.
For now, I put $500 into Vanguard each month, and since retirement is around 25-30 years away, this definitely counts in my saving rates.
Each month I put $100 into a fund for inevitable vet bills. Josie’s a pretty healthy cat — recent issues notwithstanding, and they seem to have gone away for now — but eventually some malady will probably require x-rays or something else that will result in a bill for at least a few hundred dollars. So best to be prepared.
That said, this month will bring the total up to just over $1,500. I think that’s sufficient, so I’ll probably stop here until vet bills make the balance dip.
Throughout the years, I’ve used frugal hacks to trim my expenses, and I wanted to make sure the money doesn’t disappear into the ether of general spending. So each month I set aside $160 as “saved savings.”
I add to this each month as I find other ways to save on items I would’ve bought anyway. This means sales, coupons, store rewards, etc. I also deposit any credit card rewards into this account. I then add these amounts to my mortgage payment to help pay down the principal faster.
This month, all of that came to $261.04. I count the amount in my last saving rate, which is the one that includes additional mortgage principal paid.
Guest house rent
I have a small guest house out back that I rent to a lovely woman and her adorable dog. I don’t strictly need the money, so I only charge $500. (While it’s a tiny space — 412 square feet — this is apparently well below market value.) I add that amount into my mortgage payments each month to help pay off my balance a little more quickly.
As with saved savings, this amount counts toward the rate that includes additional mortgage principal.
A relative came out as transgender female last year. It wasn’t a surprise, since she’s been dressing as a girl for as long as I can remember, but it wasn’t official until last year when they decided to have her start hormone therapy. Hopefully, the early use of those will mean she can skip some of the surgeries more commonly needed. But some will still be necessary and obviously they’re not cheap.
So I’m saving $50 a month in a bank account and will gift it to her when she’s getting ready to have the surgeries. By then, I should have at least $2,500 to give, so hopefully that will help a bit.
Since I don’t plan on keeping this money, I don’t count it in my saving rates.
I was recently reminded that the main house’s HVAC unit is around a decade old — and that lifespans for a unit is around 12 to 15 years (20 if you’re lucky). And those suckers ain’t cheap. So I started socking away $145 a month toward an inevitable replacement. If my unit can last about five years — and I can replace my unit in the wintertime — I will have about enough to pay for a new unit. If not, at least I’ll have something saved.
Since I shouldn’t need a new unit for more than a year, I count this in my saving rates.
I have an iPhone 7. It’s working perfectly well, but based on Apple’s history, it probably won’t accept updates much past the release of the next model this coming fall. And at some point, the inability to update will be a problem. So I’m putting away $50 a month to make sure I can replace the device when the time comes.
I don’t know when a replacement will be necessary, so I’m not counting this in my saving rates.
I get my cell service through Mint Mobile. For $15 a month, the company provides unlimited talk/text and 4 GB of data. (For a comparison of the best cell phone deals for your situation, check this post.) The only catch is that I have to prepay for a year to get that rate.
Still, that’s only $180 (plus taxes and fees) for a freakin’ year of cell service! But since I didn’t like how it felt to add $201.37 to my monthly spending, I’ve decided to create my billionth sinking fund and put away $16.78 a month so that next year I have the amount in full.
Since this is less than a year away, I don’t count it in my saving rates.
Similarly, I pay about $330 a year for termite protection, and I don’t like how much that adds to my credit card balance once a year. So I put away $27.67 a month into a fund — which also doesn’t count toward my saving rates.
I put $200 into my emergency fund every month in an effort to save a full year’s worth of my emergency budget. But to help efforts along, I boost the amount a little.
After I take care of all of the above, plus leave money in my bank accounts for day-to-day spending, auto-debits (such as life insurance and utilities), etc., I take the leftover amount and round it down to the nearest $100 and put the difference into my emergency fund. So $1,550 would become $1, 500 with $50 extra going to the EF.
This month, that was $41.27. And since my emergency fund is a long-term goal, I count this in my saving rates.
This left $1,400 to divvy up between my SEP-IRA and my savings account. Normally, I’d send at least $200 to savings, but I had almost $350 unspent from last month’s funds — and I put all unspent funds from the previous month into savings. (Since it doesn’t come out of the current month’s check, I don’t count these amounts in my saving rates.) So I figured $350 was plenty for a savings account that has a good-sized balance already.
Thus I was able to send $1,400 to my SEP-IRA. I also had $124.19 in various income from the blog. All business income goes into my SEP. So I was able to make a $1,524.19 contribution to my SEP this year.
As an S-corp, my business can contribute up to 25% of what I pay myself as an employee. I’ve had a darn good year so far — partially because I banked last year’s bonus at the start this year year — so this month’s contribution means that three months into the year, I’m 38% of the way to maxing out the SEP. Woot!
As with the Roth, these retirement contributions get counted in my saving rates.
All in all
So what does this all mean in terms of saving rates?
Well, adding up all income — business income, guest house rent and my check — my rates were:
Post-tax plus additional principal: 60%
Pretty darn good numbers this month! But I’ll say again that these are slightly artificial, since the total of my credit card balances was $400 less than it normally would have been.
On the other hand, February also has two fewer workdays in it than most months. So… I guess it evens out? I dunno. Whatever. I’ll just enjoy the higher percentages.
Here’s where I like to remind everyone that their mileage may vary and to remember that I have some advantages that others don’t, allowing me to have high saving rates even though I’m not quite as frugal as some folks.
First and most obviously, I have a high income. More money to save makes it a lot easier to, ya know, save it.
Second, I have a very low mortgage. It went up some this year ($597ish to $643ish), but now that I have a new insurance company, I’m going to request an escrow review. So it should go down to about $620 a month.
Third, it’s just me. No kids needing new clothes or doctor visits or the latest toys/gadgets.
There are probably others that I normally cite, but honestly I have a headache right now (Sunday afternoon) and this has to go up tomorrow. So I’m just going to sign off with this reminder that very few people’s financial situations are apples-to-apples, so as long as you’re doing the best you can, you shouldn’t be comparing yourself to others.
How did everyone else’s month go?