Well, the checks are deposited and the money moved around, so it’s once again time to see how I did this past financial month.
As a reminder, I calculate the savings rate three ways: pre-tax, post-tax and a savings amount that includes additional mortgage principal (divided by a post-tax amount).
So let’s see where my money went this month:
My 2012 Honda Civic has got plenty of life left in it, but I’d love to have the full replacement cost when the time comes. So I put $300 a month into an account for my eventual payment (or down payment).
This is a long-term goal (spending it will be more than a year from now), so it counts toward my saving rates.
Each month I put $100 into an Ally savings account so I’ll have the full yearly premium ready when the time comes next year.
Since this will be paid out in under a year, this amount isn’t included in my saving rates.
Each month I put aside $1,550 in anticipation of my quarterly tax payments (FICA plus federal and state income tax). This is obviously a short-term goal; but it’s a goodly chunk of my check, so I figure it’s worth noting.
Of course, this amount also doesn’t count toward saving rates, but once again the balance was decently large enough to mention. There was a confluence of expenses that meant I had to fork over $930ish to the credit card companies. Sigh.
My main house unit is getting older, and they’re several thousand dollars. Sometimes they’re even five figures. So I have an account that I put $145 a month into to be ready for the replacement cost.
Since I won’t be spending this money in the next year (please god), this counts toward my saving rates.
A relative recently came out as transgender, and surgeries aren’t cheap. She’s still a teen, so the surgeries would be a while away. So I started putting away $50 a month, and I’ll give it to her when she’s ready to have the procedure(s) to help with expenses.
Since this isn’t for me, it doesn’t count toward my saving rates.
Based on Apple’s history, once the next iPhone is released in the fall, my iPhone 7 won’t take updates. That shouldn’t prove to be an issue right away, but I’m putting away $50 a month toward a new one.
It’s entirely possible that I’ll need a new phone within a year, so I’m not counting this amount in my saving rates.
I pay Orkin a yearly premium for termite protection. While $330 isn’t a huge amount in the grand scheme of things, I want to just save up throughout the year rather than let the premium ratchet up one month’s credit card bill. So I put $27.67 into an account each month.
Since it’s a yearly premium, this is a short-term goal.
Similarly, I felt a pinch last month when I had to pay for a year of Mint all at once. It’s a great deal — $15/month for 4 GB of data — but altogether that amount plus taxes and fees means a $200ish bill a year. Might as well save for it, right? So $16.78 goes into an Ally account for this short-term savings goal.
Folks, I think I’m addicted to sinking funds.
Because I make things unnecessarily complicated, I have a weird system for determining how much to put in my EF every month.
I put in a standard $200, but I’m shooting for a year’s worth of my emergency budget. So to goose the savings a bit more, I take the amount left after all of the above (and general spending) have been deducted and round down to the nearest $100. For example, $1,550 would become $1,500 and that extra $50 would go to the emergency fund.
This month, that meant that $211.92 went into my emergency fund — which is getting pretty close to its goal, hooray! — and this obviously counts as a long-term goal. So it counts toward all three saving rates.
I put $400 into my general savings account this month. I’ve got a good-sized balance in this account, so I could probably have put less in. But anxiety is a thing so…
This amount of course counts toward my saving rates.
This, combined with some income from the blog over the past month, meant a SEP contribution of $2,232.86. Yowza. At this point, I’m 54% of the way to maxing out my SEP for the year. (I can put in up to 25% of what I pay myself as an employee salary.)
Obviously, retirement counts as a long term goal, so this amount is included in my saving rates.
It’s been two and a half years since I was on a marketplace plan, but I got a $317.07 check from Allwell about a week ago. The letter referred to a lawsuit, so I think it was an issue of the company spending too much on overhead. The terms of the marketplace are pretty strict about the percentage of premiums that can go to administrative costs.
I put this amount into savings for lack of any other idea. So it’s counted in y saving rates.
Guest house rent
I rent to a lovely gal and her very cute dog. It’s a small space — 412 square feet — and I don’t really need the money; so I only charge her $500 for rent and utilities.
This amount gets added to my mortgage payment each month, so it counts toward my third saving rate, which includes additional mortgage principal paid.
Over the years, I’ve used some frugal hacks to trim expenses. I switched from Vonage to Ooma, cut cable, etc. All in all, I’ve trimmed about $160 from my budget. Since I don’t want that amount to disappear into the ether of general spending, I put it aside into a Saved Savings account each month.
This account also gets money that I end up saving (from coupons, store rewards, sales, etc.) on items I was going to buy anyway. And my Citi Double Cash card rewards go in the account too.
The total — this month it was $277.46 thanks to a hefty credit card reward redemption — gets added to my mortgage payment. So the amount counts toward my third saving rate.
All in all
So where did that put me for my saving rates? Well, adding all the savings up and dividing by the sum of my paycheck, blog income, guest house rent, the aforementioned random insurance check and the redeemed credit card rewards, my rates broke down as:
Post-tax plus additional mortgage principal: 56.4%
Since my goal is 50% for the third rate, clearly I had a very good month. I wish they could all be this good, but I’ll try not to look a gift horse in the mouth.
An evergreen reminder
If your saving rates don’t look like mine, please remember that almost no two people’s finances are going to look exactly alike. I have multiple things that make it easy to save more.
First, I have a high income. It’s just plain easier to save when you have more money left over after basic expenses.
Second, I have a low mortgage payment: $643.19. And it should go down about $20 a month soon now that I’ve switched home insurance providers. The average U.S. mortgage/rent is around $1,000 to $1,100. So that while I do technically make a bigger payment to the bank than that, almost half of it is additional mortgage principal and thus counted as savings.
Third, I’m single with no kids. Partners are great — and certainly additional income is helpful — but a second person often means more expenses. And of course kids have the bad taste to constantly be growing out of or breaking things or otherwise just being adorable but expensive. I don’t have to deal with that.
To sum up: There’s a good chance my income is higher and my cost of living is lower than most readers’.* (And I mean that in the least snotty way possible.) So there are likely very good reasons why our saving rates may look different. As long as you’re making an effort to put away money for the future — be it retirement, an emergency fund or some other long-term expense — you’re doing a great job and should be proud. End of story.
*Honestly, a lot of you would probably have higher saving rates in the same circumstances. But while I don’t go crazy and make an effort to be frugal in some areas, I try to enjoy the here and now somewhat rather than just saving for the future. So my spending is definitely a bit higher than it could be.
How did everyone else’s financial month go?