As usual, now that the checks have been deposited and money moved around, I can finally take a look at how I did this month, money-wise.
So let’s see where my money went this month, shall we?
As regular readers know, I have a $300 “car payment” each month. Which is to say that I bank that much in anticipation of needing to replace my current car. So either I’ll have the full cost when the time comes, or I’ll have a big down payment and be used to that amount coming out of monthly funds.
It should be noted that my current car (a 2012 Honda Civic) still has fewer than 90,000 miles on it, so the body may well give out before the engine. I’m hoping to get at least 150,000 miles out of it, preferably 200,000.
But for now, I have more than 70% of the base cost of a new one. Which — when you add in taxes and fees and I’m sure some basic things that somehow are never included with the base cost — I’m guessing I have 60 or 65% of the replacement cost if I buy new.
Hopefully, the car won’t die in the next year, so this money counts as a long-term savings goal and is thus included in my saving rates. (Yes, “rates” — I have three different ways of calculating my savings.)
Can’t have one without the other. I had an accident a little under three years ago, so my rate is a little higher than it would normally be. So I put $100 a month into a bank account in anticipation of my yearly premium.
Since this money will be paid out in less than a year, I don’t count it in my saving rates.
Obviously, this isn’t a savings category, but since these account for a decent chunk of my money, I figure they’re worth mentioning.
I pay both halves of FICA for the amount my S-corp pays me as an employee, plus state and federal tax estimated payments. So I put away $1,551.75 each month in anticipation of my quarterly payments.
This is another case of money not being saved, but the amount being substantial enough to mention, since this is a holistic look at where my money is going.
This month was a little higher than I’d anticipated, but unfortunately it’s right around what seems to be the new standard. My health insurance is included, along with charitable donations, but I also had to buy a new contact, my doctor’s rate went up (while he’s getting recertified, I’m paying out of pocket), and I had to pay about $130 for a Cox Internet service call, since it turned out to be a problem on my end. Whee.
So all in all I paid about $1,297his month.
A new unit was put on the house when I first moved in, but that was 10 years ago, and HVAC units don’t last forever. And aren’t cheap.
So I’m putting $145 a month into a fund. Hopefully, the unit will last another five or so years, and I’ll have the full replacement cost. But if not, at least I’ll have a substantial chunk of the cost.
Since I’m hoping not to have to buy a new unit within the next year, this amount is counted as long-term savings and included in my saving rates.
When I finally got myself a new phone a couple of years ago, I chose the oldest generation that Apple was still selling, which was the iPhone 7. This means that it’s about time for Apple to start making my phone outdated, unable to accept new updates. Which will keep some apps from being able to update, which will eventually affect the functionality of my phone.
So I’m putting aside $50 a month for the inevitable replacement I’ll need in anywhere from a few months to a year or two. Time will tell.
Since the phone may need replacing sooner rather than later, I don’t count it in my saving rates.
A teen relative recently came out as transfemale. Which most of us were expecting, but we’re all glad she’s finally able to be her true self.
Transition surgeries aren’t cheap, and I know it’ll be at least four years before she would have them. So I’m putting aside $50 a month that I’ll gift her when she decides she’s ready to have the procedure(s). This will still be only a small part of the cost — probably $2,000 to $2,500, depending on how long she waits after turning 18 — but hopefully it’ll be a helpful drop.
Since this savings isn’t for me, I don’t count it in my saving rates.
Termite protection fund
Every year I get hit with a $300ish bill for my Orkin termite protection. Since the bugs love to visit my house, it’s well worth it, but I was tired of the charge taking some of the wind out of the following month’s saving rates.
So I started a sinking fund, where I put $27.67 into an account each month. That way, I’ll be all set this winter when the next bill comes.
Since the fund will be emptied in less than a year, it doesn’t count toward my saving rates.
Okay, so there’s a chance I’m addicted to sinking funds. Because I didn’t like the $200ish bill for Mint that I paid recently.
Don’t get me wrong, Mint is a great deal: I get 4 GB of data for only $15 a month plus taxes/fees. But since I prepay for a year at a time (the way to get the best rate after the initial three-month period), it definitely adds up.
So $16.78 goes into this account. Since I’ll pay this out in less than a year, it also doesn’t count as long-term savings and isn’t included in my saving rates.
Over the years, I’ve found ways to trim spending on various things. Mainly by cutting the cord, but other small savings add up as well. So $160 a month goes into my Saved Savings account, and I add any saved savings to my mortgage payment as additional principal.
But that’s just standard savings. Throughout the month, I save money on things I’d buy anyway, thanks to sales, coupons and store rewards. Those go in this account, as do any credit card rewards.
This month, that was an impressive $154.81. It included two different credit card reward payments, or it’d be substantially less.
Since the total of $314.81 will become additional mortgage principal, I only count it in my third saving rate, which is the one that accounts for additional principal paid.
Guest house rent
I have a guest house out back, which I rent out. I don’t really need the money, so I don’t feel the need to keep up with market rates. I’d rather just have a tenant I like living on my property and who, thanks to the low rent, is happy here for the long-term.
Given that it’s already been two years, she’s very low-maintenance (she actually apologizes when things need repair and she keeps the temperature at 78 in the summer so as not to use too much electricity) and she’s even fed Josie a couple of times that I was away a day longer than expected, I think I made a good choice.
So I only charge her $500 for the admittedly small guest house. This amount also pads my mortgage payment. (If I can keep up the current rate, I’ll have this place paid off in about three and a half years!) So it counts toward my third saving rate.
Here’s where I make things overly complicated.
I want to reach at least a year’s worth of my emergency budget in my EF, and I’m putting a minimum of $200 a month into that account. But to accelerate my progress a bit (without taking too much away from my other goals), I take what’s left over after all of the above amounts (and my day-to-day spending money) have been deducted, then round down that amount to the nearest $100, putting the difference in the emergency fund.
In other words, if I had $1,050 left after everything else had been dealt with, I’d round down to $1,000 and put $50 into the emergency fund.
This month, the amount was $31.38, so $231.38 went into my EF.
Since EFs are long-term savings, this amount did go into my account.
Normally, I take the remaining funds and split them between my savings account and my SEP-IRA. But of course, I found a way to make this month more complicated. Because of course I did.
There was $265ish left in my main checking from the money I kept back last month for day-to-day spending. Usually, this would’ve been added to my savings account.*
But when I calculated my SEP-IRA contribution for the month, I found that this month’s contribution was only about $205 short of having maxed out my SEP-IRA for the year.** And naturally I couldn’t do something silly like just wait for the next month’s paycheck.
Instead, I kept $205ish back in checking so that I could take $205ish less out of my paycheck to cover all of the above expenses. Then I added the $205ish to my SEP-IRA contribution for the month, maxing it out.
To make sure I was still calculating savings based on money that had come in from the past month — paycheck, guest house rent and business income — I deducted the $205ish from the amount I sent to my SEP, for an end total of just over $1,469.
So while it was a little cheaty… I’m just psyched that I’m maxing out my SEP in eight paychecks (more or less). Next month I can start contributions to my solo 401(k).
* But not be counted in my saving rate, since I’m looking at only money from this specific paycheck
** The 25% of my employee salary, not the $57,000 maximum. I’m not that good.
All in all
So what do all these numbers mean in terms of saving rates? Again, the numbers are based on every cent of income from the previous month: my paycheck, guest house rent, blog income and even checks for credit card rewards.
Post-tax plus additional principal: 48.9%
My goal is to get that third saving rate to at least 50% of my income. Which didn’t happen this month. I guess the slightly higher credit card balances sapped a bit of my saving power away.
Still, saving even 37% of post-tax income is far more than a lot of people can manage. Which brings me to my recurring point…
I may be luckier than you
I have a number of things that help me achieve these saving rates — ones which many people aren’t lucky enough to have.
First of all, I have a high income. It’s just easier to save when there’s more money left over after expenses.
Second… Well, I don’t know that this is “luck” but I don’t have kids. I’m sure I would’ve loved the lil rugrats, but you have to admit life is a lot cheaper without them, leaving more money to be saved.
Third, my mortgage payment is ridiculously low. It’s barely over $600, which is around $500 less than the average American’s monthly payment. That’s quite a bit more money I can bank every month.
There are other ways I’m lucky, of course, but those are the three biggies. So if your rates don’t look like mine, that means very little. Because even people with the same income have different expenses. What matters is that you’re doing the best you can to put away money when possible. If you’re doing that, you’re leagues ahead of a lot of people.
How did everyone else’s financial month go?