Well, I’m once again so behind on posts that my post about the financial month that ended in mid-October is coming out… November 1st. Sigh.
One of these months, I’ll get caught up. Given that I’m battling a patio project and then a bathroom renovation, it probably won’t be November.
But anyway, let’s focus on the fun stuff. Or what’s fun for us financial nerds, anyway.
As a reminder/for anyone who’s new here, I have several accounts at Ally for various savings goals, both short- and long-term. (Here “long-term” is considered anything at least one year away.) However, my saving rate only takes long-term savings into account.
Given that there is zero uniformity on how people calculate their saving rate, here’s my monthly reminder that I come up with three types of rate: pre-tax saving rate, post-tax saving rate and post-tax-plus-additional-mortgage-paid saving rate. Because why would I ever make anything simple?
Anyway… To the numbers!
Now that I’m zooming all over creation (or at least the Greater Phoenix area) for trivia, my miles are starting to add up. Even so, I have only about 86,000 (?) miles on my Honda Civic. Meaning it’s probably got years left in it.
Nonetheless, each month I make a $300 “car payment” to the account that I so cleverly named “Car.”
This has two benefits. First, I’ll have a hefty down payment — or ideally the full replacement cost — when the time comes for a new car. Second, if I don’t have the full replacement cost, I’ll be used to having a car payment already in the budget.
Since a new car is, I hope, many years away, this savings counts toward my saving rates.
Unlike the car fund, this goal is short-term, since I’m just saving up for when my annual premium is due. So the $100 I put in here doesn’t count toward my rate.
Okay, obviously not long-term savings here. But each month I have to put away a fair chunk of change for my quarterly tax payments.
Since I’m a contractor for the company who writes my checks, I created an S-corp. This gives great tax savings, but it means that as both my own employer and employee, I pay 100% of the FICA due from what my S-corp pays me. That’s in addition to state and federal individual taxes.
As a result, each month I have to set aside just under $1,552 in my Taxes account. But since I like schools, paved roads and Social Security/Medicare being a thing, I can’t complain too much about the amount.
Again, not savings, but a decent chunk of money out of my check. So probably worth mentioning when looking at where my funds went each month.
This month was once again on the higher side at a little under $1,135. That includes my $400 health insurance and some charitable giving, but also just miscellaneous expenses that crop up during the month.
About a year ago, I was unpleasantly reminded that my current unit may not have much life left in it. They last anywhere from 12 to 17 years, and mine is 10 years old. And a replacement will be several thousand dollars.
So I’m putting away $145 a month in the hopes that my unit will last long enough for me to have most or all of the replacement cost.
Since this is (please god) an expense more than a year away, the amount is counted in my saving rates.
A teen relative recently came out as transfemale. Those surgeries are pricey, and I can imagine few worse fates than being born in the wrong body and I’m doing well financially. So I’m setting aside $50 a month so that when she is ready for any transition surgery she wants, I’ll have about $2,500 to contribute (or more if she doesn’t opt for it as soon as she hits 18).
Since this money isn’t for me, it’s not counted in the saving rates.
I pay only $15/month (plus a bit in taxes/fees) for 4 GB of data and unlimited talk/text from Mint. But to get that low price, I have to prepay a year of service.
I don’t like big charges hitting my card if I can just save for them all year. So each month I put away $16.78 so that I’ll have the full amount when I need to pay again.
Since this is money that will be paid out in less than a year, it doesn’t count toward my saving rates.
Termites love my house. A lot. So I have an annual plan with Orkin that means they come and deal with any termite activity I find.
I love the service, but I hated my credit card bill taking a $320ish hit each year. So I now put aside $27.67 a month in preparation for my December payment.
As with the Mint funds, this is a short-term expense and thus isn’t included in my saving rates.
New phone fund
My phone is actually only about 19 months old, but it’s also an iPhone 7, which means that before long, it probably won’t be able to take the latest updates. And eventually that will be an issue for functionality.
So I have been putting $50 a month into an iPhone fund. I have no idea when I’ll need a new phone (or just get annoyed with my current one), so I treat this as short-term savings and therefore don’t include it in my saving rates.
Guest house rent
I have a lovely tenant in my guest house who I vastly undercharge for rent. Because while the money is nice, I don’t strictly need it; so I’d rather have a tenant I like than get market rate.
So she pays only $500 a month for the admittedly quite small guest house, and I add that to my mortgage payment each month to help pay off the loan faster. Meaning this one counts in the third rate, which includes additional mortgage principal paid.
Over the years, I’ve employed some frugal hacks (like cutting the cord) that save me about $160 a month. I put that amount — along with any money I save from sales/coupons/store rewards on anything I’d be buying anyway — into a Saved Savings account, and then I add it to my mortgage payment as well.
This month there were basically no sales or coupons or rewards apparently, because I had a whopping $1.09 over the usual $160. Oops. But still it’s extra money going to my mortgage principal, so it’s counted in my third rate.
I’m trying to save up a year of my emergency budget in my EF account. I put in $200 a month, but to help speed up savings, I add extra each month.
The extra is determined by taking my paycheck minus all of the above and regular monthly expenses, then rounding the amount down to the nearest $100. For example, if I had $1,553 leftover one month, $53 would go into the emergency fund. (The rest would go to savings and retirement, which I’ll get into shortly.)
This month, that meant I added an extra $28.37 to the normal $200 EF savings. Both amounts are included in my saving rates.
Adding in some income I got from the blog, I was left with $2,000 to divvy up between savings and retirement.
I’ve been mostly focused on retirement — since I didn’t start saving in earnest until age 40 — so keeping back only $200 to $300 to pad savings. But I had to take some money out of savings last month for things like new tires. And I’ll be taking out more soon to cover some home improvement stuff. So I put $500 into savings and threw $1,500 into a retirement account.
All in all
So what does that mean for saving rates? Taking all income received in the past month — paycheck, blog income and guest house rent — my rates were:
Post-tax-plus-additional principal: 49.9%
I shoot for 50% in the third rate, so I was very very close this month. And I’ve been hitting the goal in other months, so overall I’m pretty satisfied.
Each month I say this, but each month it’s still important for people to know: very few people’s finances look the same. I have a number of advantages that mean my rates are going to be higher than a lot of people’s.
First, I have a high salary. Kind of a no-brainer that that’s going to let me save more money.
Second, no kids. Adorable lil suckers, but they can be expensive as all get-out. So I probably save a ton by not having progeny.
Third, my mortgage is ridiculously low — only a bit over $600, actually. That’s half the cost of most people’s mortgages (let alone rent), so that gives me a lot more money leftover at the end of the month.
So if your rates are lower than mine, just remember that it’s not necessarily a reflection on you — or a testament to my frugality. As long as you’re putting away what you can (hopefully, while still being able to enjoy yourself a bit in the here and now) then you’re doing great.
How did everyone’s financial month go?