Mr. Smith and I have a dream of achieving financial independence (FI). We've been on this path for quite some time and now feels like the time that increased accountability through reporting our monthly finances. Every month, I'll report the percentages that we spent in each category, our savings rate for the month, and our progress towards our FI number.
You might wonder why I'm reporting percentages and not the actual numbers. Personally, I think that percentages make a lot more intuitive sense for most people. For example, we often general financial rules expressed as percentages such as the rule that your housing expenses should be no more than 30 percent of your gross income. In addition, I'm not quite ready to discuss our actual numbers as I think that both detracts from what we're trying to do and I want our story to be a bit more approachable.
When working out the numbers, I pull in everything from our paystubs and go from there. I think that it is really easy to forget the cost of health care and taxes when one doesn't include them in their monthly expenses.
Without further ado, here's where we ended up in August 2018.
Honey, you have a saggy bottom
Since moving to Colorado, Mr. Smith has been taking his fitness to the next level. He works out at least two days a week at our apartment's gym and goes to yoga with me two or three times a week. As a result, he has slimmed down quite a bit. To the point where I looked at him and exclaimed, "Honey, you have a saggy bottom!" This prompted us to purchase quite a bit of new clothes for him and, thus, the higher percentage in the "shopping" category. I'm super proud of his accomplishments!
A special project is in the works
Mr. Smith and I are working on a new project. While we aren't quite ready to put it all out there in the open yet, it is a significant chunk of our spending this month. Once we're closer and things are a bit more settled, I'll share what's going on.
Those shots cost how much?!
A long while back, I shared some of the health struggles that I was going through. I am happy to say that I'm on the other side of things, but my doctors do quite a bit of surveillance in order to be sure that my thyroid cancer hasn't come back. One of the surveillance methods involves increasing my thyroid stimulating hormone (TSH) to see if any cancer cells "wake up" and produce another kind of measurable hormone. Without getting into the nitty-gritty, I have two options to accomplish this -- the shots or going off my medication for at least a month. While expensive, the shots are preferable because all of the horrible side effects of going off my medication (e.g., brain fog, weight gain, crazy mood swings, hair loss, etc) are completely avoided. On the upside, we've entirely met our deductible for the year which means my next round of surveillance testing will be completely covered.
The actual percentages
If you add up the percentages, you'll notice that we actually spent 103 percent of the income that we brought in. Spending more than you bring in is never ideal, but since we pay large bills (such as that medical bill or car insurance) all at once it is bound to happen once in a while.
Our food expenditures came down a bit from last month's high of 10 percent. I'll talk more about that in next Monday's post.
I'm hoping that September is a bit more "normal" than in the past three months. When you look back, there are HUGE expenses each month: Our charitable expenses in June, travel expenses in July, and medical expenses in August. I guess this really points to the need for careful budgeting and planning. While none of these expenses was a surprise, all of them required significant preparation.
Compared to July, we moved 1 percent closer to FI. It would have been closer to 2 percent, but the health and special project expenditures both came out of these funds. Our savings rate was 18.3 for the month. The formula I use to calculate this is (Savings - Transfers from Savings)/Income. This number differs from the percentage in the monthly spending graphic because that graphic doesn't take into account transfers from savings.
How did you do this month? Were you able to meet your goals?