One year ago – as part of a New Year’s declamation – I challenged myself to throw down the gauntlet and track every penny flowing in and out of my wallet. Since I garnered an interest in money back in 2007, I’ve tried to live a generally frugal lifestyle. However, tracking every transaction was something I had never done before. Would it make a difference in our household spending, or would it just be a complete pain in the ass?
I can say with some certainty that it made a noticeable difference for us. While I could have used something like Yodlee or Mint to automatically track our spending, there’s a mental component at work here: knowing that I would manually have to enter each transaction every time I swiped my credit card gave me consistent and considerable pause to ponder if I really needed that item. Though I do not have a documented paper trail of our spending in 2012, I feel confident that we spent less in 2013 than the prior year.
2013 was also a unique year in that it was the first full calendar year of my son’s life (he was born in November 2012). Seeing as how I suddenly became a family man, I thought this would also be a good opportunity to document what our expenses would be like while juggling a new baby and transitioning into parenthood. After all, everyone says that babies are expensive, so tracking all our expenses the first full year that we had a baby in the house would give me a good baseline for what our annual expenses would be like for the next few years, right?
I consider the IM Family to be modestly frugal. My wife and I spent years in graduate school simultaneously earning below-poverty-line TA salaries, and living a financially lean life out of necessity leaves a lasting impression. I wistfully recall – not with longing, but with some nostalgia – a time back in 2008 when my wife asked if it was okay to buy sugar at the grocery store that week. While it seems like a lifetime ago that I penned some thoughts on Freedom through Poverty – and we definitely have more wealth and financial stability now – those unforgettable memories linger.
Though I do not consider us paragons of frugality today, it does continuously permeate our lives. I would never, for example, tell my wife today that she cannot buy something she wants (and the same is true vice-versa), but then again, I don’t need to. We lived through those impoverished grad-school years together, and like people who lived through the Great Depression, we’re not going to run out tomorrow and buy a Cadillac Escalade or a new wardrobe, even if we had millions in the bank. It’s just not our nature.
OK, I’ll stop rattling incoherently now. And without any further ado, let’s see the numbers for all of 2013!
|Mortgage (Primary Residence)||$7,980||15-year fixed; principal + interest|
|Rental Mortgage + Escrow||$9,029||15-year fixed; includes taxes & insurance|
|Rental Upkeep||$225||Just some yardwork|
|Property Taxes||$3,090||TX property taxes|
|Grocery & Dining||$1,963|
|General Merchandise||$4,630||Most of this is Costco, Amazon, & Lowes|
|Cell Phones||$964||We switched to Ting at the end of the year|
|Online Services||$326||Amazon Prime; Web hosting & Domains|
|Medical||$516||Visits to doctors; pharmacy|
|Dental||$774||No dental insurance|
|Gasoline||$1,830||My commute, plus long drives to visit family|
|Auto Insurance||$663||For two aging cars|
|Service/Parts||$237||Two car batteries, oil, filters, etc.|
|Life Insurance||$748||Two 300k term-life policies|
|Donations||$40||Need to increase this next year|
|Memberships||$50||Organization related to career|
|Parking Ticket||$20||Paid the price for forgetting my parking pass|
|Birth Certificate||$23||For my son born last year|
|Credit Card Fees||$75||AMEX Blue Cash Preferred – Annual fee|
|Total (without Rental Property)||$27,741|
|Total (Also Without Mortgage)||$19,761|
Holy shit! We spent $36,995 last year? Mr. IM is a complete frugal phony! Oh, wait. That’s right: the IM Family owns two houses. And unlike my pal MMM, I don’t count mortgage principal as savings. I count the entire mortgage payment on both houses as an expense.
Our total spending looks better if I ignore the cost of owning our rental property in Kansas (see A Tale of Two Mortgages), and it looks downright awesome if we ignore the mortgage payment on our primary residence in Texas. This means that our barebones, no-frills, typical spending for a family of three – of whom one is now a fledgling toddler (which means outgrowing clothes every month or so) – is under 20k for the year. I can live with that.
Looking at the table above, there’s still room to trim some fat if need be. I mean, we spent over 4k on General Merchandise, though that’s not entirely accurate. If you have followed this Finance Tracker series, you know that I’ve included everything bought at Costco as General Merchandise, even though most of what we buy there tends to be Grocery items, which also explains why the Grocery category is so slim. In 2014, I’m going to further itemize Costco purchases into their appropriate categories.
Gasoline is far higher than I’d ideally like it to be, though some of this is due to two separate road trips from TX to GA and back to visit family. That’s logging about 4,500+ miles of driving time. In other auto-related expenses, I’m pleased that the cost of service/parts was not far higher. Back in 2012 I started doing all my own routine car maintenance, which is surprisingly easy to do if you can be bothered to read a few manuals and/or watch a few videos on YouTube. I estimate that I’ve easily saved $1,000+ over the last two years performing my own routine maintenance on our two cars, everything from fluid changes to brake jobs.
And here is the income side of the equation for all of 2013:
|Salary||$50,919||After taxes, health insurance, and 403(b) reduction|
|Royalties / Web||$2,043|
Now for the fun stuff. As you can see, we earn a middle-class income, astronomically higher than the 8k I used to earn annually in graduate school. Keep in mind that we’re basically a one-income household. My wife was able to pick up some part-time work here and there, but is functionally a stay-at-home mom to our little guy. And what a function she provides! This is why you do not see a daycare expense category up above.
As you can also see, our rental property in Kansas is profitable, but barely. I want to hang onto it for now since it used to be our primary residence, and we’re still considering moving back into it one day since we love the city and the house’s location in the city. Right now, it pays for itself, and that’s a good thing.
I’m impressed that we made over 5k in total dividends for the year. It seemed like just a few years ago that we had almost nothing in our portfolio. Oh, wait. It WAS only a few years ago. I still sweat when I think of the Great Portfolio Pummeling of 2008. My how things have changed, and will undoubtedly change again and again. Share prices will fluctuate, but as long as we’re able to consistently contribute to our funds, they will continue to pay out dividend distributions. And if you’re wondering what’s in my portfolio, see here for taxable and here for retirement. That information is over a year old, but the holdings are still much the same.
Of course, I’m obligated to report my savings rate for the year, which is how much of what I earned I was able to keep. Using the above figures, my savings rate works out to 47%, which is pretty damn good for a one-income household with two mortgages. This also doesn’t account for the automatic 403(b) deduction that’s withheld from my monthly paycheck, as well as the employer matching contribution. Given those figures, it should boost my savings rate right up to the 50% mark. I’ll take it!
So, there we have it – my entire financial life for 2013 lain out in front of you. Whether you choose to offer kudos, flattery, or mockery, I wish you a better and better 2014!