December…what a fabulous month. I just love when the calendar turns over after Thanksgiving and the decorations start going up. All of the awesome Christmas movies start being played non-stop on TV, I have lost count of how many times I’ve now seen Home Alone. What’s your favorite holiday movie? The holiday spirit is fun and contagious and I really enjoy this time of year with my family. With that said, it is also very easy to get out of control regarding your expenses.
One thing we love to do is decorate the outside of our house with tons of lights. This year, the few strands we kept from last year barely worked… it was kind of a bummer. In years past, I would have got the family in the car and we would have went on a Christmas light shopping spree. Have you seen the houses that have thousands of lights synchronized to music? I want to do that someday! Since we didn’t blow our budget on Christmas lights where did it go?
Let’s see how we spent our money in December:
This shows the percentage of our total take home pay spent in each category compiled using Mint.
- Mortgage – 15%
- Kids School – 16%
- Food/House Supplies – 13%
- Auto/Gas – 4%
- Utilities – 5%
- Miscellaneous – 8%
- Debt Payments – 18%
- Savings – 21%
Our minimums due on debt payments were about 2% giving us an effective savings rate of 21% + (18%-2%) = 37%
Mortgage: Our mortgage payment is a combination of 4 things: Principal, Interest, Taxes, and Insurance. We owe around $182,000 for our house with a 30 year fixed loan at 3.875%, our taxes run about $3,000 per year and our insurance is about $1,300 per year.
Kids School: A little higher than normal. Although my oldest was out of regular school for winter break, she ended up going to the preschool her brother now attends. I kept her out one day and we had a dad/daughter date day: we went to Cracker Barrel for breakfast (used a gift card), went to the movies and saw Disney’s Moana (used a gift card), went to Starbucks for a cake pop (gift card), then went on a shopping spree at Target (her gift card). It was a fun day and only cost me gas in the car!
Food/House Supplies: This category was up again partly from my wife and I’s date day. We went and had a nice breakfast and set out to get some stuff for the kids stockings. We ended up going in one of our favorite Mexican restaurants just for margaritas, our bill only came out to $34 but we left the bartender a $40 tip. We also used Groupon to try out BlueApron, HelloFresh, and HomeChef which will all be delivered in January and February. These are basically meals that are delivered to your home and ready for you to prepare in about 30 minutes. We are trying to make our dinner schedules a little less hectic and stressful.
Auto/Gas: Since we own our vehicles now the only expense we have is insurance that runs about $82 per month and gas. We had 7 total trips to the gas station. Remember that the average car loan has now topped $30,000, average monthly payment of $500, and average length of loan is 68 months….all new record highs! Think about what you could accomplish if you didn’t have car payments!
Utilities: Less than 5% of our take home pay went to pay for cell phones, internet, trash, electricity, gas, and water.
Miscellaneous: This includes everything else like my dry cleaning, life insurance, and a $40 tip for our messages we had after our wonderful margaritas!! All of the stuff we bought the kids for Christmas also fall into this category…as you can see we did not lose our minds and buy the kids all kinds of crap. Luckily, they have 4 sets of grandparents that love to spoil their grand-kids!
Debt: Yeah, we finally paid off that stupid credit card balance that has been following us around for years. We fell into the trap of lifestyle inflation and when we bought our first house (we were not ready) we had to put awesome furniture in it right? My credit card carried an interest rate of about 7%, which for credit cards is really outstanding. At the beginning of 2016, the balance was over $10,000 and now it is $0! The majority of our debt payments this month actually went to my student loan which will be finished in January some time. After that we will be completely debt free, except for the house.
Savings: 21% of our take home paid carried over into January.
Total Effective Savings Rate for 2016 = 24.79%
This is the percentage of our take home pay that was not consumed in some form or fashion, we instead used it to knock out some goals. We used $10,000 of it to pay cash for a new van, over $10,000 to pay off the credit card as mentioned, we also paid off $2,000 in hospital bills, $2,500 in taxes, another $1,850 in previous business debt, and another $3,000 in student loans.
It sure would have been a lot more fun to eat out 2 or 3 times a week, have lunch out everyday, taken a nice vacation or two, and subscribe to a sports cable package. It would have really been fun to go pick up a brand new car with payments. And if you know me at all, then you know I would have much rather been using that money to invest in great companies. Make sure you check out our dividends received in December.
We set our priorities and made a family money plan and set out on the execution of it. We succeeded and now don’t feel like we are slaves to our past mistakes. We have wiped the slate clean and now can concentrate on the next phase of our plan. Here’s to an awesome 2017!
Image courtesy of Stuart Miles at FreeDigitalPhotos.net