Welcome to Our Dime Our Time, my little side project exposing too much of our lives.
I am tracking this family of 4’s journey to financial independence, month by month, and scattering in bits of knowledge that I have picked up over the years. My hope is that it will inspire you to take charge of your life – BE WEIRD! Being normal, or following along with whatever everyone else is doing, is usually not the right answer.
We made the decision to take control of our money instead of it controlling us and I ended up starting this blog in February as way to keep me focused and track our progress, and as a way for you to keep me accountable.
Part of the process is telling everyone in the world where we spent our money each month. I don’t do it to brag or show that we’re better than anyone, we’re far from it. I want you to see our story and apply it to yours…for example I want you to know that if half or more of your take home pay is going to housing then you need to start making a plan to move, or make more money. If a huge chunk of your cash flow is going to pay for items with gas engines in them…then you are probably setting yourself up for mediocrity, and who wants that? I have met so many people during my insurance/finance days that can’t save $100 in a month…but they have the newest iPhone, nice clothes, cable with the sports package, and new cars in the driveway. We were very close to falling into the spell of American consumerism…but, we woke up and so can you! Every dollar you earn is a seed…you can either eat it (consume it) or plant it (save and invest) and reap the wonderful fruit it produces later.
So where did our money go in May?
I break it down in percentages of our take home pay instead of actual dollars…my better half is a little nervous about how open I want to be with all of this, haha.
Mortgage (PITI) – 16%
Kids’ School – 23%
Food / House Supplies – 7%
Auto / Gas – 9%
Utilities – 4%
Miscellaneous – 9%
Savings – 7%
Travel – 14%
Debt – 16%
Total as a percentage of May take home pay – 105%
Well there we have it, back to more normal as opposed to our weird April.
Let’s break it down…
Mortgage – Our refi went through with ease and with no “gotchas”. My favorite financial advice is to challenge everything, anyone you are sending money to every month…challenge it! That’s exactly what I did with our mortgage, I called and told them I was shopping around to refinance and they responded with offering me a great rate that cut about $200 off my monthly payment and only cost me $800 in closing fees. With a quick cost/benefit analysis you can see that I will be in the black on this deal after 4 months. When I asked why they were offering me this deal, they said “we don’t want you going anywhere else”. I’ll take it, and as you can see our housing costs now total only 16% of our take home pay…this leaves a lot of money to do other things!
Kids’ School – Can you believe that daycare is our #1 expense? Does anyone else have this problem? Granted, my kids go to a very nice school and our daughter is in the private pre-k as opposed to the lottery funded Georgia pre-k offered in our state. Our son is still in the young toddlers room which is pretty pricey and I’m sure he is a handful and we are under paying to keep up with his little butt, haha. Their tuition does pay for all of their food, snacks, field trips, etc., while there. We’ll see how this expense changes in August when my daughter starts kindergarten at what she calls “the big kid school.”
Food / House Supplies – I guess we do pretty well in this category now, because we completely cut out eating out. I use to spend a small fortune eating lunch out every day, what a waste of money! When we didn’t have a plan I would routinely spend a fortune on over priced wine and craft beer while out at dinner, now that I recognize I was doing this, all of that extra money is now being used to chase our dreams. Don’t get me wrong, I still love all of the aforementioned luxuries, I have just pushed them down the priorities list. We decided to sacrifice a little now, so that we can indulge later.
Auto / Gas – Our gas expenditures have ticked up slightly, mainly because I have a little side hustle I do 2 nights a week to earn a little extra cash, it runs me about 2 gallons of gas round trip. I was really hoping to be able to announce that this month was our very last car payment ever…apparently I have one more in June. Right now, I have a lease payment on a 2013 Prius that runs $297 per month and I cannot wait to get rid of it. I love the car and would drive it until the wheels fell off if they would just give it to me, but I would rather have that extra monthly cash flow than a car payment. We will be turning it in at the end of June and we will be buying another vehicle (most likely a mini-van) at the end of July with cash! We make enough that we could walk into any local dealership and walk away with a brand new car “financed” with a payment we could “afford”….hmmm, I really like those Teslas!!! But instead, we will make the smart decision and purchase our new vehicle that probably already has 100,000 miles on it, that way some other sucker has already paid for all of the depreciation. One day we’ll be able to buy our dream cars in cash, too. I will walk into the dealership with a briefcase full of cash handcuffed to my wrist just for effect!
Utilities – We paid for electricity, gas, water, cell phones, and internet this month. If you are just starting to get serious about your finances then this is a great category to start challenging. You can take steps to lower your overall usage, negotiate better rates, change carriers, etc. Take some time and look into it. For example my wife and I have iPhones (older) with unlimited plans that run us $70/month including all fees, taxes, etc. Another one is most people forget about their fixed rate plans and end up in the variable rate prices which are much higher, keep an eye on these things, set reminders. My gas bill is hardly anything and they send me Braves tickets every year, win win. I also own shares of Southern Company (SO) which is the parent company of my electric provider, Georgia Power. I send them a payment every month and they send me a dividend check every quarter…soon they will be paying me more than I pay them!
Miscellaneous – This category includes things like swim lessons for our daughter, my dry cleaning expenses, clothes for the kids, a charity donation, a vet bill, life insurance premiums, and school pictures. We’re working on getting the life insurance premiums lower as we speak with PolicyGenius, check them out if you are looking for life insurance or want to re-shop your existing policies. (The best part about it is that they decided to partner with me, and give me $75 for every completed application that is submitted while using my link! How cool is that?)
Savings – This month we only had 7% of our take home pay go into our new car fund….but it’s getting larger!
Travel – We had an excellent Memorial Day trip to our very good friends’ house in South Florida that accounts for half of our travel spending; and the other half was for plane tickets for a 2 week trip out to California at the end of June to see all of my wife’s family. We set a travel budget for our trip to South Florida and we only eclipsed it by $62, I think I had too many craft beers at the Rays / Yankees game! Yes, we are trying to get out of debt, yes, we are trying to save money, but, we also think it’s important to live a little and enjoy things….just do it with a plan and do it responsibly!
Debt – 16% of our take home pay went to paying off debt and only 2% of that was the minimum payments owed. The other 14% went to completely knock one of them out…”another one bites the dust.” Now, all we have left is one credit card and one student loan to pay off. We normally would have put that extra 14% in the car fund but we decided to get rid of this particular debt before it got reported to the credit agencies as it was from an old advertising contract that just resurfaced. I have to say that we were able to do that because of all the planning we are doing, taking control of our money, etc.. That gave us the flexibility and wiggle room to just take care of it, without it being a thorn in our sides any longer.
There you have it. What do you think? Should we have not gone on the Florida vacation?
Even though we spent some money on vacation we still had an effective savings rate of 21% (7% savings plus 14% additional debt payments beyond minimums due) of our take home pay, which again does not include my wife’s 6% contribution to her company 401k and the subsequent company match.
Are you starting to put your plan in action? What expense have you completely eliminated or significantly lowered?
Thanks again for stopping by and reading! Do me a big favor and share with your social media buddies Please!
Image courtesy of Stuart Miles at FreeDigitalPhotos.net