A part of our overall financial plan calls for me to track how we spend our money each month. We spent so many years looking back and just wondering where our money went…now we know exactly where it goes. This small step has shifted the power over money back to us, we tell it where to go!
Is there anything that helps you track this stuff?
The tool we use to assist us with this is Mint. Mint is a free web-based personal financial management service that is owned by Intuit…the same company that runs Turbo-Tax. All of our accounts are linked to it and every transaction that we incur gets filtered through it and assigned a spending category. There is rarely a day that goes by that I don’t quickly scan it and look for erroneous charges. All of our account balances are updated and available at a quick glance and it even shows me what my credit score is doing. There’s a helpful tool inside Mint, where you can set a monthly budget for certain categories, and you can easily track those budgets. When it is time to do one of these updates, I simply log on to the web version and everything is compiled for me, nice and neat.
Of course, Mint is going to try and make some money by offering upgrades, credit cards, student loans, mortgage refi’s, etc. Just ignore them.
Where did our money go in November?
This is the percentage of our take home pay that was used for each of these categories:
- Mortgage: 18%
- Kids’ School: 21%
- Food/House Supplies: 14%
- Auto/Gas: 5%
- Utilities: 4%
- Miscellaneous: 7%
- Savings: 0%
- Debt Payments: 34%
We spent 103% of our take home pay in November. A whopping 34% went towards our debt of which only 2% was the minimums due (spoiler alert: we made our last credit card payment in December). Accounting for the 2% and subtracting out the 3% overage gives us an effective savings rate of 29% for November.
If that is clear as mud…think of it this way: 29% of our take home pay could have been used for anything, we could have spent it on some fancy stuff, invested it to earn more money, or saved it for a rainy day. Instead, we opted to use it to get rid of past dumbness!
* This does not take into account that my wife allocates 6% of her pay to her company 401(k) which is also matched 100% by the company. (We like FREE money and you should, too.)
Mortgage: This amount includes our Principal, Interest, Taxes, and Insurance (PITI). As you might recall, early this year we did a VA refinance that cost us $800 total, and ended up lowering our monthly payment by $200. As a good rule of thumb, we never want to pay more than 25% of our take home pay for a roof over our heads. Once you start crossing that threshold, it hinders other goals and moves you closer to that club called “House Poor.” Our property taxes were just shy of $3,000 this year, as we live in a pretty low-cost area of the country.
Kids’ School: This month was slightly higher than normal since we had 5 weeks of day care for our youngest. He goes to a private daycare 5 days a week and the cost includes his meals. Our daughter is in public kindergarten and the only thing we have to pay for her is the occasional lunch and her after school program. When public school is on break, and the parents still have to work, she goes to school with her brother, which of course is an additional charge. This is our largest monthly expense, but we are very happy with the folks who are looking after our little ones every day!
Food/House Supplies: You should see this category in Mint…it is littered with Costco and Publix with the occasional Kroger thrown in. Exactly $99.58 was spent out at restaurants this month, my wife and I took a couple of days off from work to celebrate our anniversary while the kids were in school. We went to brunch one day, and then a nice lunch the next day after doing some hiking. I’m pretty sure our new years resolution is going to be to take a “date day” at least once a month. We’re also thinking about incorporating a meal delivery service into our food plan…maybe 3 times a week? Anyone have any experience with any of these? Blue Apron, Home Chef, or Dinner A’Fare…
Auto/Gas: Not much to say about this one except that we own our cars now and this only accounts for 5% of our budget. This month we had 8 trips to the gas station and our car insurance runs $82 a month. Did I mention that it sure is nice not having a big car payment? (If any of you think less of me for not driving around in a nice new vehicle….so what! haha.)
Utilities: Only 4% of our budget went to Electricity, Gas, Water, Cell Phones, and Internet. I know some people who spend more than our total on just their cell phones alone. We used to be there with our multi hundred-dollar AT&T cell plan, Direct-TV with sports packages, and best of the best Comcast internet. We had the cool stuff…but we were also broke! Not anymore.
Miscellaneous: 7% of our total budget and it went to a pharmacy run, kids life insurance premiums, Home Depot, and I paid for one of our students to get a used car checked out by a mechanic before she bought it. There was also some shopping done for our Annual Turkey Day with our family and friends.
Debt: We threw a big chunk (34%) at our remaining credit card balance and that puppy is almost gone. It will no longer be following us around wanting to play constantly, haha. The only debt we’ll have left, besides our mortgage, is my small student loan and it looks like we will be finished with all of it in January 2017…Happy New Year to us! I am not against credit cards at all, as we both still have travel reward cards, and use them for all of the expenses above. I’m just against my previous behavior with them that allowed me to pay interest instead of receiving it.
No complaints here, we are in a good spot right now because we have worked very hard at shrinking our budget and being mindful of where we spend our money. It was not too long ago that we were that quintessential American family with bills and payments flying out of our window at an alarming pace and living paycheck to paycheck.
Did you know? According to stats on www.DaveRamsey.com
- 78% of American families live paycheck to paycheck.
- 68% of Americans don’t budget every month.
- 62% of Americans have less than $1,000 in savings
At one point I was smack dab in the middle of this little party and if you find yourself there now…what are you going to do about it?
Thank you for reading and I hope the New Year that is quickly upon us brings you lots to be happy about!
To see all of our savings rates please visit our Monthly Budgets Page.