So here are the breakdowns of our 2018 expenses so far. I wanted to give everyone that reads this blog a better picture of how we spend for the month. As always, some caveats. This is, by no means an ideal anything. It is not us saying, “This is how it should be done.” This is only our story. What I appreciate about reading personal finance blogs is not that they are “right”, but that they offer a glimpse into someone else’s financial world. They help me take away the good things I see and serve as warnings for mistakes I don’t want to make. They offer a collective experience from which we can all learn without so much pain of experience. I hope my little blog can add to that collective body of work.
Expenses as a percent
I like to look at things as a percent of a whole. In terms of absolute dollars, we may have spent less one month, but if we decided not to pay any bills and spend 100% of that month’s expenses on fireworks, that would not be ideal. That said, in absolute dollars spent, it would look like we reduced expense, but in reality we would have only delayed those expenses and engaged in some pretty irresponsible financial behavior. Conversely, if we managed to pay all our bills and saved a bunch of extra money from something like a tax return or some gig economy work, then, in absolute dollars, this would look like we were increasing our expenses. (I always record savings as an expense). That would not be true because we put more away into savings. Charting these data in terms of a percent of total expenses lets us look at the contribution they make to our overall spending. Here is a line-by-line. The percentages are a four(4) month average.
MORTGAGE – 28% – This is a bit high, but it includes mortgages for our primary and investment real estate portfolio. Our investment portfolio all produces a net income, so the expense is offset by revenue and then some. Our primary residence mortgage as a percent of total expenses is closer to 15%.
HOA – 4% – We like condos because we hate work. So long as we keep the dues in check, this is a more hassle free way of investing for us. I am not really the “handy-man” type so the dues are well worth it.
UTILITIES – 1% – These are only the utilities that we cannot pay with a credit card.
PHONE – 1% – Same as the utilities.
DINING – <1% – Occasionally we will forget the credit card somewhere or have to use the bank card. It is quite rare.
MERCHANDISE – <1% – Same as dining.
BANK – <1% – These are withholdings. Negligent, but they show up on the statement so I’ve added it in.
BROKERAGE – 25% – These are savings that go directly into a brokerage account. This expense breakdown is all post-tax. Our total savings includes pre-tax (max out two IRAs and our 401k) and the principle repayment of our mortgages. The bump in March was putting the tax return into saving.
CASH – <1% – Sometimes we need some cash from the good ‘ol ATM.
INVESTMENT – <1% – This is my fun money. This year, it has gone into cryptocurrencies.
CC PAYMENT – 39% – We try to put as much as we can on our one(1) credit card to maximize points. It works. We pay it of every month and get 2% back on everything. So long as you are disciplined, this approach works great for some extra cash back savings.
Here is how the credit card breaks down:
AIRFARE – 23% – We have a personal family and work situation that requires us to travel a lot. This is temporary and unusual so we expect this to go away in time. Until then, it is a bulk of our expenses. That said, we rack up some good miles and get to expose the kids to some fun places.
DINING – 7% – Our CC company has issues sorting dining, groceries, and merchandise like Target, so consider these categories a little fluid. That said, we try not to eat out too terribly much.
ENTERTAINMENT – 2% – This is movies, mini-golf etc. We try to keep our entertainment to things like hikes, chess, and family board games, but sometimes you gotta go see Black Panther.
GAS / AUTOMOTIVE – 6% – We live in a burb so having a car is a must. We could probably cut down on this by moving closer to work, but we like the schools where we live and I like not living so close to work. Keeps a mental distance between work and personal time.
HEALTH CARE – 6% – These are premium add-ons, co-pays, etc.
INSURANCE – 6% – Here is the car and homeowners / renters / landlord insurance. As I write this I realize I need to consolidate these with one broker and get some savings.
INTERNET – <1% – This is pretty much the cost of running this site.
LODGING – <1% – We travel a lot, but stay in homes that we own, so lodging is kept at a bare minimum.
MERCHANDISE – 18% – See DINING. This is the daily stuff.
OTHER, OTHER SERVICES, OTHER TRAVEL – 6%, 7%, 3% = 16% – This includes some online payment of property taxes, non-airfare travel like ride-sharing, and other odds-and-ends that our CC company just can’t place.
PAYMENT / CREDITS – <2% These are our rewards or credits. Pro-Tip: I had signed up for a separate Netflix account ages ago, got the free month, and then forgot to cancel. I didn’t log-in or even go to the site for months, but alas, still got charged. I called and Netflix could see that I hadn’t even logged in and reversed all the charges and canceled the account. Go customer service!
PHONE / CABLE 1% – We have two(2) unlimited data plans use our hotspot for home service. It works pretty well. I can stream, watch YouTube, etc. and I don’t have to pay Comcast or whoever their $100 a month.
PROFESSIONAL SERVICES – 4% – These are tax folks, attorneys, etc. The more you have, the more these people become useful.
UTILITIES – 8% – Here are the bulk of the utilities that we can put on the card.
So that is it for this week. It is good to remember that these percentages are a percent of total expenses, not a percent of income. It is pretty close because we include savings, but there is always a small net income / loss in our total cash balance at the end of the month. It is not 100% accurate, but it gives us an overview of where we are and how we spend our money. Another week I will do income and net worth to give everyone a snapshot of that as well. In the mean time, check out budgetsaresexy’s latest post to see his awesome net worth tracking!
Have a great week everyone and I hope this was insightful! – FS