During 2017, I’m tracking every penny that enters and leaves my life. This article is the first of twelve monthly budget reports I plan to post throughout the year.
Don’t get me wrong: I have plenty saved. That’s the good news. The bad news is I have almost no income. (That should change as Money Boss grows, but for now I’m just breaking even.) I want my stash to last another 30 years or so, allowing me to live a modest lifestyle while resisting the slow, silent killer called inflation.
According to the best online retirement calculators I’ve found, I should be able to spend $4000 per month without worry. Maybe a litte more. But how much am I actually spending? That’s what I aim to discover.
Let’s take a look at my numbers for January.
I’ll start with the bottom line: I spent $4801.76 in January 2017. That’s $154.90 per day.
I’m not going to argue whether that’s a good thing or a bad thing. My goal with this project is to document my actual spending given my current habits. Sure, I’ll try to make adjustments as I go, but I’m not going to beat myself up if things aren’t as I want them to be. That’s counter-productive. I want to learn what I’m doing and make corrections, if needed.
That said, $4801.76 is more than I believed I was spending, and it’s more than I want to spend. There will need to be some adjustments in the months to come — adjustments to my spending, to my expectations, to my income…or to all three.
Not all of the numbers were bad. For instance, I spent only $12.16 on my vehicles in January. (I didn’t drive much.) And there are a few other categories that used to give me problems (comic books, for instance) that are no longer a concern.
On the other hand, I spent far too much in a handful of areas. For example:
- I spent $88.16 on books in January. Of that, $10.93 was on audiobooks. Most of the rest was on what I call “food porn” — pretty cookbooks that I didn’t actually need. This isn’t anywhere near the $200/month I spent on books a decade ago, but it’s still higher than I’d like.
- Kim and I hosted my niece and nephew for a long weekend in the middle of the month. We thought it’d be fun to show them Portland, so we played tourist for a couple of days. That cost me $402.57. In retrospect, we should have stayed in and played board games!
- Our vacuum died, which means we had an unexpectedly large household expense. (Our household expenses will be even higher in February. Our bathtub sprung a leak, so we had to call in a plumber to make a difficult repair, which involved cutting a hole in our bedroom wall.)
- I spent $290.33 on entertainment, which includes computer games, sporting events, and media downloads. Of that, a whopping $160.47 was spent at the iTunes store to purchase movies and music. Yikes!
- Even worse, I spent $1115.86 on food in January, which is $36 per day. W-T-F! This was almost evenly split between groceries and dining out. We ate in restaurants eleven times last month at spent $554.95, which is an average of $50.45 per meal. Honestly, I’m okay with the frequency, but the cost per meal needs work. Meanwhile, I spent $535.77 on groceries, which seems outrageous to me. I’m curious to see what the numbers will be like for February.
Here’s my evaluation of my spending: While I’m doing a terrific job of managing my life like a business when it comes to the big things like housing and transportation, I suck at following my own advice when it comes to discretionary spending. Again, it’s not wrong to spend on the things you love, especially if it’s intentional and you can afford it. I don’t want you to think I’m against going out to eat. I’m not.
What I’m against is spending mindlessly. Unfortunately, that’s some of what’s happening here. (One night, Kim and I joined some friends for happy hour at a hip and trendy “speakeasy” in our neighborhood. I picked up the tab: $100 for six drinks in two hours. We could have gone next door and had six beers for thirty bucks — or less. It would have been just as fun. Maybe more so.)
So, there’s work to be done. I’m up to the challenge.
There are a few things that make last month’s $4801.76 in spending not so bad. First, my investments earned $20,065.64, which far outstripped my outflows. Second, I really spent only a few hundred dollars more than I’m aiming for. Finally, through nine days in February, my spending is down. It’s not way down, but it’s down — especially on worrisome categories like dining out. (Only $10.38 spent in restaurants during the first nine days of February!)
In the end, my net worth grew substantially in January.
- My net worth on 31 Dec 2016 was $1,577,014.27 (revised from $1,570,798.39)
- My net worth on 31 Jan 2017 was $1,591,985.52
That’s an increase of $14,971.25 (which is about 0.95%). Of the $20,065.54 jump from my stocks and bonds, $198.07 was from dividends and interest while $19,867.57 was from market gains. My portfolio gained 1.91% in January, which was nearly identical to the 1.90% gain posted by the S&P 500. (This shouldn’t come as much of a surprise since most of my money is index funds — and I’m gradually shifting the rest in that direction.)
Not every month will bring such huge increases in the stock market, obviously. In fact, some months will see declines just as large. Or larger. I can’t control that. What I can control is my spending. And as the CFO of my own life, that’s what I aim to do this year. I aim to cut the fat and bring my spending habits more in line with my values.
Throughout 2017, I’ll offer brief updates on my business finances at the end of these spending reports.
I’ve never really discussed my business finances before. I keep them wholly separate from my personal accounts, only moving money in and out on rare occasions. When the business is doing well, I pull money out as it accumulates. When it’s not making much, I sometimes have to funnel money into the business. Right now, it’s breaking even.
In January, Computer Resources Northwest LLC (the company behind my blogging endeavors) had $441.21 of income and $458.98 of expenses, for a net loss of $17.77. I’m pleased with that, actually. It’s close to even. And as my income from Money Boss increases — it generated $767.19 in revenue during February — I’ll actually make a profit.