Q3 2015 Update

Income

I saw about $7,000 in paychecks in Q3, about 90% of that coming in September, when I finished maxing out my 401(k) for the year. My net income this year is actually reasonably evenly spaced out, pretty close to 25% of it coming in each quarter and each quarter’s net income being with $1,000 of each other, with each being around $28,000 to $29,000.

Saving

In Q3, I saved 64% of my net pay: depositing 96% of my net pay to various savings accounts and withdrawing about 32% of my net pay from savings accounts (mostly selling ESPP and paying fall tuition). My savings deposits were split up to the following accounts:

2015 Q3 Savings Distribution

This quarter, I finished maxing out the after-tax 401(k). My employer has continued to make their matching contributions every paycheck this quarter, even though I finished contributing to my pre-tax 401(k) last quarter. Most of the rest of my savings was tossing money into my general savings account.

Spending

Q3 2015 Spending

All in all, I spent $10,755 in Q3, with education taken out. I had estimated I would spend $7,691 in Q3, so I went $3,064 over my estimate.

Housing: $6,200 I came in over in this category by about $2,000 because I hadn’t budgeted for any of the projects we did: replacing the guest bathroom sink, painting the second bedroom, fixing the fridge, replacing the guest bathroom toilet seat, and buying a SIM card for my unexpected purchase of a new phone. Looking at my history, I seem to spend about $2,000 to $3,000 per year on home maintenance/wants and so I plan to budget for that going forward.

Clothing: $1,200 I hadn’t planned on any of this spending. I am, however, super happy with my closet and will write a blog post about my process at some point. I’m still looking for a few more pieces which I should hopefully find in Q4. My plan going forward is to then keep an inventory of my closet every season to help figure out what items I need to find, rather than budgeting by a dollar amount.

Shopping: $865 None of this was budgeted for either (well except for the cell phone, partially). What did this get me? A gorgeous Kate Spade crossbody bag, two throw pillows for the futon in the second bedroom, a new iPhone 6S 64 GB, and some plants for the balcony.

Transportation: $550 Most of this was car insurance. This was under budget because I switched car insurance carriers and only paid for a six month policy vs twelve. The other $130 was fuel and tolls.

Medical: $400 One visit to the doctor and new lenses in my glasses. Medical stuff be expensive in the US.

Personal care: $395 Monthly eyebrow waxes and the rest was mostly infrequent purchases: my annual chapstick stock-up, shaving gel, multi-vitamins, and hair products. The other bit was trying out some new skincare products.

Recreation: $302 Annual cost for sport #1 and a pair of hiking boots so hiking doesn’t kill my ankles. (You don’t see any costs for hiking here because a) it is cheap and b) since it’s a joint activity, my boyfriend pays.)

Life: Annual cost of my umbrella insurance policy. (Hint: it’s between $200-300 per year.)

Entertainment: $201.67 – I’m about $100 under budget here. This was pretty much entirely eating out with friends. For reference, I spent $212/month on this in 2014. I’m now spending $200/quarter.

Travel: $78 I came in under in this category because my boyfriend covered most of the on-the-trip costs of our summer trip.

Food: $67.13 This is super underbudget – my budget had been $360 for the quarter! My boyfriend pays for the groceries and our date nights / out with friends together, so this is $28.12 me grabbing food when I’m out somewhere and $39.01 work lunches. I’m doing great with this category! For reference, I spent $350/month on food in 2014.

(Note that details on Gifts and Donations are left out.)

With the overages this quarter, I estimate that I am on track to spend $44,795 this year overall, which is about $6,675 over my original estimate or an 18% increase. That is up $2,600 from my Q2 update, which is pretty close to what I went over this quarter. It is still under my 2014 spending of $48,040 though, by about 7%. I seem to consistently spend about $40,000 to $50,000 per year and my boyfriend moving in saves me somewhere around $4,000 to $6,000 per year, so I expect to land in the lower range going forward.

Goals

Let’s check in on my goals from the beginning of the year. I’m doing mostly okay, though I’m definitely going to fall a bit short of my savings goals, which I’m okay with.

1) Enjoy living together! Have an awesome trip to NZ!

ON TRACK! Living together is going great overall. It’s definitely taking some time to get the place to a point where it feels more like things were chosen by both of us, but we’ve definitely been making some good progress on that and on figuring out alone time too.

2) Contribute the maximum to all tax-advantaged accounts available to me. This means $5,500 in a Backdoor Roth IRA, $18,000 in a pre-tax 401(k) and possibly some additional funds to the after-tax 401(k) and possibly my 2016 Roth IRA amount in a savings account ready to deploy in January. This will account for probably about 2/3 of my savings in 2015.

DONE! I’m done with the Backdoor Roth IRA, the pre-tax 401(k), and the after-tax 401(k). I transferred my after-tax 401(k) funds over to my Roth IRA in October.

3) Learn the ropes at my new company and have an awesome first year!

ON TRACK! Things are going great so far. I like my group and things seem to be much less toxic than in my previous company. It’s definitely a different culture though and that has been quite an adjustment.

4) Exercise for at least 45 minutes per day. My phone is really helpful at tracking this for me!

ON TRACK! I’m not really sure how this is going as my phone wasn’t working to tell me this for two months. I did exercise for 49 minutes on average in July. Anyone know how to get an iPhone to tell you how to do this? It tells me my steps and Fitbit seems to get the active time somehow, but my iPhone isn’t telling me that directly and I don’t want to pay for Fitbit premium to get the monthly report that they used to give away for free.

5) Go to the gym (or run) three times per week.

FAIL!This is just a flat out fail. I’ve managed to lose some of the stress weight from my last job and get a reasonable amount of general exercise and outside time (yay city life!), so I’m fine with this. My new goal, especially with grad school is to make it to yoga/running once a week.

6) Contribute enough to a Health Savings Account such that Out Of Pocket Maximum ~= Current HSA balance + Employer contribution + my contribution.

ON TRACK! I ended up increasing this to the maximum once I maxed out my after-tax 401(k). I’ll re-evaluate this each year.

7) Succeed at Operation Bayes – I’ll explain this later.

SUCCESS! Now you all know that this was applying to and getting into grad school, which I did successfully! Yay! Now to kick butt at grad school! So far, so good.

8) Spend under $40,000.

FAIL! I’m now on track to spend $45,000 this year, which is still $3,000 less than 2014.

9) Save 70% of my net income monthly…and 100% of my bonuses. (Yay for a big raise that will allow me to save that much of my monthly income!)

FAIL! Between the ESPP, lump sum contributions to my 401(k), etc. this got far more complicated to calculate in the same way that I was doing before. So far, I’ve saved 68% of my net income overall or 72% if you ignore the withdrawals to pay for grad school. I’m on track to save 69% of my net income overall if you ignore the grad school withdrawals or 63% if you include them.

The main reduction in this compared to 2014 is the income drop. My net income is down pretty much the exact dollar amount that my savings is down by this year, about $15,000. My income is high enough compared to my spending that I chose to reduce savings this year over reducing spending. I expect my 2016 net income to be pretty close to my 2014 net income, which will help with my savings rate next year.

10) Contribute the maximum that I can to the Employee Stock Purchase Plan.

ON TRACK! Definitely doing this.

11) Pay down the mortgage with any funds that are leftover after 2), including the proceeds of 10).

NOT HAPPENING! I’m reasonably confident at this point that I will not make any extra mortgage payments in 2015, mostly due to two months of no income, setting aside money for grad school, increasing my emergency fund, and maxing out my after-tax 401(k). All of those things took….$85,000. Wow!

But, I’m pretty happy with the progress I made paying off the first half of the mortgage in the first 2.5 years aka $143,000 in 30 months. If I don’t pay off the mortgage before the rate resets, my interest rate will currently reset to 3.08% based on today’s rates, which is still a pretty good deal, especially considering that the required payment will reamortize as well, so that would drop my required payment from just over $1,000/month to ~$550/month, making things reasonably manageable if I lost my income.

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11 thoughts on “Q3 2015 Update

  1. That’s great that everything is going well with the new job. Just crushing those savings goals. Best part of maxing out IRA and 401k at this point is the big paychecks that follow!

    • Yup! My paychecks are pretty sweet now, especially that I’m finishing up Social Security tax shortly (one more paycheck to go). My direct deposits include ESPP sales for Q4 is double Q3…

  2. Nice to not have crazy state tax. I have already been out of SS, yet your net income per quarter is definitely higher.

    • Heh. My net income was higher than it otherwise would have been in Q2 because of maxing out the pre-tax 401(k). I paid SS tax on my January paycheck at my original job for the year, so I should have been done on my last paycheck, but I’m not because the current company doesn’t know about that. That’s okay because my W-4 allowances I requested accounts for that. Next year, I should have a couple of quarters that are closer to $40k! :D

      • Do bonuses during the year get social security taxes withdrawn as you get them? I know they count towards fica taxes but unsure of the mechanics. I’ve only had end year bonuses so I don’t know. 40K net in a quarter is pretty awesome.

        • I get my “bonuses” in multiple types throughout the year: some cash, some stock. And I count tuition reimbursements not really as bonuses or salary, but still income.

          Yup, they do. Basically any pay you get throughout the year gets FICA taxes withdrawn, until it’s no longer necessary, just like with your normal paychecks. I’ve never had year end bonuses!

  3. Those “fails” seem rather harsh — you’re still doing an incredible job overall, and saving 69% instead of 70% hardly seems like it deserves a big red “fail’! :-) I’m super glad for you that your job is going well, you like your team, and it feels a lot less toxic than your old job. I feel like a toxic work environment is one of the most unhealthy situations we can put ourselves in, so hooray for escaping that!

    • Well to be fair that goal was to save 70% of my regular income and then 100% of my bonuses. But then that became more difficult to track, so now I’m just tracking savings of total income, which is at 69%. Had I been meeting the original goal, I would be at 80% of overall income. You’re right though that I’m still doing great! I am a bit of a perfectionist though and I have a hard time not knocking all of my goals out of the park and I was a bit too ambitious with my financial goals this year.

    • I would say that the work environment is less toxic for sure. The commute is really frustrating some days though and that can be quite exhausting.

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