January 2017 update

It took until the end of January for me to really sit down and figure out a plan for 2017. I now have a plan in place for: graduating with my Masters, a timeline for a honeymoon, and a strong cost estimate of the wedding reception. What I plan to do after my Masters is still TBD, though I do plan to figure that out by the end of 2017.

My January net worth was up 0.4%, which is mostly notable because my total income was $180 and the last positive net worth change I saw was in August 2016. I anticipate my net worth going down 1.4% from December 2016 to December 2017. I did make my 2017 Backdoor Roth IRA contribution on January 1st.

Goals

I set monthly goals in my planner and then check in on them at the end of the month. I started doing this in 2016 and it has been great! They’re a mix of action items and routines I want to cultivate.

  1. Done! Max Roth IRA – done 1/1
  2. Pass! Drink 64 oz of water per day. I drank 59.3 oz/day on average, which is 93% of the way there.
  3. Ehhh. Walk 10,000 steps per day. I averaged 7,246 per day, which is on par for most Januarys so I reduced my February goal to 8,000 steps.
  4. Partway. 2 barre classes per week (5/8) This means I made it once a week every week which isn’t nearly as bad! I made my February goal once per week and hopefully I’ll find the scheduling to get there twice. It’s getting a little tight on some punch cards I bought in the fall so hopefully they don’t end up getting wasted.
  5. Success! Clothing whitelist only.
  6. Success! Early February trip booked.
  7. Success! Discretionary spending under $1,000. I’m trying to make sure that my limited budget still has room for some personal luxuries. It helps that I stocked up on barre punch cards in the fall when there was a sale so I won’t need to buy any for a bit and there are definitely luxuries built into the joint budget.
  8. Fail! One personal finance blog post per week. (1/4)
  9. Success! Donor Advised Fund plan. We agreed that each person got to have the final vote on where their portion of the donation money went, but we were to make the plan and do the grants together. We made donations to a neighborhood food bank, the ACLU, Planned Parenthood, Wikipedia, the Electronic Frontier Fund, a local women’s homeless shelter and some other local charities that my husband supports. I am further donating my time by volunteering to prepare tax returns through VITA (Volunteer Income Tax Assistance), which is really fun!

Cash flow

I’m managing my personal cash flow right now by keeping three savings accounts: one for grad school tuition, one for living expenses covering the remainder of 2017 and then one for living expenses in 2018 which will simply turn into cash reserves if I end up with a paying full-time job again. I have an automatic transfer of $1,500 on the 1st of every month to the joint checking account to cover my half of the expenses. I then take any extra money out I need to cover expenses as needed rather than transferring out a fixed amount. The grad school savings account is on track and the 2018 living expenses account is currently empty. The 2017 living expenses account had $26,952.93 in it at the end of January, when it should have $33,000.00 in it to get through the year. I’m anticipating deferred compensation income from my former employer in Q1 and a small personal income tax refund that will cover this difference with a small bit leftover to go into the 2018 savings account. I do have another $20,548 in Series I Savings Bonds that I could cash in and another $16,000 in Vanguard taxable index funds.

My goal is to pay for my half of the wedding reception out of my $36,000 budget for the year. $18,000 of that is the joint spending plan, which leaves $18,000 for personal spending. With $12,000 allotted for the wedding reception, I have $6,000 to work with for personal spending in 2017, which means I need to make it count! I estimated that my personal spending was about $20,000 in 2016, so this is going to be a huge experiment.

Personal spending

2017 January Personal Spending.png

I’m setting a monthly budget for my personal spending and then checking in on it throughout the month. January was a really good start!

Transportation: This should hopefully be the last time I have to pay for the car insurance out of personal spending! Transit is paid per academic period and is a reasonable price for how much I use it.

Shopping: For clothing, I replaced some underwear, which was on my whitelist. I also bought two pens and a notebook. I’m otherwise working on shopping my closet this year ;)

Entertainment: I renewed my personal domain, switching registrars to a cheaper one and had one dinner out with a friend.

Food is mostly the occasional lunch out on class days due to awkward timing of the class.

Cell phone: I switched to a cheaper data plan by reducing my data usage and in the process, reducing the time I spend on my phone per day to under two hours! My budget here was completely off because I’d changed plans after I’d already paid for the previous month. We didn’t make our cell phone bills joint because my husband pays for way more data than I do and his employer reimburses him for part of his plan.

Medical: This was paying for the remaining December medical costs. Despite my husband’s work having great health insurance, the premiums to add me were really expensive (as in about 5x what he was paying for himself). We’ll sort that all out at tax time in 2018 though, so month-to-month it will look like I’m spending very little on medical for most of 2017. I also have about $3,800 in an HSA that is helpful here.

Toiletries is low because I returned some products that I had bought in November/December that weren’t working.

If you take out the transportation, cell phone, and medical expenses, that leaves me with $380.26 in discretionary spending in January, which isn’t that bad! That’s basically my February budget ($300: $100 food, $100 entertainment, $30 cell phone, $20 eyebrows, and $50 toiletries).

Joint spending

2017 January Joint Spending.png

We also were pretty on budget with the joint spending! We were only $15.89 over our monthly cash in if you take out the two unbudgeted expenses. We each transferred in funds to cover the negative portion of the cashflow.

I hid the HOA dues from this view. We paid two months in January based on how things fell.

Entertainment is just a cash refund from a merchant that overcharged us and then couldn’t refund our credit card. I keep meaning to use it towards groceries because I hate carrying cash but I never have it on me when I’m at the grocery store…

Spotify is Spotify family. We have an account each, an account for our home stereo system (so there is no conflicting), and each of our dads have an account. We should really cancel Pandora since we mostly use Spotify but we’re grandfathered into the old rate plan and I’m having a hard time giving it up…

There is a Groceries budget listed here but we don’t follow it – it’s the average of our 2016 spending. We don’t meal plan other than that we usually eat chicken two nights, pasta two nights, beef one night, and repeat one of those the other two nights or be lazy. Restaurants is one lazy night in and otherwise food around meeting up with wedding reception vendors, as was the one Uber (which I should rename Lyft because we’ve switched loyalties to Lyft based on their current public stance).

Furnishings is the remaining item for the living room remodel. We are so close to being done with that at last!

Gifts is a wedding gift, two baby gifts, and cards for them.

I prepaid Comcast in December, so we didn’t pay them in January.

One tank of gas in January, which was near the end so we might not fill up in February.

Travel was flights and hotel for our early February weekend trip. The hotel nights were technically paid with points, which I count as spending in the approximate cost of the nights had we paid for them ourselves and as income to balance it out to zero.

Miscellaneous was jewelry insurance on my rings, picture hangers, a popcorn popper, and a measuring cup.

Wedding was the remainder of our postnuptial agreement costs, cake tasting fees, photographer deposit, and tickets to a show.

Readers, how was your January?

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9 thoughts on “January 2017 update

  1. Hey Leigh. Looks like you had a great month. :) I don’t like carrying around cash either. I always buy groceries with my credit card, mainly for the convenience but also for the rewards. Have you been inside the Amazon Go store yet? I love the concept. I’m just curious about the product selection. Like when you walk in does it feel like a Wal-Mart or more like Whole Foods? Lol. South Korean is trying to move towards a cashless society over the next 5 years. That would be interesting to see.

  2. For some reason I’m under the impression you couldn’t technically contribute to an IRA until you had earned income in that year. Maybe your loophole would be spousal earning? I’ve seen several bloggers say they already did a family 11k contribution within the first couple days of the year so I’ve been wondering about that.

    I’ve been missing your monthly rounds posts so it’s great to see one again. We have a lot of major changes happening now, so even though we plan on maxing all of our tax advantages accounts this year, we can’t front load because I’m worried about cash flow. Even so we’re indulging in lifestyle inflation by getting house cleaners. I hope it will free up enough time that it will be worth every penny!

    • You are absolutely correct that you need earned income! There are two caveats to that: 1) my husband and I will file Married Filing Jointly even though we mostly keep our finances separate and based on the household earned income you make IRA contributions when you are married. Our household income in 2017 requires me to use the Backdoor rather than the front door. And 2) I have some deferred compensation from my former employer coming in 2017 that is enough earned income to allow me to make an IRA contribution this year. 2) is a moot point since I’m married but it made me feel better about my ability to make the contribution.

      I stopped doing the monthly posts because I didn’t see the point in checking in on my net worth every month in detail. This year with less income I’m concerned with managing cash flow so I want to talk about that and make sure I’m balancing luxuries in my budget and making my savings last all year. I wasn’t super on board with the house cleaners when we first got them but it has really freed up time to go to the gym, do laundry, and relax way more, plus they make the house way more clean than we ever did doing the cleaning ourselves. It probably saves us at least some of their cost in money we would spend eating out to find time to clean.

      It’s great that you can max out all of your retirement accounts this year! Front loading is really hard on the cash flow – I essentially lived off of my savings account for half of 2015 and 2016 while front loading. I don’t recommend it to people without really healthy liquid savings accounts. I hope that most of your major changes happening now are good!

      • I’m glad to hear you talk about your house cleaners, because my husband and I have a similar situation. We decided about a year ago to have cleaners come in once a week to clean, to the tune of about $200 a month. I alternate between feeling guilty about this expense and thinking that it saves us money. When the house is clean, we don’t spend all weekend cleaning, and it’s amazing how much mental bandwidth it frees up to have a clean house!

        • Thanks Laurie! Once a week for $200/month is a great deal! We pay $110 biweekly. The cleaners clean way better than we ever did and we love it. It’s been a year now and I’ve stopped feeling guilty about it because I love a clean apartment and we have a hard enough time getting all the dishes, laundry and cooking done as it is.

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