Savings (6 months + 2.37% down payment)
With a large influx of non-salary income this quarter, we accomplished the goal of having 6 months of expenses in savings. We will re-evaluate later in the year if this is an accurate figure. Halfway through the year, it looks like we should increase it by about 14%. We will re-evaluate this at the end of the year since we have plenty of other cash if something did happen.
As I mentioned in my homeownership reflections post recently, we decided to start saving towards a down payment. I estimate that we should be able to squirrel away a 20% down payment for houses in our price range by the end of next year. We have now saved a 2.37% down payment. Our plan is to split savings funds 1/3 to our Vanguard taxable account and 2/3 to this down payment savings fund. We’ll re-evaluate twice a year and when we have a 10% down payment saved.
52.8% FI progress (up from 46.8% last quarter or 45.0% in December 2017)
Last quarter, I noted our FI ratio for the quarter, which was really solid due to Q1 having lower expenses than other quarters. I realized though that it doesn’t show very good progress as our FI ratio this quarter is quite a bit lower, despite a decent net worth increase.
I have a row in our net worth spreadsheet that estimates the amount needed for FI as the condo value in that column plus 25x the expenses for the last 12 months. This FI progress % is our net worth figure divided by that number. I find this helps to smooth out more expensive months with cheaper months since a lot of our expenses are irregular and also takes into account the fact that I don’t include the mortgage in the expenses, but I do assume the condo would be paid off in the total number we need. I like having this figure re-calculated in each month’s column in the spreadsheet to see how the $ needed for FI changes over time, as well as the progress.
We hope to make some solid progress on this figure this year as last year’s expensive months drop off the average, though of course if we move, this number will get recalibrated. We’ve already made some solid progress here – we passed the 50% mark in May and increased it again in June. I expect that we will hit 60% once last year’s wedding expenses drop off in the fall.
We used the remainder of the non-salary income to start a new joint taxable account, once we decided on an asset allocation. (This money is currently living in a category in YNAB, pending setup of the account at Vanguard, so it’s not shown in this chart.) With the large house down payment split of savings, we decided to skip bonds for now. Regular, monthly 401(k) contributions continued. This was a pretty boring quarter for investments since most of the non-salary income went to cash savings this quarter.
The taxable jump in February (Q1) was pretty exciting though! Both of our taxable accounts are heavier in international stocks, which have been performing poorly this year, so those accounts are down a bit. Both of our Roth IRAs are heavier in US stocks and our 401(k)s have more of a mix. (Can you tell that my husband started investing after we started dating?)
My Series I Savings Bonds aren’t on this chart, though we do count them in the overall Investments figure. I mostly took them off to make the x-axis less clear. I’ve had my oldest ones for over 5 years now, so they don’t have the three month interest penalty anymore!
3/31/2018 balance: $114,535.01. 12 years, 0 months remaining.
Interest at closing to old and new lenders: $484.38 old and $281.73 new, plus $295 refinance fee
April principal only payments: $670.85 plus $87.73 in post-closing refunds from the old and new mortgage
May principal only payment: $670.85
June payment: $821.05 principal, $291.81 interest ($102.66 less than the last regular payment in March)
6/30/2018 balance: $112,504.52. 9 years, 11 months remaining.
We budgeted to make principal payments in April and May to make sure that we were budgeting the full amount we wanted to for the whole year, even though the mortgage company gave us two full months without payments. Those two amounts were about 1% of the March mortgage balance, so that still made a dent. We paid the mortgage down 1.7% this quarter and are at over 60% paid of the original balance now, six years in.
Spending ratio – Portion of the ideal annual budget cumulatively
I calculate the spending ratio with expenses in the numerator and the denominator as 4% of our investments plus the value of any redeemed credit card points. The second figure is the cumulative spending so far for the year divided by our ideal annual budget, expressed as a fraction of 12. Both of these figures ignore the mortgage payment.
April – 40.9% – 4.43/12
May – 44.6% – 5.81/12
June – 45.2% – 7.37/12
Q2 – 43.6%
H1 – 53.4%
Q2 was more expensive than Q1 by 50%, similar to last year. We spent about 25% less in H1 this year than we did in last year, which is mostly explained by the honeymoon and wedding spending not happening this year. Most of the increase between Q2 and Q1 this year is explained by the fact that our Q2 housing spending was about 2.5x the Q1 housing spending.
We are 6 months into the year and we have spent 7.37 months worth of my ideal annual budget for the year. It looks like that was probably a bit too aggressive. I’ll keep tracking in relation to that same figure here for the rest of the year for consistency. We have spent 20% less YTD than we had at this point last year ignoring wedding expenses though, so that is a strong improvement.
Our top three categories this quarter were: housing, food, and my personal spending. Our three most expensive months so far this year were all in Q2. Interestingly, April and June were in our top three most expensive months last year as well, though not May.
Housing was expensive because we paid half of our annual property taxes, a special assessment to the condo association, and spent 1.5x what we spent all last year on maintenance, plus Q2 has two electricity bills versus Q1’s one electricity bill. We hired multiple people to do several small projects this quarter: fixed the hinges on one of the bathroom doors, fixed the one shower door so it actually moves, installed a fan switch in the other bathroom (one already had it), fixed a toilet that wasn’t flushing anymore, dealt with a moth infestation (including the dry cleaning bill and super jumbo ziploc bags to store our clothes and other linens), some liquid plumber drain for our kitchen sink issues (just supplies – we did that one ourselves), replaced a light fixture that we hated and could not handle a LED bulb, and separated the bathrooms onto their own GFI systems. Those projects all cost $1600. We contemplated adding another heater, but that estimate was $3000 due to the damage and needing to re-do our circuit breaker so we will probably just not do that. Our oven temperature has been having issues too and our dryer is pretty squeaky… This counted in the Shopping:Furnishings category, but we also bought some shelving for our laundry closet which is working out much better than our previous system of stacking tons of boxes and bins on top of packages of toilet paper until we wanted to use the toilet paper.
I’m really excited to go to the Cents Positive Retreat in November that Tanja is organizing! It will be exciting to meet some of my internet friends in person! I am also going on a trip with my sibling later this year. In irregular personal spending, I replaced my hiking backpack this quarter because the mesh was worn out and fuzzing up all of my lovely clothes…
We spent an amazing week on a nearby road trip checking out sites, which was super fun and gorgeous! It was part of our plan to stay closer to home to save money on travel costs but still have fun adventures. We are considering another road trip for the early fall.
In other spending, we bought a new ice cream scoop after the one I inherited many years ago started leaving peeling metal in our ice cream, replaced our Magic Bullet cups since the plastic was warping and we use it all the time, and bought a new lens for our fancy camera because the kit lens was having a lot of issues even after we repaired it last year. We’ve already spent more money on fuel this year ($243.39) than all of last year ($234.51). We have been driving more, but also gas prices are up from last year. I’ve been using my husband’s free work benefit bus pass and then he has a card we put on auto-reload, which has been working out well – we’ve been spending about $15/month on transit for him. We had anniversary photos taken with our wedding photographer, which was lovely! We hope to do that regularly since we get photos of us together taken so infrequently otherwise.
YNAB is still going well! We are pleased with it. The two best things about it are: 1) my husband opens the app and 2) it’s super easy to enter transactions at the time I buy something while I’m out with the app on my phone.
Readers, how was your Q2?