2016 In Review

2016 was a year full of huge highs and lows! I started the year with a pretty solidly ambitious plan and despite the various life changes that happened, the year actually turned out pretty well financially, all things considered. You should note while reading this post that my husband and I have separate finances and that everything described in this post is only about my finances or my half of the shared finances.

Goals

First, let’s review the measurable goals I set out for the year.

4) Contribute the maximum to all tax-advantaged accounts available to me.

Success! I maxed out my pre-tax 401(k), got the full employer matching, maxed out my after-tax 401(k), maxed out my Roth IRA, and my HSA. I also contributed the maximum I could to the Employee Stock Purchase Plan and sold it all right away.

5) 7,000 steps per day.

Success! I averaged about 9,100 steps per day, which means I blew this goal out of the water. I got more steps as the year went on (as we got out of winter), so 7,000 steps seemed like a stretch goal last December and it was – I didn’t reach it in January or December, but I did every other month this year. My goal going forward is to average 10,000 steps a day each month. My FitBit One is really helpful at measuring this and then every few months or so, I put the month summary data into a spreadsheet so I can compare by month.

Over the course of 2013-2016, I increased my weight up about 20% to my heaviest-ever weight in mid-2016. With a lot of the job stress, I had stopped prioritizing exercise without changing my diet and it was starting to show. I saw a nutritionist partway through the year who helped me make some small diet changes, started drinking almost entirely water (I probably drink 1-2 sodas per year, have maybe 12 drinks of alcohol throughout the year, though I did keep my one small glass of juice with breakfast) and really significantly re-prioritizing exercise. Combined with reduced work stress after the layoff, those changes all made a huge difference and I’m now only up about 10% from what I weighed four years ago, which is much more reasonable.

6) Spend no more than in 2015 ($48,000).

Fail! Hah, this goal was a complete fail, with all the life that happened. I’ll go into more detail below.

7) Save 70% of my net income before tuition savings account withdrawals. (This is achievable if I spend no more than $48,000.)

Fail! This goal was also a complete fail, since I spent way more than $48,000. My savings rate, before tuition withdrawals was 47% for the year or 38% after tuition withdrawals.

8) Increase my liquid funds (including my stock index funds outside of retirement accounts and my Series I Savings Bonds, but ignoring the grad school savings accounts) to two years of living expenses. This means adding $40,000 to my general savings account in 2016, some of which will probably be put into Series I Savings Bonds and/or CDs.

Success! At its maximum, I got this figure up to 2x expected annual living expenses, ignoring the mortgage payment, so I’m going to call this goal a success! Of course, I hadn’t planned on getting married and thus being in a tax bracket higher than 10-15% at most while on my planned break (which I will go into more detail on later), so I’m still trying to figure out what my exact plan for covering living expenses is here.

9) Pay down the mortgage with what’s left. I anticipate having about $0 left after all of the other goals in 2016. (I don’t anticipate being able to meet the liquid savings goal in 2016 – my current figures show me coming up about $5,000 short.)

Pass! I’m going to call this goal a pass. I didn’t make any extra mortgage payments, but that is perfectly fine based on how my husband and I plan to handle the condo going forward (which I will talk about soon!)

10) Turn my “taxable assets – debts” figure around so that taxable assets are > debts. (This is my “golden” goal for 2016.)

Success! I did achieve this goal, though not in the way I had originally planned. In fact, I only improved the figure by $8,600 from -$41,700 at the end of 2015 to -$33,100 at the end of 2016. I’ll explain exactly how I mean I achieved this goal later.

Spending

2016 was the most expensive year that I’ve had. I spent a whopping $68,000! For some of these categories, it represents solely my spending and for other categories, it represents my half of the joint spending. I may switch up how I report on this next year as I have two separate budgets for 2017: one for joint spending and one for personal spending.

2016 Spending.png

Surprisingly, if you take out the wedding and the living room remodel (my half was $8,000 combined for those two), then I was within 10% of my original budget. Or if you look at it another way, I spent exactly 50% of my budget for the year in the first half and then another 100% of my budget in the second half, resulting in spending about 150% of my original budget. I didn’t write a Q2 wrap up post because I thought it was so boring being exactly on point with 50% of my savings goals done and 50% of my budget spent. Who knew the second half of the year would turn so exciting…

I spent a pretty tidy sum amount on medical care this year (just under $3,000) and on rebuilding my closet ($7,000). My husband and I spent very little on travel compared to what we usually do ($4,400 for my portion and $8,500 total) this year to compensate for the living room remodel. Transportation was more expensive than usual due to my car commuting, which is thankfully behind me now. Our grocery spending was pretty reasonable for the cost of living in our area, coming in at an average of $450/month.

Some awesome things that this spending saw are:

  1. $16,000 (joint amount) Living room remodel including designer fee (totally worth it!) and painting. We went from worrying we might need more space and should move to loving our place again. We absolutely love our new couch, new furniture arrangement, and wall colors. I’m also really glad we paid a designer because it reduced the process of buying one item at a time and spending ages trying to figure out what it would go with. We’re almost done with the remodel – just waiting on one more piece of furniture to come and then we can hang the gallery wall which is full of travel and wedding photos. I still can’t believe we bought a $5,000 couch, though it is incredibly amazing to sit and lounge on.
  2. $500 Deposit on a reception venue to celebrate our marriage with our friends and family next year!
  3. A trip to Banff for an extended long weekend! Such a gorgeous place and absolutely on our list of places to return to with more time to wander. (That’s the featured photo on this post!)
  4. Our wedding, including our postnuptial agreement and my rings that we ended up splurging on after the wedding.
  5. Grad school tuition! I’m so thankful to not need to rely on the tuition reimbursement program through my former employer in order to keep pursuing my degree, despite the opportunity cost.
  6. $299+tax Bose QuietComfort 20 Acoustic Noise Cancelling Headphones – My husband has the over the ear ones and these are the in-ear ones. They are absolutely amazing for working in a crowded office!
  7. $3.99+tax Stylebook app
  8. $1,300 Improving my desktop computer set up and ergonomics at home
  9. $75+tax A wristlet wallet for my iPhone that is so useful. I had one for my previous phone and I procrastinated for a year with this phone before spending the money to buy a new one and I really shouldn’t have.
  10. $40+tax A new case for my iPhone 6S. I originally bought the silicone case that Apple makes. It does fine at keeping the phone free of scratches, but it was a huge pain to get in and out of my pocket/purse, so I finally replaced it and it was definitely the best money I spent that week.

Savings

2016 Savings.png

Despite having my lowest savings rate since graduating college, I still didn’t do too badly for savings this year. I maxed out my pre-tax and after-tax 401(k) accounts, saw the full employer 401(k) match, made the regular mortgage payments which unlocked a reasonable amount of equity, maxed out my Health Savings Account and got the full employer contribution, maxed out my Roth IRA, and put $1,100 into my general savings account. That all added up to about $55,000, before accounting for taking grad school tuition out of a savings account.

By The Numbers

2016 Net Worth Increase.pngDespite my highest year of spending yet and a relatively low year of income, I saw my second highest net worth increase since college, due mostly to adjusting the condo value up about 17%, which accounts for over half of my net worth increase.

My investments (~30% fixed income, 35% US stocks, 35% international stocks) were up about $16,700 for the year, which was a return of +6.72according to XIRR. My average return since I started investing in stocks back in early 2010 is +5.45%

Thanks to the timing of the layoff, my gross income only dropped 4% in 2016 from 2015. My gross income was 204% of my spending in 2016, so I did spend less than half of my gross income. Of the remaining half, about half went to savings and half went to taxes.

$ to FI vs net worth over time EOY 2016.png

In early 2016, I surpassed the halfway marker to financial independence – my net worth became higher than the remaining amount required to reach financial independence. Unfortunately the year got expensive quickly and I went further away from financial independence, but that trend reversed in the last few months of the year. Hopefully in 2017 the trend will improve again.

I surpassed six figures in my Roth IRA at some point in 2016, though it didn’t stick. I also surpassed one year’s base salary (at my pre-layoff salary) in my pre-tax 401(k). Unfortunately due to the increased spending, my investments are worth the same number of years as they were at the end of 2015, which means that my investments grew by the same rate as my spending (40%). Had my spending not increased, my investments would have gone from 4.20 years to 5.81 years.

4% SWR versus expenses over time EOY 2016.png

I came really close to the 4% SWR on my investments being four figures in 2016! I need my investments to grow by 5% more than where they were at the end of 2016 to hit that figure. It’s possible that I will hit it in 2017, depending on how things go. My portion of the fixed shared expenses is covered with this current figure! That doesn’t leave much in the way of discretionary spending yet, though it is still exciting progress!

Conclusion

I felt really guilty about how expensive the last few months of 2016 were, especially with my then lack of income. One (offline) friend commented that it sucked that life was expensive while I also had a drop in income. Doing this annual review though showed me that 2016 wasn’t all bad and that it’s important to look at the big picture. It showed me that I didn’t really see a drop in income and if you look at household income, we actually had an increase thanks to my husband being well appreciated at his job. If you just looked at my net worth growth, you would have no idea how expensive the year was. If you looked at just my spending without looking at my income, it would look pretty bad. When you consider that this is only my portion of the spending – I’m guessing more than either of our separate base salaries before taxes. Oops!

Here’s to a less spendy 2017!

2015 In Review: Spending

A sidenote before we get into things: I decided to no longer report specific numbers on my charitable donations on this site. I removed those amounts from the Financial Stats page, they’re not in this pie chart below, and I won’t talk about them on my monthly reports going forward either.

According to this spreadsheet, I spent $48,288.04 in 2015. (I say according to this spreadsheet because each spreadsheet’s total seems to vary slightly…)

2015 Spending

In my 2014 year in review, I talked about what I thought my 2015 spending/savings might look like. Let’s check in with that:

1) I will spend $3,035 less on housing with my boyfriend moving in. I don’t know what the property tax bill will look like yet, but I’ve estimated for a 20% increase. There’s also a small special assessment due. I justify not caring about this by how much cheaper owning is than renting (~$14k to own my two bedroom condo last year versus ~$39k to rent a similar place).

We ended up rearranging how we split costs pretty quickly after he moved in and I did not spend $3,035 less on housing – in fact, I spent about $3,300 more thanks to some projects.

2) I am planning to spend less on clothing, but who knows how that’ll actually end up going.

We all know this failed miserably! But that’s perfectly all right. My clothing spending in 2015 was about half of the sum of my clothing spending in 2010-2014.

3) I think I’ll spend about the same on entertainment, dining out, and personal care.

I actually spent about half as much on entertainment ($1,400 versus $2,500), a third of the amount on dining out ($67.92 versus $211.58), and 25% more on personal care ($1,060.82 versus $829.54).

4) We’ve each set up automatic transfers for $200/month to the joint account to cover groceries. I’m reasonably sure this will be sufficient, but it may be more than we need.

Well that was about what we spent on groceries per month for the year, but we switched up our system later on.

5) I’ve estimated to spend about the same in 2015 on work lunches, but I’m going to see how the new job goes, how much the cafeteria costs, and then see if I can reduce this at all.

I seriously reduced this! Woo! I spent $1,817.05 in 2014 and $462.27 in 2015, just under $40/month in 2015. I did pretty well with bringing my lunch many days and occasionally buying it. Food is reasonably cheap here.

6) I estimated in my budget that I’ll spend less on recreation. My new employer will cover a certain amount of fitness related expenses. I haven’t decided whether I’ll count the funds as income or a reduction in spending. If it’s taxable income, I’ll probably count it is a income. That’ll affect what this category looks like this year.

I ended up categorizing the spending as spending and the reimbursements as income since they were taxed and all. I spent a tiny bit more on recreation.

7) I’ve estimated only $500 for shopping compared to 2014’s $3,400.

Hahahaha. I spent $5,266.16 on shopping. This covered: a new laptop, a new desktop computer, a new fancy office chair, a fancy new computer desk, a new iPhone and case, a new Kindle, a speaker for the kitchen, three new purses, a sunglasses case, some kitchen tools, and a new pillow. So lots of things!

8) I estimate spending about $400 more on transportation. Hopefully that’s not the case and car insurance will go down!

I actually spent a lot less! Car insurance went down AND I only paid for six months, not twelve. I also surprisingly spent less on fuel and the commuting costs weren’t too bad.

9) I’ll spend about $500 less on travel.

I actually spent about 2/3 of my 2014 travel spending. A decent chunk of New Zealand was paid for in 2014 and my boyfriend bought our Christmas flights per our expense sharing agreement.

10) Overall, I plan to spend about $9,200 less in 2015 than in 2014: 33% of that is housing, 10% clothing, 13% health, and 31% shopping.

Hah.

Some interesting spending items in 2015 to note:

  • $15.20 unaccounted for cash withdrawals
  • $15.25 books
  • $146.05 cell phone (two SIM cards, one activation fee, and ~3 months of service)
  • $44.22 spent per month on average on food (this includes work lunches and lazy eating out by myself)

How do I think my 2016 spending will be different than in 2015?

  1. I will spend less money on clothing. Other than 2015, I’ve averaged about $2,200/year post-college. I bought the Stylebook app early this month and now I have the game of driving down my cost per wear on items and buying new items is counterproductive to that.
  2. I’ll spend less on shopping – I don’t need to replace all of those things I replaced in 2015 yet.
  3. I’ll probably spend less on travel too.

Those three categories added up to about $16,000 in 2015 or about one third of my expenses, which is a good chunk considering that housing was half. We are planning on possibly getting a new couch in the next few years though and possibly some other living room furniture, though we don’t have a timeline on those yet. The rest of the categories I expect will be pretty similar year over year, so I may end up underspending my estimate for 2016 for the first time in a while…

Readers, how was your 2015 spending?

2015 In Review: Goals, Savings, Net Worth, Investments, and Charts Galore

Remember that time when I made paying off my mortgage my primary goal for 2015? Well, as you can tell, that hasn’t happened.

Also remember when I set out to spend $38,800 in 2015? That didn’t happen either.

2015 was however a pretty full year: I left my job of five years, took two months off unpaid including a month traveling with my boyfriend, applied to grad school, started a new job, got accepted into grad school, and started grad school. Most of these things I knew about at the beginning of the year, though I didn’t know if I’d get into grad school. The goals I set on the blog assumed I wouldn’t since I didn’t want to jinx it and tell you guys I’d applied. That fact clearly changed my 2015 a lot.

Goals review

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

Success! This has definitely been good :) It was more of an adjustment than either of us anticipated, but mostly it’s pretty awesome!

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.

Success! I made my 2015 Backdoor Roth IRA contribution in January, maxed out my pre-tax 401(k) with $18,000, and maxed out my after-tax 401(k). As I predicted, this accounted for about 2/3 of my savings in 2015.

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

Success! This is definitely going okay. I think I’ll be here another year at the very least.

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

This has not gone very well. And once I switched to an iPhone, I couldn’t figure out to track “active time” per day anymore without having an Apple Watch. I think I probably only got down to around 25-30 minutes on average. This was definitely a more sedentary year than usual for me.

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

Fail! This one fell pretty flat. It became really hard with grad school and my priorities which I did stay on top of fell to: sleep, eat, work, and grad school.

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

Success! I started out doing this and I ended up contributing the maximum (IRS maximum of $3,350 – my employer’s contribution = my contribution). So success!

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

Success! I applied to grad school and got in! Woo! And did quite well on my first course :)

8) Spend under $40,000.

Hah. Fail. I came in somewhere around $48,000 of spending.

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!)

Pass! It became difficult to track how much I saved of my net monthly income separate from my bonus income with the compensation structure at my new job. Overall, I saved 70% of my net income before grad school tuition withdrawals were accounted for or 61% after. This should even out in future years because a large portion of the withdrawals will be reimbursed, though there will be some income taxes to be paid.

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

Success! I mostly did this. One month I had too much go to my pre-tax 401(k) while I was frontloading it and missed out on a few dollars of ESPP contributions. I sold all of my ESPP purchases as soon as I could and then used the proceeds to fulfill other savings goals.

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

I made zero extra mortgage payments in 2015. Its natural amortization lowered the mortgage balance to less than my annual base salary, which is quite exciting!

Even if I make no extra mortgage payments, the mortgage will pay itself down by about $9,000 in 2015. I’m becoming much less concerned about the mortgage with the smaller balance and the likelihood of the interest rate jumping up to 7.5% when it resets seeming less and less likely. Right now, if it were to reset today, it would likely reset to 3.25%, which would actually lower my required payment by ~$460/month and increase the January 2015 interest cost by about $89 or about 30%. [note: updated this paragraph with the numbers as of mid-December 2015.]

Overall, I’m anticipating a net worth increase of about $100,000 to $120,000 for the year to increase my net worth to $630,000 to $650,000. I expect my gross income to be somewhere between $140,000 and $150,000 in 2015.

My gross income fell smack in the middle of that range, so that prediction was good. My net worth prediction fell pretty flat though:

  1. I had calculated that my investments would go up by about 8%, for a return of about $13,000. Instead they fell, meaning that they ended up about $22,000 lower than I had expected.
  2. I had planned on adjusting my condo value by 3% to account for inflation. I decided not to do that since it’s hard to know what it’s worth exactly. I may end up adjusting it in 2016.
  3. I paid out of pocket for grad school and haven’t gotten all of the funds back from my employer.
  4. The above three points account for $45,000. They would have gotten me from my actual end of year net worth to the high end of my anticipated range, a $115,000 increase.

2015 by the numbers

  1. My gross W-2 income was about $150,000, a drop of about 12% from 2014 after a similar 14% drop from 2013->2014.
  2. My gross income was about 301% of my spending for the year (my average since college is 317%).
  3. I paid down the mortgage by $8,900 from $143,000 to $134,100. That’s about 3% of the original mortgage balance, putting it at about 53.1% paid off, which isn’t bad for only having owned the place for 3.5 years.
  4. Increased my net worth by $69,100 over the course of the year to $600,700.
  5. I spent about $49,687, a 3.4% increase over 2014’s spending.
  6. I saved about $74,400, for an overall savings rate of about 64% of my net income.
  7. My investments (~30% fixed income, 35% US stocks, 35% international stocks) were down about $5,500 for the year, which was a return of -2.56% according to XIRR.
  8. Increased my assets and paid down my mortgage such that my assets were I to liquidate all of my retirement accounts are worth more than the mortgage and I am only about $41,600 in already liquid funds away from being able to pay off the mortgage, a $29,000 improvement from 2014.
  9. Decreased the amount needed to save to be FI by $28,000 to $783,300.
  10. Increased the years of savings in retirement accounts from 2.89 years to 3.66 years, an increase of 0.77 years.
  11. Buying my place is now about $8,800 cheaper than continuing to rent would have been, ignoring the increase in value.

2015 in charts

2015 Savings Distribution

My savings was far more fragmented than in 2014. Contributions were split between: pre-tax 401(k), after-tax 401(k), tuition savings, Employee Stock Purchase Plan, regular mortgage payment principal, my 2015 Backdoor Roth IRA, and my Health Savings Account. I transferred a decent chunk from my general savings account to other goals such as my 2015 Backdoor Roth IRA, spending while unemployed or frontloading my retirement accounts, and my tuition savings account. I sold all of my ESPP purchases as soon as I could and used the funds to top up my general and tuition savings accounts.

December 2015 Net Worth Graph

I had my lowest net worth increase for the year since 2010 at $69,100, settling in at $600,700 at the end of the year.

Net Worth Since Dec09

To put things into perspective, above is a chart of my net worth growth since December 2009. I’ve increased it by about 20x in the last six years!

I really like the “Where in the world could I retire today?” game that Planting our Pennies have been playing. At the end of 2014 if I were to sell my condo and retire, I could have retired in Sofia, Bulgaria. I could now retire in Podgorica, Montenegro! I’m guessing that by some time in 2016, I should be able to retire in the lowest cost of living city in the United States or Canada on the Expatisan listing. This year, my expenses were about 8.3% of my end of year net worth (down 0.7 percentage points from last year).

4% SWR versus expenses over time

The 4% SWR on my investments is no longer near zero – I’ve been making some really great progress in this area in the last few years. I’m actually anticipating getting this figure up to $900/month by mid-2016, which is starting to become a pretty decent figure. With that, the vast majority of my fixed expenses will be covered (other than my mortgage) and it’s on to getting the discretionary expenses covered, which is pretty cool!

$ to FI vs net worth over time

I made yet another chart recently which shows the “$ to FI” figure vs my net worth over time. It’s pretty cool to see them converging, which I expect to happen sometime in 2016. It’s cool to see that even though I feel like this number is a huge moving target, there is still progress being made. This chart also shows that at current spending levels, I’m probably about halfway to FI, which is pretty awesome.

2015 Mortgage Paydown

I didn’t make any extra mortgage payments in 2015. The regular amortization still moved things along relatively well though thanks to the extra payments I’ve already made. If I had a normal 30 year mortgage and not a 5/1 ARM, then I would have 12.75 years left on the mortgage at this rate, which is pretty good considering that I bought my condo 3.5 years ago!

2015 Investments

My investments had a lot more ups and downs in 2015 than ever before. My employer and I contributed just over $50,000, which is double the 2014 figure. My 401(k) was above $100,000 for most of 2015 and my Roth IRA thanks to the after-tax 401(k) contributions is now above $60,000 – it almost doubled this year. I also saw just over $4,000 in dividends across all of my accounts and I’m estimating to get close to $5,000 in 2016. My largest one month gain was $9,132 and my largest one month loss was $9,988.

As my investments have grown, the monthly gain/loss has increased significantly as you can see with this chart:

Monthly Investment GainLoss

Here’s to a wealthful 2016!

2014 In Review: Spending

Now, let’s talk expenses. I spent $48,018 when everything was tallied up this year. I gave a small gift to my sibling to help out with something and I don’t count that in my spending. It certainly puts things into perspective the fact that I can’t even tell by looking at my net worth which month I did that.

2014 Spending

This pie chart looks pretty similar to 2013’s version, except that travel is a much bigger chunk of the pie. In my 2013 year in review, I talked about what I thought my 2014 spending/savings might look like. Let’s check in with that:

1) My boyfriend and I are working on a system to split some expenses more so than randomly because we’re working on incurring more shared expenses than we had this year. For now, the plan is to make it easy to transfer money between each other’s accounts since we use the same credit union for our primary checking accounts.

SUCCESS! We set up the transfers between each other’s accounts and near the end of the year, we set up a joint account that we’ve slowly started using. For now, we’re just using it for groceries. We’ve also talked about getting a joint credit card at some point.

2) I plan to contribute more to charity in 2014 than I did in 2013. The plan involves getting my donations up to 1% of my gross income, including my bonuses. I have a few annual contributions set up and will continue to donate to the random causes that my friends participate in. When my bonuses post, I will transfer 1% of the gross amount to my checking account, add that amount to the donations budget and then figure out where to go from there.

SUCCESS! I’m calling this a success because even though I only donated $30 more in 2014 than I did in 2013, I set aside the 1% of my gross income from every paycheck and bonus and the reason why it’s under is because I’m going to make a big donation in January 2015 and I wanted to have the money set aside for that. Near the end of the year, I moved the balance of this budget item to a savings account at my credit union in an attempt to separate it from my normal spending plan.

3) Overall insurance costs should be about $1,000 cheaper in 2014 because I had been paying monthly through July 2013 and then paid for a full year in August.

SUCCESS! In 2013, I spent $2,670.67 on insurance (auto, condo, and umbrella). I spent ~$1,800 on the same policies in 2014, a savings of ~$900. The new company raised my auto policy rate in 2014 by a decent chunk that I will probably try to shop around again in 2015.

4) I think that I will spend less on electricity. I spent about $700 in 2013. I’m hopeful that I can get that figure down to around $440 for the year, but we will see how things play out!

PASS! The average in 2014 was 0.33 kWh/day more than in 2013. I hadn’t planned on my boyfriend moving in this year when I set the goal to reduce electricity costs. All things considered, a 0.33 kWh/day increase for a second person isn’t too bad. I’m hopeful that with some of our new energy saving light bulbs, we should not increase our electricity consumption in 2015.

5) HOA dues went up a small amount for 2014. I have been budgeting for property taxes to go up about 3% per year, but it looks like my property value went up by much more than that for 2014 and so I’m guessing that they will go up by closer to 20%, putting those two items at about an increase of $800 in 2014. I don’t have much control over those items without moving though.

These two items ended up going up by about $700 in 2014. It looks like my property taxes may go up an additional 20% in 2015, which I’ve budgeted for since they sent me a notice with my new assessment value for the 2015 tax year a few months ago.

6) I think that I will spend less on my household goods and toiletries items because there were a lot of cleaning products and different items that I stocked up on that should last for a long time – I shouldn’t have to re-buy very many of those items.

SUCCESS! This was accurate on household goods. I spent $342.23 in 2013 and only $197.10 in 2014, a savings of about $145.13. I spent $347.89 on toiletries in 2013 and only an additional $24.87 in 2014 of $399.76. That’s not bad.

7) I will spend around $400 more on recreation in 2014.

SUCCESS! I spent $882.01 on recreation in 2013 and only an additional $97.43 in 2014 to $979.44. Looks like I underspent on recreation! This is definitely true – I didn’t exercise nearly enough in 2014.

8) I will probably spend around $1,500 less on shopping in 2014- fewer condo projects.

FAIL! I spent $3,538.94 on shopping in 2013 and $3,383.68 in 2014. So yes, I spent less, but not $1,500 less like I had predicted. Where did all of the shopping money go this year?

  • $1,666.59 painting and second half of closet install
  • $411.38 small furnishings: picture frames, a pizza stone, a nice knife and some other kitchen things, new sheets, artwork, a temporary desk, and some wood swatches
  • $354.37 a new camera
  • $301.59 small electronics: batteries, a new router, a speaker
  • $267.54 fixing my laptop (includes shipping costs)
  • $141.07 plants and a container
  • $123.69 three hats and a scarf
  • $108.13 new thermostats
  • $20.22 a case for my cell phone

9) I will spend a lot less on taxis and nothing on tolls.

PASS! I spent $52.83 on tolls in 2013 and only $30.00 in 2014. I spent $259.25 on taxis in 2013 and only $63.85 in 2014. Since I own our one car and pay for that, my boyfriend tends to pay for taxis when we’re going somewhere together.

10) I will increase my overall savings rate to 85%.

FAIL! Hah! This would have required my income to be in the higher end of my estimate and to have spent much less.

11) My current forecast is about $38,500 in spending in 2014, which would be about a $7,000 reduction from 2013.

FAIL! Hah! I spent $48,000 or about 25% more than my forecast. Oops! It was a good year though :)

Comparing 2014 to 2013:

  • I spent $619 more on housing (internet, condo insurance, electricity, HOA dues, household goods, mortgage loan fees, property taxes, required mortgage payments).
  • I spent basically the same amount on clothing/shoes (~$1,900) and personal care (~$800 on hair cuts, eyebrow waxes, toiletries, and make-up).
  • I spent $697 less on entertainment in 2014 than in 2013, for a total 2014 cost of ~$2,500.
  • I spent $109 less on eating out by myself in 2014 than in 2013 (almost all of my eating out these days is with my boyfriend or with friends rather than by myself).
  • I spent $354 more on groceries, which was to be expected since I’m eating out a lot less and we also cook meat a lot more at home than I was on my own. This amount is less than the decrease in entertainment and eating out though and still under $200/month so I think this is fine.
  • I spent $863 more on work lunches since I didn’t take my lunch very much in 2014, for a total 2014 cost of ~$1,800.
  • I spent $637 more on presents.
  • I spent $671 less on health (medical, dental, and vision) than in 2013. I estimate I’ll spend even less in 2015 since my premiums are lower with the new job.
  • I spent $155 less on shopping.
  • I spent $1,448 less on transportation.
  • I spent $3,082 more on travel – a whopping $7,558.45 on travel in 2014!
  • Overall, I spent $2,736 more in 2014 than in 2013.

Where would I say my $9,500 over my spending goal went?

  • $3,558 to travel (a $900 bachelorette party for a friend and our upcoming month-long trip to New Zealand)
  • $1,344 in unplanned shopping spending
  • $907 of unplanned medical/dental/vision spending (partially an increase in premiums)
  • $1,094 in unplanned clothing spending
  • $1,026 in unplanned food spending
  • $229 in unplanned personal care spending
  • $1,338 in other miscellaneous unplanned spending that I’m too lazy to research since my budgeting isn’t really that thorough

Basically, I spent the exact same as I did in 2013, plus I spent an extra $3,000 on travel. Lifestyle deflation is apparently really hard and I think I should try to make fewer sweeping lifestyle deflation changes going forward. I was too optimistic for my spending in 2014! I recognize that $48,000 is a large sum of money to support just one person. I try to instead remind myself of the fact that I saved 68% of my net income in 2014 and to evaluate whether I enjoyed the purchases I made throughout the year and so long as I did, then my spending is fine. I also don’t want to regret not going to a friend’s wedding because I thought the price was too high to go.

How do I think my spending in 2015 will be different than 2014?

  1. I will spend $3,035 less on housing with my boyfriend moving in. I don’t know what the property tax bill will look like yet, but I’ve estimated for a 20% increase. There’s also a small special assessment due. I justify not caring about this by how much cheaper owning is than renting (~$14k to own my two bedroom condo last year versus ~$39k to rent a similar place).
  2. I am planning to spend less on clothing, but who knows how that’ll actually end up going.
  3. I think I’ll spend about the same on entertainment, dining out, and personal care.
  4. We’ve each set up automatic transfers for $200/month to the joint account to cover groceries. I’m reasonably sure this will be sufficient, but it may be more than we need.
  5. I’ve estimated to spend about the same in 2015 on work lunches, but I’m going to see how the new job goes, how much the cafeteria costs, and then see if I can reduce this at all.
  6. I estimated in my budget that I’ll spend less on recreation. My new employer will cover a certain amount of fitness related expenses. I haven’t decided whether I’ll count the funds as income or a reduction in spending. If it’s taxable income, I’ll probably count it is a income. That’ll affect what this category looks like this year.
  7. I’ve estimated only $500 for shopping compared to 2014’s $3,400.
  8. I estimate spending about $400 more on transportation. Hopefully that’s not the case and car insurance will go down!
  9. I’ll spend about $500 less on travel.
  10. Overall, I plan to spend about $9,200 less in 2015 than in 2014: 33% of that is housing, 10% clothing, 13% health, and 31% shopping.

Readers, how was your 2014 spending?

2014 In Review: Goals, Savings, Net Worth, Investments, and Mortgage

Whew! 2014 was a very full year. A lot happened that I didn’t plan on at the beginning of the year: my boyfriend moving in, job hunting, sharing Christmas, finding a new job, about to quit my job, and a big trip happening in early 2015.

This post has been delayed since I finally left my job. I now have a bit of a break until I start the new job next month. I’m really curious as to what will happen with my net worth in January and February!

Goals review

1) My first priority in 2014 is to continue to develop my relationship with my boyfriend. Things are going great and I want to continue to prioritize that.

SUCCESS! If anyone remembers a haphazardly mentioned Operation Penguin from a monthly goal post this year, that was my boyfriend moving in. He’s moved in officially now, which is awesome. We have a ton of physical stuff to sort through from merging households still, but we’re in one place! We’ve also planned a big trip for early 2015, went on three trips in 2014, attended two weddings, and shared Christmas with my family this year.

2) Rock out at my new job. Without the high-paying job I have, I wouldn’t be able to accomplish any of my financial goals.

FAIL! I’m going to give this one a big red fail. The new job went great for oh, the first five months and then it just fell flat on its face. I couldn’t have predicted how this would go and then I ended up job hunting partway through the year, which was incredibly stressful. I’m really excited about the new job and it’ll be such a change that I’m feeling much more confident about it!

3) Max out all tax-advantaged accounts available to me. This means $17,500 to my 401(k), $5,500 to the Roth IRA on January 2nd from savings and $5,500 to a savings account to fund the 2015 Roth IRA.

SUCCESS! Woo! I accomplished this one 100%. I maxed out my 401(k) in July, thinking I was going to quit my job. I did make my full $5,500 Roth IRA contribution in January 2014. Mentally, $5,500 of my savings account is for my 2015 Roth IRA. It’s possible that my income might drop to the point that I can contribute directly in 2015, so I may end up waiting a bit to do the Roth IRA contribution. I haven’t fully decided yet. I may just wait until February. Who am I kidding, I’ll probably just do it January 2nd like I did last year.

4) Pay down the mortgage. I would like to get it under $91,284.28. That should keep me on track to paying it off by the end of 2015.

SUCCESS! This was a super vague goal and by its vagueness, I succeeded at it! I did pay down the mortgage, yes I did. I did not get it anywhere near $91,284.28, hah! It is currently sitting at $143,000, which represents it being half paid off. My savings account has about $20,000 extra in it, which will possibly go to the mortgage once I start the new job, so that would have put the mortgage at $123,000. If we weren’t taking this unplanned awesome trip, it would be down another $6,000 to $117,000. My bonuses were less than anticipated, accounting for another $7,000 in a higher mortgage balance, so $110,000 in the ideal scenario. That’s still ~$20,000 above my “goal”, but I was expecting to hit closer to $110,000 anyway.

5) Spend less than $39,000 for the year. If I can accomplish this, it would be my cheapest year since graduating from college! This would map out to 4.4 years of expenses saved up, which is about 17.6% of the way to FI if you count it as having 25x annual expenses saved up.

FAIL! Flat out fail. When all was said and done, I spent $48,000 this year, $9,000 or 23% above my spending goal. I’ll go into this in more detail in another post, but I definitely didn’t plan on all of this spending.

6) Overall, I’m anticipating a net worth increase of about $115,000 for the year to increase my net worth to about $465,000. (For reference, I expect my gross income in 2014 to be between $160,000 and $190,000.)

PASS! If you take out the increase in my condo’s value, my net worth went up by about $93,700 this year, $21,300 short of the above guess. My gross income ended up being just under $170,000, in the lower end of the range I listed above, which contributed to most of the lower net worth increase. The other contributing factor was of course the unexpected spending.

2014 by the numbers

  1. My gross W-2 income was just under $170,000, a drop of about $30,000 from 2013.
  2. I churned three credit cards, which gave me $1,940.42 in credit card rewards including the regular 2-5% cash back and taking out the $89 Barclaycard annual fee.
  3. My gross income was about 353% of my spending for the year (my average since college is 317%).
  4. I paid down the mortgage from $187,552.40 to $143,000, a difference of just under $45,000. That’s about 16% of the original mortgage balance, putting it at 50% paid off, and giving me just over 60% in equity.
  5. Adjusted the value of my condo in my net worth by about 26% based on how similar units are selling around me.
  6. Increased my net worth by $185,700 over the course of the year to $531,600.
  7. I spent about $48,000, an increase of about $3,270 from last year.
  8. I saved about $86,700, for an overall savings rate of about 68% and about 54% of my regular income.
  9. My investments were up about $5,200 for the year, which was a return of 3.42% according to XIRR.
  10. Increased my assets and paid down my mortgage such that my assets were I to liquidate all of my retirement accounts are worth more than the mortgage and I am only about $70,600 in already liquid funds away from being able to pay off the mortgage, a $64,600 improvement from 2013.
  11. Decreased the amount needed to save to be FI by $12,600 to $811,300, though I possibly added 2.56 years to my FI date? (Clearly this is still very much a moving target.)
  12. Buying my place is now only $2,307.96 more expensive than continuing to rent would have been, ignoring the increase in value of my condo. It will break even assuming purchase price in February 2015.

2014 in charts

2014 Savings Distribution

My savings were split this year mostly between my Traditional 401(k), extra mortgage payments, and some cash savings in anticipation of changing jobs. Most of that cash savings will go to the mortgage in 2015.

December 2014 Net Worth Graph

I also had my highest net worth increase yet of $185,700, settling in at $531,600 at the end of the year. Things are moving along well! I really like the “Where in the world could I retire today?” game that Planting our Pennies have been playing. If I were to sell my condo and retire today, I could retire in Sofia, Bulgaria. I’m no longer stuck in India, which is pretty cool. I’m guessing that by some time in 2016, I should be able to retire in the lowest cost of living city in the United States or Canada on the Expatisan listing. I also have about 11 years of expenses saved at 2014 spending levels if you include my condo value or about 3.7 if you take the liquidated value of everything except the condo. This year, my expenses were about 9% of my end of year net worth. I’ve been noticing that the more money I have saved, the less motivated I am at work when I don’t like my job since that job looks more and more unnecessary as time goes on and my nest egg accumulates.

December 2014 Mortgage Balance

I finally paid the mortgage down to the 50% marker! I’m pretty excited for that one. I didn’t make nearly as much in extra payments as I did in 2013 (see $30,000 gross income drop). But I did manage to lower my monthly interest cost from $400 in December 2013 to $307 in December 2014 by paying down about $45,000 of the mortgage.

2014 Investments

My investments had a lot more ups and downs in 2014 than ever before. My employer and I contributed just under $25,000. My 401(k) was over $100,000 at some point this year and my Roth IRA is definitely over $30,000 now. I also saw just over $3,000 in dividends across all of my accounts and I’m estimating to get close to $4,000 in 2015. My largest one month gain was $5,235 and my largest one month loss was $4,373.

2013 In Review

I have to say that this is one of my favorite posts for the year! It’s really motivating to take a look back and see how far you’ve come in a year since it’s a long enough period of time that you can accomplish a ton!

  1. My gross W-2 income was just under $200,000 for the year. (Just four years ago, it was just under $100,000, so this is an amazing improvement!)
  2. I have some cashback credit cards with useable limits (i.e. > $1,000). I earned over $200 in cashback, which is more than double last year’s $105 number.
  3. I paid the mortgage down from $259,600 to $187,552.40, a difference of just over $72,000. That is about 25% of the original mortgage balance, giving me about 48% in equity, assuming the purchase price.
  4. Increased my net worth by almost $30,000 in one month.
  5. Increased my net worth by $134,400 over the course of the year to $345,070.
  6. Decreased my expenses by almost $6,000 from 2012.
  7. My net income exceeded my expenses by over $100,000 this year. Now that is financial freedom!
  8. I saved about $113,000 this year, for an overall savings rate of about 75% and about 60% of my regular income.
  9. I now have over $100,000 in my retirement accounts (401(k) and Roth IRA), with that split to about $75,000 in the 401(k) and $25,000 in the Roth IRA.
  10. My investments were up about $17,000 for the year, which is a pretty sizeable increase considering that you can only put $17,500 into a 401(k) in a year.

About 65% of my savings in 2013 went to paying down the mortgage. In 2014, I’m expecting that number to be closer to 80%.

2013 Savings Distribution

My net worth took off by leaps and bounds again!

December 2013 Net Worth Graph

I made some really awesome progress with the mortgage. I’ve now paid down about 1/3 of the original balance. The balance is most definitely under $200,000 and I don’t feel nearly as worried about it as I did last year. That could also be because my total monetary assets is now just over $12,000 from the mortgage balance.

2013 Mortgage Paydown

I also contributed a fair amount to my investments in 2013. You can see the compounding growth starting to take off with the slowly increasing separation between the “Contributions” and “Total Value” lines. My investments returned approximately 15% this year, in addition to me and my employer contributing just over $43,000.

2013 Investments Growth

Last, but not least, I reduced my expenses by almost $6,000 from 2012. That’s a pretty good chunk! I spent $44,807.75 when all was said and done. That number still seems high to me, but I don’t see nearly as much room for improvement with it as I did with last year’s number. I do think that I would feel better about my spending if I got it under $40,000 for the year, including the mortgage or about $28,000 excluding the mortgage, which would require a reduction of about $5-6,000 in spending next year.

2013 Spending Pie Chart

Some of the primary differences from last year:

  • I spent $5,555.23 less on housing.
  • I spent $1,369.02 less on clothing.
  • I spent $649.45 more on entertainment.
  • I did my own income tax return, for a savings of $435.85.
  • I spent $302.85 less on eating out by myself and $1,109.15 less on work lunches. (Under $1,000 for the year on work lunches!)
  • I spent $700 more on health.
  • I spent $1,578.33 less on recreation. This is mostly because I paid for an annual gym membership in October 2012 after I’d already paid for monthly memberships throughout most of the year and in 2013, I didn’t pay for sport #1 because of my injury.
  • I spent $2,737.64 more on shopping.
  • I spent $630.35 less on transportation.

What do I expect to change in 2014?

  1. My boyfriend and I are working on a system to split some expenses more so than randomly because we’re working on incurring more shared expenses than we had this year. For now, the plan is to make it easy to transfer money between each other’s accounts since we use the same credit union for our primary checking accounts.
  2. I plan to contribute more to charity in 2014 than I did in 2013. The plan involves getting my donations up to 1% of my gross income, including my bonuses. I have a few annual contributions set up and will continue to donate to the random causes that my friends participate in. When my bonuses post, I will transfer 1% of the gross amount to my checking account, add that amount to the donations budget and then figure out where to go from there.
  3. Overall insurance costs should be about $1,000 cheaper in 2014 because I had been paying monthly through July 2013 and then paid for a full year in August.
  4. I think that I will spend less on electricity. I spent about $700 in 2013. I’m hopeful that I can get that figure down to around $440 for the year, but we will see how things play out!
  5. HOA dues went up a small amount for 2014. I have been budgeting for property taxes to go up about 3% per year, but it looks like my property value went up by much more than that for 2014 and so I’m guessing that they will go up by closer to 20%, putting those two items at about an increase of $800 in 2014. I don’t have much control over those items without moving though.
  6. I think that I will spend less on my household goods and toiletries items because there were a lot of cleaning products and different items that I stocked up on that should last for a long time – I shouldn’t have to re-buy very many of those items.
  7. I will spend around $400 more on recreation in 2014.
  8. I will probably spend around $1,500 less on shopping in 2014- fewer condo projects.
  9. I will spend a lot less on taxis and nothing on tolls.
  10. I will increase my overall savings rate to 85%.

My current forecast is about $38,500 in spending in 2014, which would be about a $7,000 reduction from 2013.

Readers, how was your 2013? What are you looking to change in 2014?

2012 In Review

Overall, 2012 was a great year financially! There are some things I wish I did differently, but then when I look at the big picture, it really makes me question my love for details.

  1. Improved my down payment fund to over $70,000 and total savings to over $100,000 before buying a condo.
  2. Closed on a condo in the mid 300’s with a 20% down payment.
  3. Made almost $30,000 in mortgage pre-payments in the last five months of the year, paying down almost 10% of the original mortgage balance, and giving me over 25% in equity.
  4. Refinanced my mortgage, lowering the rate half a percentage point from 3% to 2.5%.
  5. Maxed out my 401(k) for the second year in a row!
  6. Increased my net worth by over 50%.
  7. Bought my first (and hopefully not my last) Admiral Shares fund.
  8. Increased my net worth by almost $20k in one month.
  9. Hit the $200,000 net worth marker. (NTF was right – the first $100,000 was definitely the hardest.)
  10. My net income hit the six figure range for the first time! (Last year, my gross surpassed six figures.)
  11. Doubled the amount I have invested to over $70,000.

Now for some visual proof of the good stuff!

My net worth took off by leaps and bounds in 2012, exceeding my original predictions by $30,000! I finished the year off at $211,300.

December 2012 Net Worth Graph

My investments doubling off really helped with this. They saw a rate of return of about 11.2%! Maxing out my 401(k) was a huge help as well, of course.

2012 Investments Growth

Paying down my mortgage wasn’t a bad chunk either, though it still seems incredibly huge. It’s really difficult for me to fathom exactly what having over $200,000 in debt means. Even with my somewhat-aggressive payoff schedule, it still feels like a huge mortgage. No matter how many times I forecast how much I can reduce my balance by the end of 2013, it still seems huge. I’m not sure what I can do to make me feel like it’s less huge other than paying it off. There is definitely a part of me that wonders if it would feel more manageable if it was under $200,000 or some other number. I think it definitely would under $80,000 since that’s the amount my net worth increased by in 2012. I think it probably would under $100,000 too. I’ve just…never had debt before in my life and I’m not a huge fan of it. I don’t want to admit how many times I log into the online servicing website for my new loan wondering if maybe it’s gone down a bit. At least I finally figured out how to make extra principal payments outside of the regular payments.

2012 Mortgage Paydown

Now for the bad…my expenses were really high in 2012. As in, I spent about $50,000. As far as I’m concerned, that’s an obscene amount for a single person, no matter what the cost-of-living is in my city or what my income is or how much I saved. I think that some of the spending wasn’t done very consciously due to the stress of moving, so that’s definitely something I’m going to try to work on in 2013. Before making every purchase, I’m going to try to remember to ask myself a few questions:

  1. Do I need an item of this type?
  2. Do I already have an item of this type at home?
  3. Is the cost of this item worth it to me?
  4. Does this item fit well?
  5. Am I sure this item fits well?

I’m also going to record every purchase manually. I want to kick off some of the fat in my spending from last year. It’s really hard though to think about a $15 purchase when it represents such a small portion of my overall income or when I look at the net worth and savings graphs above, but that’s exactly what I need to keep doing to close the gap on my mortgage debt and my assets. I need to try to think my income is smaller than it is. I’ve adjusted my direct deposit so that my monthly budget, without my mortgage payment, goes into my regular checking account and the rest of my paycheck is siphoned off into a savings account to put into savings, pay down the mortgage, or invest. I think that should help to not just adjust the budget every month to account for overages, but I guess we will see how the year plays out.

2012 SpendingThe main categories here that I can control are:

1) Food

2) Clothing (yeaaaaaaah… I really need to ask the above questions.)

3) Financials: I can do my own income tax return.

4) Internet bill – I can ask for new promotions every few months when mine expires, but I’m really bad at remembering. (This was a good reminder to go do that, but live chat is soooo slow!)

5) Electricity: I can switch my lights to the CFL ones that use less electricity as they wear out and actually program my programmable thermostats.

Readers, what did your 2012 look like?