Spend Report – August 2018

Spending Report August 2018

This entire year has been rough when it comes to spending. There has just been a spend bug in my body the entire year. A lot of it is stuff I actually use – or services that make my life better. But as I want to FI, I need to find the areas that spark joy and truly do make my life better for the expense. One of these things has been fake lashes. I love them, but fuck they’re expensive. I go to a great woman, and I technically need a fill next week, but I honestly don’t know if I’m going to go. I should, but it’s so, so, so incredibly expensive. Ugh. And I’ve been into eye makeup more, and the lashes do kind of get in the way…¬† I probably won’t go.

Anyways, what you came here for:

My August Spend Report

A Brief Note on My Expenses: I live with my boyfriend who charges me $550 in rent for rent/utilities/groceries. Recently, I’ve been into credit card churning and have been paying for groceries, Netflix, and Hulu rather than giving him $550 a month. I reconcile this monthly and carry forward any remaining negative balance. Some groceries I do pay for myself and don’t bill him (like if it’s part of a Target run).

I break my categories into Category1 and Category2, Category2 is a sub-category of Category1. I try to get as detailed as possible in my Excel budgeting model. If I go to Target, I break out every item. If I go to the grocery store and only buy groceries- I lump it all together, but if I buy household items, they get categorized accordingly.

Below is my August 2018 Spending, This is a Pivot Table in Excel. I’ve purposefully broken out Category2 for Certain Categories

August 2018

In Review

This was a heavy spending month. I spent more than I have left over after I invest and save cash. $3,064 is definitely a lot of spend. Thankfully, most of that increase were due to unforeseen expenses (or foreseen, since I did have savings for them.

A few specifics:

  • Annual There were a lot of gifts this month!
    • My boyfriend’s birthday is next month. I bought him a very expensive, very nice kitchen knife.
    • My mom needed a new purse so I bought her one.
    • Our friend’s baby turned 1!
  • Personal Care I spend a lot of money on myself. Mainly on beauty.
    • High End Make Up stands out, Sephora had a 20% off sale so I got the < a href=”https://amzn.to/2LLRVLk”&gt; Tatcha Silk Canvas Primer</a> . I also made a stop at Ulta because I needed more eyebrow pencils.
    • Skin Care Stands out as well. Turns out I’m a sucker for everything Drunk Elephant. But in reality, I needed to refill my Vitamin C and buy a full sized Glycolic Acid . I had the mini, it was time to upgrade!
    • I also decided to purchase a meal plan from the fitness trainer I’ve been working with.
  • Transportation Car repairs
    • This month I needed my oil changed. It also came with $800 in car repairs. A cracked radiator, something wrong with the gas fumes leaving the car (I reported it). It adds up. But I love my mechanic! and the 2003 Hyundai Sonata chugs along.
    • This also came with ~$30 in Uber rides since I didn’t have a car for 3 days.
  • <strong> Household</strong> New furniture!
    • Although I’m not paying for it, my boyfriend bought a new coffee table and rug this month. We’re adulting pretty hard and this is definitely an abnormal expense.
  • <strong> Business</strong> Buying Domains and Ads
    • I started my venture into earning money online! Read that post here (if no link, it isn’t written yet ūüôā )

<h4> All of the Unusual Expenses added up to 40% of my monthly spend </h4>

August 2018 Unusual

 

<h3> Lessons and Spend for Next Month </h3>

September should calm down a little bit. Maybe. I’m anticipating getting my hair done, which will be anywhere from $200 – $600, depending on if I choose to get extensions or not. I’ve always wanted to try them and can fit them into my budget. I may or may not get lashes (eeek, what to do). I also plan on throwing a huuuge 25th Halloween themed birthday party. So shopping for that will definitely add up as well.

I should have fewer business expenses, although I plan to build up my Poshmark and upgrade this Website to WordPress business, which is another $200.

I have a feeling the rest of the year is going to be expensive. But as long as I keep contributing to my Brokerage, Roth, and Cash savings without skipping a deposit, I’ll be okay.

 

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I’m Holding on to Too Much Cash – Will I Regret it?

Too Much Cash

 

I’ve reached the point with my finances where I have options. While I can’t have everything, I can have anything if I set my mind to it. And while I lean to be more conservative with my spending habits, I do love nice things. I always have. Even while I was growing up in a house-poor household with maxed out credit cards, I wanted a Louis Vuitton. Now, I had no idea how money worked, and the important difference between saving and investing.

Where My Savings/Investments Go

Currently, I contribute $1,211/ every two weeks (or 26 times a year) to my brokerage/Roth and $500 to my HYSA. Meaning every paycheck I’m saving almost 30% as cash. This doesn’t include money I fully intend to spend, like for the holidays, my cat, or a vacation.

Right now, cash is sitting at 21% of my NW. With my current rate of contribution, cash will ultimately reach 24.4% of my NW before decreasing- assuming I don’t spend any of it.

But that’s just it, I do plan on spending this money. Just not at Sephora. hah.

Big Life Events

I call this my “Big Life Events” Fund. The general rule of thumb is if an event is >5 years away, don’t put it in the stock market. And, while I don’t plan on buying a house in less than 5 years, I do if the market retracts. And if the market goes down and my savings for a house is in the market, well, there goes my savings until the market recovers.

I want to be prepared for if/when the market takes a nose dive.

I also want to be prepared for:

  • An Emergency (duh, some of this money is my emergency fund)
  • My annual max out of pocket
  • A new-to-me car in ~2 years
  • A potential down payment on a house
  • Replacing my laptop (even though I’m kind of saving elsewhere)
  • A pet emergency
  • I have really bad teeth, over my life I’ll need ~$40k in dental work
  • A Loss of job
  • Taking time off of work if I burn out
  • etc.

For me, there is no Plan B if I lose my job. There is no safety net other than the one I create to catch me if I fall.¬† I was very poor once upon a time, but I won’t let it happen again.

What Cash Makes me Lose Out On

I save $13,000 in cash a year (if everything go according to plan [it doesn’t]). On this $13,000 I make 1.085% currently.

Over a decade, if I were to invest it I would come out with $192,000 at 7% return. By saving it, I would come out with $144,000, or a difference of $52,000.

$52,000 is a lot to lose out on over a decade. $52,000 could be one year earlier of committing to FIRE.

But one year earlier doesn’t compensate for a cash security net right now. Perhaps once I get to a certain number and have a more reliable care I’ll invest more of it. But for now, I’ll stay a little cash rich.

How much cash do you hold on to?

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August 2018 – My Road to Financial Independence

My Road to Financial Independence 201808

 

This is the introductory post to my journey to Financial Independence. I’ll probably do these quarterly or even semi-annually, with a large one done every January for a true annual check-up.

My current goal is to fatFIRE between 45 and 50 with $3.5Million in invested assets. This does not include any equity in property or cash. With this fatFIRE amount, I’ll be able to take 3+ international vacations a year, buy whatever I want, and maintain a very fun and social lifestyle. This amount would also mean I no longer have a mortgage or am very close to paying the house off. I assume if I have a partner at this time, they’ll have their own assets or will continue to work.

This number can always change, and who knows, once I’m fully FI I may not want to Retire Early. But this is my goal for now.

My Road Map to My Current Status

September 2014

-$25k Networth

May 2015

-$16k Networth

January 2016

$0 Networth!

  • $4,500 in a 401(k)
  • $4,500 in student loans left

March 2016

  • Debt Free!
  • Salary increase to $70k, still contributing 10% to 401(k)

January 2017

  • $18k Networth
  • Emergency fund funded!

January 2018

  • $50k Networth

August 2018

  • $93k Networth
    • $18k Cash Savings
    • ¬†$7k Checking/Savings that will be used eventually
    • $68k Invested in RothIRA, 401(k), HSA, and brokerage
    • $2K in Crypto, going to HODL this
    • Currently have 2k on my credit card (this gets paid monthly)

Current and Future Goals

I turn 25 this October and my goal by January 2019 is to be worth >$100k. Right now I’m on track to be there, I just need to be careful with holiday spending. I’m also throwing a large birthday party in October and I’ll need to monitor those costs.

My current job does not have a 401(k) and maxes my HSA for me. So I have no pre-tax savings on my income.¬† Of my take home pay, I invest 47% and save 19% for a total savings of 66%. I do save other monies, but it’s all earmarked to be spent (i.e. I save money to travel, but don’t include it in the 19% savings above). The cash savings above is for various things, a new car, getting my teeth done, maybe a boob job, maybe for a one-day wedding, a house down payment, etc.¬† This is also my emergency fund (although that is currently fully funded).

If I want to buy myself something nice and “save” for it, that money also come from elsewhere, not from my cash savings.

In 2019 my goal is to invest $45k and save $6,000 cash.¬† Ideally, if the markets stay stable my net worth at the end of 2019 will be slightly over $150k. But the faster my NW grows, the better. I’d love to push for $200k. I also don’t make “Net worth” goals in the short term, the market crashing is out of¬† my control. Most of the money from my 2019 goal can come from my main income. But, I strive to diversify my income as well. Follow those pursuits in my Extra Income category!

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How I Paid off $25k in Student Loans in 18 months while Making $50k a year

High dollar student loans are the struggle that the majority of millennials understand- 63% have >$10,000 in student loan debt. Pair that with the poor financial decisions often made in their twenties *cough* credit cards  *cough* and a lot of millenials are in rough shape

I took out a little over $25,000 in student loans, $5,500 through Sallie Mae with a floating interest rate of 9 – 12% (yikes!) and the rest were all federal subsidized/unsubsidized loans with the highest interest rate being 4.65%.

My plan, when I went to an in-state college, was to minimize my debt. How did I do that? I graduated in three years, applied for every scholarship I could (I went to China for free!), and was extremely frugal.

For me there was no Plan B if I graduated and couldn’t find a job. My parents were out of the picture and I wasn’t sure about living with my boyfriend at the time. I was 100% on my own, both in college and out of college.

While I was in school, I worked different jobs, mainly in the campus offices. I wanted to get some relevant office work on my resume to help me find a job. I worked anywhere from 15 – 40 hours a week while taking 18 credits every semester.

A very Frugal College Experience

My life wasn’t fun in college. Looking back, I wouldn’t go back to those years at all. I was depressed and stressed for three straight years. But future me is appreciative of how past me treated loans. I considered them as not my money . And the thing is, student loans are not your money for booze, parties, and eating out every meal. Student loans are so you can afford to be a student- the bare necessities like tuition, housing, food, and basic transportation.

My Freshman year, I did live on campus, which is where most of my debt came from. I think it was somewhere in the neighborhood of $6,000. The next set of debt came from a Chinese Summer program I did in Indiana, that was another $5,500. The rest of the debt, comes from federal loans, both subsidized and unsubsidized.

My tuition was covered (for the most part) through an academic scholarship and covered four years of education. All I really had to cover were living expenses.

I started getting into personal finance at the end of my Freshman year. I loved reddit’s personal finance¬† and started using different programs to track my expenses. After realizing I didn’t want to graduate $40,000 in debt, if I were to go to college all four years and live on campus, I grabbed a friend and moved into an apartment right off campus. I could still walk/ride my bike everywhere.

My monthly budget for living expenses in my Sophomore and Junior years were pretty similar and break down as follows:

  • Rent¬† (utilities included) – $310/$400
  • Groceries – $150
  • Phone – $45
  • Internet $17/35
  • Misc. $50

The max total I ever spent in a month on non-school related items was $680, and that would only have been in my junior year if I spent all my grocery money and all of my Misc. money, which never happened.

The cost difference in rent and Internet is that my Sophomore year, there were three of us in a two bedroom apartment and my Junior year, just two of use.

The apartment we lived in wasn’t new. In fact, it was about 60 years old and besides carpet and 50 layers of paint, had never been renovated. The oven was so small it could only fit the smallest cookie sheet in our pack of¬† cooking sheets. Everything in the apartment smelled kind musty and old. The tub would flood whenever it rained. And, we got bed bugs.¬† BUT the money that that apartment saved me was real. Thousands of other students were flocking to the new high rise apartments that cost $750/month for one room in a four bedroom apartment, plus utilities. No, I didn’t have stainless steel appliances, but I did shave off time on my student loan debt sentence.

A note on the Misc. category. This money was rarely spent. This money was for deodorant, shampoo, necessary personal care products, and the very, very rare meal out. My sophomore year, my parents got divorced and amid the divorce I was able to hoard all the shampoo, conditioner, deodorant, and clothes detergent that was built up. I didn’t have to buy shampoo or conditioner the entire time I was in college.

But everything else, I rationed. I allowed myself to use 1 razor for every 2 weeks, and did I take care of that mid-priced three blade razor. I would stretch out my body wash by adding water, cut lotion bottles and toothpaste in half to get out every last drop. Living frugally in college was absolutely utilizing and using everything until you were forced to replace it.

And for my food budget, I ate a lot of rice and beans, beans and rice, just beans, and just rice. But I also ate a rainbow of eggs, spinach, apples, strawberries, frozen veggies, and Trader Joes’ mini pizzas. I had lost 50lbs and wanted to keep it off, so no, I didn’t eat Ramen every day.

What I didn’t splurge on in college defines my frugality just as much. I didn’t buy new clothes for three years (even after losing weight), I didn’t get my hair cut, I didn’t own a car, I didn’t buy booze, I didn’t have time to party. I took care of myself mentally and physically and hoped for the best in my future.

Starting in my Junior year I was re-paying my Sallie Mae loan from my paychecks (literally, my whole paycheck), and living on my other loans.

Finding a Job and Paying off My Loans

I knew I could graduate at the end of my junior year if I wanted to with a major and two minors. That was the goal, but I would need a job first. Plan B was to stay at university and take a minimum amount of classes, and earn enough money to pay for my expenses until I found a full time job. Or multiple full time jobs.

I applied to over 50 positions in the Fall of 2014, I was set to graduate in May of 2015.

I heard back from two. One was a denial letter. One was an interview offer. I interviewed in mid-January and accepted my first full time job two weeks later, earning $50,000 a year.

This was the most money I had ever seen in my life. I set up my 401(k) to take 10% of my base. I had $6,000 of unused loan money in my bank account and while I became comfortable at my new job (while also taking 18 credits my last semester), I slowly started paying back the $6,000 as well.

I graduated with about $16,000 left in student debt.

I think my paychecks were something like $1,345.00, and I felt like I had made it- that everything would be okay.

Hunkering Down

Due to a problem with our apartment, my friend and I split ways. My ex-boyfriend helped me buy a car on craigslist for $2,500 and I got my own place. My rent has skyrocketed up to $975/month and utilities for an additional $140 (Arizona is HOT). And while I wish I could have stayed at that apartment longer to save money, living on my own after all those years was fantastic.

I had a car, which was freedom. A gym membership. And I even spoiled myself with the occasional makeup product.

But at this time I never had more than $1,200 in my account – which scared me shitless and I was paying down my debt as fast as possible. If an emergency did happen, I could just not make a loan payment.

I got a kitten during this time too.

My 22nd birthday went by and I bought myself Kat Von D’s Shade and Light Palette. I cried. I was so excited.

And for the next 5 months I would get paid and immediately pay what I could uncomfortably afford to pay for my student loans.

The End

March of 2016 was when I made my last student loan payment. I went to work and told coworkers double my age about it. Most were proud of me, and many mentioned their own student loans that they were still paying off. It was one of the happiest days of my life, no longer being debt free, being able to hold more than $1,000 in my account because there is no debt for it to go to.

I had also just gotten a $20k raise. My next check, the very first check where no student loan needed to be paid, was all mine. I had a really, really fun shopping trip to Sephora, upped my 401(k) contribution, and never looked back.

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