A week or two after Valentine’s Day each year, the gym starts to slow down a bit. There might be a surplus of bicep curlers still getting ready for spring break, but you’ll start to notice the increasing space. There are fewer people around.
Planning is still important though. You might find yourself having a little more flexibility on what you can do at the gym. But you still need to plan and actually show up.
In our financial fitness, we’ve learned that we hate budgeting as much as the guy hogging the squat rack at the gym. We’ve tried it multiple times. And failed at it multiple times. We can never seem to rotate in for a quick set.
With expenses and budgeting, it’s the same at times; we know how to fit in what we want to get done while working out. Call it mindful or conscious spending; we have an understanding of where our money goes each month. Overall, what’s important is that we contribute to our goals and plans first.
Looking back quickly at 2017 as a baseline, here is a checkpoint of our money exercise and habits about 6-7 weeks into the new year.
2017 Spending Summary
Top 5 Categories
The top 5 expenses accounted for a combined 68.6% of our entire average monthly expenses. Clearly, an adjustment in one of these areas can have a significant impact on our bottom line. But we have made a good effort to bring down these items over the last several months.
(1) Rent – 34.1%
Arguably, we’re currently shorting real estate by being renters. But we balance it out via our real estate exposure in our portfolio. From an expense perspective, housing remains our biggest expense. To clarify, this is NOT a percentage of our income.
Related: 10 Years Lost? Our Renting Remorse(lessness)
(2) Travel – 11.0%
We vacation frequently. To places like O.h.i.o! And D.C. And Wisconsin. We are looking to take a “non-family visiting” vacation in 2018 though. Overall, we’re very happy that we’re fortunate to be able to travel and visit family and friends.
Related: You Can’t Say “I Do” Without Friends, Frozen, & BBQ
(3) Restaurants – 8.6%
I’m guilty of a large chunk of this just by being lazy at work. I make my lunch most days and enjoy a purchase a couple of times a week now. I’m not going to tell you that brown bagging will make a significant impact to my bottom line. But I will tell you that it continues to make a NON-impact to my waistline. I generally eat less (if not healthier) when making stuff at home.
Related: 160,962 Calories and 209 Workouts: 365 Days Later
(4) Personal Care – 8.1%
This category, as with all the others, are from Personal Capital. This includes our gym memberships and a few other items. The former accounts for the majority of this category.
Related: Why I Spend $2,148 A Year On Orange(s)
(5) Clothing/Shoes – 6.8%
My office recently allowed us to wear jeans every day except during client meetings. For me, this equates to cheaper – and more comfortable – clothing. I’m also ironing less frequency, so I’m happy overall.
3 Quick Hits So Far in 2018
Here are a few details on some areas where we’ll soon start to benefit from a reduction in expenses. They’re worth considering if they might be areas for you to also save.
(1) Cable/TV (& Internet)
We live an a multi-dwelling unit (MDU) – specifically, an apartment building. Our TV and internet options are limited to the providers offered via our building management. We have a choice of AT&T or some other “house” package (I don’t even know the name…the options are limited, expensive, and unreliable). Hence, our use of AT&T.
Living in the same building for nearly 3 years now, we have had to keep renegotiating and/or utilizing a promotion or upgrade in order to stay at a lower rate. AT&T wanted ~ $220 (including taxes) for their U-Verse 300 and Internet (up to download speeds of 45 mbps).
Enough was enough. We pulled the plug on the cable and switched to Hulu. After a one-time cancellation fee of about $100 (due to a contract tied to the second or third promotional rate we utilized), we’re now paying ~ $40 a month for Hulu (live streaming TV) plus $35 a month for our existing AT&T internet.
Total Est. Savings = $145 per Month
(2) Healthcare/Medical
To keep this short, I’ll just say we did not always have the best option for certain in-network coverage items. We do now.
Total Est. Savings = $100-200 per Month
(3) Qapital
To be honest, this is not a reduction in expenses per se. But Qapital is a great tool that alleviates the pain and effort associated with saving for certain items. A few examples of new or expanded savings categories we’ve created:
- Travel – we’re not sure what our next “non-family” trip or vacation will be this year. But this will help pay for part of it.
- Pets/Pet Care – in addition to Stella’s doggie insurance, she has her own unofficial health savings account. We save for the average cost of her annual check-up.
- Electronics – I don’t know what we’re buying next. But it’s nice to have something saved.
- Renters Insurance – similar to Stella’s heath savings account, we save for our annual premium.
I’ve received a few queries from readers about Qapital. We’ll look do to a more thorough review in the near future.
Related: Apps & Tools
Wrapping It Up – Status of Potential 2018 Actions
This table contains a list of our 2017 expenses by category. I like working with percentages as they provide relativity where actual values or numbers might not offer this perspective. Overall, I’m happy with the progress we’ve made so far in 2018.
Looking Back and – More Importantly – Ahead
This exercise – whether financial or physical fitness – can be applied to other areas of your life as well. It doesn’t have to be all or nothing. Finding balance is key.
Readers, what areas of your life have you prioritized to review recently? On the financial side, are there any recent examples of savings or increased income opportunities? What else are you focusing on?
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Related:
A 10-Year Reflection: To Gym or Not to Gym?
My 20 Year Addiction – 9 Things I’ve Learned
2018 Goals Overview: What Do You Want To Do This Year?
FTW! Is it Possible to Invest for Today AND Tomorrow?
Our favorite free financial tool is Personal Capital. We use it to track our net worth, manage our spending & savings, and to monitor our investments. It’s simple and free to use.
Nice analysis Mike. It’s a good way to keep a check on things. Impressed that you are a cable cutter. That monthly bill gets me, but I’m not ready to pull the plug. Tom
Thanks, Tom. On the cable, Hulu gives us 50+ live TV channels. The hardest adjustment was initially getting used to the interface. But it’s quite easy and a good experience.
I thought I’d notice a difference, but I don’t. As long as you have a good internet connection, you can’t tell a difference. – Mike
‘ssup bd mike? we’ve had similar categories for 10-12 years but they’re all in the same savings acct. i just break out the amounts with a binder and a calculator every friday when we fund our buckets. it’s been one of the best moves for us. for me, the best column on the ledger is the vacation/gift/repair fund. we went down to one steady income about a year ago, which meant a reduction in funding that one. we had some expensive house repairs so that just means some leaner vacation money this year. now it’s just deciding on a couple of regular kinda pricey trips or more frequent cheaper ones ’cause that’s all the funding available. we haven’t minded at all as it turns out.
Hey Freddie – hope you’re doing well.
The same savings account is still helpful. We did something similar for a while, then I opened up 5 savings accounts all online with Ally a few years ago. But Qapital does the allocation for us now.
Thanks for sharing your recent experience. It’s good you’ve prepared. Hope you get to travel soon. – Mine
Sounds like you have a great handle on your financial health BD. By the way, I’m a huge fan of Qapital. I overused it before to the point where it was getting out of control. I combined the use of Qapital with IFTTT and wow did I have fun. But, I over used it I had to quit it for a while. Just recently got back into it and now only have one goal that I use it for and that’s to complete the 52 week money savings challenge.
To answer your question, the area that I’ve focused on a lot is getting out of student loan debt. My goal is to eliminate that debt by October. I’m currently on track but as the weeks and months go by, it gets harder and harder. Kind of like the initial stages of working out. It’s easy to start but it’s harder to stay motivated. Which reminds me, I need to start back going to the gym after a two week hiatus.
Having been married for over 35 years my budget was also done with a notebook, with biweekly meetimgs with my future & current wife in a Greek diner. ( Talk about saving money!). Now I do it on the computer with good old Excel and online separate savings accounts. Principle holds the same but I do like BD’s sensible approach. Just wonder how Mrs BD likes Hulu 🙂
Thanks for your comments, PD. A Greek diner (or any diner for that matter) is a great meal. We still use Excel for other tracking and analysis, but Personal Capital does a lot of the heavy lifting. Overall, Hulu had been good. – Mike
Hi DP – thanks for the comments. On Qapital, I also had to tame it down a bit 🙂 . I had so many rules on that our checking account drained far too quickly. And we typically don’t keep a lot of idle cash sitting in the account. We’re also a fan of the 52 week rule.
Congratulations on your progress toward paying down the debt. October will be here before you know it, and I’m sure you’ll be excited to redirect the capital elsewhere. Just keep up the momentum and consistently will carry you forward. – Mike
BD –
Nice article. Question – how much are you looking to save after this rent/lease term is up? Looking to sharpen the pencil there? Looking forward to your continued progress!
-Lanny
Hi Lanny – thanks! On the rent, perhaps a couple hundred bucks.
Nice job Mike. Seems like you are slashing all they key categories. I’m looking forward to reading more about Qapital!
Thanks Jason! The Qapital post is in the queue.