Six Month Checkup on Spending

Earlier in the year, I wrote about re-looking at our spending a couple of months in, to make sure our budget was tracking fairly well. Depending on your viewpoint in the FIRE community, you can be rather blasé about your budget (maybe just pay yourself first and spend the rest) or you can be very nitpicky. We tend to fall more towards the former category, but being very frugal, we typically end each month with a little more than we started. We’ve also reached that point in our lives (mid 50s) where we have purchased all the major things we need/want (cars, furniture, home, clothes, etc.) so we just have to maintain, rather than increase.

It does make sense, however, to occasionally review your spending, so you don’t get surprised at some point. With the Chinese Covid virus hitting, it has caused a lot of folks to alter their spending habits, in some cases significantly. For example, we are both working from home, so our grocery bill has gone up significantly, but the money we spend to eat at work (coffee, lunch, snacks) is non-existent. Our vacation and entertainment money has also seen a drop off.

So how have we done for the first half of the year?

Here is my earnings, deductions, and expenses for July 2020, as a percentage of total income.

AreaCategory% of total
EarningsRegular Pay99.4%
EarningsCell Phone reimbursement from my company0.4%
EarningsExpense Reimbursement0.2%
AreaCategory% of total
Deductions401K Roth4.5%
DeductionsLong-Term Disability0.3%
DeductionsSpousal Surcharge0.6%
DeductionsWellness Credit-0.5%
TaxesFederal Income Tax14.3%
TaxesSocial Security5.7%
TaxesState Income Tax4.8%
TaxesNJ Family Leave, Disability, Unemployment, etc.0.6%
AutoAuto Fuel0.4%
AutoAuto Repair1.1%
AutoAuto Registration0.0%
AutoAuto Tolls0.1%
EntertainmentLA Fitness0.2%
EntertainmentPostal/office supplies0.1%
FoodDining Out0.9%
HomeHome Repair2.0%
InsuranceLife Insurance0.3%
InsuranceHome/Auto Insurance1.4%
MedicalMedical – H.S.A0.1%
TaxesProperty Taxes3.3%
UtilitiesWater Bill0.2%

Some things, which stuck out after doing this analysis:

  • Still have about 5% “unaccounted for” in spending. This ends up being the extra we have that has gotten plowed back into savings.
  • Taxes still take a big bite (22.4% of gross pay for Federal & State income + property tax). Since we aren’t paying a mortgage anymore, this is our biggest hitter
  • Investments coming in 33.4% of gross pay (if you count the Roth, its 58.3% of take home pay after taxes & work deductions). Doing a fairly good job of putting stuff away
  • Medical is coming in at 4.2% of gross – with just about all spending coming out of the H.S.A. We still have funds in it, so its been a good choice for us.
  • Food and Utilities each around 5%
  • Charity is about 3.1% of gross, about 9.6% of net pay coming in. We don’t itemize, so we get no deduction from this on our taxes, but we try to give as much as we can.

So like most, our home utilities and food have gone up, our spending related to our work and going out have gone down, and we seem to have spent less over the last six months.

The only big surprise for us this year (other than Covid) was the tax bill. We ended up owing $2,600 federal and $600 to the state. We adjusted our tax withholdings up (that is why the percentage is higher now than my February update). We continue to be on track and in fairly good shape, even with all the shutdowns. Mrs. 39 Months has had her hours cut 20% (one day/week furlough) but I’m still earning. We appear to have stayed relatively within budget and continue to save large amounts of our take home pay.

How are you doing with your budget and spending so far in 2020? How has Covid affected you?

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Mr. 39 Months

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