For some folks in the FIRE community, the opportunity to go through their spending with a fine-tooth comb, to analyze and agonize over every dollar spent, is an act of joy. There is a constant review of spending, and a categorizing of it into appropriate buckets. There is a celebration of dollars saved, and a flagellation when we fail to meet our budget objectives on a daily, weekly or monthly basis. Again, for some folks, this is one of the things they really enjoy, both to do and to write about.
For many others, the author included, we are less exact. For a lot of folks, there is the “set it and forget it” concept, where we determine our initial budget, identify the amounts we can save every month, and then set it up to automatically put this money away. This generally follows the “pay yourself first” philosophy, where you get the money out of your site (into investments) and then live on the remaining money. That is the philosophy that I have lived with for almost 20 years, and while I may not be as quick to hit FI as many others, it has allowed me to reach the point where I am close – while not spending excessive time reviewing my spending.
Still it does make sense, near the start of a new year, to review your base budget and see how you are doing. Better to identify this in the first couple of months, rather than be surprised halfway through the year, when you have less time to react and rectify the situation. This sort of analysis also leads to some surprises. So how have I done for the first 2 months? Here is my earnings, deductions, and expenses for Jan-Feb 2020, as a percentage of total income.
|Area||Category||% of total|
|Earnings||Cell Phone reimbursement from my company||0.7%|
|Area||Category||% of total|
|Taxes||Federal Income Tax||11.6%|
|Taxes||State Income Tax||4.0%|
|Taxes||NJ Family Leave, Disability, Unemployment, etc.||0.8%|
|Medical||Medical – H.S.A||0.1%|
Some things, which stuck out after doing this analysis:
- Taxes still take a big bite (27.4% of gross pay). Since we aren’t paying a mortgage anymore, this is our biggest hitter
- Investments coming in 32.1% of gross pay (51.4% of net pay after taxes & work deductions). Doing a fairly good job of putting stuff away
- Medical is coming in at 10.5% of gross – though the H.S.A. is about half of this
- Food and Utilities each a little over 7%
- Charity is about 4.3% of gross (we put away a select amount every month for this). Bump this up every year, but still have a ways to go to get to the biblical 10%
The only real surprise for our budget was a $724 utility bill in February. We do an even payment plan, and they relook at it every 6 months, and then charge you or credit you, based on actual usage. We have gotten money back from this as often as we have paid it.
Overall, we appear to be staying close to our budget, and nothing is really too far malfunctioning. Looks like steady as she goes into 2020!
How are you doing with your budget and spending so far in 2020?
Mr. 39 Months