We're a 33-year-old mechanic, 32-year-old consultant, and 2-year-old daughter. Like most "normal" millennials, we spent freely during our 20s. We thought we were doing fine by living slightly below our means. We didn't take on student debt or car loans, put a couple bucks into our retirement accounts, and patted ourselves on the back for a mediocre job well done.
In 2014, in our late 20s, we discovered Pete the Planner and made our first budget EVER.
In 2015 and 2016, we continued budgeting, started actually putting money into retirement, and I turned my side hustle into a full-time LLC.
In 2017, our income kept growing SO unexpectedly--from $112,000 in 2014 to $285,000 in 2017--that we had to figure out how to manage it even better. We discovered Dave Ramsey, the Mad Fientist, MMM, and JL Collins. We're upping our game!
Here's the rundown on our numbers. Scroll to the bottom to see our detailed spreadsheet and offer ideas for improvement.
EARNED $285,000 GROSS AND $180,000 NETWe earned $285,352 during 2017. We live ~50 miles outside of Washington, DC, so the cost of living is still fairly high–our modest townhouse cost $348,000. We probably make significantly more money than most of our neighbors, but we spend significantly less–the perfect equation for FI!
Of that $285,352 gross income, we paid $84,778 in taxes, $16,000 in self-employment business expenses, and $4,300 in healthcare, for a take-home pay of $180,274.
SPENT $102,000 ON MORTGAGES, DAYCARE, FOOD, AND OTHER STUFFOf the $179,157 net income, we spent $17,065 on our rental condo, $25,203 on our townhouse, $10,907 on part-time daycare, and $49,403 on other household expenses (food, clothes, vacations, furniture, utilities, etc.), which left a “surplus” of $77,556.
(The condo also brings in money, which contributes to the gross and net income mentioned above. We have to keep the rental condo’s income and expenses separate on our taxes, so we mentally keep it separate, too.)
SAVED AND INVESTED $77,000Of the “surplus” $77,556 we invested $30,500 for retirement, saved $3,650 in a college savings plan, contributed $19,533 extra towards our mortgages, and added $23,873 to our boring old savings account.
OUR NET WORTH: $337,000Our accounts fluctuate each day, so here’s roughly what we’ve got.
ASSETS
Boring old savings account: $107,000
College savings plan for our 2-year-old: $9,686
Retirement investments: $140,000
Old car, jeep, and motorcycle
Some equity in two different homes
DEBTS
Condo mortgage: $63,389 of $160,000 remaining since purchased in 2007
Townhouse mortgage: $323,569 of $348,000 remaining since purchased in 2016
NET WORTH: INCREASED $215,000 DURING 2017 (?????)
According to Mint, our net worth was $122,000 in January and reached $337,000 by December, for an increase of $215,000 over 12 months.
SAVINGS RATE: 43%Savings/investments of $76,439 ($30,500 into retirement, $3,650 into a college savings plan, $19,533 extra towards the mortgage, and $22,576 into a boring old savings account) divided by a take home pay of $179,157 (gross income minus taxes, business expenses, and healthcare) = 43%.
In 2018, I’m estimating that we’ll hit a savings rate around 54%.
WHAT’S IN STORE FOR 2018: THE CONDO COUNTDOWN!1) We’re going to bust our butts and pay the remaining $63,389 mortgage for our rental condo. After listening to ten gazillion hours of Dave Ramsey’s podcasts (yes, his energy is that addictive), we decided to go hardcore and pay the sucker off once and for all.
2) Continue saving $30,000/year towards retirement. My self-employment income fluctuates A LOT–from a low of $3,000 one month in 2017 to a high of $43,000 another month in 2017. (I do roughly the same amount of work each month, but I can’t predict when clients will actually send the checks.) I brought in $208,000 in 2017 and I’m estimating that I’ll bring in at least $175,000 in 2018. If I make it to $175,000, then we can pay off the $63,000 condo AND invest $30,000 towards retirement.
3) Spend down our bloated savings account from $100,000+ to around $50,000 by transferring this money into the condo’s mortgage or into retirement savings. I need to let goooooooo and stop hoarding so much cash that only gains pennies in interest.
4) Use debit cards and cash. No more using credit cards like debit cards. A few studies have found that we spend more–up to 130% more–when we swipe our credit cards instead of using cash or debit.
5) Trim the budget. We’re not buying alcohol, coffee creamer, vacations, weekend trips, or new clothes until the condo’s paid off. We’re also working on meal planning to shrink our grocery bill. I’m not a cook so it’s actually been pretty hard to find recipes that are budget-friendly, waist-friendly, and freeze-and-reheat-for-lunch friendly. Mr. Fi365 is literally exploring Budget Bytes as I write.
6) Choose a financial focus for 2019. Will we go hardcore on our townhouse’s mortgage? Will we go hardcore on our retirement savings? Will we (I) get nervous and hoard money in the savings account again? Will we blow everything and have to start over from square one? All of the above?
VIEW (AKA STALK) OUR SPREADSHEET AND HELP US IMPROVE!More details in a blog post here:
https://fi365.wordpress.com/2017/12/31/2017-report/And here’s our detailed budget if you want to see how a minimalist, semi-frugal family making $285,000 spends their money:
https://docs.google.com/spreadsheets/d/1oDfc1-QBNuoO84IO7XaXZe9SIa1llUcZJiJ-tQRkGdQ/edit?usp=sharing Cheers to getting one step closer to financial independence in 2018!
–Mrs. Fi365