Monday, September 23, 2019

12 Month Spending Analysis

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As I’ve blogged in previous posts, I’ve kept track of our spending for 25  years, since we got married.  I was excited for August to end, because it meant that I could start my 12 month analysis of our spending since I left the workforce!  This year we cut back on spending, so I was very curious to see what we spent our money on. 

The common wisdom is that what you spend your money on should reflect what your values are.  And I was so happy to see that our spending in the last 12 months does reflect that!  It is also very startling to see the cost of living in CA, especially for home and car ownership.  We will dig deep into the major spending categories for the last 12 months!

One thing I do want to clarify is that the % is the spending in each category out of the total amount spent in one year.  It is NOT the % of income spent on each category.  (Which is what the usual spending % that you see in finance articles.)  That is another way to look at it, but if I had done the analysis as a % of income, then I would have had to include categories such as health benefits, 401k contributions, employee stock purchase plan, and all kinds of fed state and local income taxes.  That really wouldn’t be as interesting.


HOUSING – a staggering 46.8% of our expenses goes towards housing.  That includes just the mortgage (principal + interest), property taxes, and homeowners insurance.  California coastal living really is quite expensive.  But also, we refinanced our mortgage to a 15-year loan in 2010, which made the payments quite high.  It also means that our loan will be paid off in six years though!  So in six years, we will be rid of that 38.2% of our annual spending, which means we will get to keep a lot more of our money each month.  This category is obviously not considered discretionary.  While we could move somewhere else and live cheaper, we choose not to at this time.

CARS – It is surprising how much it costs to own cars.  7.7% of our 12-month spending went to our cars.  Part of it is also the expensive registration, insurance, and gas in CA.  Guess how much it costs to register our two cars for one year in CA?  Over $550.  Insurance was about $1800/year.  We only have one gas car though, and it’s the Subaru that I drive.  I don’t drive it a lot now that I’ve left the workforce, so the gas is only like $70 per month.  Our other car that we had for most of the past 12 months was the Kia Soul electric car that Todd drove.  He had free charging at work, so our electricity cost was very minimal.  Not to mention we have solar power at our house, so we didn’t even have an electric bill for the past 12 months.  I did have to get some service on my Subaru this year, which cost about $700.  This category is also not really discretionary.  When we both retire, we plan to have only one car, which would save us a lot of money.  That combined with no mortgage (see above) would mean our annual spending will be much less!

CHARITABLE CONTRIBUTIONS – This really surprised me.  After the cost of housing and cars, which aren’t discretionary, the very next thing we spent the most money on was charitable contributions at 6.2%.  Ever since we’ve had jobs, we have contributed a % of our monthly income to various charitable organizations that we support.  These are monthly commitments that we take seriously.  When I left the workforce, we decided to not cut back on this for the first 12 months and see where we are.  Since we cut back on various other discretionary spending but not charitable contributions, the % we spent on it went up.  They say spend your money on what you value, and in this case we are!

VACATION – 6% of our spending went to vacations.  This is slightly surprising, but when I think about it, it does make sense.  We have intentionally tried to value experiences over things in our spending for quite some time now.  And the “vacation” category also includes airfare and other expenses involved in visiting family.  Also, we paid for all five of our air travel trips this year and we’ve only gone on two so far.  So this amount includes airfares for future trips.  The big expense was our December trip to Orlando to meet up with my sister Joyce and nephew Andrew for Disney World.  It was a a last minute decision so the airfare was pretty expensive.  And we all know how much Disney admissions can be!  BUT we decided to do it when my sister invited us, because we value spending time with her and Andrew.  My sister has an older son Xander who is severely autistic.  He’s 17 and non-verbal, and requires around the clock care and monitoring.  This was the FIRST time in years that we’ve been able to get together without her having to take care of Xander all the time, so it was an opportunity I could not pass up.  (My brother-in-law offered to stay home with Xander.)  Even though we always try to find the best deal for travel and vacations, I always feel this category is money well-spent.

FOOD – the next two categories we spent the most money on was food-related:  groceries and eating out.  They combine to 11.6%, with groceries at 6% and dining out at 5.6% of spending.  We value both cooking dinners at home and eating out.  We usually cook four to five dinners per week and eat out two days, mainly on the weekend.  I’ve compared our grocery cost for two people versus other people with bigger families, and it’s pretty much in line proportionally.  Dining out is more expensive in CA.  Even if you go to semi-fast food, it’s more expensive.  When we travel to visit family in OH and TX, we marvel at how much less it is to dine out.  But we value the experience and it’s fun for us to try new restaurants or eat our favorite meals at favorite places. 

UTILITIES – spending 5.5% on utilities didn’t really surprise me.  This category includes electricity, gas, water, trash, TV, phone, and internet.  We didn’t incur any electricity cost this year, thanks to our solar system we installed in 2017.  Our satellite TV cost the most, with cell phone bills right after that.  We could cut the cord on TV, but we enjoy live sports a lot, and enjoy just turning on the TV and being able to watch live TV and having lots of choices.  However, we do realize it is an opportunity to save money should we need to.  Streaming TV used to seem cheaper, but now you have to subscribe to many different services to watch what you want to watch.  With the divergence of streaming services (Netflix, HBO Now, Hulu, Amazon, CBS All Access, Apple+, Disney+, etc.), now it doesn’t seem like you could save that much money, unless you choose to roll them each month and do the subscribe/watch/cancel rolling schedule.  But that’s a pain in the a$$ too.  I really dislike how much cable/satellite, cell phone, and internet cost nowadays.  It’s definitely a category where the prices shot ahead of inflation.

PACIFICA GRACE STUDIO – about 3.5% of our expenses this past 12 months is the net cash flow out of my Etsy business Pacifica Grace Studio.  I had a lot of fixed startup costs with liability insurance, shelving, equipment, mailbox rental, shipping materials, container & packaging, etc.  Some of this was one-time cost, while others are ongoing costs as well. 

CASH – we chose not to track the money that we take out of ATMs a long time ago.  We categorize it as petty cash.  We use our credit cards for most of our spending and pay it off each month.  Cash spending mostly consists of coffee, sodas, snacks, occasional lunches, parking, etc.  This category is mostly Todd’s spending now that I don’t work anymore.  I almost never use cash. 

GIFTS – this 1.5% of spending is for gifts to other people, including birthday, anniversary, Christmas, and special occasions.  This past year we had a 75th birthday banquet for my dad, where I paid for half and my sister paid for half.  That was a majority of spending in this category, which made it bigger for this year.

HOUSEHOLD – we spent 1.5% on household, which are things like cleaning supplies, organizing supplies, tools, and home decor.  It doesn’t include home maintenance, which is a separate category (and include things like exterminator, paint, stucco repair, sprinkler repair, air filters, etc.) 

GARDENER – yes we have a gardener who comes 2x per month.  It is money well spent, LOL.  Neither one of us enjoys pulling weeds, cutting grass, trimming bushes and palm trees, etc.  So we outsource it.

PETS – this is the cost of Noodle every year!  We spent 1.1% of expenses on him, which includes food, litter, supplies, and toys.  He is probably spoiled.  But he’s worth it.

The rest of the spending categories are under 1% of our expenses.  Not much to talk about except a couple of things.  Haircuts are expensive!  Especially the stylist that we’ve been going to.  Most of the haircut expense is Todd getting his haircut every 5-6 weeks.  I’ve only gotten a haircut twice in the last year, and I don’t get it colored at the salon anymore.  After I quit work, my stylist kept asking me when I was gonna color my hair again.  I told her that now that I don’t have an income, I can’t spend money on hair coloring anymore.  She keeps trying, and I keep refusing.  She has increased her haircut and hair color prices a lot since we started going to her several years ago.  It may be time to find someone cheaper.  But you know how it is.  Once you find a stylist who works for you, it’s hard to break the inertia and go to a new person.  The only other thing I’ll mention is that I used to spend a lot more money on clothing when I worked.  But after I left work, I still have SO MUCH clothes that I never wear, that I really cut back on purchasing new clothes in the last 12-months.  That’s why it was only 0.4% of our spending.  Oh, and the negative % spending on medical is because it is netted against the contributions we’ve made to our Health Savings Account.  So for the last 12 months, we’ve contributed more than we’ve spent medically.

Do you keep track of your spending and where your money goes?  Does it align with your core values?  What do you spend too much money on?  What is one thing you could cut back on?  What is totally worth the spending to you?  Leave a comment if you’re so inclined to share!

1 comment:

  1. I love this post, Christine. I think it's a good idea for everyone to take a step back and find out how much of the annual expenses are beyond the basics and just how expensive those basics can be. I too marvel at how much cheaper everything is outside of CA. And yet, we all stay and gladly pay the "sunshine tax."


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