Hello everyone! Welcome back to The Green Swan. Today I have my second annual spending overview. For a look back, here is my 2016 spending summary. I’ve been tracking my expenses and investments for over a decade now. If you’re interested in tracking your finances more closely, check out Personal Capital. It’s free, very simple and a great tool to aggregate all your accounts. I use it to keep track of everything and for monitoring purposes, but I also heavily rely on my own excel spreadsheets. There’s something about having control over the data and all the record keeping.
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The Home Front
I like to start these reviews with a quick glance at the year that was 2017! We had a couple major developments that I wanted to hit on.
- First of all, Lucy and I had our second kiddo back in April. We are now proud parents of two little boys (the eldest born in April 2014).
- Secondly, I made a slight career change. I’m still in banking, but in a senior credit role now which offers an improved work / life balance. After 5 months I can say it was definitely a positive move. I was quickly reaching burnout in the prior gig. I’ve settled in nicely in the new role and it’s been a refreshing change of pace.
Take a quick look at my spending overview below. The bottom line is we came in under budget! That’s fantastic and it allowed us to tuck that money away into our retirement accounts instead. But the story isn’t quite that simple. I was actually wildly off budget in a few key categories. Specifically, our mortgage costs, groceries & dining out, housewares, and vacations were each over a thousand dollars off budget (either in the black or red…).
The Spending Overview
How could I budget my mortgage wrong…it’s a fixed principal and interest payment for goodness sake!? Well, what I didn’t predict or budget was cancelling my bank escrow account. I elected to do this and instead pay insurance and taxes myself when they are due rather than letting the escrow account sit on idle cash year-round. With real estate taxes paid in August, my annual mortgage costs were less as I didn’t escrow funds for the remainder of the year.
The payments were also lower in 2017 compared to 2016 as my home LTV reached 78% at which point the bank allowed me to drop mortgage insurance (“PMI” – I initially financed my house at a 90% LTV). The PMI payment was $93 / month and not tax deductible. That’ll be a nice $1,116 in annual savings going forward!
Groceries & Dining Out
Boy did we spend a lot on food this year! This was really unusual for us. This year’s food budget eclipsed our previous high water mark back in 2011 when we lived in San Francisco (and dined out much more liberally!). Granted we have a 3 year old to feed these days.
So what happened in 2017? I think it is the perfect example of how things can snowball and build up without realizing it. It’s not like our food costs were unworldly, seven grand is still reasonable. We just missed budget. Digging in more behind the numbers, we spent nearly $700 more on dining out than 2016 and almost $500 more on groceries.
Dining out was an accumulation of more frequent $10 Panera trips on the weekend with the family. We’ve really come to appreciate and value this time together, and so has our 3 year old. I’ll also chalk it up to more takeout meals for convenience during the work week. Our week-nights are super busy with the kids (if you have kids you know what I mean…) and we’ve relied on takeout a bit too heavily. It won’t always be like this and we’ll have to be creative to improve on this.
While we transitioned to a whole food plant based diet (veganism) in mid-year, I can’t tease out whether our routine grocery bill has gotten any cheaper. It is a little difficult because of other changes in our grocery list (such as our 3 year old’s growing appetite and baby food for kid #2). All in all, our grocery bill was up $40 to $50 per month.
After seeing our dining out snowball, I can now understand a bit better when I hear others say they don’t even know where all the money they make goes. For many folks, occasional meals out and also trips to the mall shopping can build up like crazy right under your nose!
Unlike the jump in the food budget, the massive increase in our housewares was much more of a cognizant decision. As you recall from my prior post, we’ve elected to embrace lifestyle inflation in a few targeted areas.
We were on, off and on again with maids. As Lucy mentioned in her November Swan Life post we found some good and reasonable maids to help us out and reduce some of our normal weekend workload.
We bought a iRobot Roomba 960! This too saves us weekend time (and the maids give us a discount for not having to vacuum). But nobody loves it more than our 3 year old. He is now excited to pick up toys so that he can start the robot and watch him go (and sometimes he plays “chicken” with it and gets in its way…).
We bought a new personal laptop. Our prior one was getting quite old and was showing signs of a slow death. We got a good deal, taking advantage of my employers discount program it has with various retailers.
Lastly, spend on vacations was down significantly from 2016 and our 2017 budget! We crushed it travel hacking! While we took less trips in 2017 (2016 trips for two of my brothers’ weddings, bachelor party trips, normal holiday trips, etc), but we also have our 3 year old to buy plane tickets for (no more flying for free since he’s over 2!).
And as you may know, we plan on continuing to crush it through 2018 with a plan to travel to Greece for free for Lucy and my 10-year anniversary!
Other Noteworthy Factors
I have a few other smaller things I want to touch on quickly!
- Gas for the Cars: In my 2016 spending summary I mentioned how the Publix and Harris Teeter would offer $10 off $50 gas cards when buying $50 in groceries (and HT would double it to $20 off when bringing in the Publix coupon). Well HT stopped offering the double discount and the Publix coupon has been offered much less frequently this year. We capitalized on $280 off gas cards in 2016 compared to only $90 in 2017.
- Car Maintenance: We were cruising pretty close to budget on this one until we got a flat tire the week before Christmas! Buying two new tires for $413 ended up pushing us over for the year.
- Cell Phone: February 2016 was the last monthly phone payment for Sara as she ditched the personal phone and solely relies on her corporate provided cell phone now. And beginning in 2017, my small business began picking up my phone cost completely.
- Daycare: We don’t really have much for healthcare costs annually. So for 2017, I stuck all the labor and delivery healthcare costs in the daycare line item. I initially set it up this way back with the birth of our first kiddo and I’m not entirely sure why. I may end up changing this at some point…
All things considered, I’m pretty happy with our spending in 2017. We spent more on food than expected and we also elected to spend a little more on housewares to make our lives easier. No regrets on either of these categories where we overspent our budget.
Our 2017 cost of living was $62K which I don’t think is too bad. Especially considering the big categories of $19K in mortgage payments and $16K in daycare. In retirement, we likely won’t have a mortgage (we’ll still have real estate taxes and insurance though) and daycare payments will go away when the kiddos enter school. Backing out approximately $30K in these two items and our cost of living is near $30K which is pretty great!
What’s in store for 2018? My 2018 budget is shaping up around $61K right now and that is a pretty firm number. There will be only minor tweaks at this point. Compared to 2017 expense levels, the big changes include an approximate $1K drop in housewares (we’ll have maids come monthly, but we won’t have the new laptop expense we had in 2016) and a $1.5K drop in personal care. Back in October 2015 I financed my LASIK procedure at 0% interest over two years. With those payments ending in October 2017, this category will come down significantly for 2018.
These declines in spending will be offset by a full year in daycare for our youngest. Besides that, the budget doesn’t have too many other changes. The goal is for our food budget to stabilize in 2018 and not rise any further, but we’ll see how things play out.
Your Spending Overview?
How did your year-end review turn out? Did you keep your expenses in line with budget? Did you have any runaway expense categories? Let me know in the comments below.
Also, this is just Part 1 of my year-end review. Check back next week for my overview on our 2017 investment performance.
Thanks for taking a look!
The Green Swan
Note: For privacy and personal reasons, we’ve elected to not disclose income figures, income taxes, gift expenses and cash donations.