I’ll cut to the chase. The wheels came off (for our budget at least) in October. Check out the gory details below.
In our inaugural blog post, I briefly introduced you to our goal of achieving financial independence (“FI”) by the age of 35* and shared that we are already (finally?) halfway to our target net worth of $1,250,000! Here’s last month’s update in case you missed it.
This post is the latest in what is becoming a regular series of monthly financial updates to track our progress to FI and beyond. Bear with me – I’m a little obsessed with spreadsheets and track every penny we make and spend in excruciating detail. I’ll do my best to summarize that activity in a way that gives enough insight into our financial maneuverings without boring you to tears.
With that, here’s where our net worth is at through October 2020:
| BALANCE | CHANGE FROM PRIOR MONTH | |
| ASSETS | ||
| Cash, Checking, Savings | $14,190 | ($1,857) |
| Investments | $571,238 | ($552) |
| Home Equity | $99,729 | $550 |
| LIABILITIES | ||
| Credit Cards | ($4,343) | ($2,669) |
| Misc. Other Debts | ($20) | $80 |
| NET WORTH | $680,794 | ($4,448) |
Cash, Checking, Savings
Consists mostly of our $9,000 emergency fund held in a high-yield online savings account at Ally Bank. The rest is held in a “big bank” for depositing our paychecks and paying bills.
Investments
Another down month for our investments, as the market returns wiped out our sizable contributions. No worries – we’re confident in our investing strategy and will continue to plow as much as we can into our accounts each month. Several different accounts are included here, most of which are true “retirement” accounts. It also includes our taxable brokerage account at Schwab.
Home Equity
Purchase price of our home, less the outstanding mortgage balance. I don’t worry about adjusting the value to whatever our Zestimate is on a particular day because it doesn’t matter until we sell.
Credit Cards
Just the balance on our various credit cards (future post on our travel hacking exploits to come) as of the end of the month. We pay these off on time and in full each month, so the change in this balance will usually manifest itself in the expenses below.
Misc. Other Debts
Usually just my administrative accounting of who owes what for various fantasy sports leagues.
Here’s a look at our expenses for the month:
| EXPENSES | |
| Home (mortgage, property taxes, maintenance, etc.) | $5,626.29 |
| Utilities | $143.69 |
| Automotive | $511.52 |
| Groceries | $332.76 |
| Dining Out | $134.37 |
| Health & Beauty | $330.26 |
| Cell Phones | ($24.34) |
| Travel & Entertainment | $415.60 |
| Pets | $84.84 |
| Work-related | $123.76 |
| Merchandise (furniture, decorations, clothes, etc.) | $177.22 |
| Other Expenses | $190.00 |
| Total Expenses | $8,045.97 |
Uhhhh not so great, considering our average monthly budget is an even $5,000. In the words of the late, great Vince Lombardi, “What the hell is going on out there?!”
Notes
It turns out, this is actually pretty easy to explain and (mostly) not a surprise. We paid $2,800 for the second half of our 2020 property taxes, so if you subtract that out we’re at a much more reasonable $5,200ish. We choose to pay our property taxes out of pocket in 2 large installments during the year (May and October) rather than having them escrowed with our mortgage payment each month. This keeps OUR money in OUR accounts longer, working hard and earning interest for US rather than the bank. Since The Spreadsheets diligently track our estimated cash flow throughout the year, I am able to plan ahead and make sure we have enough in our checking account to make those large lump sum payments.
The home expenses category also includes $1,030 to renew our homeowners’ insurance for the next 12 months. I did a fair amount of shopping around to get the best rate and came in over $200 cheaper than it would have cost us to renew with our previous carrier. Similar to property taxes, we choose to pay this amount in full to a) keep our money in our pockets longer, and b) receive a decent discount over the monthly payment plan.
The automotive category looks a little high, since we paid ~$300 for the next 6 months of insurance on both of our cars. It’s unfortunate that this renewal occurs in the same month as our homeowners’ and property taxes, but again, it’s something I plan for each year. I also shopped this rate and locked in at about $100 less than our previous carrier quoted.
Cell phone expenses in October actually included a $24.34 credit, as I received reimbursement for August and September cell phone usage through work. We both own our phones outright, and pay Mint Mobile for service once a year (~$200 each for 3GB of 4G LTE data and unlimited talk/text). I had a couple referral credits on my last renewal, so for 12 months it came out to $146.02. Divided by 12 = $12.17/month. No need for outrageously high phone bills when we are connected to wi-fi more often than not and receive adequate service elsewhere.
As mentioned in my September update, Travel & Entertainment actually included some travel and entertainment costs! We spent 4 days/3 nights in various cities in Colorado, the first day of which was September 30. The entire trip cost us less than $600 out of pocket thanks to some serious travel hacking on flights and hotels. To be honest, Colorado wasn’t a destination we had high on our list (no offense, Coloradans). But given the state of our world right now, it sure felt great to get out and explore a new area at a pretty reasonable price.
Merchandise purchases included more birthday gifts, as well as exchanging a suitcase purchased last month for one that Mrs. FIby35 likes more and was cheaper. Win-win.
Conclusion
Overall, the market was unkind again this month, and we did some self-inflicted damage to our net worth, which decreased for the second straight month. Have you done any (somewhat responsible, pandemic-friendly) traveling recently? Any recommendations?
*Technically, The Almighty Spreadsheets project we could reach FI sometime during 2024 if the market cooperates, which would put me at age 34 and Mrs. at age 33. But in the interest of being conservative, we’ll stick with “by 35.” It also provides this blog with a more succinct name than “FI by 34 and a half.”
