Our 2020 Spending Revealed

If you followed along through the monthly financial updates thus far, you probably figured out our monthly average budget of $5,000 would lead us to a total of $60,000 in spending for all of 2020. So how did we do compared to that goal? You’re about to find out!

A full $7,100 over our goal of $60,000 doesn’t look too great on the surface. Believe me, I would have loved to trim some of the fat off of that number (and there’s plenty to be trimmed). But allow me to rationalize a bit here to soothe my frugal soul.

Spending $67,118 over the course of a single year would seem downright extravagant to many (most?) people. According to the U.S. Department of Labor’s Bureau of Labor Statistics, the average American household spent $63,036 in 2019, putting us slightly higher than average last year. However, that same study indicates that the average American household’s income before taxes was $82,852 – meaning the average American household spent over 76% of its pre-tax income. I don’t think I’m quite ready to reveal our income on this blog yet, but I can assure you it was higher than $82,852.

Back to our own relative spending spree. Having lived through it, I am able to provide some more context as to where we spent in 2020 and why we did so.

Where we went wrong

Home Expenses

I hesitate to say we “went wrong” in the housing category, but it’s a large number and makes up a whopping 42% of our total spending. This actually was not as bad as we were anticipating at the start of the year, since we saved about $240 a month by refinancing our mortgage to a lower rate way back in February. Our home is less than 3 years old, so some of this spending is still a result of one-time, new house expenses – blinds for the rest of the windows, small pieces of furniture or decorations, etc. All in all, we knew what kind of costs we were getting into when we moved here and made the conscious decision to spend according to our values. No shame in that.

Automotive Expenses

Ah, yes. There will be a year where I will live without extensive use of motorized vehicles, but 2020 was not that year. $1,214 of this total is the final payoff of the loan I had on my car, so that will be an instant reduction in 2021’s budget. We now own both of our cars outright, which feels fantastic. What doesn’t feel so fantastic is the ongoing maintenance battle with vehicles that are now 9 and 12 years old. Luckily, a substantial amount of wear and tear was saved in 2020 due to Mrs. FIby35 working from home since March – let’s hope that continues into the future.

Other Expenses

This black hole of a category looks pretty ominous, but it’s actually fairly reasonable once you dig in.

$5,377 is made up of Mrs. FIby35’s final tuition and books payment for her MBA (!), and $5,250 of that was reimbursed by her employer. One could argue that the expense should be offset by the reimbursement…as a true accountant, I will not make such an argument.

This category also includes $2,954 paid when filing our 2019 taxes in July. Yes, we could increase our withholdings during the year to reduce the amount owed at tax time, but we prefer to keep that money in our hands as long as possible and pay it only when required to do so.

Where we went right

Dining Out

At first glance, almost $1,400 is a lot to spend on dining out. Referencing the Bureau of Labor Statistics’ 2019 report again, the average household spent $3,526 on food prepared outside the home. In a normal, non-pandemic riddled year, our spending in this category would have admittedly been higher. But given the constraints on restaurants this year, we made more food at home and came up with some pretty delicious new recipes in the process.

Cell Phones

The Bureau’s report doesn’t specifically identify average household spending on cell phones, but I have to believe that $365 for an entire year for two adults with unlimited talk and text plans is WAY below average. Anecdotally, many people spend that much for their family plans each month. Mint Mobile for the win.

Travel & Entertainment

This may not look like a win, but I consider it a great value for the travel and entertainment we enjoyed in 2020. If we’re talking actual cash out the door, this number is really only about $2,800, since we cashed in $1,567 worth of Southwest Airlines travel vouchers for points during the year. Two trips to Las Vegas, a solo venture to Disney World (it’s not as sad as it sounds), four days in Colorado, a weekend day trip to brewery hop in Duluth, a full sun-soaked week in Cancun, and pre-booking trips to Las Vegas and Hawaii in 2021, all for only $2,800? I’ll make that trade any time.

Conclusion

As I stated in the intro, I would have loved to have come in under budget in 2020. However, the excess spending was completely covered by additional income (thank you stimulus checks), employer reimbursements, or other miscellaneous money made during the year. We’ll try better to trim the fat in 2021, but I’m satisfied with the value we got for our dollars this year.

Did you tally up your spending for the year? Were you able to stick to your budget better than we did?