It’s that time of year!
That time when 365 days of ridiculous tracking of my money gets shared with YOU. (And the rest of the world…)
As always, this year’s report includes every single cent I spent, every dollar I saved, and even something most personal finance bloggers are shaking in their boots to admit – every dollar I got paid!
Last Year’s Budget – $36,000
You might remember that I made a drastic change to my budget last year.
After getting slapped with the realization that my current rate of savings would likely have me reach age 60 with anywhere from $4-8 *MILLION* dollars…
…I had to face the harsh reality that I might actually be saving too much money.
(Not an easy thing for a frugal blogger to admit!)
Balance is the key to life, or so I’ve been told from the yin yang logo.
So, I made a change.
Heading into 2020, I upped my monthly spending by about $500. With an extra $6,000 a year earmarked for doing whatever-the-heck I want, I had dreams of venturing out from my roots in the frugal forest and going as hog-wild as drunk dude at a Vegas bachelor party.
But like all good plans, things immediately went sideways.
How Much I Actually Spent in 2020 – $30,841
Old habits die hard, apparently.
In 2020, I failed to meet my extra spending goals by $5,000, and I’m still not sure if that’s a good or bad thing?
Interestingly, this is almost the exact same amount I spend in 2019. And even less than I spent in 2018!
It turns out, with the help of a nation-wide lockdown, pretending to be a drunk dude on a bachelor party in Vegas isn’t easy when there are no bachelor parties and no trips to Vegas.
The Super-Detailed Monthly Spending Chart (2020 Edition)
Rent: $9,381 (32% of Total Spending)
Without question, this is the #1 cheat code that helps me save so much money.
Regular readers know that a few years ago, Lady Money Wizard and I started looking for a house. Based on our incomes, the standard advice would have had us saddled with an oversized home and a $500,000 mortgage.
We’d have been drowning!
Instead, we found a $180,000 beauty in a modest neighborhood, and quickly put another $15K into an open floor plan kitchen remodel.
Since then, our modest ~1,200 square feet has been absolutely perfect for us and the pets, and I can honestly say I never find myself day dreaming about something bigger or more expensive.
But the most interesting development on this front is that our housing costs, as a percentage of annual spending, actually went went down, from 33% last year to 32% this year. I view this as a sign of one of the biggest benefits of owning your own place – you actually lock in your mortgage payment at current price levels, forever. As inflation continues to rise through 2020 and beyond, we’re still paying our “rent” at 2018 prices. Pretty sweet deal!
Groceries: $2,475 (8%)
That’s about $48 per week, which is up from our usual $35 per week on groceries. Not surprising with all the quarantine home cooking.
Dining Out: $3,547 (12%)
I’m a sucker for a fancy meal out, and when I upped this year’s budget, dining out was the first category I was excited to go wild with.
COVID did its best to put a damper on that spending, but we fought back!
Knowing a ton of local restaurants were struggling we were not, we made a conscious effort to get lots of take out from our favorite locally owned spots. At times I actually viewed this spending like giving to a community charity, which is an impressive feat of mental jujitsu to help justify something I really wanted to do anyway.
We humans are funny like that…
Entertainment: $1,747 (6%)
Another category that COVID put the big kabosh on. Apparently, board games and zoom calls are less expensive than live concerts and sporting events. Who knew?
Vehicle Expenses: $962 (3%)
The $13,000 Mazda 3 is up to 35,000 miles and was shockingly cheap to own in 2020. (About $500 under budget.)
Fate loves irony though, which is probably why just a couple days into 2021, I hit a patch of ice and found myself saddled with a $1,000 deductible to fix my shattered headlight and bumper.
You just gotta laugh at 30 seconds of driving costing you more than the past 365 days. An important reminder for how quickly things can go sour behind a wheel. And if those things can be fixed with money, I should count myself lucky.
Gas: $425 (1%)
Average mpg on the year – 35.4!
House Expenses: $1,040 (3%)
I’m considering axing this category all together.
My “rent” payment includes about $150 per month to a home maintenance fund that Lady Money Wizard and I use to fund any big projects. So in reality, this category is usually just the stuff that we accidentally pay out of our normal account. (Or when we’re too lazy to make a transfer to track things properly.)
Gym: $852 (3%)
When COVID hit, I traded my gym membership for a $375 Peloton knockoff and a $30 set of gymnastics rings. So far, I’m really enjoying it, and I may never go back to a Globo-Gym again.
Pets: $1,453 (5%)
These guys ain’t cheap. But can you put a price on this loving family!?
Travel: $6,176 (20%)
This was the most surprising category for me.
After March, I didn’t take a single flight in 2020. What’s more, Lady Money Wizard and I traded the usual trips to Costa Rica and Alaska for the likes of Northern Shore, Minnesota and Upper Peninsula, Michigan.
And still, somehow I went over budget!
Note to self… definitely need to up the travel budget when things open back up…
…Just don’t want to get caught in a February 2021 Cancun Airport crowd (real pic below)
Materialistic: $799 (3%)
Interestingly, this really came down to just three major purchases. Two of which I consider to be some of the best money I spent all year:
- A $100 pair of running shoes. 2020 will go down as the first year of my life that I started enjoying running. This is absolutely shocking for a guy who used to think running was just something angry high-school coaches made you do whenever you were in trouble. Instead, I found myself addicted to the freeing feeling of moving those feet, and I got a little obsessed with trying to get my one-mile time as low as possible. (From gasping for breath and worried I might keel over and die at 9 minutes per mile to right around 7 minutes flat… hoping to hit a 6 minute mile in 2021!)
- A $300 Vitamix blender: This might be one of the most life changing things I ever bought. I now have healthy smoothies 3-5 times per week, and I feel great.
- A $150 Demeyere Sauce Pan: Cooking at home so much made me want to upgrade some tools. (And avoid terrifying Teflon coating flaking off and giving me cancer…)
Medical: $29 (0%)
Truly, the most important category. Especially with everything going on in the world this year.
Wealth is nothing without health. I couldn’t feel more fortunate.
Other: $1,293 (4%)
Mostly gifts and some charitable giving.
Total 2020 Savings: $58,249 (65% Savings Rate)
Okay, that’s just redonkulous…
The first thing that needs to be said up front is that I made a lot of money in 2020.
I was extremely fortunate to keep my job in a year when many weren’t. And that job paid a salary around $105,000 which resulted in an after-tax income of around $62K.
From there, my weak attempt at upping my annual spending meant I still saved $30,963 of that take home pay. Mixed with $19,500 of my own contributions to my 401K plus my employer’s matching, I was able to save a total of $58,249 during the year.
Here’s the wild part, though. Compound interest was even more powerful than my salary was, again proving that your money can work harder than you can. (Even if you have a high paying job…)
- During 2020, my net worth increased from $353,011 to $473,457.
- $58,429 of that increase was from my own savings, while $62,017 was from return on investments.
(Also interesting that those investment returns doubled my annual spending. In other words, I could have hypothetically had no job this year and still grown my net worth by about $30K. Sure, it was a crazy bull year in the stock market, but this is definitely a sign that I’m getting really, really close to financial freedom!)
- This is only my info and does not include any of Lady Money Wizard’s earnings or savings. (We planned on combining finances when we got married, but we delayed the wedding because of COVID. Hopefully in 2021!)
- Income from this blog isn’t counted. I keep those earnings in a separate account in an effort to keep this blog’s experiment as relatable to the average office worker as possible. Maybe one day I’ll pursue some fun investments with those earnings?
What this article means for you
I have no idea.
But hopefully this TMI level of transparency was helpful to you in some way.
These days, my salary is definitely getting higher, but the fundamentals are still the same.
- Focused savings on the only 3 expenses that matter. No matter how high my salary was, it wouldn’t have mattered if I blew it all on an expensive house or overpriced car. Instead, living FAR below my means on these three categories helped pour some gasoline on my fire of savings. (Same as when I was a new-grad making $50K)
- Steady contributions into low cost investments. It’s easy to get distracted by my recent dabbling in cryptocurrencies, but in 2020, over 80% of my investments were still dollar cost averaged into Vanguard’s Total Stock Market Index Fund or similar 401(k) index funds.
Thanks for reading!
PS – If you want the spreadsheet I used to calculate all this, be sure to sign up for the Money Wizard newsletter. I’ll be releasing it exclusively to email subscribers soon!