Phew. July is over. It was our worst spending month since starting this journey. Granted, we had a baby this month (yay!), which threw us 100% off our routines… so… I’m not going to beat myself up too much over it. But it still doesn’t feel good.
Today, though, my mother-in-law, who came to help out with the new baby, went home after 2 1/2 weeks staying with us, and we’re ready to return to normalcy.
(image source luiz monteiro)
What exactly brought us so far off course? Well, let’s take a look at July’s variable spending by category:
|Avg. pre-Greener Pastures||Avg. Post-Greener Pastures||July|
|Home furnishings & home improvement||$1,600||$1,054||$1,814|
I’ve called out some particularly high expenditures in red. WHOA. Look at all that spending on home goods, home furnishings, and home improvements!! WHAT THE WHAT?!?!??!
Ok, calm down. My mother-in-law was here. She can’t sit still. My husband and I have both been home from work on maternity/paternity leave. House projects have been getting done with wanton abandon. We installed ceiling fans in 2 bedrooms. We bought furniture for a room that we’ve been trying (and failing) to use as both a study and a guest room. We finally got a mattress we like in our bedroom, and bedding to fit it. We had someone come to take photos of our newborn and toddler.
I have to think these home improvement/furnishing costs will eventually get under control on their own — we moved into our house 2 years ago, and it’s been a long, slow process of setting up shop. Eventually, everything will be in its right place, and although there will always be unexpected repairs and improvements, hopefully the number and pace of them will slow down over time. Also, although we’re still spending money on these things, we’ve changed how we get them. We’re taking much greater advantage of Craigslist and neighborhood groups to buy nice things at a fraction of retail costs. For example, we got an IKEA crib in great condition for our new baby for free off a parenting group; we got a futon for our study/guest room off of Craigslist instead of buying new. We got a simple but attractive table to use as a desk from IKEA instead of a $650 desk from West Elm. With each purchase, we consider cost before taking the plunge.
What else did we spend on? Several big costs this month are things that should be annualized — our HOA hired window washers, which they do once per year. That would normally come out of our HOA fund, except that the HOA has never gotten its act together to set up a fund, so instead we’ve been paying for shared expenses as they come up. We had to renew our car’s registration. We had to pay the annual registration fee for daycare. So I’ve increased the amount we set aside for annual recurring fees to account for these expenses. That way next year they’ll already be saved for and won’t come as a surprise.
I do this with many expenses to smooth out our monthly expenditures, and I suggest you do the same. Here are all the things we pay annually that I set money aside for each month (including the new additions mentioned above): Property taxes, life insurance premiums, insurance on my engagement ring, daycare registration fee, window washing, annual testing of our water system (required by the city), car registration, money to pay up next year’s maximum IRA contribution. These go by an automatic deposit each month into a Betterment account, which I’ll tap into once these expenses arise again in 2018. In addition to smoothing out spending month to month, setting aside like this makes it easier to see the true cost of our lifestyle. The true cost of our home, for example, is not just our mortgage — it also includes our property taxes and any HOA expenses. The true cost of owning our car is not just gas, tolls, repairs, and insurance — it also includes the registration fee. And the true cost of having kids in daycare includes the annual registration fee. Without putting these into the fixed expenses category and setting aside for them each month, I think these big annual fees would get lost in the shuffle, leaving us wondering, where does all the money go?!
So that explains the higher-than-usual spending on home stuff, kids, and car stuff, leaving the entertainment category. That one’s high for July because we threw a barbecue to celebrate our son’s birthday and the arrival of baby #2. And you know what? I’m not sweating it. The barbecue was one of the best days of the year. Tons of our friends came and hung out in the park near our house, where we reserved picnic tables and a grill. It was a gorgeous summer day. We cooked all of the food for the party ourselves rather than having it catered or renting out a restaurant. It was a low-key and highly enjoyable affair that cost a few hundred dollars. I wouldn’t give up having done it, and I think we did it in a pretty low-cost way.
So, how are we course-correcting? Annoyingly, some of July’s expenses have bled over into August — the futon purchase, and the remainder of the photography expense, will hit this month. So we’re already starting off behind. But I’m going to redouble our efforts at spending at an $80,000 annual level. Since I set that goal back at the end of May, we have not had a single week where we’ve managed to spend at that level. So my goal for August is to have at least 1 week where we hit the $80,000 level. And, we will also strive to spend 15% less than our 2016 average, which would make August our best month since starting this journey (so far, our best month has been Mid-April to Mid-May, where we were 11% under 2016’s average):
|Total spending (incl. pre-tax items)||$11,344||$11,088||$10,914||$8,136||$8,340||$9,755|
|% change over previous month||-2%||-2%||-25%||3%||17%|
|% change over 2016 average||24%||21%||19%||-11%||-9%||6%|
Specifically how will we do this? Even though we’ve been smarter about our home goods purchases, I’m considering instituting a home goods/home improvement moratorium for a few weeks. We’ll continue chipping away at our food expenses, and try to use what we have in the house and make some especially low-cost meals for a few weeks. And, with any luck, no more unexpected annual expenses will blindside us in August. Stay tuned to find out how we do.