Here's Your Change!
2017 was a big year financially for me. Change was inevitable but I had been procrastinating for some time. I was relatively conservative with my money over the last few years in all but one category: food! Those that know me are aware that I love good food. Not married and no kids, I didn't have the discipline to buckle down on my eating out before this year. Breakfast consisted of diners for bacon, eggs, hash browns, pancakes and coffee. Lunches were places I hit up with the guys from work like Mexican restaurants, Five Guys, establishments with wings and burgers. Dinner was usually a Fatz Café, Applebee's, J Peters or Coopers that offered steaks, potatoes, macaroni, steamed vegetables and dinner rolls.
I purchased a home in June of this year and quickly saw my accounts draining. So I went back for a 12 month analysis of my food spending. On a conservative month, I was spending no less than $1,000 a month on food. Most months ranged from $1,200 to $1,500 and peak months saw well over $2,000. Up until the home purchase, I didn't view the spending as a problem (or so I told myself). I live in SC and cost of living is very affordable. I was single and my only responsibility was to me. About the third month in my new place, adding in the costs of painting, cleaning, some renovations (remember my place needed some work from a previous post), I burned through about $10,000 very quickly.
So October saw a dramatic change. I developed an aggressive budget to fit my desired life style financially (Debt free by 33!). I was already putting maximum amount in the 401K, had refinanced the truck to pay off sooner rather than later, and was doubling up on a loan and medical bills. From Gross Income, I had 25% in taxes, 14% to 401K, 3% to health insurance (single, no kids) and 3% to Church (working on 10%). This left me with 55% of my gross income and allocated to net income. I then added up my fixed costs in percentages relative to net income:
- 20% to Mortgage (Including P&I)
- 20% to Truck Payment
- 7% to Loan (Motorcycle)
- 7% to Vehicle Insurance (Truck and Motorcycle)
- 6% to Medical Bills
- 5% to Utilities (Electricity, Water, Sewer, Trash)
- 5% to Phone
- 4% to Property Taxes
- 1.5% to HOA
- 1.5% to Internet
- .5% to TV services (Netflix and shared cost of Amazon Prime annual expense)
- .5% to Annual Expenses (CWP, Antivirus subscriptions, Fishing License, etc.)
22% was all that was left from Net Income. Not such a large number. Especially because its 22% of net income which is 55% of gross income. Therefor, all I had left was about 12% of my salary to spend on food, fuel, haircuts, chiropractor visits, household items, clothing, entertainment and I STILL needed to squeeze a few dollars into the savings account! After estimating out the other costs, I came to the realization that I had 5% of my salary that I could spend on food. Now, I love my Chase Rewards cards, but it was time for them to be grounded. I calculated weekly withdrawals and now handle my food, fuel and other variable costs in cash. When the funds run out, then that's it. Backup plan: If you run out of cash, find other areas to borrow from. If that fails, time to sell an item that isn't value added in your home.
Report: I've been doing this since week 40 this year (first week of October) and it is now week 48. In October, I went over budget by $30.00 for the month and in November I am trending to stay under budget with an extra $6.31 to contribute to savings. By the way, I made up for the $30.00 loss in October by selling one item on eBay and skipping a haircut. Keep up the saving and continue to crunch those numbers! Your future depends on it.
Future: Always have a plan. Be aware of your finances because no one else is going to do it for you. For my future state (as I begin to layout my 2018 budget and goals) the Truck, Harley and Medical expenses are paid off (April, July and October respectively). I will be tripling up on the mortgage payment by November (goal to pay off in 5 years). Also, I will gain another college degree in business in May. I plan to take the summer off from school before diving into the MBA program. Experimenting is over and its time to launch a supplemental income campaign to quadruple up on the mortgage payment. More to follow on the side gigs I've tried from organic mushroom farming to eBay/Craigslist flipping!
I purchased a home in June of this year and quickly saw my accounts draining. So I went back for a 12 month analysis of my food spending. On a conservative month, I was spending no less than $1,000 a month on food. Most months ranged from $1,200 to $1,500 and peak months saw well over $2,000. Up until the home purchase, I didn't view the spending as a problem (or so I told myself). I live in SC and cost of living is very affordable. I was single and my only responsibility was to me. About the third month in my new place, adding in the costs of painting, cleaning, some renovations (remember my place needed some work from a previous post), I burned through about $10,000 very quickly.
So October saw a dramatic change. I developed an aggressive budget to fit my desired life style financially (Debt free by 33!). I was already putting maximum amount in the 401K, had refinanced the truck to pay off sooner rather than later, and was doubling up on a loan and medical bills. From Gross Income, I had 25% in taxes, 14% to 401K, 3% to health insurance (single, no kids) and 3% to Church (working on 10%). This left me with 55% of my gross income and allocated to net income. I then added up my fixed costs in percentages relative to net income:
- 20% to Mortgage (Including P&I)
- 20% to Truck Payment
- 7% to Loan (Motorcycle)
- 7% to Vehicle Insurance (Truck and Motorcycle)
- 6% to Medical Bills
- 5% to Utilities (Electricity, Water, Sewer, Trash)
- 5% to Phone
- 4% to Property Taxes
- 1.5% to HOA
- 1.5% to Internet
- .5% to TV services (Netflix and shared cost of Amazon Prime annual expense)
- .5% to Annual Expenses (CWP, Antivirus subscriptions, Fishing License, etc.)
22% was all that was left from Net Income. Not such a large number. Especially because its 22% of net income which is 55% of gross income. Therefor, all I had left was about 12% of my salary to spend on food, fuel, haircuts, chiropractor visits, household items, clothing, entertainment and I STILL needed to squeeze a few dollars into the savings account! After estimating out the other costs, I came to the realization that I had 5% of my salary that I could spend on food. Now, I love my Chase Rewards cards, but it was time for them to be grounded. I calculated weekly withdrawals and now handle my food, fuel and other variable costs in cash. When the funds run out, then that's it. Backup plan: If you run out of cash, find other areas to borrow from. If that fails, time to sell an item that isn't value added in your home.
Report: I've been doing this since week 40 this year (first week of October) and it is now week 48. In October, I went over budget by $30.00 for the month and in November I am trending to stay under budget with an extra $6.31 to contribute to savings. By the way, I made up for the $30.00 loss in October by selling one item on eBay and skipping a haircut. Keep up the saving and continue to crunch those numbers! Your future depends on it.
Future: Always have a plan. Be aware of your finances because no one else is going to do it for you. For my future state (as I begin to layout my 2018 budget and goals) the Truck, Harley and Medical expenses are paid off (April, July and October respectively). I will be tripling up on the mortgage payment by November (goal to pay off in 5 years). Also, I will gain another college degree in business in May. I plan to take the summer off from school before diving into the MBA program. Experimenting is over and its time to launch a supplemental income campaign to quadruple up on the mortgage payment. More to follow on the side gigs I've tried from organic mushroom farming to eBay/Craigslist flipping!
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