Photo: A mountain range near Taos, NM. Taken March 2016.
Last year, I had set a goal to do a monthly update on spending each month. This year, I have decided to do a spending rate article every quarter. This way I can devote more time on other articles. As you may recall, our 2016 goal is a 35% savings rate, mainly because we did not hit our goal last year and the fact that we now have a mortgage payment. Below, you will find the spending rate for January 2016.
The image above shows our 2016 January spending rate, which shows most of our spending going towards Savings and Mortgage expenses. Below is the percentage breakdown of the spending rate:
- Savings: 39% (includes principal from mortgage)
- Mortgage: 13% (only includes taxes & interest)
- Donations: 8%
- Groceries: 6%
- Household: 6%
- Vacation/Travel: 5% (Visiting Phoenix and Tucson)
- Work Expenses: 3% (Licensing Test for my wife)
- Other: 20%
I was pleasantly surprised to find out that our savings rate was above our 35% goal for the year and it sets us up on a good solid footing for the remainder of the year. About 52% of our expenses went to two categories. That's good news for the future (when the house i paid off). Next, let's look at the February 2016 spending chart.
The image above shows our 2016 February spending rate, which shows most of our spending going towards Savings, Auto and Mortgage. Below is the percentage breakdown of the spending rate:
- Savings: 45% (includes principal from mortgage)
- Auto: 16% (Major Car repair on my car)
- Mortgage: 13% (only includes taxes & interest)
- Donations: 6%
- Groceries: 4%
- Other: 16%
In February, we had a windfall come in and we were able to dump a lot of money into savings and we even dumped a lot of extra income on the mortgage. Luckily, we had this extra income, because of my car repair that was a pretty big chunk of money. The beauty of having a solid financial footing is that a major car repair does not feel like a lot. It is amazing the way that different expenses affect you as you grow in your financial journey. Before an emergency fund, $350 new tires stressed me out, but now I am not stressed out because of our emergency fund. Next, let's look at the March spending rate.
The image above shows our 2016 March spending rate, which shows most of our spending going towards Savings, Travel and Mortgage. Below is the percentage breakdown of the spending rate:
- Savings: 32% (includes principal from mortgage)
- Vacation/Travel: 16% (Traveled to New Mexico)
- Mortgage: 15% (only includes taxes & interest)
- Household: 7%
- Utilities: 6%
- Groceries: 5%
- Health & Fitness: 4%
- Other: 13%
This is the first month of the year that our savings rate fell below the goal for the year. This could be attributed to our vacation to New Mexico to go skiing. Other than that, we are seeing a constant trend of savings in the 30 percent range and that is good news for the future. It was amazing to see the differences and similarities in spending over the course of the three months. This is why it is very beneficial to track your spending, because you get to see where your money is going and that allows you to try to cut expenses. Below, I will show our yearly savings rate and the current yearly total.
The year has started of positively with a 41% savings rate. This is six percentage points above our 2016 goal. Below, you will find the 2016 current spending rate and how it compares to the 2015 spending rate.
- Savings: 41% - Increased 1% from December
- Mortgage: 13% - Increased 9% from December
- Auto: 10% - Increased 5% from December
- Donations: 6% - Decreased 4% from December
- Vacation/Travel: 5% - No Change from December
- Groceries: 5% - No Change from December
- Household: 4% - No Change from December
Lastly, I want to compare the 2016 savings rate to the 2014 and 2015 savings rate..
2014 Savings Rate: 29%
2015 Savings Rate: 40%
Current 2016 Savings Rate: 41%
The great news is that our hard work in 2015 of cutting expenses has continued to bear lots of fruit. Three months into 2016, we are on pace with 2015 and that is very rewarding.
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