Progress to Freedom 35: 2015 Annual Update
Year end round up time: I thought I’d compare our financial situation over the last two years and see if tracking our expenses publicly and in more detail made a difference in helping us level up our frugality and reach our goals.
Average Monthly Expenses
|Health & Fitness||$330||$360|
I pronounce no major difference on the big stuff, and some wins on the smaller stuff.
Reduced housing spending is the big win, that came from refinancing our mortgage, not from any change of habit we made. Decreased housing costs were offset by the addition of child related expenses. A summary of one year of baby expenses is interesting enough for it’s own post; it turns out the majority (~90%) was paying for daycare, everything else was relatively cheap (no $1000 robotic folding stroller here). Childcare costs will increase as we go into a full year with neither of us on parental leave. Every now and then, having unprotected sex has consequences 🙂
Child related spending displaced travel as our second largest category of expenses (first-world-problems and all that). We spent ~$5000 last year on travel; someone tells me this isn’t too bad, and thanks to aggressive travel hacking we managed to take nine trips for three people with that amount. Either way, it’s a big chunk of our spending, and one I don’t see it being reduced immediately.
Not As Big Stuff
We managed to slash our eating-out costs in half, and reduced our grocery spending by 15%. I think we’re eating better and more lavishly than ever before, so this was a win-win. It’d be easy to discount the relatively small amounts involved, but reducing our food costs by $100 a month means we can feed ourselves for the rest of our lives with $90,000 saved, instead of needing over $120,000. We reduced the amount of money needed for early retirement by over $30,000! I will count that as a victory.
A few other small wins in reducing dog related expenses (mainly starting DIY grooming), and reductions in our driving and miscellaneous expenses were offset by increased bills and utilities, mostly associated with the cable company not buying our annual threat to cancel our internet if they don’t continue their new customer promo rate (they finally yielded at the end of the year).
On the transportation front, we went from one of us working from home and the other biking to work, to the other one working from home while one drives to work; if we kept this silly multiple mile commute thing up, we’d consider buying an electric car; instead we’re hatching plans to reduce or remove the car commuting. The only way to win the commuting game is not to play.
2014 Average Monthly Income: $17,000
2015 Average Monthly Income: $20,000
We spent like drunken sailors, and got paid by even drunker sailors.
It’s tempting to argue that reducing our spending wasn’t as big of a deal as our increased income. By keeping our expenses low, we’re able to sock away as much money as possible. My new favorite saying is “make hay while the sun shines”. We don’t expect these ridiculous salaries to last forever, and lifestyle inflation is a horrible thing to undergo.
Increased income is still pretty nice, and at least part of that has to do with quitting our jobs, and finding new ones. Maybe we should quit our jobs again this year and see what happens. Freedom33 also has a nice ring to it right? Even if it isn’t a round number.
We finished the year with a savings rate of 78%, or 81% if you count mortgage principal payments as savings. Our goal was to try and hit a 80% savings rate, and we’ll call it successful. If accounting tricks are good enough for large corporations, we’ll say they are good enough for us.
2014 Year End Net-worth: ~$700,000
2015 Year End Net-worth: ~$875,000
Flat markets meant we lacked headwinds to help us get richer. Combined with a large (by our standards) charitable contribution timed to improve our tax situation, our net-worth increased for the year by less than the difference between our income and spending.
Progress to Freedom35
Financial Independence and Early Retirement Goal: Q1 2018. On Target
Our aggressive estimates say we could essentially retire now, while our most conservative projections say we have to keep working until 2020. We’re happy to split the difference in the middle and say we are on track to meet our goals.
We’ve been having a lot of fun and think we are doing pretty well. We’ve lately been toying with the idea of pulling the plug even earlier (we wouldn’t be the only ones), or setting ourselves up for new adventures in exciting places. We’ll keep you appraised on our thought processes. Thanks for reading!