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Diary to constrain spending

74K views 324 replies 51 participants last post by  james4beach 
#1 ·
I moved to the US for a new job (all amounts in USD). My monthly spending went up entirely due to travel (exploring the region and frequent visits home). I fear I'm letting my spending run away from me and getting in that trap of higher income & higher expenses. I don't want to get used to an expensive lifestyle.

I recently got a raise, and now I want to make sure I keep my spending in check so that I actually get ahead and don't squander my raise. Like Mr. Money Mustache, I think it's critical to have a high savings rate.

My take-home pay is $5,900/month, and I've tried to adjust for tax refunds, dual-country taxes, etc
Goal: save $3,000/month, spend $2,900/month to achieve a 51% savings rate.

This is realistic and very doable as I budgeted these amounts based on my long-term averages.
 
#2 ·
I'm really focusing on spending through all of this. Here is my monthly spending in 2014. That year was quite typical of my pattern (previous years had similar averages)

April2,447
May3,078
June2,880
July2,710
August4,398
September2,643
October2,191
November2,384
December2,293
2014 Average2,780

And 2015 so far. You can see how it's running away from me:

January3,009
February2,629
March3,178
April3,990
May3,498
June3,137
July3,767
2015 Average so far3,315
 
#3 ·
Additionally, to hit my monthly spending goal of 2,900 here are the guidelines based on my past averages. Single with an apartment in the city core:

Food: 380
Rent + utilities: 1,420
Travel/transportation: 400
Services incl cell: 140
Home essentials: 110
Consumer goods: 80
Entertainment: 200
Health-related: 80
Gifts/donations: 50
Uncategorized: 40 (this is avg of infrequent big purchases)
 
#7 ·
Geez when you said you had "high spending" in another thread last week I wasn't picturing this James! Well done. Not many people are saving so much of their income, especially living alone...

I've taken less interest in budgeting monthly as I used to. I don't really see the point anymore. Just make sure your core expenses are efficient and low (rent, food, transportation, phone/tv/internet) and make sure that the extras are worthwhile to you, and you're good to go. Don't fret over spending 4 or 5k in a month when you're budget is 3k, so long as that extra spending has been on something worthwhile (like a surfing trip down south?).

I also used to like MMM's chart with the math about savings rate, but I now think it's kinda silly. I mean I get the point, but when it comes down to it savings rate % is NOT the most important factor when determining when you'll retire, not at all. The most important things, in order, are: your spending during retirement, investment returns, and your saving amount (not rate) while working.

Someone who makes 30k net, saves 20k and spends 10k living frugally is "killing it" according to the MMM chart. But you, who are spending 36k and saving 36k, have a "longer" time to retirement according to the charts because you "only" save 50%. I'd call bullshit on that. When it comes down to it, after 15 years he'll have some amount of money, and you'll have some amount that is twice as much. They'll say "but you spent so much while you were working so you'll spend that much when you're retired too" I'd call bullshit on that as well. It's easy as pie to cut back your spending whenever you want! Sure it might be a bit tougher if you're 40 with a mortgage, wife, and 3 kids... But when retiring/quitting work, I don't see why one cannot revamp their life extensively to accommodate any spending level they require, regardless of past spending.

Overall I think MAKING more money is much more important than saving more money. Don't get caught in the MMM frugality trap where your savings rate is the all-important indicator of success. Budgeting, discount shopping, and reading about frugality all the time are very real drains on your brain. You only have so much mental energy to spend, and if you spend too much on frugality then other, more important things, are GOING to get pushed out. Things like investing, developing ways to improve your career/business, making side income, taking care of your health, etc.

Of course I know know MMM has articles refuting what I've said, and insisting that frugality/savings is more important than income. But my post is getting too long already so I'll just leave it at that for now. :)
 
#8 · (Edited)
Thanks for the encouragement, everyone.

peterk, I continue to debate this with myself. I've landed on the side of aiming for a certain annual expense target (35 K for me), but not depriving myself of things I want... like the surfing trip :) I still think that recording and tracking is a great exercise. But I fully forgive myself the high expense months, like the $4,398 month last year when I did two surfing trips and toured the Oregon coast. Worth every penny.

You might have a point that expenses can easily adjust downward in retirement. Suddenly you gain flexibility in when you travel, book trips, etc. One reason my trips are so expensive is that I'm always booking around tight work schedules with limited windows, and I get forced into expensive tickets. That wouldn't happen when you're retired.

Also - I'm not quite as nutty as I sound. My employment has been very boom & bust (due to the technical consulting field I'm in) and it would be very normal to encounter another year without income. Right now, business is great so I'm trying to save for a rainy day and 51% savings is feasible today. In two or three years it might not be and I may not be able to save anything, so the high savings rate is my protection. Averaged over say the last 10 years, my savings rate is well below 50%
 
#13 ·
Saving 50% of salary is rough when you have a spouse / kids. It can be done for sure, with discipline (depending on income).

I am not currently able to save 50% of my take-home pay. I am around 40% net salary if you include DB pension plan contributions, but it requires discipline for sure...
 
#14 · (Edited)
Monthly update. August spending: $2,940

I got close to the goal of spending less than 2,900 a month. I'm pleased with this. August has been my lowest spending in six months and I definitely made efforts -- switched Internet providers, used public transit more, and ate out less. Thanks everyone for the encouragement :)

Fun was not negatively impacted. I did my surfing trip to California!
 
#28 · (Edited)
only if you and you spouse are in different tax brackets.
We are (I'm in lower), but I believe there's a higher chance of him working longer and making more, so no rush, he can open a spousal account in 10 years or never :)

if you have RRSp room, than why do invest into Cash account?
The only cash account we have is joint HISA for "emergencies" (and I don't consider it investing :)) So until we max out registered - no unregistered...

(I'll answer any further questions in my thread - James, I'm sorry, I was just trying to make a point that wife will not spend all your money! lol)
 
#30 ·
I always give vacation/travel spending a pass. I make sure I'm not going nuts with it, of course, but I don't include it when I'm assessing my spending habits. At the end of the year I look at my non-rent, non-grocery, non-vacation expenditures, and as long as they are well below $1,000/month (on an annual basis), I am happy. :)
 
#31 · (Edited)
Monthly update. October spending: $2,781 which is below my monthly spending goal of 2900

This month: 5900 net income - 2781 spent = 3119 saved (53% savings)

Very pleased with myself, this was my lowest monthly spending in eight months. I'll tally it up at the end of the year to see what savings rate I've achieved for the calendar year. Additionally, there are faint early signs of potential trouble ahead at our company. Since boom & bust in my field is inevitable, this gives me an added reason to keep the savings rate high in anticipation of potential unemployment.
 
#32 ·
The monthly savings rate isn't too important... there's too much volatility and large purchases that could easily shift one month to the next. For my monthly updates, I'm going to add trailing 12 month savings rate: the savings rate over the last 12 months

October spending: $2,781
Total spent in last 12 months: $36,701

Trailing 12 month savings rate: 48.2%
 
#34 · (Edited)
Monthly update and yearly total for 2015. I continue to be a bit shy of the overall goal for the year so I have to keep watching my expenses carefully. There will be a bit more pressure on this next year as my rent has been raised 5%

December spending: $2,805
Total spent in last 12 months: $37,540

Trailing 12 mo. savings rate: 47.0%
 
#36 ·
I have nothing against saving, and all the more power to you. Keep it up.

With my financial plan, most of my "savings" came from investing and capital gains. When I was younger I lived frugally and saved. After age 40, I essentially did not save much from my income. My savings came from my investments. Once I got my seed money for investing going, I saved less and just let my best investments run.

There is nothing like buying assets that produce income, and using the income to buy more assets that produce income.

Look at a long term chart of RY for example. Starting in the mid '90's it steadily chugged along right through the tech bust consistently spitting out increasing dividends up to the present. The big pothole was 08-09 from which it quickly recovered. If you put your savings into companies such as that, in 10 years you might not feel like having to save anymore because the investments save for you.
 
#39 ·
With my financial plan, most of my "savings" came from investing and capital gains. When I was younger I lived frugally and saved. After age 40, I essentially did not save much from my income. My savings came from my investments. Once I got my seed money for investing going, I saved less and just let my best investments run.
That's my plan too. *hopefully* after this year I should have a enough capital invested to give me an effectively high savings rate without actually saving anything anymore. I'll be glad when this austerity period of my life is over. Saving is not exactly fun.
 
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