What’s the opposite of frugal? Me, if our 2017 budget is any indication. While I’ve never shared an exact breakdown of our monthly budget, I have hinted at it here and here. And since our budget for January will match all the other months, it’s pretty easy to run the numbers for the year. We’re going to clock in right around $40,000 for the year. My poor heart! Grab the paddles!
So how did we get so lost? That’s actually partly why I don’t share an exact breakdown. Because my fear is that I know exactly what you all will do. Because I do it too. You’d focus on the extras. I know our cell phones are too expensive. I know we could cut cable all the way to save some money. But when you get right down to it, our budget isn’t all that excessive.
Take our spending money for the month. Each month, we set aside $300 for the two of us. That could include dinners out, but it also includes things like prescription refills and medical co-pays. Or dental visits because Mr. P’s dental insurance is
kind of really a joke. It’s not all shits and giggles. But that $300 line item might look that way on paper.
But let’s say I’m going to be absolutely ruthless and cut everything from our budget. I’ll kiss our cleaning service goodbye. Mr. P will host a 21-click salute for cable. We’ll switch to a low-cost cell phone carrier. You know what I’d save? Around $210 a month or $2520 a year. That still leaves our budget just shy of $40K.
That’s not to say that small changes are nothing. They do add up. And I will continue to seek them out. Any extra money–no matter how much or how little–we can avoid spending can go towards saving. Or the real budget killer: our debt.
It turns out that our budget, while not quite barebones, is actually pretty frugal aside from one thing. If I “Eeny, Meeny, Miny, Moe” through every line item in our budget, the most significant way to make a difference is to get rid of our mortgage. At just under $1000 a month, it is colossal compared to everything else. Well, everything except the $700 a month we set aside for property taxes. I might live in the Midwest, but when it comes to taxes, this sweet little slice of suburbia is more Chicago than anything else.
So if I look at the $40,000 we are on pace to spend this year, we aren’t looking terribly frugal. In fact, I might be downright laughable considering all the time I spend on the internet talking about money. But in less than ten years, that $40,000 will drop to $28,000 once we kick our mortgage to the curb for good. Now we’re talking.
So Tell Me…Has your budget ever looked misleading? Do you know how much you’re on pace to spend this year?
I have no idea what I’m on pace to spend this year, and I don’t care to know. If I did I’d probably start comparing myself to everyone else who has released their yearly spending goals. Right now, I think I’m at my best when I take it one month at a time because no two months are ever the same. My wife and I have our priorities, and we budget around those. There’s an ebb and flow as the year goes on, and we roll with the punches. I get the sense that you and your husband are pretty dialed in to your priorities, and there’s no need to make apologies for that 🙂
My budget is literally a Google Sheet copies from month to month with me changing the title! It’s been that way since 2015. The only part that ever gets adjusted is the savings rate when we get our raises. So it kind of frustrates me to think that we’ve been spending $40K for three years in a row, but at the same time…it makes me really happy to know that our savings rate has increased a ton, but our budget hasn’t moved.
Good for you Penny, and you are probably much happier, than just flying by the seat of your pants.
Great post Penny and thanks for sharing. It will be great once that mortgage disappears. You can’t cut back to the bone on everything in your budget so $40k sounds ok to me. Mr. P and yourself need to have some fun. Take care 🙂
I needed that reminder, Matthew. Thank you for that 🙂 We do enjoy ourselves and that’s no small thing with how much people chase happiness!
Gwen @ Fiery Millennials
Soooooooooo remember how I say I’m not particularly frugal either? Yeah, definitely spent $41k in 2016. #notashamed
I lived in a fancy apartment close to work to “save money and time” but really, it would have been better for me to get a cheaper apartment 10-15 minutes away from work. My car gets good gas mileage. Anyways, what I’m saying is don’t beat yourself up over it. There’s no Internet Police that will find out and take away your blogger rights because you’re not Mrs. Frugalwoods. Frankly, I think the fact you’re doing so well saving for retirement on teachers’ salaries is BA!!
Thanks, Gwen! The whole teacher salary is sticky. I feel like a lot of people on Twitter said $40K isn’t bad. Sometimes, because they aren’t two teachers. But at the same time, I know how much our salaries will increase when we finish these next degrees. So maybe $40K really *is* a number to be happy with.
$40k for two people really isn’t that bad, especially considering the cost of your mortgage and property taxes. I came in at $21k for 2016 and that’s just for me, with a mortgage that’s paid off!
Life is for living and there’s absolutely nothing wrong with spending money on the things you enjoy or things you need. It’s cutting out the stuff you don’t value that’ll be the most helpful and it sounds like you’ve already done that.
Just do the best you can and don’t sweat the rest 🙂
That’s a really helpful perspective, Kate! Thank you 🙂 Having no mortgage sounds incredible!
Mrs. Picky Pincher
I completely understand your trepidation with sharing your financials. The great thing about it is you can reveal as much or as little as *you* want. 🙂
I started doing budget reports with specific numbers and we’ve totally gotten our butts handed to us by a few people–usually over silly things that I forgot to give background info on, like *why* we paid for an oil change in December.
I think frugality looks different for everybody. If you can afford an “extra” and it’s worth not having extra cash on hand, I say go for it. The extras do add up when you’re trying to get out of a tough debt situation, though. I keep a running list of all the things we’d eliminate if we were on tough times; I call it our “Bare Minimum.”
So it’s fine to have “silly” things in the budget as long as it works for you.
I think last year we spent around $45,000. That number is actually high for us since we purchased a house and had to deal with all kinds of little expenses. It should look way better for us in 2017. 🙂
I guess that’s what frustrates me. We do have some extras in our budget, but it is closer to the minimum than the maximum if that makes sense.
Seriously, people got upset that you paid for an oil change?!
Not gonna lie, having a little bit of a money blogger identity crisis. We always pay that $20-25, and consider it well-spent to not have to pay almost the same to recycle the oil anyway…
Agree 100%, Ms. Steward! I actually just read a post about all the money you could save changing your own oil, and it talked about throwing the oil away. Talk about disappointing!
Hmmm. We spend roughly $40k and I consider us frugal. Maybe I’m doing this wrong. And we do have cheap cell service and no cable. We don’t even have Netflix or a gym membership.
Time to do some investigating.
I don’t think so. If Twitter is to be believed, I need to calm down for a change. I think what distorts things for me is the fact that our mortgage and property taxes are close to 50% of our budget (not factoring in savings and investing). Of course, it should be much lower…but I think that’s only true if the other categories are higher. For example, I don’t think the typical household spends $200 a month on groceries. Because we’ve chipped away so well at some of the other categories, our housing seems astronomical. And spendy.
I’m shocked at how high your property tax is in comparison to your mortgage.
You guys seem pretty careful and you’re doing the best you can. So yeah, I’m with Twitter, Penny ought to calm down a bit. The good news is that once that mortgage is paid off, you can add some extra $$$ to your spending money and you will still be spending way less than you are now.
I also would say it’s fairly common for housing to be 40%-50% of one’s spending, very few of us are able to (or interested to) “hack” that.
Even for me, my rent/utilities is by far my highest category (unless you count saving….)
We could not have timed the purchase of our house better. The tax assessor couldn’t believe it wasn’t a short sale or a foreclosure. The sellers were going through a nasty divorce and the contract with the first buyer fell through. We swooped in…not knowing all the drama we were getting into!
So our mortgage is pretty low because we got a good deal and because it’s a 30-year mortgage. Our taxes are so high because we live in suburban Illinois. I believe our state has some of the highest, if not the highest, property taxes in the country.
I suppose I should take solace in the fact that the part of our budget that I didn’t include is the fact that we save 45% of our take-home pay (not counting what goes to our pensions).
No kidding! We compare ours to MMM and the difference seems insane, then we realize that a lot of it is insurance (health, disability, home, umbrella) and licensing fees/dues for work. Some is frivolous, of course, but most would be foolish to cut.
We could move to a smaller house to cut utilities, but I wonder what it would do to our marriage if we didn’t have space to spread out a bit. If we had to leave the house to get our alone time, it could be much more expensive. Or maybe not. Now you’ve got me thinking.
We definitely won’t be moving anytime soon if we have a say in it. As much as I hate, hate, hate our mortgage, I absolutely love where we live. Even in the winter. We’re both close to work and family on both sides. And we’re really lucky to all the miles and miles of trails around our house. It’s pretty unusual for suburban Illinois!
I am one of those Twitter people saying to calm down! We spend 35-40k a year, and the Frugalwoods, again unless I’m mistaken, also come fairly close to that mark. So, I was pretty shocked you were so upset that you do spend 40k.
I, too, if forced to take a guess, suspect that it comes from how little you all do spend on “extras,” compared to the rest of your budget. We’re sort of the opposite. We spend 35-40k, but house and daycare only comprise about a third of that spending. Everything else is, yes, necessities, but also a lot of fun stuff and luxuries. Do I want to cut back a little on that? Sure, but also I want my marriage to be happy, and hubby is not in the same place. I’ve decided since the amount is not so off-the-charts in the scheme of things (even though I wish we made more to overcome that amount), I won’t stress it.
This is wonderful, Ms. Steward. Yes, I appreciated the “take a breath” tweet 🙂 Our housing does look high because it is and because the rest of our budget is pretty minimal in most cases. I think you definitely have the right approach. And it’s one I need to adopt!
Kalie @ Pretend to Be Poor
Those are some steep property taxes! But if you like your location I’m sure it’s worth it. I really don’t think $40,000 is crazy these days considering costs like insurance, medical expenses, taxes, utilities, and a mortgage.
They are steep. And interestingly enough, we moved over one city to lower our taxes. Illinois is really good at taxing people…and less great about how they use that money.
Yeah, so about the frugalness – we just totaled up our 2016 vs 2015 and while we’re down ~$11k for 2016, we still spent around ~$102k. $48 of which was mortgage and daycare, both hitting about $2k/mo. Some months mortgage was slightly higher, some months daycare was slightly higher, so yeah….
That will all be detailed in next week’s post, but like MMM touts living off of $25k or whatever it is, our FIRE budget is still going to be around $50k because we’re counting allowances which make up ~$12k for the both of us. We could frugal more I’m sure, but we’re at a good enough spot for us.
That’s the key, finding a balance that works for you, regardless of what your final number is, and how it compares to everyone else’s. There will always be more frugal people and spendier people out there no matter how much you spend or save. Even in the PF blogosphere I know of bloggers that spend more than us, and many that spend less. I’m fine with where we are and that’s all that matters to me. 🙂
Yes, as long as you are comfortable where you are, that’s all that matters. We would seriously have to step up our income game to spend like that. But we also don’t have to deal with daycare (now? yet?). It makes my hands sweaty just thinking about how much that would change our budget!
Gary @ Super Saving Tips
I think that sounds perfectly frugal to me. Not every penny needs to be saved so long as the overall financial picture looks good. Our budget is actually higher than that, with the difference made up of our medical expenses (which are higher than our mortgage).
That’s another thing that makes me so uneasy. Right now, we are relatively healthy. But I cost my parents a small fortune growing up with chronic hives and then trying to get my thyroid issue properly diagnosed. I’ve only be hospitalized once on my own insurance, and that was a tough pill to swallow…and that was before I was even really worried about numbers!
Emily @ JohnJaneDoe
We spent more, and while some of it is due to having rentals (so basically $12K worth of business expenses), some of it’s not. Our expense tracker shows gems like $4324 spent on vacations last year. We’ll cut back this year on it, but I’m not sure by how much, and we can probably improve on groceries. But housing, taxes, insurance, car maintenance and gas are hard to budge.
Oh, this definitely doesn’t include vacations! I could easily fit Vegas into this budget because we can do it so cheaply. But Costa Rica came from side hustling (summer school and one season of coaching for Mr. P). We don’t put any side hustle numbers in our budget, just like we don’t put vacations in our budget. We figure if we can’t count on the money, we can’t bank on the vacation 🙂
Full Time Finance
Back when we had kids in daycare (before my wife’s transition to a stay at home mom last year) our numbers looked much worse. Day care added once 20k in unavoidable costs a year such that my wife could work, that cost is now gone since my wife is at home with the kids.
I have heard this from many teacher friends who have young kiddos! If both are teachers, most allocate one income to daycare and child expenses. They keep working, though, because of the yearly raises that come with the job. Not that the raises are a ton of money, but it’s really the only way to earn them. Gosh, this makes my hands sweat just to type!
I am joining the calm down chorus. Of course there are things that you *could* cut, but life isn’t all about spending as little as possible and enjoying nothing. It took me almost 5 years to switch my cell phone off my mom’s plan after she passed away (I paid for two cell phone lines for all those years. It was “only” $79/month but the stress of figuring out who to go to and what plan and data and text and changing my phone number paralyzed me and I focused my frugal efforts elsewhere.) There is something to be said for convenience and I don’t think a 40k spending between two people (which includes mortgage payments!) suggests that you’re living a life of mindless spending.
Does your spending include planned savings also?
You inspired me to look at my spending for last year and it was about $42k. Just me though, since Mr. Beach Life and I don’t combine finances. That doesn’t include a mortgage or property taxes for our shared house (Airbnb/ Mr. BL is responsible for that!) but does include paying off $8,565 of renovation debt and $2,606 for the new roof we put on the house in 2015. I hope that this year I can do better since the roof is already paid for and the reno debt will be gone by the end of April. I am shooting for $36k.
Nope, our savings isn’t in here. In our full budget, we allocate 45% of our take-home pay to savings. That doesn’t include the 10% of each of our salaries that go to funding our pensions, either. But the rub with savings (and partly why I don’t include it here) is because some is pure savings and some will ultimately go to debt repayment (mortgage).
Revanche @ A Gai Shan Life
Penny. Our spending will likely be more than twice your spending this coming year. I hate that but it’s true. There’s a lot going into that and I won’t break it down now but, well, hello HCOLA and a second household.
Absolutely! And you have JB and Seamus. Plus, you do a lot to support your family! So, yes, yes, yes. It totally makes sense why our budgets would look vastly different.
I still think you’re kicking all sorts of butt, friend.
Girl, you’re doing great especially considering teachers salaries these days!! One that mortgage is gone you’ll be blazing… I hate that taxes are so expensive here…and mostly for parts of the city I don’t often use. I really think Chicago needs its own county so the rest of the burbs can genuine relief. Regarding your budget, it would be hard to cut down any further without sacrificing quality of life. Keep doing what your doing!!
Thanks for the Chicago perspective, Miss Mazuma! I can’t complain about property taxes too much, though, since a fair amount of my salary is based on what homeowners are willing to pay! We could definitely move more rural, but teacher pay is even lower there (and often times, less resources for kids, etc., etc.). So I guess I should shut my mouth 😉
Amanda @ centsiblyrich
You are very intentional with your spending, Penny, and that’s HUGE. You know exactly where your money goes and you make conscious choices. Whether or not it’s considered frugal doesn’t matter, in my opinion. I think if you’re happy, that’s good enough! As our fellow bloggers have kindly reminded me before – personal finance is just that – personal! 🙂
I haven’t figured up exactly how much we spend last year yet but we bought a boat (albeit a used, older boat)! That’s not what most would consider a frugal money move.
I believe I’ve said this before on your site, Amanda, but I support the boat 100%. We used to travel all the time (and haul a real fixer upper!) when I was little. Then, my parents bought a small cottage in Wisconsin. The two boats that have been part of my life make up so many amazing memories that I’d never try to put a price on them!
Sounds a lot like my spending level! In 2016, I was at about $22K for the year, and I expect 2017 to be comparable (maybe even a little higher because I’m anticipating a move). That’s just for me, and my live-in partner spent about the same, so we’re at almost $45K.
So–that doesn’t sound frugal, and sometimes I do spend money on unnecessary things, but I always know exactly where my money is going and I still manage an average savings rate of over 60%. The key is just being intentional!
That’s incredible, Eva! I didn’t disclose our savings rate here very clearly. We always save 45%, and we are able to save closer to 50% most months, especially when I include side hustling money. Thanks for reminding me of that! It’s not just what you spend, but it’s what you spend in contrast to what you save.
$28K not including mortgage seems frugal enough for me these days!
Considering the frugal internet guru himself Mr Money Mustache spends $27K a year (and obviously hasn’t got a mortgage) – I think there’s your yardstick right there and you are pretty much bang on it.
Being from the UK it’s not a very good comparison but we spent £37K last year, including £10K worth of mortgage expenses, and we saved 35% of our income. I’m pretty happy with those figures, there will always be people “doing better” than you and people doing “worse” so just aim for whatever makes you happy and you are comfortable with.
Yes, and I think he’s in if not a cheaper COLA, certainly a more efficient COLA. I wish our suburbs were bikeable, but they’re just not. The Midwest has a lot to learn from the coasts in some regard.
Saving 35% of your income rocks. Congrats, FIREstarter!