Updated: Nov 29, 2020
Starting in 2018, I decided to start track our spending. I was planning to start in January, but got a bit of a late start and didn’t begin until February 1 of last year. That means that as of January 31st, I have now tracked our spending for an entire year. I didn’t pick and choose what to write down. I wrote down everything. Every dime. It sounds tedious and somewhat overwhelming, but it’s not.
I don’t believe I’ll ever go without tracking our spending again. It keeps us aware of what we are doing. Every time a purchase is made, I know it will need to be entered, so there’s no more mindless spending. The biggest thing the tracking does, is allow us to see that we are staying the course with our savings goals. There are very few purchases I can recall that I wouldn’t have made. Almost everything has been “necessary”. We do occasional mini splurges, but nothing that is going to break the bank.
I realize the little/small purchases add up. Seeing people around me, in the work place, friends, etc. that talk about purchases they have made as if they are “no big deal”, I am more aware of the impact that will have on their long terms goals. More than anything, it provides motivation. We are constantly looking for things to cut from our budget to increase our savings rate.
A few goals. We are aggressively paying off our student loans and will have them completely paid off within 4, 5 & 6 years. We may be more aggressive towards these in the future, once we add some additional investments to our portfolio. That is the next goal, to add additional passive income, or consistent monthly income, most likely through real estate. Additionally, we are continually looking for ways to add additional monthly income on top of what we have already. Looking for additional side gigs that are doable right now with our current employment situations to increase savings and push aggressively towards our retirement goals is one of our primary game plans.
Nipping things in the bud from a tax perspective. Taxes can be a real downer, especially if you are a DINK (Double Income, No Kids). So, we have to be much more strategic in finding ways to cut our tax liability down. One thing we have done this year is maxing out our 401K and HSA plans at work to allow us to significantly cut down on our taxable income for the year. Instead of taking funds after tax and throwing them in a brokerage account, they now go directly into these accounts. Yes, there are access restrictions for a certain age, but we are prepping these accounts & creating a much more strategic game plan for the future. We also each maxed out individual ROTH accounts to help with taxes in the future, post retirement.
In tracking our spending we have gotten much better at taking vacations and traveling, which is a very important part of our life. Our yearly 2+week vacation costs us a similar amount as two weeks of living at home in terms of food and we budget out months in advance on how much gas, lodging/camping, and fun activities will cost to avoid the vacationing affecting our high savings rate as much. We are currently focusing on staying in the USA and seeing as many National Parks as possible pre-retirement, so that when we cut the chord on our full time jobs we will have more time and freedom to enjoy traveling abroad.
I just want to make it clear, just because we try to keep to a strict budget does not mean we do not enjoy ourselves. We live in a truly beautiful place with a ton of outdoor recreation opportunities that we enjoy. Denver is an extremely dog friendly area and we have great hiking out of our backdoor that we enjoy daily. There are many free and fun thing to spend time on and we do not feel at all like we are missing out by going out to eat on a daily basis.
Creating more goals. What’s next? Continuing to be strategic in spending, saving and finding new ways for growth are a good start. There will always be challenges, but finding ways to get past them will make you stronger and allow you to find new opportunities for growth. Cheers to frugality!