A friend volunteered to cut her hours to halftime, but only after the fact did she crunch the numbers and realize that means she's now running in the red by a few hundred dollars every month. I haven't seen the numbers she used - I hope and assume there's some room for belt-tightening to make it work, but I don't want to stress her by asking. I may broach it in a few weeks, very very gently.
However, her situation inspired some number-crunching, and I'm happy to say I feel absolutely certain that I could get by on half my income, but it wouldn't be fun or pretty. I've also got enough in savings that I could support myself for eight months, which is a good solid feeling to have.
AND - there's lots of room for improvement in my fiscal life. I just looked at all my spending and saving last year. I saved 16% pre-tax for retirement, and saved 19.5% post-tax. Not bad, you say? Well, it's true but I could do a lot better. Most of my post-tax saving was from various bonuses, contract work, my tax return, and other non-work income. If I just look at what I earned vs what I spent each month, I saved 5.6% - meaning 14% of my savings came from sources of income I can't count on next year!
Travel was what killed me (and thrilled me!) the most last year - 16% of my post-tax income went to that. So... I guess that's the biggest place to focus for savings this year! Here's how my numbers broke out:
| Category | Percent of income | Notes |
|---|---|---|
| Eating out | 6.96% | 10-12 times per month on average |
| Groceries | 4.92% | That's about 75-80 meals/month |
| Coffee out | 0.20% | 2015 will include all at-home coffee expenses |
| Bills | 42.71% | That's all mortgage principle/interest/insurance/taxes; plus water, gas, elec, trash, cell, internet, driver's insurance...very little to trim here. In a pinch I'd get a roommate to offset this. |
| Entertainment | 1.64 | Netflix, NYTimes, movies, the occasional play or concert in town. |
| Gifts | 1.20% | |
| Charity | 1.72% | I'd like to double this for 2015, and ideally hit 5% annually. |
| Travel | 16.41% | wow! 2015 travel should be half or a third that amount. Good thing nine of my 2014 flights were practically free. |
| Transportation | 1.41% | No idea how the car thing will affect this |
| Clothes | 3.05% | If my weight stays down I'm going to have to get a few more items, but I'm slowly buying clothes. |
| Household | 1.84% | Cleaning supplies, decor, small furniture expenses, etc. |
| Upkeep/Health | 2.64% | Haircuts, doctor copays, vitamins, etc. |
| Hobby | 2.71% | Knitting, biking, sewing class - bought a number of biking items pre-Cycle Oregon last year. |
| Misc | .15% | Glad this is so tiny - means my categories are good. |
| Booze | 1.49% | wine, beer for home. Toning this down this year. |
| House | 1.25% | Things like a ladder, a couch. |
| Big ticket | 4.02% | Big irregular expenses like glasses and other $$ outlays. New-to-me car will go here. |
Some of my categories have crossover: is running gear for health or for hobby or for clothing? Is a framed picture household or house? How about a ladder? I just try to be consistent - the art is household (since I'd have paid for it whether or not I owned a house) but the ladder is house (as a renter I wouldn't own one). So far I've slotted running gear into clothing, but as I buy extras that are beyond the bare minimum, I'll probably put them into hobby spending. Registration fees for 5k events will be hobby for sure. If I needed physical therapy, it would be health/upkeep.
The best spots for trimming spending and boosting saving are travel (16%!) and food (when I combine eating out + grocery I see I spent nearly 12% of my income there). Funny that they are the fun ones. We'll see how it goes!
Wow, that's a lot of detail! I used to do mint.com a long time ago, I may need to do that again - thanks for the inspiration!
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