I sort of cheated and provided a thorough eleven-month update of income and expenses earlier this month. That one did not have charts! Thus I present to you my fourth quarter or end of year update on my income and expenses for 2018.
My income is primarily from my day job except for this spring when I dabbled in a side hustle. I did not love it.
2018 Total Take Home Pay: $56,960 (rounded)
Monthly Average: $4,750/mon
2018 Total Take Home Pay + 401k deductions: $75,460 (rounded)
I used Google sheets to track my expenses all year for the first time. I included Savings and Investments as a line item just to account for where all the money was going. There’s a bit of a dip in Savings and Investments in December because I had maxed out my 401k in November. I don’t recommend that because I didn’t get my company match for the month I didn’t contribute anything.
October had a bit of a credit from Aunty MERJ because I was paid back for some of her expenses I covered. Total automated Savings and Investments for 2018 was $41,154.
Above are my monthly expenses without including Savings and Investments as a line item. Home is noticeably higher in December because I prepaid January 2019 due to some administrative issues with the leasing office. Any other questions, ask in the comments below.
Total 2018 Expenses: $32,917
Projected 2018 Expenses: $30,000
Projected 2018 Monthly Expenses: $2,500/mon
Actual 2018 Monthly Expenses (avg): $2743/mon
Even with the addition of Aunty MERJ’s expense and more than a few health appointments, I think I did pretty good this year. My projected annual expense was $30,000. I spent $32,917. My three largest expense categories were: Home ($13,097), Student Loans ($6,265), and Aunty MERJ ($5,251). So 2018 Expenses – Home – Student Loans – Aunty MERJ is $32,917 – 13,097 – 6,265 – 5,251 = $8,304. In early retirement, I would not live in such an expensive apartment; I would not have such a high student loan payment; and Aunty MERJ’s expenses would be minimal. Thus, with basic annual expenses coming in just around $8,000/yr, I think it just might be possible to live off $18-20k/yr in early retirement.
A firm tenet in FIRE is recognizing and increasing your savings rate. Tracking income minus expenses, here is what the data reveals.
For the third quarter, I was fortunate enough to maintain a savings rate greater than 50% across all three months. My average savings rate for 2018 was 57%.
I don’t do a zero dollar budget, so how much did I really save? Depends on how you calculate it. If I do Savings = Income – Expenses, I get about $42,500 in savings or a 56% savings rate. If I do Savings = Automatic deposits to 401k, regular savings, and brokerage account, I get about $41,100 in savings or a 54% savings rate. And if I do the average of monthly savings rate, I get a 57% savings rate. So, I’ll just pick an unscientific estimated savings rate of 55%. It matters not in the end.
I did some quick scratch calculations of my savings rate through the years, just using old W-2s and Jan and Dec bank statements to get a basic idea of how I did when I was less intentional about my finances. Here’s what I found. Again, these are rough estimates.
2016: $34,350 (savings)/ $65,770 (rounded net pay) = 52%
2017: $17,000 (savings)/ $70, 420 (rounded net pay) = 24%
2018: Estimated savings rate = 55%
I think that’s it. Questions or comments? How did your 2018 go?