Last month I did a rough calculation of my savings rate. It came to a little over 40%. This has not been something that I have religiously calculated but realize that it is something that I should follow more closely. As such, I am going to experiment with updating it publicly on a monthly basis on this forum. I figure this will help to hold me accountable.
The reason this comes to mind at this moment is that I have recently had a sense that my numbers were skewing in the wrong direction. I have felt this simply by viewing my credit card spending. I have made strong progress this year by diverting a decent chunk of money each month to a savings account in addition to my automated money moves into my taxable investment account. I have noticed that in the past few months I have not been in a position to divert this additional money since my credit card spending has dramatically increased so I have used that money to pay my credit cards off in full each month.
In analyzing the reasons for this increased spending, the obvious culprit appeared to be that we wer nearing the Christmas holiday and we have done some shopping. Rather than simply embrace this assumption, I decided to do some quick analysis of spending. Over the past year or two, I have closely analyzed my spending, and this was the main tenet in my recent financial successes. However, I have gotten away from this analysis in recent months.
I decided to chart my numbers for the past three months—September, October and November—since September was the month that I had previously analyzed for the post What is Your Number?
Here is that analysis:
| Category: | Sept 2018 | Oct 2018 | Nov 2018 |
| Total Monthly Gross Pay: | 100% | 100% | 100% |
| Taxes Withheld: | 22.59% | 17.25% | 20.69% |
| Other Withholdings: | 5.05% | 5.00% | 5.53% |
| 401K Withholdings: | 12.00% | 11.99% | 1.06% |
| Diverted to Investment Account: | 6.75% | 6.75% | 4.92% |
| Diverted to Savings Account: | 22.52% | 22.52% | 0% |
There are a few obvious items that stand out for the recent month. First is that my 401K contribution is dramatically down from previous months. This is due to me maxing out that account for the 2018 year. In my post I Maxed My 401K, I explained that the goal would be to continue to capture the monthly amount that had previously been diverted to 401K into a savings vehicle. Sadly, I have not done that thus far. Additionally, we can see that the 22+% I had been able to divert to savings in previous months has disappeared. This was due to the credit card payments.
So, this analysis proved the feeling that something was amiss this month. This led me to attack the credit card statements. As mentioned above, I assumed holiday shopping would be the obvious culprit. While there was certainly quite a bit of holiday shopping evident on the credit card statements, the main culprit was FOOD. There were several entries for grocery stores and even more for restaurants. Our grocery spending is properly planned and budgeted so these frequent entries were strange to see. These purchases averaged $30-$40 so these were obviously not weekly grocery trips. These were convenience purchases. This is something that my family will need to address and make sure we are more deliberate with our grocery spending. The largest item on the credit card statement were restaurants. I lump all eating out into this category so this would include fast food restaurants, date-night sit down restaurants and nights out at a bar in this grouping. The fast food restaurants are fairly easy to explain. I have gotten away from the diet I have followed over the past year or so and as such, I have gotten lazy and allowed myself to eat at fast food restaurants. I have often justified this with the usual “I deserve a treat” type rationale. This type of thinking has certainly hit my waistline negatively but this analysis has shown me that it has also hit my pocketbook as well. Perhaps this awakening will give me the push I need to regain the discipline to eat healthier. I listed the sit down restaurants as “date-night” items because in this case, that is what they were. There was one entry for a dinner with my whole family and a few for nights out just me and my wife. These entries were in fact treats and saying I deserve them is not an excuse in this case. They presented quality time for my family to be together and I will gladly spend that money, even if it means working a little harder to cut back in other areas. Last and certainly not least, is my casual dining/drinking spending. This category has skyrocketed in recent months. This is the area that I will need to focus on the most if I am going to control my spending, not to mention that this also leads to weight gain as well. I have a regular weekly “guys night” which tends to be somewhat pricey. But as I mentioned, this is regular so I can budget for this. I can certainly work to make this a little less pricey but I wouldn’t want to cut it out altogether. The other, less frequent items are where I really need to buckle down. My plan for these is to try to plan ahead and use cash when I am in those situations. This will force that spending to be much more deliberate and obvious. Even on the occasions when I spend a little more than is comfortable, I will immediately feel the pinch and use that to readjust and alter my focus.
I think that I will work on publishing a monthly account of my savings as I did here. If you think this is a worthwhile exercise, feel free to play along and post your savings rate in the comments each month.