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I like numbers and quantifying things. That includes quantifying things like my personal progress towards financial independence. To feed this craving, I've started to keep monthly spreadsheets of spending in various categories. At end of each week I manually update a spreadsheet that I've set up with simple math expressions to track my savings rate. It takes me a few seconds to update this spreadsheet and instantly, I see the new numbers for the current month appear in front of me.
Many FI bloggers say that a monthly savings rate of 70% or higher is ideal for those who want to reach FI in the fastest possible time. While I am very far behind from this target I'm slowly making progress!
Before I Discovered FI
The spreadsheets tell a story of the dark before I discovered FI. In January, I was spending way more than I was earning, due to being unemployed. Then in February, I had started my new full-time job and my savings rate was at 11%.
Looking back, I can see I made some mistakes because I didn't track my spending. From February to July, my savings rate fluctuated from 0% to 35%.
In May 2017, I traveled to Portland, shopped a lot for beautiful high end clothing including a $500 dress, and I ate many scoops of Salt&Straw ice cream in the humid city weather. In that same crazy month, I got my wisdom teeth removed, which I paid out of pocket.
Looking back, I should have really thought twice about impulsively shopping on big-budget clothing items. I didn't even know where the money was going until months later when I started tracking my spending such as shown in the below real example.
After I Discovered FI
July was a turning point. I started tracking all my expenses in spreadsheets on a weekly basis. I was hooked on the ChooseFI podcasts, and eventually managed to get my savings rate up all the way to 40% with intentional budgeting.
The first half of 2017 is like night and day compared to my second half of 2017. It was ridiculous that I was saving almost nothing or just 20% of my total take-home paycheck in the first half of the year.
I use Mint.com as the primary source for these numbers. I don't have January numbers because Mint.com mysteriously removed all my data from before February 2017. This adds another reason why manually entering the numbers into your finance spreadsheet helps preserve the data and be more aware.
At the end of the month, I double check my numbers in the spreadsheet against the numbers in Mint. I categorize anything that is discretionary spending under the Mint.com category “Shopping” that includes clothes, furniture, live events, and any purchase that is non-essential.
From the spreadsheets, I found 10 items that I would NOT buy again in retrospect. I would've saved a lot more money in 2017 if I had discovered the FI community earlier. Now I know better. I have started making smart intentional changes.
- $1,100 for one ticket to attend a black-tie gala event hosted by a ballet company.
- $529 custom-made formal gala dress.
- $251.33 for vintage necklaces and a new handmade shirt.
- $80-200/month on Lyft or Uber.
- $98/month Verizon phone bill. I now use a $40 pre-paid Verizon plan with 3GB data on my iPhone 5S.
- $100 library fines. I now get email notifications turned on about library due dates.
- $50 ice cream pints/month.
- $190 for a pair of handmade leather oxford shoes ordered online but were the wrong size.
- $300/month dining out at restaurants.
- $137 opera tickets.
I've changed my ways so that I no longer spend outrageous amounts for these items. For example, I love the black-tie galas but to save money I now volunteer at gala events, this way I can get in free and sometimes even get a free dinner. To save money on clothing I now only buy from thrift and consignment clothing stores. I only take public transportation, which is reimbursed by my employer's transit plan. I signed up for email notifications from my library so I never forget a due date. I've started bringing my lunch to work and cut back on my ice cream habit, saving my health as well as my wallet. And finally, the opera has cheap standing room tickets which is how I now get my opera fix.
New Year's resolution
Looking ahead, I want to do better than my current 40% monthly savings rate. Eventually I want to get to a 50% or higher monthly savings rate. Even maybe a 70% savings rate if I make major life adjustments. But this is especially difficult because I live in San Francisco—one of the most expensive cities in the United States.
If you've started to track your spending by category in a spreadsheet, please let me know what new things you've found in your own spending habits by leaving a comment.