My 2020 Budget Recap

Going through my expenses at the end of the year is always fun for me. It’s like a snapshot of what happened and what I did. It always tells me way more than just what I spent my money on. It brings up memories, shows me if I’m actually valuing the things I say I am, and gives me ideas for how I want my spending to look next year.

With 2020 being such a strange year it was interesting to see how this year’s budget didn’t just reflect me and my year personally, but also the collective experience that was 2020.

There was very little spent on travel and gas, but I now had multiple transactions for face masks and hand sanitizer. I never knew I would be so grateful to have a toilet paper delivery subscription. I was now tipping 20% on top of my grocery bill. There was almost no eating out with friends, but more gift cards sent to friends who’d lost jobs or loved ones. My donations leaned heavily toward anti-racist organizations compared to last year. I bought a desk to turn what was originally planned to be a guest room into a home-office.

Speaking of home-office, by far the biggest thing to happen in our financial lives this past year was that we bought a house!

While we have a joint account now to take care of the home expenses, most of our finances are still separate. This is partially because this year was so busy with house stuff and work that we didn’t really have time to sort that all out, and also very much because Cassie works for herself so things are a bit more complicated in that department. All that to say, what follows is a recap of my financial year and not an overview of us as a household. Maybe by next year, I’ll be able to do a household recap. We’ll see.

My Income

My base salary pre-tax this year was $43,000 with an end-of-year bonus of $1,000. However, I ended up making a decent amount more than that through different side gigs and projects throughout this year. I feel incredibly fortunate that not only was my income unaffected by the pandemic but that I actually had my highest earning year to date, earning $59,105.

Here’s a rough outline of how that $59,105 broke down:

  • Full-Time Job Take-Home Pay: $31,712
  • Retirement Contribution Deductions (403b and 457b): $8,751
  • Various freelance work and projects: $6,050
  • Rental Income: $5,525
  • Dog Walking: $2,437
  • Stimulus Check: $1,200
  • Tax Refund: $830
  • Security Deposit Refund: $715
  • Other (dividends, cashback, interest, gifts, selling things, etc): $1,875

My Expenses

It’s a good thing that I had my highest earning year, because I also had my most expensive year when it came to spending. While we spent much less than usual on travel, we more than made up for it when it came to spending on our house. You’ll see.

While we spent a ton this year, a good chunk was spent on designing a low-cost life for the future, so I actually feel pretty good about it. Plus, we were able to update our home to be a place that we actually love spending time in (which…you know…2020), and saved a bunch by doing most of the work ourselves.

Here’s the full breakdown of my spending this past year below:

Rent and Interest on Mortgage$6,602.99Since we were living in a rental for half the year I bundled the rent category with the interest on our house category. I don’t count payments towards the principal of the loan as an expense.
Property Taxes and Home Insurance$2,152.08These costs also come out of our mortgage payment, but this is only for 7 months since we moved mid-year.
Closing Costs$2,028.09Appraisal, inspection, origination fees, etc.
Utilities $1,768.73
Pest Service$210
Renters Insurance$37.80From the first few months of the year when we were still renting.
Car Payment$855.96Paid off in March, woohoo!
Car Insurance$804.75
Gas$204.95Clearly, I didn’t go very many places.
Car Registration$301.70Paid for two years at once
Auto Maintanence $19.24I really need an oil change…
Groceries$3,675.75This is over $1,000 more than last year. We ate a lot more at home, but also got most of our groceries delivered so the extra fees and tips added up. Don’t forget to tip your delivery people!
Dining Out$1,116.13My goal was to cut last year’s spending in this category in half. I didn’t quite make that but I did cut $350 compared to last year. I’ll call that a win since, again, the delivery factor added in extra fees.
Coffee Out$49.31
Subscriptions$681.44Netflix, Hulu, Spotify, annual fees and memberships
Fun Money!$687.27Lots of beer and a kayak purchase
Clothes and Shoes$159.58
Stuff for the house$16,032.85Jeez, that’s a big number! A little less than half of this went to putting in new windows on both our side and the rental side. Also, new flooring, paint, fence supplies, garden beds, a few pieces of furniture, lots of tools, plumber and electrician visits, a new stove and oven, and tons and tons of other stuff. Maybe I’ll do a full breakdown at some point.
Travel$931.70This includes a trip we took in February, pre-paying for a cabin trip we’re taking this coming March, and a gift card for a ferry to Key West to use sometime between now and the end of 2022.
Dental Insurance$309.81I can get much cheaper dental insurance through work, but I really like my dentist (and am a baby when it comes to going to the dentist), and they don’t take my work’s insurance so I purchase myself.
Health, vision, disability, life insurance$1,067.08
Health Spending$179.31Co-pays, masks, medicine, etc.
Work Expenses$773.56Equipment, software, web hosting fees, etc.
Christmas$675.86Gifts and tree
Rental Costs$2,460.85A new AC for the rental side of the duplex and gift cards for the kids’ birthdays. Technically there should also be a couple hundred dollars of fence supplies in this category as well as a couple thousand dollars worth of windows, but since we paid for it all at once I lumped it in to our “Stuff for the House” category above.
Grad School$2,197.12A couple textbooks and payments on my student loans.
Misc. $1,207
Total:$47,808Remember, this is just my portion of our household spending this year!

My Net Worth

Net Worth on Jan. 1, 2020: $20,040

Net Worth on Jan. 1, 2021: $49,222

2020 Net Worth Change: +$29,182

Breakdown of My Net Worth:

-$137,841Debt: “My half” of the mortgage and home depot credit card (0% interest for two years) plus my student loans and credit card balances (set to autopay mid-month)
$28,318Invested (403b, 457b, Roth IRA, and taxable accounts)
$5,498High-interest savings account for emergency fund and long-term sinking funds
$5,747Checking account for monthly expenses and short-term sinking funds
$147,500Home Value: “My half” (this is a conservative estimate as it’s the appraised value prior to all of our updates)

Lessons Learned

I would say the biggest thing I learned this year was that automating your finances really does work and it feels like some wild wizardry magic when it does. I knew this already, but I really came to see it playing out in my own finances in a big way this year. I felt like I was spending massive amounts of money every month with all of the projects we were doing on the house, and yet every month I was surprised that my net worth had gone up again. By a good bit.

If you subtract my expenses from my income it shows that I saved around $11,300 this year, or about 19% of my income, yet my net worth increased by nearly $30,000. This is thanks to my automatic deductions that go to my retirement accounts, my other investment accounts, and the equity I’m building in my house.

So even though I was spending a lot, my savings were on auto-pilot and earning me more money. It’s wild.

Because of all of this spending though, I also learned that I feel better with a bit more accessible cash on hand. While having a high net worth was great, so much of it was invested and in home equity that when I had bigger expenses (like grad school and putting in new windows) I ended up taking out loans and putting it on credit. I know financially this was actually a better move because it’s earning more invested than what I’m spending on interest (in the case of the windows, 0%), but I’d still prefer a bigger cushion in the future, so I’ll be diverting a bit more of my money to high interest savings over this next year until I hit that sweet spot.

I’m hoping I can harness both of these lessons to give more next year. With so much spending I didn’t give as much as I would have liked to this past year considering how much need there was. I’m hoping that by keeping a larger accessible cash cushion I’ll feel comfortable giving more, plus I’m hoping to set up a few new automatic monthly donations to use the power of automation to do a little more good.

Money Goals for 2021

  • Stick to the schedule for paying off the Home Depot project card a couple of months before the 0% interest period is up (May 2022).
  • Fund my grad school sinking fund to cover my remaining summer and fall semesters without any loans.
  • Build up our high-interest savings account to at least $10,000.
  • Simplify and combine more of our finances.
  • Give more.

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