PoP 2013 Spending Summary

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Our neighbors tested out a snow maker this weekend…

I’m writing this at 8:45pm on New Year’s Eve. Fireworks are being set off around the neighborhood and Kitty PoP is a tad freaked out. Mr PoP is still at work because that’s what can happen when you work in sales. He’s trying right up until the very last minute to bring business in before the fiscal year closes. (What a great employee, right?) But considering all the grocery stores and coffee shops are closed and Mr PoP’s got more than enough gas in the tank to get home I’m calling the PoP financial books closed for 2013.

How Did It Turn Out?

In short, household spending was higher than we aimed for. Luckily we know the reasons it was high (some excusable, some not so much), so have a plan of attack for 2014. Spending and income on the investment properties was about where we thought it would since we assumed there was a good chance the AC would need to be replaced in 2013.

Let’s look at the details, though…

PoP Household Spending

Money Spent: $59,228. To me, this is a fail since we set out to spend $50K. However, big expenses that kicked that up (some of which other people back out of spending) included:

  • $2,500 in garage expenses so far. This was a late addition to the budget, and we didn’t sacrifice by cutting back anywhere else, so it’s not really a shocker that we’re over.
  • $6,757 to pay off the car loan in full. This pulled forward about $4K+ interest in future spending into 2013. Some people might not count this debt payoff as spending. I do.
  • ~$6,000 in principle paydown on our mortgage. Some people don’t count mortgage principle paydown as spending. I do.

I’d like to highlight a few failures (these were big in size), and a few successes (these were smaller in size – hence the overall failure…) and what we’re looking forward to in 2014.

Failure #1 – Transportation

I want to gag when I see how much we spent on cars this year. $14,410. Yes, almost half of that was paying off the car loan balance. But that still leaves $7K+ in “ongoing” car expenses.

  • $4.1K in gas
  • $1.3K in car insurance
  • $1.6K to replace all tires on both cars

Looking forward to 2014 – I really hope the Q1 Car Challenge is a success. (Anyone else want to join in on the challenge with us?) If it is, this could be the biggest, easiest win for getting 2014 spending under $50K.

Failure #2 – Food

We spent just shy of $8K on food for the two of us this year, an average of $664/month. I wouldn’t mind it if higher food spending were correlated with greater health and well-being. But it’s become pretty clear over the last 6 months that it’s actually much more of an inverse correlation. The worse we eat, the worse we feel. The worse we feel, the worse we eat. It’s a dreadful cycle and I want to spend the next year developing habits to reset it on a pretty permanent basis.

Looking forward to 2014 – Knowing that Mr PoP still really likes eating out, I’d like to get us to the point where we’re eating really well with a grocery budget of $350 and a restaurant budget of $250 for a total of $600/month on food.

Failure #3 – Home Spending

The main reason this is a failure was the late addition of garage spending which shot home maintenance from the $2K that we typically budget to $4,449. While it’s technically a failure, I’m not going to stress about this, though.

Looking forward to 2014 – Hitting the $2K home maintenance budget should be do-able, and I’m also hoping that a switch to Ting could knock $100/month off our cell phone costs.

Success #1 – Travel Spending

When I was putting together our March Income Statement, I realized that we had already spent $1,300+ on travel in just the first 3 months of the year. We were on track for way more than the $2K in travel we had spent the year before. Right then we decided that we’d adjust the travel budget for the rest of the year to come in at $3K. Happily, this was a success as we ended the year at $3,044 and even have the hotel for my February marathon pre-paid as well as our AirBnB stay for the Berkshire Hathaway annual meeting that both fall in 2014.

Looking forward to 2014 – We hope to keep the $3K budget, but with some strategic use of mileage bonuses from credit cards, stretch it even further.

Success #2 – Pet Care

Kitty PoP has proven himself once again to be an entertainment value. Food + litter + yearly vet visit came in almost exactly at $241, or ~$20/month. But his little hotel stay with us did end up costing about $116. Altogether he was at $357 for the year. Still < $1/day for all the joy and love he brings us.

Looking forward to 2014 – As long as Kitty PoP remains healthy – and watching his weight is one way I hope to keep him that way for as long as possible! – these numbers look like they’re about where we’ll fall again. We don’t expect he’ll come vacation with us this year, so instead of hotel costs we’ll assume it might cost about that to have someone look after him while we’re away.

Success #3 – Gas

I’m counting gas as a win even though transportation costs were overall very high. Pre-biking to work our gas spending was $382/month. After starting biking to work it was $325/month. Both are significant improvements over the $477/month average spend on gas in 2012. (And no, that’s not a typo.)

Looking forward to 2014 – If we can keep the gas at $325/month or less I’ll consider it a win! If we do get rid of the Jeep, this will be much easier as that is about a $60 tank to fill rather than a $35 tank. Not to mention the $35 tank seems to take us much further, too…

 

PoP Investment Properties Income & Spending

Mostly as expected. We had full occupancy on the duplex, though we did give a renter half-price rent for a month when we were hoping she’d find a new roommate and stay. She didn’t, but we raised the rent and it worked out better in the end.

  • Cash In: $17,725.
  • Cash Out: $10,164 – This is the expenses on both investment properties, so all the expenses for the empty lot (which generates NO income) are counted here as well…
  • Deductible Interest Payments: $2,562
  • Net Proceeds: $4,999

Looking Forward to 2014: Since the debt is paid off, there shouldn’t be any interest payments next year. However, there’s a good probability that we’ll be redoing the roof on the duplex in 2014.

And by “we”, I mean… actually not either one of us. This marks a change for us. Mr PoP and his brother did the roof on our house in 2010 (and the roof on his parents’ duplex in 2008). However, it was easier to justify Mr PoP taking a week off work when he was making minimum wage than now when his (lumpy but high) pay is largely dependent on him being in the office and making sales. It just means the roof will cost us more than just supplies (and unofficially slipping his brother some cash).

This means that next year will probably show a similar Net Proceeds, but the years following should bounce up to ~$10K/year when this last big expense is taken care of.

 

As we move on into 2014, we’ve got our budget set and have high hopes that we’ll accomplish that $50K spending goal.

 

How did your spending end up for 2013? What are you looking to focus on spending-wise in the new year?

 

 

41 comments to PoP 2013 Spending Summary

  • Yeah, I don’t count extra debt pay down as spending. It’s something we do with extra money, and is an investment if it safes future interest. I do count required monthly debt pay down because it is a necessary expense. Technically the interest is spending but the principal is saving.
    Nicoleandmaggie recently posted..Ask the grumpies: Bad work situationMy Profile

    • I know a lot of people treat it the way you do, but I prefer to count it as it wasn’t counted as spending in the past (we didn’t mark $14K as spending the year we bought the car), and we’re not going to hold it back as already spent in future years (we’re still trying to hit $50K this year, not $40ish that we would need to account for our overage, or even $46K to account for what was pulled forward from paying the car down…)

      I wonder what the breakdown in the pf blogosphere is on this – I never would have counted principle paydown as savings and only heard of that when I started reading pf blogs.

  • “However, it was easier to justify Mr PoP taking a week off work when he was making minimum wage…”

    This is something I struggle with too. I have a lot of work to get done in 2014. Just yesterday, I was headed to the crawlspace to do some plumbing when the 6 year old asked me, “Dad, can we build some stuff with Legos?” No plumbing got done.

    I have planned to take a week of paid vacation just to work on the home. We’ll be bringing a relative in that week to watch the kids. However, that nearly isn’t enough time to get it all done.

    I just don’t have enough hours in the day.
    Mr. 1500 recently posted..Thursday Rant – How the Grinch Stole My Christmas SpiritMy Profile

    • Aww, what a cutie. If only she were a little older and thought PVC and copper piping were as fun as Legos.

      The older we get the more it seems we need to consider the trade offs between DIY projects and living life. (It was a lot more clear cut when we had way more time than money…)

      • “It was a lot more clear cut when we had way more time than money…”

        Yes! I remember coming home from my first real job at 5pm or so and having nothing to do. Ahhh, how times change.

        All of this “I’m too busy” talk is actually a great motivation for early retirement. Quitting a full time job means you’ve freed up 50 hours/week. I can’t wait to just read for 3 hours/day.
        Mr. 1500 recently posted..10 Questions with New York BudgetMy Profile

  • I love the annual reviews, especially since I’ve never done one. I think 2014 will be the first year we calculate annual costs.

    $50k seems like an attainable goal. We’re doing okay with just one car and did so even when we were both going away to our respective ‘jobs’ (office for me, school for the missus). It’s an adjustment, for sure, but with you biking now in a part of the nation with great weather, I think it should go pretty well.
    Done by Forty recently posted..Budget PornMy Profile

    • The “great weather” was a bit on the cold side for me today… a chilly 53 degrees and breezy for the ride both AM and PM. brrrr! =)

      Mint makes the annual tally so insanely easy that it’s always been a nice way for us to check-in at the end of the year. Last year we were over by a couple of grand, but had almost that much in reimbursements from medical spending after the car accident so it cancelled out.

  • Love this annual review, especially since your failures are most people’s status quo’s. Definitely something to aspire to – best wishes in 2014, PoP’s!!
    anna recently posted..Being Kinder Than Necessary (and Happy New Year!)My Profile

  • Hmmm, I don’t know the exact numbers of what we spent this past year but I do know a few things:

    1) This was the most expensive travel year ever, as we did about a month and a half of traveling. Still, it was cheap considering how much time we spent on the road :)

    2) Our gas expenses were WAY down the second half of the year since we moved to Portland.

    3) Food always has been (and probably always will be) our biggest YOLO expense. We spend a lot on food (and not because we buy uber healthy food, usually the opposite).
    Erin @ My Alternate Life recently posted..January 1st NETWORTH Update!My Profile

  • Wow I love how detailed you are with your annual spending! I’m sad to say that I’m not exactly sure how we did with our 2013 spending, but I do think that we did well. In 2013, we really worked hard on food spending and I think we did good!
    Michelle recently posted..Extra Income Series: I’m a Beachbody CoachMy Profile

  • I’d join you in the car challenge, but I think we already did that 😉 It has been no trouble to only have one car. There was one time when we got our signals crossed and both needed the car, but it was simple to sort out (my “need” was going to a dorm meeting a mile away, so I caught a ride with someone else. And I should have walked, but, ugh, Minnesota cold).

    You really make me want to tally our spending. Is this just your CC spending? We could do this with our CCs, but I’m not quite sure how much cash went out. We have tried saving receipts (which I did successfully when single to track spending), and it just ends up being too much for us. When we did track food spending, we found we spent about $350-400 a month on food, but we get lunches and most breakfasts taken care of by work, so I think we only do so-so on food.
    Leah recently posted..Christmas treeMy Profile

    • We record cash out when we pull it out of the ATM, so this is everything. I guess the only thing it might not account for is if we found $5 on the ground and used it to buy some ice cream. But in general even when we sell something for cash on Craigslist we deposit the money in the bank asap and list it as “misc income” and then when we spend it, it’s spending.

      It also includes stuff like the mortgage payments (which were about $14K of the total here).

  • This year would look beyond bizarre if I did this – $5k wedding, $30k travel…

    At first I thought that’s not too bad at all for car spending and petrol, then I remembered you guys are in the US … not sure what petrol costs in Florida but presume it’s still about 1/4 of what we pay here! How much driving do you do?
    eemusings recently posted..Link love (Powered by rice noodles and an epic giveaway)My Profile

    • Less and less all the time, but Mr PoP’s job is ~25 miles away from our house. So just to get him to work and back with no stops anywhere else, it’s 1000 miles per month minimum.

      Plus our cars aren’t the most fuel efficient, but they are more fun to drive. =).

  • Anne

    Wow, you guys hold yourselves to some pretty high standards counting principal reduction as spending! A quick check-in with mint shows me as being right around 50k last year if I held myself to those standards. 2014 is shaping up to be higher, especially since one of my goals is to pay extra on the mortgage and fast-track us out of paying PMI. 2013 and 14 are also years we flat out planned to be high cost since we’re hosting a big traditional wedding, a decent discretionary chunk of that number was me and my bridesmaids dresses, photography deposit, etc.

    • “Wow, you guys hold yourselves to some pretty high standards counting principal reduction as spending!”

      What’s funny is before I started reading pf blogs I never would have considered not counting principle as spending as a valid thing to do. I guess the way I look at it is that if I bought a couch on a payment plan I would count all the payments as spending even if I paid it off a little early. Why is a house or a car any different? But to each their own, eh? =)

      Weddings are definitely pricey when you go the traditional route, but I’m sure your bridesmaids really appreciate that you’re paying for their dresses.

      • Anne

        Ah, in my mind it’s spending if the asset depreciates, savings if it appreciates. So principal on a home I tend to count as savings since 30 years from now I can sell the house again, and likely* recover all of the principal and then some. Whereas a car or couch likely isn’t likely to last that long let alone be in sellable condition, so I think of them as consumables and the cost as spending. But as you say, to each their own- these sorts of details are what make personal finance personal (oh, and the girls definitely appreciated not having to buy the dresses).

  • I count mortgage payments as spending, but principal reduction as savings, two separate figures. That’s sort of double-counting, but they mean different things.

    How did you guys spend $4.1k in gas??? I spent $394.17, which is about how much you spend in a month!

    Good luck with your $50k spending goal next year! Mine was $40k for 2013 and I blew that by just over $4k, though still better than last year’s slightly over $50k. (Yes, there is just one person for that spending amount.) I’m hoping to stay under $39,000 in 2014.
    Leigh recently posted..Reflections on Home Ownership: 18 Months InMy Profile

    • Hopefully gas will be a lot lower next year, but a big chunk of that is Mr PoP’s normal commute to/from work, which is about 25 miles each way. Since we’ve discovered he doesn’t get quite the efficiency in my car as I do (he likes the higher RPM…), that means he’s using about 1 gallon of gas each way, or 10 gallons of gas per week. So that’s about $40/week for the absolute minimum.

      Where do you live. Leigh? <$400 in gas is freaking amazing! I hear you on the double-counting, but if it works for you then that's what matters. =)

  • Ivy

    We also count the mortgage payments as spending, including the extra towards principal. For us the savings are the net difference in the account balances (401k, IRA, taxable, saving, checking) January 10th one year vs January 10th the prev year (the reason for the 10th is that I get my bonus on Dec 31st and the first days of January see a lot of shuffling of funds between accounts). Even in the net worth tracking we keep the house net value separate as non-liquid asset.

    This year was tough financially for us because both kids were in preschool – so kids expenses (mostly tuition, camps and activities) were our biggest spend group this year, a whooping 25% of all. I am really looking forward to the older one starting public school next fall:-)

    My biggest goal for 2014 is reducing the food spending. It’s double yours, and not because of eating out, we rarely do, but the groceries are killing us. The kids are still little, and I don’t think the prices in the Northeast are double the Florida ones, so we just have to try harder.

    • “the savings are the net difference in the account balances (401k, IRA, taxable, saving, checking) January 10th one year vs January 10th the prev year (the reason for the 10th is that I get my bonus on Dec 31st and the first days of January see a lot of shuffling of funds between accounts)”

      So savings = liquid asset balance growth for you guys? We do it a little differently (savings = the deposits we made into those accounts, basically), but your way definitely sounds easy to calculate and very straightforward.

      Oooh those kid expenses sound killer. Are you able to use a dependent care flex account through work so maybe part of it is pre-tax dollars at least? I can understand why you’re looking forward to public school…

      I don’t know what NE food prices are, but I doubt they’re a ton higher than ours. Ours tend to be on par with what I get at the grocery store in the DC suburbs when I’m visiting friends there. Not inner-city prices, but definitely not what I paid when I spent a few weeks in Indiana for work once (holy cow their groceries are cheap!). As a comparison, our regular store-brand gallon of milk just went up to $4.05, it was $3.89 until a few weeks ago. What’s milk cost for you guys?

      Do you have a plan of attack on the food spending?

      • Ivy

        And herein lies the catch. Regular milk is $4.09 – $4.19 in our store, depending on the brand and type, but the milk we buy organic, so it’s $6.79 for us. We get mostly milk, apples and carrots organic because of the kids, and also splurge on premium meat cuts, but the rest is usually generic and regular.
        Good question about the plan of attack. We are not coupon people, and we rarely buy processed food (since we cut at home) so coupons wouldn’t yield much anyway. Last year I introduced the less frequent shopping trips and sticking to a list as much as possible, but obviously it didn’t help. This new year I made a menu for the week, trying to structure a little bit what we cook, as I do tend to go creative and try new recipes, which of course require more ingredients. And I also am trying to use down the pantry. We’ll give this a try for a few months, I don’t have other ideas right now :-(

        • Oh yeah, organic/fancy meat prices are killer. We don’t do a whole lot of organic – some, but I don’t have a list of things that are “must” for organic or anything like that. It’s mostly ad hoc choices that get made in the store.

          I am also always amazed at how much meat costs (3 boneless skinless chicken breasts for $7.50! I wouldn’t have bought them if they weren’t BOGO packages today.) I don’t buy meat all that often since probably 80-90% of the food I cook is vegetarian. (Mr PoP is the only person in the house who eats meat and it’s no longer something he feels needs to be at every meal.)

          So far my plan of attack is trying to use up ingredients before they go bad. Bell peppers bought last week for quiche and not quite finished ended up in fajitas today. But our fridge often seems to be either feast or famine, that is, chock full or mostly empty. I think that’s the thing I need to work on the most. Too full and we end up with waste, too empty and we run out to buy subs at Publix because they fill an immediate need. But if you find a plan of attack that works for you I’d love to hear it!

  • The debt at a point in time is a stock, and paying it down is a flow. It seems like you are discouraging yourself from prepayment conceptualizing it the same way as spending money eating out.
    Nicoleandmaggie recently posted..Lurking link loveMy Profile

    • I don’t think it’s accurate to say it’s discouraging us from prepayment. If it were, then we wouldn’t have paid the car off early. The only thing “discouraging” us from pre-paying the mortgage is its lovely 3.25% interest rate that we’ve got for the next 13 years.

  • Adding.. Paying down your debt increases your net worth just like saving or investing.
    Nicoleandmaggie recently posted..Lurking link loveMy Profile

    • Of course – but if you’re not booking the full expense when you take on the debt (or are you and that’s what’s being omitted from the conversation), and you’re not booking the incremental expense when you pay off the principle, then you’re never booking the expense period. Which seems weird.

  • ok, look for a post on this topic Jan 13th!
    nicoleandmaggie recently posted..Lurking link loveMy Profile

  • Lara

    Well done on so much debt payment this year.

    I try to set up our personal finances much like a business would. I have an income statement, balance statement, and cash flow. Assets = liabilities plus retained earnings.

    When I pay down a loan, the interest payment portion is marked as an expense but the principal payment is considered a reduction of liability. It is not an expense, per se, but a shift from one account to another since it neither increased nor decreased your net worth. Both interest and principal payment would show up as an outflow under the cash statement. When you say that you want to keep your spending under $50,000, I think you mean you want your cash outflow to be under that amount while many people would assume you meant your expenses.

    I’m sure my home accounting system would seem obsessive/compulsive to the majority of Americans, but I freely admit that I’m an ubernerd who geeks out over well ordered spreadsheets. That’s part of why I like this blog.

    • Love the geekiness! =)

      While I’m not an accountant, I see the way I book it as “cash basis accounting”, where the inflows/outflows are the same as revenues and expenses. That’s in contrast to “accrual accounting” which it sounds like is more like what you are using… though I’m still not convinced it’s the same. In accrual accounting, the year you bought a house for $150K, you’d need to book $150K in house buying expenses since that’s when you bought the house. But I’m not convinced that most people are doing that when they’re omitting the principle payments…

      The issue that I see with seeing principal payments strictly as a reduction of a liability is that how much would you book the total expense for your house as? Just the cumulative interest payments (since most people I believe wouldn’t book the entire cost in the year of purchase)? That seems quite silly. If you sold the house and didn’t buy another, you’d book the entire sale value as income (all cumulative principle and equity increases), so why wouldn’t you count the cumulative principle payments as expenses as they are paid out.

      We do fully recognize that prepayments, and even normal payments won’t be recurring past the loan term, but for us, as long as you’re paying them, they’re expenses. And actually in our future spending spreadsheet we have a column that notes when the mortgage will be paid off and subtracts from off the projected expenses the mortgage payments (Principle + Interest) from the expenses growth after it is scheduled to be paid off.

      Does any that make sense? =)

      • Lara

        I do get what you’re saying. I’m sure neither of us is fully applying generally accepted accounting procedures, but both are systems that work and give a pretty good snapshot of where we are financially. That’s all that matters – except when we’re comparing numbers with someone else who is using a different system.

        I guess that I do consider the sum of interest payments to be the total amount I’ve paid for the house. I’d probably include my ongoing maintenance costs also, but not the principal payments. Since well maintained houses, generally, don’t drop a great deal in value over time, I have an asset that can be sold to recover the purchase price.

        I’ve never taken out a car loan, but if I did I’d have to treat that differently. I generally expect to keep a car until the day it dies, so when I buy a car I just list it as an expense. The more correct approach, I suspect, would be to list the vehicle as an asset and depreciate its value over the expected life of the car. I wonder, would the “expected life of a house” be the number of years that it takes for maintenance costs to equal the purchase price of the house?

        • “Both are systems that work and give a pretty good snapshot of where we are financially. That’s all that matters”

          Couldn’t agree more. =)

          As for the “expected life of a house”, the IRS says it’s 27.5 years. Oddly specific, right? But that’s the depreciation schedule for buildings and “improvements” on the buildings.

  • Can’t reply up there on my phone…I live in a city and < 2 miles to work. I do a lot of walking (average 5-7 miles per day) throughout the year. I usually walk to work, sometimes bus if I'm lazy, but it isn't super convenient. I also walk/bus/cab to hang out with friends. I drive mostly to play sports and to see family who live a few hours away. I have averaged just under 4,500 miles per 12 months in the time that I have had my car. It is still cheaper than car sharing, which is what I was doing before I bought the car, for around $400-500/month.
    Leigh recently posted..Reflections on Home Ownership: 18 Months InMy Profile

  • For most of the year my food expenses were pretty low, but more recently I’ve been going out to eat more and blowing my food budget just like you guys. What I’ve realized is that it really doesn’t matter how much I spend on groceries as long as I like what I make for dinner. Because if I can avoid just one trip to a a restaurant, I can justify spending about $20 more on groceries.

    I really like your goal to be more intentional about the food you put in your body. I don’t think you’ll end up spending all that much, but your quality of life will probably improve. I’ve cut down on meat and now I eat more organic food. Have a great new year! :)
    CashRebel recently posted..The truth about lifestyle inflationMy Profile

  • How do you track your spending so efficiently? Is it in Mint? My problem with tracking my spending, especially in the monthly format, is I put everything on credit card (which I pay in full), so tracking the spending is a bit more tricky as it’s in different forms.
    Tara @ Streets Ahead Living recently posted..Materialistic Envy is So Easy to CatchMy Profile

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