January Finances 2021: “Personal Finance Apprentice”

Posted On February 1, 2021

In January we didn’t have a mortgage to worry about and we took a spur of the moment trip to the Sierra Nevada for a weekend getaway for the MLK holiday weekend. While I usually dislike spur of the moment money spending, this trip to the snow was exactly what we needed as a family; just a few days out of our house in new surroundings doing absolutely nothing.

Somehow we managed to stay in the black this month despite the splurge.

We also added a new category to our monthly spending spreadsheet. I call it the “Life Happens” category. This will be $800 dollars added to our monthly excel expense tracker. It’s quite high, but it warrants this high value. We’ve been averaging about $1200 dollars of overspending each month. Granted, the holidays made up a big portion of this value as an outlier. So I optimistically lowered it a bit to $800 dollars. This change will not affect our auto investing amount. The extra money is coming from what would be our cash cushion allowance.

We decided to make this “Life Happens” category into a game of sorts. Any money not spent in this category will be used to purchase an individual stock flavor of the month. It’s a win in my book. I’ll be accounting for the unexpected extra money that we spend each month, and if we have any savings here, we get to buy a stock as a present to ourselves and slowly add growth stocks to the portfolio.

Another highlight (lowlight) of the month was that I purchased a coffee for the first time since March for $2.38 at a coffee shop last Friday. That won’t even move the needle, but it was a watershed moment of discipline weakness…sigh. Funny how I trip about a stupid cup of $2 coffee but blow $1400 on a cabin! But for me, it’s about a break in my discipline, which I hold very dear.

Still haven’t bought lunch at work since last March. I hope to keep that streak going.

Personal Finance Apprentice

This Personal Finance thing is an evolving process for me. (Q-FI wrote something about this in his recent post). Till quite recently, I didn’t think we needed that much cash on hand. Now I see the need to have at least three months of expenses in cash just to make things more optimal and less hands-on. In our case, we spend about $6k a month, so we want to hoover around $18k in our checking/savings account.

There is an old Zen saying and practice of keeping a “Beginners Mind” in all things. I tend to lean towards this philosophy of trying not to let my mind get full and thus not having room for new knowledge. Basically, I want to always keep an open mind to new ways.

They say it takes 10 years to truly master something. I’ve only started my FIRE journey last March (but I’ve been taxable investing for 6 years). So, I’m still a first-year Personal Finance apprentice. In the trades, it takes about 4 to 5 years of apprenticeship before you become a journeyman. So I have a ways to go before I get to a journeyman level. Hopefully, the year I become a PF journeyman, I’ll also retire!

Most apprentices learn best by doing two things:

1. Working with an experienced journeyman

2. Time and Practice

My proverbial “journeyman” is just reading as much as I can, be it other blogs, podcasts, and news articles. Mostly blogs. It’s great that there’s such a wide array of blogs out there with everyone doing things slightly different than the other and happily sharing their experiences and techniques. This makes for great and easy “apprenticing” from others.

The practice part is just living my life with the intention of saving a minimum of 50% of my income. That part is easy. Automatically transfer a set amount of money to Vanguard before we can touch it and live life off the rest. Easy peasy.

It’s what we do with the other 50% that I struggle with at times.

I know we could have a 65%-70% savings rate if we really tried. You know, didn’t splurge on weekend getaways, shopped only at discount grocers, were more mindful in our activities, but this would lead to a depraved feeling I think. A feeling that we aren’t enjoying or living in the moment. These really are my best years; my kids are young and want to kick it with mom and dad, my wife and I both have energy and are in good health.

There is a really fine line to be walked here. A razor-thin line between truly enjoying the moment and finding rationalized excuses for unneeded spending. It’s this line I hope to one day master.

This is the part I’m apprenticing. How to live everyday life on this path and be comfortable with my decisions.

I can live with our current 50% savings rate. I know this number will grow when the next round of salary raises comes into the picture for us. Last year both our companies froze promotions and raises. So when raises and promotions do eventually come, this will go straight to savings and therefore raise our savings rate.

January Finances

Glad to start 2021 spending in the black. Even with some unexpected higher than usual Hard Bills. I received my union vacation check for $2700 this last Friday, nice since I didn’t get a company bonus this year. This money will go to our emergency fund. If you notice I dropped my mortgage down to $1630. This will be our new mortgage payment going forward after the refi. It’s way lower, but I’m saving the difference for the impending property tax.

Here’s what we over or under spent on and why:

Hard Bills- $1553–

The lack of a mortgage bill helped us out this month and allowed us to splurge on that cabin in the Sierra. Our cable bill was much higher than its usual amount. We had a promotional deal that kept our monthly bill at $39.99 for a year. Well, that expired last month, and the full regular price of $82 reared its head. To top it off they charged us for HBO Max. I called to see if they could reduce the bill back down, and after an hour of waiting on hold, they told me they couldn’t. That’s when I did some quick math and decided to eat the $240 cancellation fee rather than shell out $960 for another year of the contract.

Directv Canceled! Ah, that felt so good to do. We hardly watch cable tv. And when we do it’s either CNN or sports. The package I had wouldn’t even allow me to watch my Giant’s baseball channel without an upgrade. So bye Directv. Cancel culture is real.

I’m actually looking forward to testing out a no cable tv life. No news might be a good thing. I’ll see how long we can last with no news and sports.

Soft Bills-$1514

Alright, this is where the cabin came into play. Ate up quite a bit of our breathing room here. I put $800 of the cabin cost in our new Life category. No individual stock bonus this month.

My wife’s phone broke, so she got a new one. This will add $12 bucks a month to our bill for 3 years.

As for the $75 general merchandise, I didn’t realize I don’t have a merchandise section on here, haha. How were we living without buying any luxurious merchandise? I don’t know. But I like not having it so I can second guess any spending here. The items were some bath salts, firewood, and beauty supplies for my wife.

The PG&E bill was hella high. We’ve been running the heater pretty much full time so this is why the bill is so high. The problem is we need new windows. Our double-pane windows have moisture inside and when it gets cold here at night (’40s-’30s) it can feel as if the window is open. I’m dreading the estimated cost. I bet it will be around $3K-$5K if I do the work myself.

My homeowner’s spider senses are also tingling for a possible new water heater this year. The hot water pressure is super low. I wonder if this has anything to do with a higher gas bill?

Happy Savings!!

Any of you guys use YoutubeTV or any other streaming service? How was your January?