So it’s that time of the month again, the pay cheque has landed in my account, I have collated my expenses for the last month and I can see how I am doing….
So as always I had my steady Salary drop into my bank account, always nice. I don’t include any of my personal ISA dividends in my income statement, that is just part of the growth of those portfolios. The income thrown off by my other half is included, however this is an incredibly small amount at present (less than 1% of income) so it is more of a statistical error! It is still up a significant amount from last year which is nice, and it went straight off the mortgage. Sadly January is always a terrible month for income from dividends and I don’t see that changing, seems that not many pay out in January.
So, steady as she goes on income – very slowly creeping up.
So this is going to be a tale of two numbers. I will explain more after my “first run” on expenses…
|Things I choose not to avoid*||Mortgage, Insurance, shared bills etc. – yes, we could move somewhere cheaper, not have insurance, reduce our bills a bit and so on, but we are where we are.||42%|
|Groceries||All the food and other stuff needed for home||2%|
|Alcohol for home||Home alcohol consumption only||2%|
|Bicycles / Car related||Any costs related to either the bikes or the car||0%|
|Alcohol Out||Generally, its the pub….||0%|
|Eating Out||I include purchased lunches in this as well as meals out etc.||1%|
|Other||My catch all for anything I may have missed….||4%|
|Holidays||Any spending related to holidays, flights etc.||0%|
|Savings||Anything left over! This includes money into ISAs, mortgage payments and non relief pension contributions. My company pension comes out before it hits my bank account so isn’t included, nor do I include the “top up” of money when my money goes into my personal pension (i.e. I put in £100, I register it as £100, not the £125 that gets credited in my pension)||49%|
Wow! What a great start to the year – 49% savings! I looked back at my history of spending, and this is the lowest amount I have EVER spent in a month – and so I think it is unlikely I will be able to continue at this level of spending, but it shows it can sometimes be possible. It was helped as I bought so little.
Sadly, all is not as great as it seems. Despite the fact that I put in my tax return back at the beginning of May 2016 for last tax year, HMRC decided to wait until Christmas to tell me that I owed them money. Quite a lot of money as well – more than I can pay back over the year with my tax code. As such, this not just hits this months savings rate, but will hit next month as well :(.
This was because of a bonus I received last tax year which I used to top up my emergency funds. I have learnt my lesson – my bonus this year will 100% go into my pension, regardless of how much I would prefer it to rebuild my emergency cash. It’s not where I would want to put it all either as it gets locked away, but if it helps reduce my tax bill I have to.
As such, my declared savings rate isn’t really 49%. I did drip feed the usual amounts into my pension and other half’s ISA, however for tracking purposes I will declare zero savings for the month. This does also make it an interesting one – how do I calculate this in my road to FI? Yes it is an expense, however it is a one off, and not a bill I expect to have to pay in retirement – so I could argue I shouldn’t include it, but I didn’t save the money. I would rather put a more pessimistic view on it, so I am including it for now.
On the plus side – I found I could pay for my tax bill online, using my credit card – for a small fee. A quick number crunch showed that I would get more money back (more than double) in rewards than the cost of the charge for using a credit card. So I paid on credit card!
So, my dry run goals – how do I fare, with my final declared number?
Dry run 1: Savings.
Each month I will aim to put into my current ISA the same amount that I plan to put into the Go T’ Pub ISA and see if it is realistic. With some holiday booked and a few other challenges I am already aware of this is going to be a real challenge, but its important to setup for success as best I can.
Conceded Fail. Had those wonderful people at HMRC not hit me with a huge tax bill then I would have passed and the amount I had chosen to invest would have gone in. So I know it is technically feasible this month – however have I just shut up shop for the month after Christmas? Lets see.
Dry run 2: Reduce my alcohol expenses.
This needs to average out over the months, as I tend to buy when the offers are on so it comes in peaks and troughs. I am going to aim to reduce my “Alcohol at home” budget by 25%. This really is going to be a challenge as the whisky collection has been hit hard over the Christmas break and so I do need to buy some more soon(ish) which will hurt.
Pass. So only 2% this month went on alcohol – so that’s a great reduction, however I would say I consumed more than normal it is just that I had plenty of alcohol in and didn’t go out much.
Dry run 3: Reduce my “Other” expenses.
This is going to be a lot tougher one as these really are other things (e.g. the Weekend FT, a taxi home from town etc.).
Conceded Fail. So this is really linked to dry run 1. Had I not been hit with a tax bill then my other expenses would have been a lot lower, in reality I took a 49% hit in the other category. Again, not something I expect to be doing regularly but being transparent, this did cost me, so sadly a fail.
Not the ideal start to the year, but such is life!
How was your January? Did you hunker down after Christmas, or did you keep the spirit flowing?