Holey Socks on a Six Figure Income: Our Budget and Spending
My salary is now just under 100k/year. D makes just over 20k/year. That puts us at about 120k combined income. Yowzars. We MUST be moneybags. Um. Hold it.
We didn’t earn that in 2016 or any prior year. There can be a big difference between sticker salary and actual earnings – depending on if full time, part time, or this new sticker amount is due to a raise. I’ve collected two paychecks in 2017 based on this new just under 100k salary. Derek works hourly. He has no paid time off. In 2015, I was underemployed for four months, in 2016, for three months. Underemployed = not earning enough to pay the basic bills. Hello credit cards – thanks for letting me run you up so I could pay rent and eat.
Anyway, onto the numbers.
Further disclaimers and budget tweaks:
Now – I know up top I said our working budget is about 120k for this year. But, that number needs to be tweaked. Because that’s not the number that’s available for the typical costs outlined above. We don’t pool all our money together. Derek has some bills he pays, I have some things I pay. Taxes eats up at least 15k/ year. Subtracting out other costs not factored here (like holdover debt from last year), that leaves about 85k-90k as the pool of money we expect to have to play with this year.
On Holey Socks: It’s all about priorities
Yes. I’ve got about 85-90k in money I could spend and I wear holey socks. Why? I know my priorities. And socks aren’t high on the list. Travel is, however. I’ll happily wear socks with my heel hanging out if it means I have a few more dollars to take an incredible trip. Or buy fancy bread, or get another six pack with D. Those are things I care about and I spend on them.
My Rent is Too Damn High
My rent is the biggest budget item. It eats up nearly half of what I spend per year. It can be seen as high or reasonable, depending on how you slice it. My thought is it’s wrong to look squarely at rent or mortgage alone as your “cost of living.” A fair comparison is rent, plus house-specific costs, plus local transit to work. That’s the total bundle of my housing cost. I could live someplace with cheaper rent, but may have a higher commute cost, which makes it a wash.
So, my total cost to live and work where I do is rent, local transit, laundry: $2125/month.
A friend of mine lives in upstate NY. She’s noted her mortgage payment is like $500/month to stress how cheap it is to live there. But, she needs a car to get to work, has required costs like homeowners insurance, and required expenses like a new well. Adding up all her costs – mortgage, property and school taxes, homeowners insurance, car payment, car insurance, car repairs and maintenance, gas, home repairs, home maintenance, snow removal, trash, sewer or septic costs, water bills, heating costs – raise her total house cost a lot higher. She doesn’t pay $500 a month for her housing. I don’t know exactly how much it ends up being, but she likely pays a lot closer to $2,000/month for her house and work commute. It’s important to properly compare.
Having $85,000 spending money is STILL a lot more than my penciled in budget. By my rough estimation, I should have 32k available of this for saving. It’ll be interesting to see if I manage to save over 30k this year.
I’ll update actual spending vs budget a few times to see where I’m doing it right or where I’m going astray.