Expenses Revealed – Q1 2016

Over the last few weeks I have been buried studying for the CPA exam. I finally seem to be slightly ahead of schedule, so I thought I would take some time to write an update on this year’s spending so far.

During the first quarter of 2016, we came back to the U.S. shortly after celebrating our wedding in Colombia. Other than that it was a rather inconspicuous quarter as Elisa came back to work, and I started my last semester of grad school. Without further introduction, I present to you our expenses for the first three months of 2016.

Q1 2016 expenses

Rent: our biggest expense as usual. In the 2015 tracking expenses post, I said that we were exploring ways to reduce our housing expenses (without reducing long-term happiness). We are under contract to buy a home right now and if everything goes well, I will write a post with all the numbers behind this big purchase! Stay tuned.

Travel: travel was the second largest item as we purchased two tickets for Camp Mustache, and a round trip flight to Chicago. Both were totally worth it!

Health: health related expenses were higher than usual. They include monthly health insurance premiums as well as my very first pair of glasses. I guess that’s just part of getting old 🙂

Education: this category was also a little higher than usual as I needed some new textbooks. Those bastards are expensive! The cost of the textbooks was somewhat offset since I was able to resell most of them later on. What you see on the table above is the gross cost. Reselling proceeds are classified as income.

Gas and Parking: these were still high back in January, February, and March since I was still commuting from Raleigh to Chapel Hill. Looking forward to reporting lower expenses here in the future as I no longer have that big commute.

Our savings rate for the three month period was 57% as income was somewhat boosted by wedding gifts, textbook resales, and cash back from credit cards. So far we are on target to exceed our savings rate for 2015.

Final Thoughts

Another way to look at expenses is on a day by day bases. Our daily expenses for the first three months of the year averaged $84.15 per day ($7,657.82 / 91 days). Do you know how much of your money is going away on an average day?

I am currently reading The Millionaire Next Door. The authors describe building wealth as a game comprised of offense (income generation) and defense (expense management). Here is a quote from the book that I hope will motivate you to track your expenses if you are not doing so already. “How is it that you are losing at the game called wealth accumulation? Be honest with yourself. Could it be that you play terrible defense? Millionaires play both quality offense AND quality defense. And quite often their great defense helps them outscore those who have superior offenses. The foundation stone of wealth accumulation is defense, and this defense should be anchored by budgeting and planning.

If you want to build wealth and are ready to do something about it, I encourage you to start tracking your expenses and rethinking some of your choices. Here is my own approach for doing so:

  1. Access all our transactions through Personal Capital (a free online tool).
  2. Classify them into categories using this free spreadsheet.
  3. Go back and check what is actually necessary, and what brings us long term happiness. Eliminate everything else.
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6 thoughts on “Expenses Revealed – Q1 2016

  1. Congrats on buying a house! I look forward to reading your post on this subject. To my surprise, some personal finance experts seem to advocate renting over buying. Keep up the good work!

  2. Over the last few weeks I have been buried studying for the CPA exam. I finally seem to be slightly ahead of schedule…

    I’m envious. I find myself perpetually behind schedule. Best of luck on your impending exam.

    (In an attempt to escape my studies, I projected your annual spend based off of your first 3 months’ spending: a hair over $30,000. Split that total between you and Elisa and we get $15,000 per person – which in my opinion is pretty damn good defense already. Keep in mind, your travel-related expenses are only going to go one way now that we’ve graduated, so your actual 2016 total will most likely fall short of $30,000. Laura and I don’t pool our income & expenses yet, but my best guess is that we spend around $20,000 per person. Hopefully, we can follow your example in the future, though our moving to Boston probably won’t help.)

    • I should have put more emphasis on the word “slightly” 🙂 It took me a while to put this post together as I could only devote a small amount of time per day. I am envious that you already passed one!

      I like how you did a pro-forma based on the first three months. You are right, around $30,000 if it continues on the same path. It will probably be higher than that due the closing costs of buying a house (more to come when/if we close on the home).

      No time like the present to get started my friend!
      Regarding joining or not joining finances with one’s significant other, the MadFIentist has a couple of great posts based on his own experience.

      http://www.madfientist.com/an-unexpected-guest-post/

      Check it out when you take another break from studying.

  3. Nice work really detailing out and tracking your cash flow. The Millionaire Next Door and several of the late Thomas Stanley books are among some of my favorites! I think you’ll really enjoy a lot of his data and perspectives as to what really makes a person “rich”.

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