My savings rate and expenses – December update – three paychecks
December was a great month. Lots of family time, lots of time off and lots of dividends plus three paychecks. That always makes for a strong savings rate if expenses don’t creep up.
My family isn’t huge on gifts for a variety of reasons. Part of it is that most of my family is not in the US. We’re first generation immigrants. Part of it is that we’re all notoriously difficult to shop for. That means we’ve historically just exchanged cash and gift cards.
It was actually my parents who brought up the idea of just stopping gifts all together for the adults. Now we only buy gifts for the kids(there’s only one). I was happy to get on board with as a cash exchange didn’t really make much sense anyway.
For our family, the holidays are more about spending time together. We were never huge on gift giving mainly because we grew up poor in Europe and early on in the US and didn’t have the money half the time.
It may seem odd that we never changed that dynamic much after we shifted into the middle class but it just wasn’t something that mattered to us much then or now. Therefore it wasn’t hard to make the decision to just cut out gifts all together. It makes sense to concentrate on other things during the holidays. We still do small little gifts like chocolates but there’s no major expectations from any of us when Christmas approaches.
That means that my holiday gift expenses for me weren’t that huge. I got small gifts here and there. I bought my girlfriend and my nephew something nice but I didn’t dread the holiday shopping season as much as others. That’s because I knew ahead of time that my spending would be limited.
My girlfriend’s family is a bit different as they spend a bit more than us. This was the first year I participated and was impressed by the efficient way her family chooses gifts for everyone else. I enjoyed all the google spreadsheets and tracking that they do in regards to what everyone’s getting, how much it all costs and what everyone owes at the end of the day.
All that means December wasn’t bad for me from an expense and effort perspective. I didn’t have to do much shopping for anyone. The shopping I did do was all on Amazon.
I let my girlfriend handle everything on her end. It was easy to just cut her a check for my portion of the expenses. I didn’t actually pay her for that until January. That expense isn’t reflected in this month’s total. However, it wasn’t a big one anyway as the total cost of all the gifts they got was split among multiple people.
On the savings rate front; things were good due to this limited spending. Three paychecks plus reasonable expenses means good things when it comes to that.
Let’s take a look at how things look for the last update of the year. First up is the gross income breakdown.
I saved 45.28% of my gross income this month which is the best month of the year! This was due to a combination of a three paycheck month and lower than expected spending.
Adding in employer contributions sends this number up to 50.29% which is awesome to see before the end of the year.
The goal here is to have this above 33% before contributions on a consistent basis. I beat that hear but I still think I’m behind on that goal for the year overall as I’ve had plenty of misses in the months that didn’t have three paychecks.
My other three paycheck month this year(July) clocked in at 41.7% before contributions which is a good deal below what I saw in December. I actually made more money in that month as well due to a small bonus but my expenses were a bit higher so I’m impressed that I beat that month here.
Now let’s look at the savings rate.
December clocks in at savings rate of 62.7%! That number jumps to 69.7% after employer contributions.
This is awesome to see to close out the year and beats July by over 5% which is impressive considering I made more money that month. I’m super excited to close out the year like this and while this month is obviously inflated by the third paycheck; it’s still great to see improvement over the last comparable three paycheck month.
My goal here is 50%+ and I succeed there this month but the struggle is to do it in months where I don’t get three paychecks.
My expenses weren’t that high this month despite the fact that I had a lot of time off from work along with my girlfriend. We spent a lot of that time hiking and doing other things that don’t cost a lot of money.
Let’s take a look at my expense breakdown for the month.
My overall expenses were actually lower than any other month this year which was interesting. I had about half the month off from work. Generally, I spent more time doing things that didn’t cost money. I ate out a bit less and cooked more at home. Hiking and enjoying nature took up more of my time. Some of that was due to not being as tired after work and having more energy to cook and do things instead of just going out and doing things that cost money.
As always, rent makes up the biggest portion of my expenses followed by my car payment. Both are higher as a % of overall spend as they’re a fixed cost and my overall spending decreased.
Gifts is higher for obvious reasons since it was the holidays but nothing else is really surprising with an even split around common spending categories.
December was also the last month I had to save for my quarterly tax payment. That one is due in January and that cost will not be in play for 2017 as I have no estimated payments to make. I might replace that with resuming savings for a house down-payment which I haven’t done this year. It’s possible that 2017 will be the year I start to seriously think about buying a house. That is if the right property goes on sale.
Overall, this was a good month on both fronts. I controlled spending without really trying and had an awesome savings rate as a result.
This also wraps up 2016 from a tracking perspective. While I only started tracking this data in March, I’ll have a nearly full year to review pretty soon once I put together that data set.
I plan to make a 2016 in review post sometime soon. That will help me analyze everything that happened last year. It’ll also help set realistic goals for 2017.
That’s it for this update. I’ll be working on my 2016 review next as well as putting together some 2017 goals. I also plan an intro post to my side hustle experiment that will set a baseline of what I’ve already published, how much I’ve written and what my earnings were before I got back into it for 2017.
Thanks for reading this update. How was your savings rate for December?
3 Comments
Buy, Hold Long
Very nice saving rate there for sure. How good does it feel when you can save well over half of your income. Well done. I also believe in living well below your means in order to have more later in life and to not rely on work to get me by. All the best for 2017.
Dividend Life
Hi timeinthemarket,
Congrats on an awesome Savings Rate for December! That will certainly be a big factor in early retirement. I hope you were able to spend some time on your writing over the holidays too.
My Savings Rate ended up at 59.1 of net income which is a record for me. I'm hoping to make some new records this year.
Best wishes,
-DL
Dividends 4 Future
Impressive savings rate, I'm trying to to do around 45% in savings and some times its really tough, over 60% at this point for me is almost close to impossible.