The Time in the Market savings rate report – January 2018 – winter hibernation, Netflix and adult coloring books
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Winter is not my favorite season. Cold weather, icy roads and snow fill the forecasts and going outside becomes a drag. It’s very easy these day to fall into a state of winter hibernation. Winter, in my mind, is a season for staying in and I actually like that part of it.
I’m an introverted person and staying in to read, watch Netflix or write is right up my alley. I might not like the weather but I don’t mind the fact that it forces me to stay in more often. The fact that I’m likely spending less money by not going out doesn’t hurt either.
Thankfully, this doesn’t mean we become hermits that never go out, hiss at the sight of the sun and have no social interaction. We still go to work, still take walks when the weather allows it and still see friends and family. However, on snowy weekends with stinging frigid wind, it’s certainly much easier to just say, “eh, let’s stay in today.” Even when we do go out and see friends, half the time we’re staying at their place and playing board games since who wants to go out in this weather?
As with most people, weekends are an easy time to spend money and staying in helps keep that at bay. The best part is that we’re not unhappy when we have to stay in any given weekend. We are those types of people. The wide variety of entertainment provided by services like Hulu, Netflix or Prime Video means you can do a lot of things at home at a fraction of the cost. I’ve been making huge use of Overdrive to read a lot of books lately. It’s not just investing books but also a ton of fiction.
There’s been some fluff like the YA series, The Reckoners by Brandon Sanderson. Sanderson is one of my favorite authors but Steelheart and the latter books in the series were a bit dull. I do recommend a lot of his other work like Mistborn and Way of Kings. I’ve also been re-reading The Wind-Up Bird Chronicle by Haruki Murakami, another great author. I recommend that book but be prepared for a lot of weirdness.
That’s one of the things I love about winter even if the weather sucks. Staying in often allows me to read a ton and there’s really nothing better than curling up in bed and reading a bit before or just after waking up in the morning.
My fiancee luckily is cut from the same cloth. She actually prefers staying in more than I do and reads at a ridiculous clip often going through a few books every week. Than god Overdrive exists to satiate her thirst for audio books because those are expensive. I know I’m talking about Overdrive a lot but seriously check it out because it’s an awesome resource if you like reading or listen to books.
One of things she loves to do to wind down in color and the recent influx of adult coloring books has been great for that. She’s an artistic type and sometimes designs her own pages to color like the one below. If anyone likes coloring then you can check out the item below in full size on this new page I created.
It’s great that she can do that but sometimes it’s much easier to just color sheets from a book. I always try to keep an eye out for books she might enjoy. Recently I saw a lady coloring one at a doctor’s appointment. The book caught my eye because it seemed high quality and the patterns were cool. I spent some time online looking for it and bought it for her as a gift. It’s always nice to give gifts especially when they’re well received. One has to remember that a gift doesn’t have to be expensive as long as it’s well thought out.
I know winter isn’t the favorite season for many people. That’s why little things like that help make an otherwise drab season a more enjoyable one. Winter seems a lot easier now with the bevy of entertainment options you can have at home. There’s entirely too much good television to watch between the three subscription services and it’s very easy to fill the free time with something like reading, writing or other forms of entertainment.
Reading books borrowed via overdrive and staying in means we’re spending less on entertainment and food which should mean good things for the savings rate.
We’re starting the year this month so I’m hoping to see good results. As a comparison, last year started with a 26.4% gross savings rate and a 34.1% savings rate.
Gross Income Savings Rate
On a gross income basis, I saved 37.7% of my income this month. That’s a big bump versus January last year and a great result for the month.
That number jumps to 42.69% when I add in my employer contributions.
The start of a new year means my 401k contributions can go up on a % basis which lowers my tax burden in these early months. My 401k contributions generally end the year in the low teens but start the year in the 20%+ range as I like to front load them a bit. That means I’m saving more through my paycheck early in the year and paying less taxes due to a lower taxable income.
Overall, this is a great result for a two paycheck month and one I’m very happy with.
Let’s take a look at the savings rate.
My savings rate for the month is 49.06%! That is a kick ass number to kick off 2018 and bodes well for my results and goals this year.
Adding in employer contributions bumps that number to 55.55%.
It’s just a bit shy of being a 50% month before employer contributions which is one of my goals but it’s not too far from it. January’s results speak to my ability to manage expenses this month. No doubt, that was helped by winter and the season’s ability to force me to stay inside and spend less.
Overall, I’m very happy with the results here and am glad to continue the strong streak I’ve had since I reviewed my Q3 2017 performance and realized I was behind my 2017 goals. Since then, my savings rate has been 54.6%, 51.2% and 49.1% this month. Those are steady and awesome results.
The best part is that February will likely continue that I just received my bonus which included a 50% contribution towards the 401k. That means February will likely kill it as far as savings rate goes and that will mean my 2018 is off to a great start!
Still, this year will have some heavy expenses due to my upcoming wedding and honeymoon. That means a strong start is important if I want to have a shot at meeting my 2018 goals. That means managing my expenses and maximizing savings.
Speaking of expenses, I talked about a few things I bought this month but let’s look where my money went.
My primary job makes up 99.67% of my income this month with a tiny trickle of book income helping that number.
The graph looks pretty good this month with that big chunk at the top devoted to savings. Typical expenses make up the top including rent, my car payment and some restaurant expenses.
The biggest expense in the restaurant category was a dinner we had with some friends at a new restaurant. It was quite delicious. We’re also big brunch/lunch people and generally eat out at least once a week on Sundays.
Gifts are made up of the coloring book mentioned before and a gift for my father’s birthday.
None of the other items are surprising or interesting. I did pick up a few shirts on sale at J. Crew so the clothes category makes an appearance. Entertainment is the generic Netflix and iTunes payments but also includes my annual $99 for Amazon Prime.
Health expenses this month included an rX refill as well as some supplements that I take regularly. Gotta get that Vitamin D during these sunless depressing months!
Expenses this month were low in relation to other months and are mainly driven by winter hibernation! There wasn’t anything specific I did in order to push my savings rate up, just a natural tendency to stay in more and spend less due to winter’s cold embrace.
Overall, this was a really solid month with great results. I’m happy to see a near 50% result in a two paycheck month. I’m now looking forward to February which should look good as well due to my bonus and high 401k contributions!
Thanks for reading and let me know how your January went.
That is one hell of savings rate! Cogratulations on those results. The wedding and honeymoon are as expansive as you want them to be 😉
Btw I also love to read!
Thanks! I know we can control the wedding and honeymoon expenses and we’re doing a good job at that but I also want to be realistic around my fiancee’s wants and needs around the wedding plus I really want to have a great time in Hawaii even if it costs a bit to do all the things we want to do.
Fantastic savings rate Time and nice to hear you enjoyin a good restaurant dinner. Vit D in winter goes a long way, I’m deficient nearly every winter so I just take it now.
It’s definitely an important thing to supplement if you’re living anywhere that has a long winter.
Tom from Dividends Diversify
Nice summary and keep up the good work Time.
Good stuff mate! I am intrigued by your front loading of 401(K). What is the reason behind it? Does it no go against dollar cost averaging?
Time in the market beats timing the market. The assumption is that the market will rise in the long run and we can’t time it well. If you believe in that then getting your money into the market as early as possible is the way to go and I try to do that with my work accounts. The other part of it is that my bonus happens in February and that’s taxed at a much higher rate than standard pay so I bump up my 401k contribution to 50% for that check to make sure I’m not overpaying on taxes.