To cut to the chase, July was our most expensive month to date. There were a lot of reasons for this, both voluntary and non voluntary, but the fact of the matter is we spent considerably more this past month than we have any other month this year, including May which saw us on a two week road trip on the East Coast.
For that reason, it was really, really tempting to just skip over this month’s financial update and wait for August, which will be a much better month, both on the income and expenses sides. However, I promised myself (and everyone who reads this blog) that I would stay transparent and accountable by sharing how we did every single month, good and bad. And the bad months are the ones that are probably most important to share anyway. The only way to keep things on track is to know exactly what and where we’ve spent our money, and that means not putting my head in the sand when it ends up being more than I’d like.
Non Voluntary Expenses
The biggest non voluntary expenses this month were vehicle and pet related. My husband’s truck needed some work, and while he initially attempted to do the work himself, it still wasn’t starting well and so he took it into the auto shop. They do a great job and charge a fair rate, but obviously any time you have to pay a mechanic it is going to cost a decent amount. Since this truck is both his work vehicle and our camping “van,” keeping it in good running condition is essential.
The other significant nonnegotiable expense in July was our vet bills. Both dogs had to go in for their annual check up and shots, and our older dog now requires blood work and additional tests since she has a heart condition. That vet appointment combined with her monthly medications that cost us close to $150 means that we spent quite a bit on pet care, and starting next month we’ll also be spending $100 per bag of dog food for her because she is going on a special kidney diet.
I feel very strongly though that if you choose to bring animals into your home, you take care of them properly. This means not skipping vet visits and paying for the food and medication she needs to stay healthy. A year ago we weren’t sure she would still be around now, and she is worth every extra dollar we’ve spent to keep her healthy. She turned eight years old yesterday, so happy birthday Ellie. We’re so glad you’re still here.
We also had some home maintenance expenses this month, including needing to replace part of our master bathroom sink because the drain piece and stopper was really old and starting to disintegrate. Instead of replacing the entire sink – or paying someone to do the work – we went to Home Depot and paid for just the pieces we needed and my husband did the work himself.
Voluntary Expenses
Now on to the voluntary expenses for the month, because they were significant as well. July is the month that we share in the cost of a half of a cow from a local farm. Last year we split a quarter between two families, and this year our neighbors were also interested so we ended up splitting a half between three families. Our third of the cost was just shy of $600, so we completely blew through our grocery budget for the month.
We will continue to eat meat, though, so my goal is to purchase it in the best way possible, which is direct from a local farm where I know they treat their animals well and minimize their impact on the environment. A bonus of that is the meat tastes so much better than anything we can buy at the grocery store, and we don’t pay more per pound, though we do have to pay for it all up front. So while this expense may be disproportionately charged to our July budget, it will cut the cost of our grocery bill for many months to come. In terms of our annual savings rate, this cost doesn’t change things.
We also bought our plane tickets for our next trip to Hawaii, though they cost us only $11.20 a person, so the flights weren’t a significant part of our expenses for the month. We did book four nights of a rental house for that trip though, which was a much larger number (though we will be booking a couple nights via hotel points so the number is smaller than if we paid out of pocket for the whole trip). I like spreading the cost of a vacation throughout the months leading up to the trip, so we don’t pay for it all in one go. It just means that July bore a significant chunk of those costs.
I could have waited to book the house until August to keep our expenses down in July, but I wanted my pick of houses and each month we wait to book the fewer choices we would have. The point of spending well below our means is that I can make my choices based on what will be best for the long run, even if it means an artificial spike in expenses for a specific month. The numbers ended up a bit painful this month, but when I remove the non typical expenses, we didn’t spend more than average.
The question is then, should we have not spent any of the money that we did this month? Vehicle, home, pets, those expenses were absolutely non negotiable. Bulk meat purchase? We agreed to buy from the farm months ago, and it will save us money over the next six months or more. Vacation spending? We are taking my grandmother to Hawaii for the very first time. No, we absolutely wouldn’t take back that money spent.
So July was just an expensive month, and August will be time to buckle down and bring the curve back in alignment for the rest of the year. After all, what’s the point of saving your money if you aren’t living the life that makes you happiest? We want to be financially independent at some point in the future, but we aren’t willing to ignore the present in the chase for some day.
July 2018 Spending (Excludes mortgage + daycare)
| Jan 2018 | Feb 2018 | Mar 2018 | Apr 2018 | May 2018 | Jun 2018 | Jul 2018 | |
| Groceries | $462.37 | $491.07 | $497.53 | $343.37 | $658.76 | $353.25 | $1,041.77 |
| Restaurants | $406.95 | $440.00 | $243.63 | $583.75 | $1,040.03 | $529.21 | $329.83 |
| Fast Food | $19.48 | $5.72 | $80.34 | $83.54 | $120.78 | $75.89 | $117.72 |
| Gym | $17.84 | $17.84 | $17.84 | $17.84 | $17.84 | $17.84 | $17.84 |
| Gas | $110.10 | $120.23 | $262.00 | $199.76 | $263.60 | $242.89 | $117.72 |
| Car/Transit | $28.11 | $166.00 | $60.00 | $0.00 | $30.00 | $737.53 | $640.86 |
| Utilities | $218.01 | $370.27 | $223.99 | $366.55 | $200.25 | $266.25 | $126.98 |
| Pet Care | $228.28 | $209.95 | $769.90 | $221.65 | $273.96 | $277.56 | $578.63 |
| Vacations | $588.69 | $274.65 | $129.51 | $297.44 | $971.66 | $148.00 | $483.45 |
| Misc | $53.00 | $256.28 | $823.58 | $177.49 | $354.68 | $164.62 | $629.79 |
| Total | $2,132.83 | $2,352.01 | $3,108.32 | $2,291.39 | $3,931.56 | $2,813.04 | $4,084.59 |
| Savings Rate | 53% | 51% | 61% | 53% | 44% | 44% | 30% |
| Excluding Mortgage Principal | 47% | 45% | 57% | 47% | 39% | 38% | 23% |
YTD: 48% savings rate
Even with a drastic drop in our savings rate in July (ouch, seeing that number in black and white isn’t so much fun), we are still at a 48% savings rate for the year, which is just shy of our big goal of 50% for 2018. As long as we keep on track the rest of the year, we should hit it, which feels a little surreal when I look back at our savings rate in 2016 and 2017, which were both just north of 20%.
I might be a little frustrated with our savings rate in July, but I have to remember that it is still higher than the average for the years previous. We’ve so significantly changed our savings rate through careful tracking of our money to ensure that we are spending on what brings value to us.
When I compare July to last summer, the change is especially noticeable. We had a few very expensive months back to back right after I started this blog, and I wrote about them: home and car maintenance, emergency vet bills, and finally, when we had to use our emergency fund. The culmination of thousands of extra dollars in unexpected expenses led us to a point where we were outspending our income, however briefly.
Comparatively, this past month meant just a drop in our savings rate, though we were still well in the black financially. We may be many years out from financial independence with no plans to quit our jobs, but that pursuit of financial independence has given us such a margin in our monthly expenses that even much higher spending for a given period still allows us to send money to savings instead of needing to float out our expenses on the next month’s credit card bill (even if paid off before interest accrued).
That margin gives us such peace of mind and the confidence that we can handle whatever a specific month throws our way. That alone is a reason to pursue financial independence, even if you have no interest in retirement. The freedom there is really what it’s all about.