Finance Friday: 2019 Spending

The calendar year has turned, so it's time to review my 2019 spending! I've been doing this since 2015 (see 2018 here, 2017 here, 2016 here, and 2015 here). When I wrote my finance post last year, I made it a goal to do a financial post each quarter... and then never wrote another one! Whoops! My finance posts always get a lot of good comments and seem quite popular, so I am really going to try to write 3 more in 2020. We'll see if I achieve this goal!

Before I dig in, a couple of notes about adjustments made:

1. 2019 ended up being an expensive year since we bought a house. I feel weird talking about this, but I'm all about transparency, so here goes! We paid off our mortgage early in 2019. Phil bought our last house at a great time 5 years ago, so the mortgage wasn't very high since the price was fairly low and he'd made extra payments over time. The rate was going to reset (we had a 5-year ARM) and would be higher so we decided to just pay it off (we had money saved from previous bonuses, etc). Then in December, we sold it for almost $100k more than he paid for it and put all of the proceeds from the sale towards the mortgage on our new home. So paying off that mortgage/applying the sale proceeds toward our new mortgage combined with the down payment on the new house was a big chunk of money. Some might wonder why we are so committed to paying off our mortgage. The reason for this is that we both work in financial services which is a very volatile industry. So having 2 incomes that are subject to a lot of volatility means that we want to reduce our monthly expenses as much as possible in the event one or both of us gets laid off. Phil got laid off when the hedge fund he worked for blew up after the 2008 financial crisis and I had to move to Charlotte to keep my job when my department was moved, so we've already experienced the volatility of our industry. And it's only going to get worse as the financial services industry is shrinking. If we worked in less volatile industries or didn't BOTH work in a volatile industry, we might feel differently about not having a mortgage. Our goal is to pay off our new mortgage within 5 years. 

All that said, I removed the down payment/extra lump sum paid towards our new mortgage from the spending chart, because it was several multiples of the rest of our spending. Had I included it, the pie chart would have had one huge piece and some teeny tiny other ones!

2. This chart does not include savings. 

3. This chart does not include payroll deductions for things like health/dental/vision insurance or charitable contributions. I could easily add these items in but I haven't in the past. The charitable donation is in my control, but the insurance items aren't so I don't feel it's necessary to include them.

4. This chart doesn't include all of Phil's spending. He has some credit cards that are not on my mint account and it's not really worth the hassle of adding them. The guy barely spends any money so he doesn't really want/need to track it. But that means things like grocery shopping aren't included since he does all of our grocery shopping!

Overall, our spending (excluding our housing expenses) grew by 10%. Here's the category breakout - I'll talk about the categories that bear mentioning. 

Taxes: We paid less in taxes in 2019 compared to 2018, but I think Phil made a payment toward our 2019 taxes in early January, so we'll probably end up spending about the same amount as 2018. As I explained last year, we have to make extra tax payments because even though we each claim 0 with holdings, our companies don't hold back enough for taxes. Part of this is the "marriage penalty" - meaning the tax obligation of our combined income is significantly higher than the tax obligation when we were single (we used to both get large refunds each year and claimed 1-2 with holdings). It's too complicated to explain the marriage penalty but you can google it if you are interested. Things are further complicated because some of Phil's income doesn't come on a w-2, instead he gets a K-1 and has to estimate how much taxes he owes on his K-1 income. I let him do all the math and make the extra tax payments.

Kids:  This is mostly child care. This category jumped by about 1/3 this year as we only paid for about 4 months of daycare last year. Daycare is not cheap but we are so happy with the daycare Paul goes to. He has learned so much under their care and he seems to genuinely enjoy his time there! It was nice when tuition went down $40/week when he moved into the toddler room in September, though. Other than child care, I really do not spend much on Paul. I rarely buy clothes for him (mostly pajamas, not much else) and if I do buy clothes, I go to Once Upon a Child. Luckily Paul has received a lot of hand-me-downs from friends and Paul's grandmas, especially Phil's mom, enjoy shopping for him! We also have not bought many toys since he received a lot for his birthday and Christmas - plus we got a bunch of hand-me-down toys from my college friends in December. I do buy books for him but it's really important to have lots of books around the house and he thoroughly enjoys them!

Home:  This includes our regular mortgage payments before paying off our mortgage, and the payments on the new house, our cleaning service (I talked Phil into hiring one in August), moving expenses, some of the furniture for our new house and miscellaneous repairs. Overall I'm content with what we are spending on our house. Hiring a cleaning service isn't cheap but it's money well-spent!

Target:  Ay yi yi. This is a category I would like to cut down on. I was surprised to see that I spent more at Target than Amazon since it feels like we buy a lot from Amazon! There is a Target a block from where I work so I go there quite a bit. I think a lot of this spending is on groceries, household items and things Paul needs, like pajamas, winter hats/gloves, etc. My plan for 2020 is to track what I am buying at Target so I can get a better handle on why I spend so much there! I don't feel like I make many frivolous purchases at Target - it usually feels like I am buying necessities - but I want to watch it more closely in 2020.

Travel:  I am happy that travel is back on my spending grid in 2019 after spending next to nothing on travel in 2018 since we had a baby that year! We took one trip in 2019 - a trip to the Sarasota area of Florida. We also paid for 1/2 of the VRBO for our 2020 trip to the Tampa area of Florida. We are hoping to continue to take one family/trip per year and are really hoping to take our first trip without Paul in May or June if my mom is able to watch him - we'll see if she is able to retire this year!

Food and Dining: Since I don't do the grocery shopping, this is money spent on meals out, coffee, alcohol, etc. This increased by about 50% in 2019 but it was really low in 2018 since I was wrapping up the pregnancy (and laid up for 6 weeks with a blood clot) and then home for a good chunk of the year with a young baby. We really do not eat out much as a couple/family- maybe once every 2-3 months, if that! So a good portion of that expense is lunches during the workweek (I eat out once/week), meals out with my book club, and coffee. I typically only let myself get a coffee once/week but broke this rule during our move as our coffee pot was packed away. I had packed it away early in my pregnancy as coffee was a huge turnoff. I didn't feel like unpacking it after the miscarriage it so got lattes every day for about 5-6 weeks. Oh well!

Personal Care: This increased quite a bit from 2018 as well, mostly because I replaced all my make-up and skin care with cleaner products (Beauty Counter). I also treated myself to a couple of massages which was money well-spent! I expect this category to shrink in 2019 since I won't be buying much make-up/skincare products.

Focus for 2020:

2019 was an incredibly expensive year between paying off a mortgage, buying a house, and buying some furniture for the new house. We had been saving for the house/furniture so we were ready for it, but it's still hard to look at the outflow from 2019. In 2020 I'd like to really focus on spending LESS! Not buying a house will really help! I am a frugal person in general, but there's always room for improvement. Here is what I plan to do:

1. My biggest focus for 2020 will be examining my spending at Target and trying to spend less there. We'll continue to aggressively pay down our mortgage this year, so it will still be a spendy year, but overall I'd like my spending at places like Target to decline.

2. I also want to stop ordering so much from Amazon. With free 2-day shipping through Prime, it's so easy to buy things when I realize we need them. What I'd like to do is add something to a wish list if it's not something I absolutely NEED. If it's something we need, I'd like to add it to our cart and wait 1-2 weeks to place the order. Obviously if it's something we urgently need, I will order it, but a lot of my orders aren't urgent needs. This will cut down on the number of boxes we receive (which is a bit of a sore subject in my house)!

Overall, I know we are doing well with how we manage our finances, though, so I am trying not to be too critical. Life is meant to be enjoyed so I fully believe in continuing to spend money on things like coffee, lunches out, meals with friends, our bi-weekly cleaning services, etc. If it was up to Phil, we'd cut most of that spending out. Ha! But, "you can't take it with you!" so I want to enjoy the fruits of our hard labor - within reason, of course!

Do you review your spending? Is there a spending category you'd like to spend less on? Are there any finance topics you'd like me to cover this year?