How a Physician slashed her spending
We had an 85% savings rate in 2017, which beat our 63% savings rate in 2016! It wasn’t easy. At all.
I know—you’re asking how this was possible and how did we calculate this? And lastly, why would anyone want to save so much money in the first place? (#YOLO crowd, here’s looking at you!) 😉
First, the calculation. For various reasons, I don’t count taxes or donations as “spending.” So I calculate based on whatever money lands in our bank account (plus deposits from our paychecks into retirement accounts) minus whatever is spent.
Second: how’d we get our spending down? In 2016 I had this gut feeling a BIG financial change was coming for our family. To prepare, I started tracking our expenses. Wowser was that a painful eye-opener! My eyes practically bulged out of my sockets when I realized how much money was slipping through our fingers every month.
I started to read about frugality obsessively. My husband and I had already read Mr. Money Mustache’s blog years earlier—which eventually led to my husband selling his car and biking 25 miles round trip to and from work—including through tropical storms. In the middle of the night.
There was also my husband’s whole ten-foot-alligator-in-the-middle-of-the-night biking incident. Then there were his two near-death experiences when cars almost hit him when we had two kids in diapers (which resulted in two broken arms—each one a few months apart!) I finally declared enough and bought a second vehicle, for fear he’d die the next time a car got too close.
Yeah…not a big fan of Mr. Money Mustache’s bike-to-work advice.
So after I was done cursing Mr. Money Mustache—whose blog made my husband act like he had a brain tumor (his words, not mine)—I turned to the Frugalwoods blog. Towards the end of 2016, and all through 2017, I was able to steadily figure out what we cared to spend money on and what was an acceptable, yet cheaper, alternative. And believe it or not, what we should spend more money on (cue the “hire a house cleaner/buy more prepared food” advice to increase happiness advice).
After cutting our expenses, I realized we’d been on the proverbial hedonistic treadmill Mr. Money Mustache wrote about. I looked elsewhere for more advice and stumbled across Greg Karp’s book Living Rich by Spending Smart. I also studied every.single.food Frugalwood blog and was able to chop our food bill in half each month. Yeah, I’m a foodie, and I had to figure out how to get that obsession under control.
So there you have it: to slash your spending, you first have to track it. There are many ways to do this: Personal Capital, Mint, YNAB, or you can be a dinosaur like me and use an excel spreadsheet.
And why did we want to save so much money? What was the huge financial change that happened? That’s the subject of future blogs. Something about YOLO 😉
Do you track your spending? If so—how—and has it changed your spending habits?