Welcome to our monthly FIRE update for July 2019. In our Monthly FIRE Updates, we review our financial goals for the month, how well we were able to do against our goals and our key takeaways that we will use to adjust our plans for future months.
July 2019 is the beginning of our FIRE journey. Mrs. SAM and I rejuvenated our financial focus, cleaned up our lax spending and set some real goals to get to Financial Independence and Early Retirement (FIRE). So welcome to the starting line!
First a Little Prologue…
About two years ago, we caught the frugality and budgeting bug from Mr. Money Mustache and YNAB. We spent several months cleaning up all of our consumer debt, getting on a budget and building up our emergency fund. We saved a good bit and reeled in our crazy, blind consumer spending.
BUT…. For the last year or so, we’ve lost our focus. I bought way too many board games, we stopped budgeting, went on some super fun, but spendy trips and generally got lazy in managing our finances. I even paid finance charges on our Citi Double Cash card because I wasn’t paying enough attention – oh the humanity!!!
Financial Goals for the Month
Having snapped out of our consumerist sleepwalk, Mrs. SAM and I decided it was time to get back on track, set some real goals and make some moves. Because this was the re-birth of our FIRE journey, some drastic action was needed to set the tone and create some momentum.
Goal #1 – Re-Institute a Budget and Track All Expenses
We’ve had great success with YNAB. We really enjoy the convenience of sharing a budget, being able to track spending in real-time and the ease of reconciling accounts. Goal #1 was to reboot our YNAB budget and begin tracking 100% of our spending for the month.
Goal #2 – Cut Easy Expenses
A year of budget blindness had resulted in a pile of credit card leaching subscription services and random throwing of cash in all directions. We needed to take a hard look at where our money was going and find the no-brainer stuff that was sucking cash from our accounts and providing little value in return.
Goal #3 – Set New FI Targets and Start Planning
In our previous effort to get our expenses under control and start saving, we didn’t set any specific targets for savings rate, investment goals or a date to try and reach financial independence. We decided if we were going to be serious about this, we had to set some real goals and develop a plan to get there.
End of Month Results
So how did we end up for July? Let’s take a look:
#1 – Re-Institute a Budget and Track All Expenses
We did great! We got back on YNAB, created a brand new budget with simple categories and tracked all of our spending. Jumping back into YNAB is like slipping on a comfy old sweatshirt. In no time were back to tracking every grocery trip, bag of dog food and Amazon purchase. YNAB made syncing easier since we had been away, so catching up on missed transactions and automated bills was a breeze.
Our budget targets were somewhat ambitious since we hadn’t been in the habit of tracking and really didn’t know what our spending looked like. I put all extra money into an Emergency Fund category and just made adjustments from there to cover overages as we went through the month. We tweaked a few budget categories as we went along to make tracking more natural for our spending.
#2 – Cut Easy Expenses
We made good progress here too. Extraneous subscription services like CBS All Access ($6), Gyroscope ($12), Canva ($12), Sirrius XM ($20) were all cut before we finished our first 4th of July hot dog, saving us a whopping $600 a year.
We then turned our attention to easy spending reductions. I had been spending north of $50 a month on board games (of which I have 150) so it was time to cut that back. Mrs. SAM cut some spendy salon habits and combined we saved another $1,200 a year.
The grocery bill was next. I had become addicted to Sparkling ICE and Monster energy drinks. These delicious but silly indulgences were costing us at least another $60 a month. Cutting these in favor of Soda Stream sparkling water trimmed another $720 a year in expenses.
All of this took us about 2 hours of planning and discussion and resulted in an annual savings of $2,520.
#3 – Set New FI Targets and Start Planning
So here’s were things get crazy. We set a goal to reach FIRE by my 50th birthday. As I write this, I’m 42. Can we make it? I have no idea, but progress requires a vision and we needed a target to shoot for. We will be spending the next several weeks trying to back into the savings rate, investments and other plans that will be needed to make FIRE a reality. We’ll adjust the date as needed, but the direction will be the same – get to FI.
In truth, I will never retire. However, like most people in the FI community, I want to work on things that I have a passion for. Things that give me energy, not suck the life out of me. FIRE for us is choosing when, where and what we will work on.
All of this FIRE talk sparked some really interesting ideas between Mrs. SAM and I. One such notion was getting rid of one of our cars. There has been some talk of relocating my office right across the street from our house. If that were to happen, having two gas guzzling cars would just seem silly. Instead of going full MMM style on this, we decided to take the still-radical-to-most step of selling Mrs. SAM’s car for a fully electric Nissan LEAF and making a profit on it. We expect we’ll save at least another $500 a year in gas an oil changes. That brings our annual savings to over $3,000 based on changes we made in less than 30 days!
It was a great month to get back on track (any month is really… have YOU started yet?). We are super pleased with the changes we made this month and all of the benefits that they will bring over a lifetime of just-a-little-less-crazy spending on some very disposable things.
Our savings rate for July was just under 20% (18.44%) and this is an area where we really need to improve. Therefore, our first goal for August 2019 is to get our savings rate up closer to 50%. Food and grocery is our biggest non-housing expense category and I’d like to see us reduce that, so our second goal for August 2019 is to spend less on food. We have some travel and birthday parties coming up so that will be a test to be sure.
All told, July was a great reboot to our FI journey and we made some really positive changes. As we move forward, we have a lot of research to do on meeting our 8 year goal to FIRE. In the upcoming months, the rubber will meet the road as the new wears off of our frugality and the holiday spending seasons tests our commitment. We will need to stay focused and keep tracking. These monthly updates will be our public accountability on our goals and progress. We hope you’ll follow along, make suggestions and share your own progress. Let the journey begin!