First of all, for those who don’t follow us on Twitter, you may have noticed that we didn’t publish a post last week. I sent out this message on Twitter, letting everyone know that there wouldn’t be a post.
Both Poopsie and I started new jobs a few weeks ago. While they’re with the same organisation, the jobs themselves are different to what we were doing before and let’s just say, there has been an adjustment. We both get home and collapse. Our brains are mush.
Hopefully we will begin to adjust and this will become our new normal. I certainly don’t want to give up blogging, as it’s something that I enjoy. We hope everything will smooth out and we can continue with our regularly scheduled posts.
This should have been a January savings rate post. But instead, it’s a ginormous ARE YOU GUYS SERIOUS??? post.
We tallied our January spending and guess what it came to?
Are you ready?
Cause I’m not sure I am…
Yes, you read that correctly.
No, that is not a typo.
ARE YOU GUYS SERIOUS???
Now, lest you think we are super high earners, we are not. We had a very negative savings rate for the month of January. This wasn’t our first negative savings rate, we had one a long time ago in 2016.
Negative savings rates are bad, don’t get me wrong. Of course we always want a positive savings rate. But to us, what is worse is the amount we spent. In one single month!
It is utterly outrageous. Sometimes when we have bad savings rates, we get very positive comments and it drives Poopsie mad as he thinks our poor spending habits are being encouraged.
So, on insistence from him, please do not post anything encouraging in the comments. We are rubbish and at this rate, will never retire early.
Now, I can try and justify a few things. There were five Mondays in January, which means we paid rent five times. We paid for our actual wedding day (at the winery) and our spending on our honeymoon.
I turned 30 and Poopsie bought me a very lovely but expensive gift. He also planned a weekend away for us in the CBD. A lot of that was paid for last year when he booked it, but we spent about $700 on the actual weekend.
We spent more on Poopsie’s kids than usual, as they both needed laptops for school (compulsory). We also bought a television, seeing me own one for the first time in five years! The TV and the stand cost a bit, plus we moved so there were the usual trips to Bunnings to get all the household type stuff we needed for the new place.
Finally, we also booked some future travel. We have booked a short cruise for February 2019 and we have booked a week in Tasmania in May. We have also booked a camping trip for late February.
Sure, these things may be higher spending than usual but they’re all sort of reasonable.
But, we also spent $1500 on groceries.
For people who usually try to spend $550 a month, this is astronomical!
There were a couple of larger shops when we restockd the fridge after our move, but for the most part it was lots of small trips to the shop. We now live in walking distance of Woolworths and the number of transactions we made there in January is huge. Ducking down to the shops after work to grab something we forgot invariably turns into a couple of other things and before we know it, we’re at $1500 for the month. When we lived in Brisbane, we had to drive to the shops and mid-week, we usually could not be bothered so just did without whatever we thought we needed.
The damage for this month is so bad that, at least for FY tracking, we can’t come back from it. Even if we have a savings rate of 50% for the rest of the FY, we will still only have a savings rate of 35% for the financial year. Given that we have a large tax bill becoming due soon, we’re unlikely to achieve a 50% savings rate in February.
Needless to say, we’re pretty disappointed with ourselves. With spending like this, we will not be able to retire early, if at all. Remembering that we still have a house to buy and pay off before we can retire, things are not looking great.
So this post is a bit of a reality check for us. Something has changed and it needs to change back. Whether that’s an attitudinal shift, or just a bad month, we will need to work through. Both of us have been having second thoughts about early retirement, and it’s possible that has come out in our spending habits.
We have a lot to think about and discuss. I hope to be able to report back about how those discussions go, but it may be a drawn out process. In the meantime, we will be trying to ensure our spending aligns with our values and if our values have changed permanently, then we may need to get used to a new normal.
How did your savings rate go for January? Have you ever had a negative savings rate?
Disclaimer: While we had a negative savings rate for the month, we did not take on any debt for our excess spending. Given the large amount we have saved, we were able to cash flow this spending with barely a dent in our account balance. If we had gone into debt over this spending, it would be an even bigger disaster. Spending money you don’t have is not okay. Spending beyond your means will get you into all sorts of trouble, and it is not something we advocate at all.
HOLY CRAPOLA! I literally did a double-take when I read that amount.
I also hear a lot of my own negative talk in the words you have used in this post. (As in, you are echoing the exact words I have said to myself on occasion.) Sometimes it is right to be very angry with yourselves, but you have to be able to acknowledge how it happened, vow it won’t happen again, and leave it behind you.
You’ve already identified the issue with groceries. We were the same, and that’s how meal planning has helped us cut down so much. I even admonish Mr. ETT not to buy a single thing when he goes down to check the PO Box. It’s so easy just to pop in while you are there, and (especially with Woolies), you only have to buy a couple of items and the cost really adds up!
That’s a huge hit to your savings rate, and I can see that it hurts now. Don’t give up on your plans based on a single month. I’d like to propose that in 10 years time you will look back and tell each other the story: “Remember the year we got married and we had that massive spend?!”. Then you’ll quietly laugh as you lay in bed while the rest of the neighbourhood gets into their cars for their daily morning commute.
I hope your last paragraph comes true, Mrs. ETT!!!
While our January wasn’t quite that bad it was much worse then normal. I wrote a post a few weeks ago about it but to summarize I reset the start date of my goal setting to begin after the spending occurred. That way it’s not too discouraging. In our case we weren’t over our gross income, so no savings hit even. But as a higher income individual we spent close to our income for the month, which was resiculous. Like you though there were also mostly valid reasons: cat euthanasia, some medical necessities for the kids, and planning for an upcoming trip. As long as it doesn’t become a trend.
Thanks for dropping by Full Time Finance. I feel slightly better that you also had a bad January (sorry!) You’re right, we need to stop it from becoming a trend. Unfortunately, as I mentioned, this one bad month has ruined us for the year in terms of savings rate, but that’s no reason to throw in the towel!
Ouch! While you can excuse a wedding/honeymoon as that should be a one-off expense and once in a blue moon expenses like a TV, it’s those short, expensive holidays that seem to be featuring more in your blog posts that seem to be pushing the spend line out of bounds. Maybe it’s time to get back to basics with your vacationing?
Also, expenses associated with your moving house and state are likely more than made up for by the allowances you received from your work for the move. Maybe you should be counting these types of expenses net of the allowances you received for those specific expense purposes?
Finally, and I’ve said this before, I’m not a fan of monthly savings rate tracking because there is too much variability between months that can distort the real trend. Big spend months like the last can demoralise you for the rest of the year, which it seems to have done. I’d be more concerned about whether any expense categories are getting out of hand for what you had planned for the year if you budget or against your FIRE plan if you don’t budget annually.
Chin up and continue towards the FIRE!
Thanks Ozstache. We really value travel, so I guess we need to figure out if that’s important enough to us to have a poor savings rate. Something to think about and it may not be an easy answer.
I agree with Mrs ETT. It has happened, be angry and then use that feeling to move to a more productive space.
Really look at what you want to achieve and by when. Maybe you don’t want to retire early, but drop down to part time etc. This could give you a bit more of a buffer. But if you really want to RE then you will need to pull your sock up! Only you can decide.
Looking forward to hearing where these discussions go and what the future plan is for you 🙂
Motivating words, Miss Balance! And probably what we need to hear. I’ve added these thoughts to the list of things we need to discuss, thank you.
Early retirements need savings to use for buying house, paying off debts and routine expenditures later on, keeping a targeted savings rate could help and to reduce bad investing habits can further add up fuel to your savings account.