Keeping Up With The FIRE Dreamers: Personal Finances Report Card March 2018

Keeping Up With The FIRE Dreamers: Personal Finances Report Card March 2018

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March 2018 Pinterest Personal Finance Expenses Jack The Dreamer KonMari Style

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Some Exciting News!

Before we begin, I want to share with you my first “convert” who told me she’s trying the experimental KonMari Sparkjoy analysis of personal expenses.

Cyn, in her personal finance blog, Saving with Sense, wrote her March Money Diaries on how she analyzed her purchases through the lens of whether it brought her joy or not (KonMari method) and discovered that some of her purchases didn’t bring her joy.

She then dug deeper for the reasons why she made those choices and came to some eye-opening realizations. You can read her article for more details.

I’m just so excited to see that people are reading it and trying it out!

I feel like I’m finally not shouting into the void. Yayyyyy! 😀

One reader also mentioned that Ramit Sethi wrote about something similar on utilty/enjoyment of stuff in his book, I will Teach You To Be Rich, so I added it to my to-read list. 

On that note, I’m no guru. Nor am I an expert. I’m not your hero.

I’m just a guy with an idea to see if I can apply the KonMari to my personal finances to make them “Sparkjoy.”

After all, this is a personal finance blog.

So let’s get started.

Transparency

From my January 2018 Finance Report Card:

There’s this movement going on in the personal finance and financial independence blogging community to acknowledge their privileges and biases while blogging, so their audience can better understand the mindset of the blogger, and for the blogger to better understand the viewpoints they are coming from in their articles. You can read about The FIRE Blogging Manifesto from Tanja at Our Next Life, a personal finance and financial independence blog.

With that said, I will note my privileges as I analyze my expenses and finances in order to be more transparent about my finances and where I’m coming from 😃

Recap

If you’re jumping into my March 2018 personal expense report card without having read my January 2018 and February 2018, it might behoove you to read them just to give you an idea of this continuation.

My Savings

For March 2018, I managed to put away 42.52% of my after-tax income into savings and investments. Woo hoo! 🎉

This is much better than the savings rate of 17.30% for January 2018 and 19.84% for February 2018.

It’s nice to finally see the savings rate closer to my goal of 50% and higher. After all, the more I can put away and invest, the faster I can reach Financial Independence.

I was able to do this because I didn’t spend any money on rent by living at home with my parents.

I’ve offered to pay some rent for being back at home and my dad said, “No. Just put that money towards your future. That’s more important than us getting rent money from you.”

😭 (when I heard that).

I also don’t have a car anymore and rely on carpools to go to work.

Not having a car also helped me curb my spontaneous “road trips” to restaurants and movie theaters.

This helped me save money by relying on free Netflix from parents and only going to restaurants when friends or family want to go to the restaurant, which isn’t often.

This all helped cut down on costs of eating out, gas, and car maintenance dramatically.

Because I also live at home, my parents and grandma prefer to do all the cooking and grocery shopping.

This means I don’t have to spend much on food and can put it all toward paying down debt, saving for my reserves and emergency fund, and investing.

Living with family does have it upsides 🙂

I aim to enjoy this while it lasts because I’m planning to move to Seattle within the next couple of months.

This move would involve paying for my own rent. Unless I can buy a multifamily house like Guy On FIRE and live in one unit while the rent from the other unit pays for my mortgage…😂

  • January 2018 Savings Ratio = 17.30%
  • February 2018 Savings Ratio = 19.84%
  • March 2018 Savings Ratio = 42.52%

My Expenses For March 2018

March 2018 Jack's personal finance report card expenses tabulation

My Total Expenses For March 2018: $1,264.56

Analyzing My March 2018 Expenses

I’m going to analyze the expenses in that order. Transparency: I don’t pay for rent because I live at home. I don’t pay for car insurance because I now don’t have a car. I also don’t have any student loans because I made some sacrifices to graduate college debt free.

Credit Cards

If you’ve been following my report cards from previous months, I have over $8,000 in credit card debt that I’m paying off.

At first, I tried to pay off the credit card with the highest interest of 20% APR. It’s also the one with the biggest balance.

However, it was discouraging to see my payments make such a small dent in a big balance so I shifted my focus to paying off my smallest balance first, even though the interest is smaller.

While paying off the highest interest balance might make the most economic sense, some suggested paying off the smallest balance first actually helps to build up confidence as you successfully pay off your credit card and roll the payments into bigger balances.

You can read more about this “snowball effect” of credit card payment from The Kellogg School of Management, and the even more in-depth Wikipedia article.

Because you feel confident, you’re more likely to keep up with the payments and be pumped for the long term. I find it interesting to see how psychology in this example can trump the mathematical sense.

I’ve also upped my credit card payments compared to previous months. Hence why it’s my biggest expense this month.

  • January 2018 credit card expense: $302.83
  • February 2018 credit card expense: $365.20
  • March 2018 credit card expense: $655.00

Education/Self-Improvement

An investment in knowledge pays the best interest.” –Benjamin Franklin

Pretty much, I strive to continue educating myself after college. Whether it’s about finances, how to be a better leader, listener, etc. Learning is a life-long sport 😄 as mentioned in this Inc.com article on Warren Buffett, Bill Gates, Oprah, and others who always seek further education.

Hence why I’m spending the money on some classes.

Eating Out

March 2018 eating out

My March 2018 eating out was $142.03. That’s less than January’s $238 and February’s $276 eating out expenses.

What helped was that half way through March, I moved back to live with my family. They feed me a lot so I was able to save money from not buying groceries nor eating out.

I enjoyed eating out 5/9 times, for a 55.55% enjoyment ratio. The times I enjoyed it were when the food and experience were worth the money.

Not too shabby compared to January’s and February’s eating out enjoyment ratio of 63.62% and 62.50%, respectively. Going to aim to keep it over 50%. Ideally, maybe get it as close to 100% as possible 🙂

  • January 2018 Eating Out Enjoyment Ratio = 63.62%
  • February 2018 Eating Out Enjoyment Ratio = 62.50%
  • March 2018 Eating Out Enjoyment Ratio = 55.55%

Splurge Account

Before I gave myself a splurge account, I was such a miserly old Scrooge. I tried to penny pinch every single purchase and probably calculated the compound interest and future money babies my money could have if I invested it.

I now give myself $100 a month to splurge on anything I want that will make me feel wealthy.

By doing so, I’m cultivating a positive attitude of gratitude and an abundance mindset.

Because face it, “wealthy people think positive.” They’re focused on the growth of themselves and their wealth, and growth tends to be a positive thinker’s mental sport.

Because I was so focused on frugality and pinching my expenses and losses, my attention was on things that gave me negative feelings of lack and scarcity, not on the positive feelings of growth and abundance.

If you’re on twitter, follow the personal finance bloggers around long enough and you’ll start to see that they’re some of the most positive influences ever because they’re all in the game of growth.

They’re there to grow not just their net worth, but to grow and improve their self worth, human capital, health, mental capacity, givings and contributions to society, etc., and share with you that growth mentality.

T. Harv Eker recommends creating a splurge account in his book, Secrets of The Millionaire Mind, and to literally spend it on anything that makes you feel rich.

Whether it’s ordering that expensive bottle of Champagne at dinner, or staying a night at a fancy hotel where only rich people go.

By doing so, you can start to shift to your mentality and feelings from one of “lack” to one of “abundance.”

I can vouch that since I’ve started the splurge account, I’m now feeling the abundant energy of the universe more because I stopped seeing it as a frugal, lacking, scarcity-minded, penny pincher.

It might sound a little like Alan Watts, but I’m shifting my view and paradigm from a place of lack, to a place of “I am the universe experiencing itself in human form. Therefore, the more money I have, the more opportunities I have to utilize it to experience more of the abundance that life has to offer.”

Because of bad planning while backpacking Europe, I’ve also spent a day wandering around Zurich, Switzerland with barely any money and the feeling of momentary destitution as I was starving in a rich person’s city, in the cold rain, without a jacket, far from home, was humbling and made me realize that having money would have definitely helped in that situation…

Money is never the end goal. It’s merely the facilitator through which we can use it to experience life.

Hence the splurge account. In this month, I literally used it on Panera Bread, sushi, and movies to enjoy myself…😂

The Rest

The rest is pretty self explanatory so I’m going to get to the other meaty subjects 🙂

My Sparkjoy Enjoyment Ratio

March 2018 Enjoyment Ratio of 54% enjoyment

For March 2018, I had a total of 50 interactions with my finances. This doesn’t include dividends from mutual funds etc.

But, for example, every time I transferred money from my bank account into my Vanguard mutual fund I counted it as one interaction.

Out of these 50 interactions, I enjoyed 27 of them. Or rather, 27 “sparked joy,” for a 54% enjoyment ratio with my finances. WOO HOO! I got over the 50% enjoyment ratio I wanted to reach in my February 2018 report card.

I didn’t enjoy 23 our of 50 interactions. This is a 46% non-enjoyment ratio.

Analyzing the Enjoyment Ratio

Being Month 3 of this experiment, I definitely find it easy to just plug in expenses as they’re happening into my Google Sheets app and then analyze the numbers at the end of the month.

This was also my first actual month being aware of the enjoyment ratio and the “yes, no” labeling system, which I think really helped me look into how I’m spending my money from a black and white perspective of “Joy?” “No Joy?”

It might also explain the over 50% enjoyment ratio for the first time because I’m now actively looking at my expenses as they’re happening and can adjust on the fly.

Eating Out Enjoyment Ratio

Even though I spent less on eating out in March 2018 than January and February, I feel like my eating out expenses could have been way lower.

Because I was changing jobs, moving, etc., toward the end of my work contract, I stopped cooking and bringing my own lunches.

I started going to the sushi bar during break and getting a salmon avocado rice bowl that was more than $11.

Not to mention, after work, I didn’t want to cook at home so I ate at Panera Bread often for dinner.

The thing that gets me is that I was able to feel like I was gathering momentum on a downward spiral of spending, because it can get addicting.

In the moment as it was happening that month, I could feel it, yet I didn’t stop myself from spending the money.

I probably could have saved a couple tens of dollars by cooking my own meals during those final days of work and then put that money into paying down credit card debt.

It’s just things to be aware of for the future, that just because life circumstances around me are in flux, that means I should take even greater vigilance on how I handle my finances.

And if my enjoyment ratio for eating out says anything, I probably went to eat out because of the stress of packing and moving, and not because I actually wanted to, hence why my enjoyment ratio for eating out is lower this month than previous months.

Where Can I Improve?

For future months, after each month is over, I suppose I can go into even greater detail of the expenses per category and do the individual category enjoyment ratios to see which categories I’m enjoying the most and which categories I’m enjoying the least.

Calculating the overall enjoyment is nice because I can see the bigger picture of overall enjoyment.

But by digging deeper into the individual categories, I can see which categories I should be spending most of my money on, if they bring me the most joy.

It’s almost like hyper honing and focusing resources and attention on experiences that adhere closest to your values that bring you the most joy.

Because if time is money, then why should we spend an inordinate amount of our time (and money) on things that don’t bring us joy if we don’t have to? (Yes, that can come across as spoiled, privileged, bratty mentality).

I’m also aiming to save over 50% of my income to invest to reach Financial Independence faster. This month I got to 42% so there’s still room for improvement.

I just got to keep going 😄

What Do You Think?

Would you do this as well? Have you already started? How’s it going for you? Let me know in the comments below! I respond to every single one 😃

Thank you for reading,

Jack


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This Post Has 8 Comments

  1. Goes to show how much money you can spend without even realizing it. Well done on the giant savings rate jump! And hooray!! Not shouting to the void! That’s the best feeling ever 🙂

    1. Thank you so much for your comment Angela! 😊 and it’s like you said (I think your 100 articles in 9 months post) as well, by just blogging about it, we are able to make more known and be more aware of how our spending habits actually affect us. Versus just keeping it to ourselves and not being accountable because there’s no public readership.

      So it feels like all of this helps the person writing as much as the person reading, which is win win is the best sense! 😆😆😆😆😆😆😆😆😆

  2. I like that you calculated your enjoyment ratio. I’ve never even thought of doing that before. Will give it a try. I have a feeling that most of the time I don’t really enjoy eating out!

    1. Haha, Janet! Thank you for reading and for your comment. Please let me know how it goes for you? It was painful for me to see how low my enjoyment ratio was for certain things but I feel like it definitely helps to let us shift spending more toward that which brings us joy 😊 good luck and have fun!!

  3. Having splurge or fun money in your budget plan is super important! Saving, budgeting, frugal living – and paying down debt can be overwhelming sometimes and I think if you deprive yourself of all splurges/fun money then you can start asking yourself is it worth it? Getting financially fit is kind of like dieting – if you don’t have a “cheat day” occasionally it is way easier to fall of the plan!

    Besides, you get that spark of Joy from Splurge money – no guilt – just enjoyment!

    1. Haha, wise words, Andrea! Wise words 😄👍 and hmm I did not look at a splurge account as a cheat day but that actually makes total sense. I was looking for a word to describe it and you said it perfectly 👌 thank you!!

  4. Love the enjoyment ratio calculation!
    I agree with Andrea, you need fun money along the way to keep enjoying your journey.
    Great job on the saving rate this month.

    1. Thank you, Caroline! 😀

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