2016 Was Tough to Review
Many of us can look back on 2016 and say it was a troubling year. In a general review the political landscape was filled with many twists and turns which will make for a very interesting chapter in the history books. The year also came with an unsettling amount of well known figures passing away. Too many terror attacks, shootings, or general brutality against individuals or groups. Add in a shaken up global economy, the Zika virus, and price hikes on life saving medicine – EpiPens and Insulin. It will not be missed by many and most definitely not by me.
My Personal Finances
I originally planned for 2016 to be a break even year. First full year in my new house. Still figuring out the overall annual cost of keeping the heat on, water running, electricity going, and other expenditures. Purposely used some savings at the beginning of the year for a needed travel experience. Counted on the fact I knew I was getting a decent tax return back. I mapped out a timeline to get a dog. Took on a DIY patio project and jumped head first into my hobbies. I absolutely forgot to take the whole year into consideration.
Missed the Big Picture
The intro graph of this page shows that only two months of the entire year of 2016 indicated a positive balance. For the remaining 10 months I ran in the red. A handful of those drastically in the red.
After getting my tax returns in April it seemed like I was in a good place to plan out a summer patio project. My credit card balance (which isn’t part of that graph) was basically $0 outside of some charges planned to be paid before interest hits the books. I got great cash back deals on the patio pavers from Lowes and Bank of America. Worked with the local aggregate material yards to get the necessary supplies as cheap as possible. In the end I went over budget by about $500. Hit a few roadblocks in doing the project but didn’t realize it should have just been put off to another year.
The large spike in June and July are a combination of tuition costs for my summer class and car related expenses. Needed to renew my license, my registration, car property tax, and of course unplanned maintenance. In these months I also went on two professional development trips where some of the costs landed on my card instead of by my employer. I was later reimbursed hence a raise in income for August and September.
The last leg of the year was the worst. Income I was gaining from my roommate stopped after they moved out in September. I had to pay tuition for another class and the holidays were right around the corner. My furnace needed to be repaired again, my deferred student loans accidentally go back on repayment, and I ended the year a bit overwhelmed.
Looking at Averages
As the below chart shows, my average monthly expenses passed my average monthly income by $1,045 each month.
Creating an overall financial deficit of -$12,450 for the entire year.
#1 Reason was not creating a realistic budget and holding myself accountable for following that budget.
#2 Reason was relying on non-guaranteed income to offset expenses, such as rental income.
#3 Reason uncontrollable financial burdens – broken furnace, car issues, unexpected student loan payments, and escrow problems to name a few.
#4 Reason not knowing the overall costs of having a puppy join my family. Vet fees add up, so does food, leashes, toys, beds, crates, etc.
#5 Reason poorly timed home improvements that could have waited another year or two. 1/4 of that deficit could have been removed by waiting.
#6 Reason cost of tuition for final few classes of my 2nd masters degree. I’m already vested into the process with 28 out of 34 credit completed.
Remaining reasons in no particular order
- Hosting too many social gatherings and spending too much money on food, drinks, etc.
- Unhealthy eating habits induced by stress and a bit of laziness
- Spending too much money on my hobbies, particularly brewing beer
- Spent more than I should on movies and video games
Breaking Down My Spending
In the above graph I broke down my monthly expenditures by taken the total of what was spent in each category for the year and dividing by 12. This helped to pinpoint exactly where all of my money was going. It was clear as day where I was over spending money. Eating out, grabbing drinks with friends, and ordering delivery were all too normal.
One person should not be spending over $500 a month on food and drinks for just themselves.
Additionally, entertainment and home improvement (not repair) could have been much less.
Habits I Can Control
Since my monthly bills are mostly out of my control, and the obligations of paying back creditors is important, I decided to break down the next biggest category. I was baffled at myself for spending as much as I did on delivery! I consider myself a decent cook, so to be putting an average of $110 each month (fast food and delivery) toward non social eating experiences is just plain stupid.
In the coming months of 2017 my plan is to do the following:
Limit my food costs to $100 a month, no delivery or fast food, and make my coffee at home.
In addition, halt any ideas on home improvement till further notice. Buy only necessary items for my puppy. Limit what I spend on hobbies and entertainment to $50 a month.
Takeaways After the Review of 2016
- I celebrated the new year in another country with some of the most wonderful people I know.
- My life is now more full with the addition of my half-border collie / half husky puppy Arya!
- I now have a beautiful 500 square foot patio in my backyard. The DIY table I made with built in ice-boxes fits perfectly too (this is what I followed).
- Moved to a kegging system for my home brewing and made a couple high quality batches.
- Got back into crossfit at the end of the summer.
- I became officially certified to facilitate the Myers Briggs Type Indicator.
- I now lack in any savings that I have previously built up.
- An influx of income such as a tax return may create a perception of a better bottom line
- Things break down and a lot of times they all break down at the same time.
- Career movement came to an unexpected halt
- An empty room in a house helps nobody
- Injured my shoulder and missed over a month of going to the gym.
- College is still expensive and sometimes even more expensive the second time around.
- It hasn’t been since my undergraduate years that my credit card balance was higher than what was in my bank account.
- No immediate methods of fixing the large amount of credit card debt. Therefore, interest each month will continue to accrue on top of the debt owed.
- In review, I could have held myself more accountable for my spending. I should have said no more often, cooked my meals more often, and put off projects even if I was excited about them. I did not set myself up for success.