2016 Budget Year-End Review
Hello everyone! Thanks for stopping by The Green Swan today. It is that time of the year where I reflect back on our financial progress in 2016 and make goals for 2017. I’ll recap my year-end review in a two part series. Today’s post, Part 1, will focus on how we did budgeting and managing our expenses in 2016 with a look ahead for 2017. Part 2 next week will delve into investment performance with my annual model going forward.
The Home Front
2016 was a great year in many respects for the Swans, it is hard to know where to start. But before I get into the financial aspects, let me hit on a few major developments on the home front.
- First off, Lucy and I launched The Green Swan! This has definitely been a new chapter for us and we’ve enjoyed connecting more closely with the personal finance community and others on their path toward early retirement.
- All three of my siblings moved and two of them got married! One brother, James, relocated to manage the new business we all bought together. Another brother, Jon, moved as his new wife earned her doctorate and a new job in the South. And lastly, my older brother moved with his new wife to a house they bought together in the same city.
- My brothers and I went in together on the purchase of a small business that James is running day-to-day. This is something that had been in the works for a while, but finally came together after a long search for acquisition opportunities.
- And lastly, my wife and I are super excited to be expecting our second child! The babe is due in early April, it is coming up fast!
As you may be able to tell, we keep a very close eye on our expenses and we run a fairly tight ship. As I detailed in my post on tracking and budgeting expenses, we use Personal Capital to aggregate our account activity and I transfer that into my excel file which allows me to cut and slice the data in more personalized ways. Personal Capital simplifies my life immensely and is free. If you don’t already use Personal Capital you should consider signing up today!
As detailed in the chart below, we came in below our estimated total expenses, but there are a couple key accounts I’d like to draw attention to as well as other broad conclusions. I still like to keep some numbers private. What I’ve chosen not to include below are income figures, income taxes, gift expenses and cash donations.
2016 Talking Points
- Utilities are much lower than prior years given our purchase of solar panels last year.
- I love the low gas prices! Plus, we benefited by a deal at the local grocery store that offers $10 off a $50 gas card when we buy over $50 in groceries. In 2016, we bought 21 of these discounted gas cards. And 7 of those cards we were able to get $20 off with the extra benefit of a competing grocery store’s coupon for the same deal (double discounts offered by the one grocer are no longer offered…go figure). That amounts to $270 off gas on the year!
- Groceries were pretty spot on to the budget. We were slightly below which was due to lower expense on dining out and slightly more than estimated spent on groceries. We didn’t necessarily make a concerted effort of dining out less, but it just happened naturally with not wanting to go out as much with a young kid. We also shifted our dining out to breakfast as opposed to dinner which probably had an effect too. That naturally is cheaper and we’ve benefited from a few Panera gift cards, double win! We have never felt deprived of dining out and have enjoyed our morning outings with our son.
- Car tax and maintenance was pretty spot on had it not been for the unanticipated chip in our windshield!
- Refer to our prior post for more detail on our kid-related expenses. We also got $100 back from tuition due to the lost jackets Lucy mentioned in our December Swan Life recap.
- Personal care expenses consist primarily of my LASIK eye procedure last year that I financed at 0% over 2 years. Expenses were up in this category though driven by a few minor health related issues and RX required for both my wife and I (nothing serious…). Plus, 2016 was my first full year of haircuts at home which I estimate saves us approximately $150 per year with my $20 wahl clipper!
- Each year we usually buy one or two furniture items for our house. In years past it has been new couches or a dining room table, etc. We didn’t have any major purchases to make this year.
- The Entertainment category would normally consist of tickets to a few local NBA / NFL games or various movie theater dates. We don’t necessarily care to do this though with a young kid. Instead, our entertainment has consisted of many bike rides to the park! We have also enrolled the little guy in gymnastics and swimming lessons occasionally which falls under the Other Kid Expense line item.
2017 Expected Expenses
Usually at this time I would take these historical results and my expectations for the next year to put together my 2017 budget. However, I’m having trouble this year. For the first time since 2010 I may not actually put a budget together. There is a simple reason for this and that is because of the huge uncertainty at this point around London, whether we end up deciding to move or not, when we would move, and what our income and expenses would look like. We just don’t know right now, but hopefully we will get some more certainty one way or the other in the next month or two, then we could start piecing together that puzzle.
For now though, it isn’t worth the trouble. And if we end up staying put in Charlotte, I wouldn’t really expect much for changes to the budget (with exception to the increase in daycare expenses). So in the meantime we will just keep on keeping on, controlling our expenses where we can. But even without a budget, I will continue to track expenses diligently! We make actually spend less as we don’t want to accumulate any more things that we would potentially need to move or store. We already completed a significant purge of the house recently!
I’m fairly happy with our 2016 on the expense side. We kept things within budget and under $60,000. Keeping it under $60K doesn’t sound all that impressive, but there are some big one-time expenses worth noting.
- We are paying close to $9K in daycare. While that is on the low side compared to what many pay for daycare, that’s a large number we didn’t have just a few years ago.
- We paid close to $6K in car payments. I’ll note that we had the cash ready to pay for our new car in full, but when we could finance it for under 2% and the opportunity cost would be the potential 8% long term return in the stock market, the decision was simple.
- We took a lot of trips in 2016 which is even more expensive now that Jr. doesn’t fly free anymore. Trips included flying home for two of my brothers’ weddings, bachelor trips for those weddings, and our holiday trip home among other miscellaneous travel. We travel hacked a bunch (future post perhaps…) but it still cost us around $5K in travel.
- As mentioned above, I’m still paying for my LASIK procedure to the tune of $2K in 2016.
- Our mortgage represents almost $22K in annual payments. Of course we need a place to live, but this is a big lumpy portion of our budget and it won’t be there forever.
Take out the daycare and car payments and our actual expenses would have been around $43K. Take out the mortgage payments, travel expenses and LASIK costs and what I’ll define as our “Core Expenses” amounted to just $15.5K. Not too shabby and the key is this hasn’t changed much for Lucy and I over the last 9 years of combining our financials!
How did your year-end review turn out? Did you keep your expenses in line with budget? Let me know in the comments below.
Also, this is just Part 1 of my year-end review. Check back next week for my overview on investment asset performance for 2016 and projections going forward.
Thanks for taking a look!
The Green Swan