Friday, April 1, 2011

The best things in life are free

There has been a lot of talk lately 'round the old homestead about what we want from life.  We have been coasting.  This is a hard phase and we need to just ride it out until things improve.  But that's not happening fast enough and I need some kind of change.  I need to be growing towards stuff.  GOALS!  Necessarily this promotes conversation about what kinds of goals to set.

What I am beating around the bush to say is, Noah wants to be rich.  But that doesn't really tell you much, does it?  What does rich really mean?  Does it mean rivaling Bill Gates?  Does it mean getting to sit down for a chat with Warren Buffet?  Not so much.  Our goal is for Noah to have to work 20 hours or less for us to maintain our current lifestyle.  In my opinionated opinion our life is rather comfy.  Our life is rather comfy because he earns a lot of money.  The important thing to remember is that we are just beginning with this goal.  Most likely we will mess up in several big ways (already have once) and I'll talk about those here too.  I think there is no value in trying to make us sound better than we are.  Ok, on to figuring out what we have.  This may take more than one posting.

Right this minute we have three checking accounts (long story[1]) and one savings account.  The sum total of cash in them is $7,439.28.  This wouldn't sound so bad if our current credit card balances didn't equal $6,223.43.  That is the closest petty cash:debt ratio in the course of our marriage.  Typically our buffer is much higher than that.  But ok fine.  We've had an expensive couple of years with having two kids and replacing our roof and such.  That's ok!  Not to fear.  This is less dire than it appears because we are... privileged people.  Oh good grief are we privileged.  Soon we will be getting cheques from a wide variety of sources.  And not just in the, "Oh I swear" kind of way.

I think I will start by examining our spending for the past 15 months that I have been using  Now you will see how ridiculously extravagant we are.

I first looked at 15 months of financial history on all of our credit cards.
Total spending: $68,660[2]
Average monthly: $4,577
Lowest month: $1,968[3]
Highest month: $8,540[4]

That's a rather significant variation there. (Keep in mind that this is credit card spending and doesn't include things like our mortgage, another rather sizable [5] payment each month.) Oof.

Then I went on to looking at our largest expenses which are unusual and/or not likely to be repeated unless we choose to.  So for example, I will not be having another child.  I will, however, continue to need sudden and unexpected medical and/or dental treatments for goodness knows what in the future.  And my children will have accidents.  So I did not include most medical items.  I also excluded house repairs, vehicle repairs, computer purchases, and the ongoing maintenance fee for the time share.

This left me with (on credit cards):

Travel: $9,654
Turek: $3.250 [6]
DVC: $7510
French Laundry: $1,053
Therapy: $750 [7]

The largest unusual purchases out of our checking account were:

NewsLabs: $12,734 ($25,000) [8]
Toyota: $24,694 [9]
Home Birth: $4,000
Lawyer: $2900

Travel is the most obvious thing to cut, only we haven't even started traveling for the year.  My second oldest friend in the world is getting married in Scotland.  And I really love travel so realistically this isn't something I want to suspend long term.  Luckily we don't have to plan for another vasectomy any year soon.  I won't buy into another time share.  I promise.  I'm thrilled with the one I have though.  French Laundry isn't something we will be doing again any year soon so that can come off.  The investment money for NewsLabs came out of stock so isn't really part of my budget.  The van was part of the refinance so doesn't really count for this.  And I don't think we'll be needing to pay for another home birth nor to do that kind of intensive legal work.

That means I am trying to convince myself that $18,713 is fairly unlikely to happen again and are the result of an unusually expensive year.  This is what I tell myself, right?

If I subtract $18,713 (the truly unusual stuff) from $68,660 (the total) that gives me $49,947 or $3330/month.

That's an interesting number to me.  Most months one paycheque pays mortgage stuff and the other paycheque handles the credit cards.  Previously Noah was taking home ~$2900/paycheque.  Noah has since gotten a different job with an increased salary.  I kind of love this valley.  Hm.  I am not sure where to go with this now so I'll let this be.  I will come back to this topic though.  I want to figure out how to get to the point where passive income is sufficient. 

1. Ok, short-ish version: One bank account I have had since I was 18.  That's where my annuities are deposited.  It is a pain to change anything with the annuities because I have to do it through the mail and everything requires visiting a notary.  They will stop coming in September of this year and that is the only activity in that account.  The second bank account was our failed attempt at a higher interest checking account.  E*trade sucks.  It is being phased out.  The third checking account (and the savings too) are now with a local credit union.
2. Yes I'm rounding.  I'm lazy.
3. Second lowest was $1,974 so not a complete fluke.
4. Second highest was $7,520 so this is an unusually high month.
5. Is anyone sick of the footnoting yet? Noah just taught me how to do it and I'm excited. And our mortgage payment is $2164/month but I pay $2300/month.
6. Noah's vasectomy; worth every penny.
7. Therapy is a new-ish category because while I have gone intermittently for a while I need to be going regularly for a while and that is a new $600/month expense.
8. Our first attempt at Angel investing. We did better than median (lose everything) but we only did that because the company folded so fast they didn't have a chance to blow all the money. Right. I hear that some of the other companies we saw that day (none of whom wanted our money) are doing very well.
9. We refinanced our house and took out some equity to pay off the van because it had a ruinous interest rate and our new mortgage is 4.375%. It was a rather good trade.


  1. um, don't you want to make an actual budget? just because it's so much fun? with a pie chart, perhaps?

  2. oh, and i LOVE the footnotes! :)