At the end of every month, I review my finaces and track basic thinks like my savings balances, debt balances, how much I earned, and how much I spent. This is usually pretty standard work, with my debt going down, my savings going up, and my income and spending staying the same. This is good on a monthly basis, but at the end of the year, I look at everything as well to see patters that may need to be adjusted. When I looked at my numbers for last year, I was a bit shocked.
I made a bit more money (gross) than I did in 2010 – mainly because I changed jobs. I thought that this would lead to a whole slew of savings – less money on gas (I fill up about 2 times per month now, as opposed to 3 times per week), more time to earn more money, and all of those things. The numbers however, slapped me straight across the cheek. I spent almost 10k more in 2011 than I did in 2010. I’m trying to figure out where that is, but I think one reason is because I spent so little money in 2010 (less than 15k) and of that 15k, approximately 6k (!!!) was on gas! Those results probably were not sustainable for the long term.
What I like to look for in large increases like this (and large bills) is a small number of relatively large purchases that make up the majority of the increase, as opposed to a whole bunch of 10-20 dollar purchases. If I found out that most of these purchases were dining out, extra shopping, etc then obviously, i’d have a lifestyle inflation problem. However, if these were big purchases that I’d been preparing for and was ready to make, they wouldnt be that big of a deal.
One of the large purchases that contributed to this was getting an engagement ring for H. This alone took up quite a bit of the extra spending, but it was something that I was planning on doing in 2011 and was ready for it. I didnt quite get as much saved as I would have liked, but I was able to cash flow the purchase more or less. Though it was planned, it was an expense nonetheless. Obviously, this wont be an expense again in 2012, though the process that this set in motion could (and has) taken its place.
One of the other large purchases I made (not by choice) was payment of taxes. I call this a purchase because I dont know what else to call it, but it was a huge expense for me in 2011, and it added quite a bit to this total as well. Not only did I have to pay federal taxes, but because of my working/living situation in 2010, I had to pay state taxes for a state that I didnt even live in! (Not to all of you that live on state borders – work in the state with low income taxes, but live in whichever state you like better). Unfortunately, I didn’t have much of a choice because I needed a job. This will be an expense in 2012, though not near as bad as in 2011. I’ll still have to pay a small amount of state taxes (I’m guessing less than 300 dollars) and dont know about my federal taxes. I did change my withholding amount with my new job because I didnt want another huge tax bill as a pre-summer “surprise”. Back of the envelope calculations I made suggest that I’ll be nearing the magic “zero” mark for taxes this year – which is where I want to be.
The last one wasnt quite a 1 time expense like this, but it does deserve an honorable mention: all the damn traveling I did in 2011. From January to december I felt like I was on the road the whole time. I went to Portland (OR), Multiple Trips to Colorado, St. Louis, Des Moines (IA), Las Vegas (NV), Minden (WV), Aspen (CO), Anchorage (AK), Chicago (IL), Washington (DC), Milwaukee (WI), Pittsburg (PA) and Chicago (IL)(again). This was a lot of travel – too much, actually. I’m working on getting it down to hopefully half that for this year, but I’ve already got a handful of tickets booked/trips planned, for the honeymoon and other things.
Obviously, these will be large categories to watch for 2012. While most of the expenses wont come again - their offshoots will (like wedding expenses) or more travel. I’ll need to be diligent if I want to keep making progress in 2012.
Readers: What were your big expenses in 2011? Were they 1 time deals, or was it a bunch of small recurring transactions?