Unlike our history of income I posted earlier, the history of our spending and saving does not go back quite as far, at least with 100% accuracy. It was only in 2010 that we started tracking all of our spending, first in spreadsheets, then in YNAB, and now back to spreadsheets (since 2016). This tracking coincides with the first year we were living together, so it seemed like a good place to start. Even though I do not have the exact numbers for the years leading up to 2010 I can make some pretty good estimates about our spending and saving that I will highlight in this post. Starting in 2010, the numbers in this Google Sheet are the exact amounts that we spent each year. If you compare this to our income, the difference (after taxes) is what we saved and in most cases invested. The exception to this is 2018 where we spent much more than we earned after taxes which I will discuss later in this post. If you haven’t done so already, I encourage you to read our History of Income post first, and then also read our post on our History of Investing. Reading all three posts will help provide a lot more context that was just too much information to put into one post. The history of our income also gives our rationale for being willing to share this information so openly on the internet.
The Early Years (2000 – 2009)
Following the same format as the post I wrote on the history of our income, I am starting this one around the same time in the year 2000. This seems like the most logical place since it is when I left college and started my first career job (high school teacher). My spouse ( we were not married at the time) was still in college during these first few years, so I will pick up her story in 2005 when she left college. Before I start I will just reiterate that both of us worked during college and I left with no debt and little savings, while my spouse left with no savings and some student loan debt (~$17,000).
In the same Google Sheet that I listed our income history, I created another tab that includes our spending. The exact amounts only start in 2010 which was the first time we started tracking our spending so everything up to that point (2000 – 2009), are the best estimates I could make, although I think they are pretty close. Since these years are just estimates, I did not include them in the spreadsheet.
When I started teaching in August of 2000, my starting salary was fairly low. The first part of the year I was completing an unpaid teaching internship that thankfully was near my university so it helped keep my costs to a minimum and I kept working my part time jobs. My first teaching job started in August of 2000 in a rural county north of the Tampa Bay area in Florida, so the cost of living was very low. During my first and only year in this school district I did not have a lot of expenses. My rent was $425 a month and utilities added probably another $80 on top of that at most. If you add in other expenses such as food, dial-up internet (I’m not kidding), I was only spending somewhere between $1,000 – $1,400 a month. To be honest I was so busy during my first year teaching I really did not have a lot of time or opportunity to spend money. Whatever I didn’t spend went into a savings account and a Roth IRA I opened that at the time had only been available for a few years. As a state employee in Florida, I opted to participate in the investment plan of the Florida Retirement System (FRS) rather than the pension plan. I knew the likelihood that I would teach in Florida for 30 years was very unlikely. The FRS deducted 3% of my salary, while my school district contributed 6% of my salary into my account. The investment options were not great, but some were not completely awful either. The school district also offered a 403(b) but the fees for those accounts were way too high and I passed on opening the account
After my first year teaching I moved into the Tampa Bay area to a new school district that paid better and was much more urban. I moved to a new apartment, and stayed there for the next five years. My rent for the apartment started at $505 a month and in my last year was $525 a month. The best part about my apartment was that I was right next to my new school. When I say it was right next to the school I am not kidding, I could just walk to the back of our apartment complex, use a key to open a gate and then I was on my high school campus. If I drove to work because of the weather or the amount of items I needed to bring is was only a few thousand feet of driving. Needless to say I spent very little on transportation costs. Food costs were low during the time since I typically grabbed a little fruit as I was running out the door for breakfast and ate all of my lunches at the school during the week at a cost of $2 a lunch. As the band director and dance teacher who had after school activities almost every day of the week and many times on Saturday, it was easy to spend very little money. Because for some odd reason I still have bank statement from many of these years on my computer I was able to look at my average spending during this time (2000 – 2006). After averaging my statements together (31 different statements), my spending was around $1,478 a month and fairly consistent. As for retirement plans in the new school district, my FRS plan contributions stayed the same and I opened up a 403(b) account even though the fees were still fairly high. I continued to add some money to my Roth IRA as well as my savings account. As I look back on my six years teaching high school, it was not that I was necessarily aware of saving a lot and spending very little, it was more a function of my career and lifestyle. To be honest, while it may look like I was really into personal finance at the time because I was saving money and had retirement accounts and little spending, most of this was just my circumstances and very little thought.
In 2006 I left my career as a high school teacher and returned to pursue my Ph.D. degree. I lived in student housing designed for graduate students ($325 a month), had a full assistantship, and did a very small amount of work on the side when I was able. While my spending was very low during this time, so was my income. I did pull money from my savings account to cover basic expenses and to accelerate my timeline to complete my degree much more quickly. Because I had money saved, I was able to graduate again with no student debt. I did not start saving money again until 2009 when I took a research position.
During this time period, my spouse (again not married at the time) started her career teaching middle school in 2006. She started in the Orlando area for two years before moving back to the same county I taught in a few years later. While in Orlando she rented a room from one of her college friends and kept her costs fairly low. At this point I have to say that we have no idea how much she spent during this time because she did not track spending and we have zero records for her during this time. What I can say is that she contributed to the Florida Retirement System (3% from her salary with an additional 6% from the school district), and when we started living together, she had zero credit card debt and only her student loan debt. With no additional savings this means she spent most of what she made with the exception of the amount going to the FRS system and her student loan payments.
The Past Decade (2010 – 2019)
Starting in 2010 we started tracking our spending and using a budget. This was also the time we started thinking about personal finance in a more serious way. We began opening 403(b) and later 457(b) accounts and made saving a priority. For the first five years we never thought in terms of financial independence, only in terms of trying to be smart about our money, but this changed around 2015. If you look at our Google Sheet I have shared, you can see the exact amount of spending for each year since 2010. This is our total joint spending although we did not fully integrate our finances until late 2013. Our financial integration happened in many distinct stages that may be a topic for a different article. If you look at the first three years of spending (2010 – 2012) our average spending was fairly consistent even with the purchase of a house in 2010. In our budget we had a spending target of approximately $4,000 a month and for three years we stayed under that target. The remaining amounts after taxes went to our retirement accounts, our emergency fund, and general savings account.
In 2012 we decided that we wanted to have a family and the costs of that decision are reflected in our 2013 spending. For us to have kids required significant additional costs beyond what our health insurance would cover so our spending was well above the previous three years. Because we tracked all of our spending starting in 2010 I can provide the exact amount of this additional cost, $20,412.83. We have no regrets spending this amount because it was more than worth it, but the fact we had to pay this amount reflects the arbitrary, political, and outright crappy health care system we have in the United States. If we did not have the privilege and good fortune to have the income or savings already in place to pay this cost, we would not have any children. It is also important to point out, and I mentioned this in our history of income, that during this decade we were shifting jobs, and 2013 my spouse started a new career as an instructional designer.
In 2014 our spending reflects a new budget that includes the cost of raising a child and the start of more consistent travel once our daughter turned one year old. Our plan was to spend approximately $50,000 a year and we went over it by $2,107. At the same time we were saving additional income into our savings account with the expectation of trying to add an additional child to our family. This year, for the first time, we were able to max out a couple of our retirement accounts.
In 2015 we incurred costs (most prepaid) associated with a second child of $21,946.41. This caused our spending to hit an all time high at the time of $77,450 before dropping down to $62,744 in 2016. In 2016 the expenses were pretty much on target for our anticipated spending that year which included additional costs associated with two children, moving to North Carolina, and having to pay some educational expenses for my spouse’s education since she was no longer receiving tuition waivers for her doctoral program. Still with an increase in spending we were still saving around 40% of our income.
For 2017 and 2018 we spent the most money ever and almost all of that spending was associated with medical costs. Most of these were medical costs that should have been covered by insurance, but that is a story that will span many posts that will be coming in the future. Needless to say this made a huge difference in how much we were able to save those years, and in fact we had to pull money from savings to be able to pay these expenses. This was and continues to be a very frustrating situation. These costs were unavoidable and without diving into too much personal history, I will go as far as to say that if we did not have money saved to spend it is highly probable I would not be here today writing this post. This makes me angry on so many levels not simply for me, but for everyone who is not afforded access to life saving care simply because they do not have money to pay up front for treatment.
Spending and Savings Going Forward
Talking about spending is not quite as exciting or in our case as in depth as talking about our income, but I think it provides important context and a fuller picture of our path so far. You might have realized that we are not the most frugal family based on our spending, but we do work on having a well thought out balance between our spending and saving. What we focus on is very purposeful spending that almost always is intentional. In the early years we saved just because of our circumstances and little thought. Lately our saving is more deliberate with a target of saving between 40%-50% of our income each year. As long as we hit our savings target we will continue to spend a bit more freely on the things we enjoy and bring us happiness. This is of course easy to say because we have made a very concentrated effort on increasing our income over the last six years and it has made saving easier. If we had less income to work with, our spending amount would certainly decrease as we would reevaluate and adjust our spending choices.