Journey To $100k: February Update

You’ve landed on the February update of my Journey to save $100,000 in 2019. You can read all about my crazy goal by reading My Impossible 2019 Goal

Journey To $100K: February Update

Honestly, February was not looking good until an HSA deposit by my employer pushed me to a new monthly record. Let’s get started with the details.

Journey to $100k
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Non-budgeted Expenses

It feels a little bit like the ending of Scooby Doo to say this, but if it wasn’t for 2 meddling expenses, February would have been a fantastic month of savings.

  1. Our refrigerator died in January. We put the $1,800 replacement cost on a credit card that came due in February. Boo!
  2. Not knowing the refrigerator would soon die, we put 4 round trip plane tickets to Boston on a credit card to watch my wife run the 2019 Boston Marathon. The damage = $1,200.

By cutting back and working extra shifts in February we cash flowed those expenses and hopefully, the worst is behind us. While it is not every day that a $2,000 appliance breaks, owning your home means anything can happen. I had to knock on wood after my son said what if the oven breaks.

But……. the garbage disposal died this week and that $200 repair will show up in March. Life is full of surprises.

Journey to $100k

If life were utopian and we followed all the unwritten financial laws, we would set aside 1% of the value of our home annually for maintenance and repair. In our case that would be about $4,000 dollars per year.

I held an informal poll on Instagram when our garbage disposal died, asking if anyone really sets aside 1%. Only 1 out of 10 respondents said they set aside 1% for repairs. I guess I’ve got company when it comes to not being fully funded for home maintenance and repairs.

My solution

While I don’t set aside 1% we do keep an emergency fund for unplanned expenses such as a refrigerator replacement. I intentionally keep our emergency fund in an online bank that takes about 3 days to access.

I figure the 3 days is enough of a cooling-off period to figure out a way to pay for an expense without actually drawing down on the emergency fund.

Such was the case for our fridge. I hatched a plan to cut back on groceries, eating out, and entertainment, all the while, I picked up a couple of extra shifts at work and the emergency fund was left intact.

Journey to $100k

Recap of 2019 Goal

Mission 2019: Our family will save $100,000. 

Yes, for 2019 I have set a goal I’m not sure I can achieve. A stretch goal that makes me uncomfortable and pushes me to the edge of possible.

Why chose a goal I am not sure I can accomplish? The whole purpose of goal setting is to lean into discomfort. By setting an audacious uncomfortable goal, I will be reminded to spend less, earn more and save the difference.

The Blueprint

Here is my blueprint for $100,000 savings in 2019.

    • Two 401k’s = $38,000
    • Two IRA’s = $12,000
    • HSA = $7,000
    • Mortgage principal = $25,000
    • Taxable brokerage account = $18,000
    • ————————————————–
  •      2019 Savings     =         $100,0000

$100,000 saved in 2019 is: $8,333 per month, $3,846 per paycheck, or $274 per day

Here Are The February Numbers

Across almost all categories we saved less in February, with the exception of the HSA.

My employer incentivizes their high deductible health plan by providing a $1,600 contribution (for family) to our Health Savings Account(HSA). This contribution bolstered our February savings.

The other category that saw a slight tick upward was my 403(b). I increased my contributions t for February to capture some of the overtime pay I was scheduled to earn.

February Capital Allocation

This pie chart shows the percentage of savings allocated to each category. As you can see, our 403(b) received the lions share of our money. This will likely continue for the first half of the year until we get closer to maxing out.

Mindful March

For years we have put most of our purchases on credit cards. From utilities to groceries, most of our monthly expenses are funneled through credit cards. For the points, we tell ourselves.

By early February I could see the train wreck coming. We had a mortgage payment and a $4,000 credit card payment(fridge and plane tickets) coming at the end of the month that we could not pay.

By the second week of February, I decided enough is enough. We initiated a credit card freeze. We went all cash and debit card to get real-time feedback of what money was actually available for spending. For the better part of February, the only purchases placed on the credit card was fuel.

I installed our bank’s mobile app on my wife’s phone so before she walked through the grocery store aisles, she knew what was available for spending. As crazy as this sounds, in months prior, there really was no constraint.

My financial objective in March is what I am calling “mindful March.”

In March I will get our credit cards to near zero balances and keep them there. By using credit cards, the pleasure of the purchase is separated from the pain of paying.

By being mindful and not using credit, I hope to not repeat the financial stress of February. I hate the credit card hangover that follows a month of larger than normal spending.  I no longer care about the cash back or points.

Conclusion

With 2 months down and 10 to go, we are ahead of schedule with 17.22% of Journey To $100k completed. In spite of February’s unusually large credit card payments, we were able to buckle down and stay on track.

If you would like to follow along with all 12 months of our Journey to $100k, be sure to get on the email list in the box above.

Journey to $100k: January Update

Thank you for reading.

 

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