May was one of those over the top special months that come along only two times per year, a three payday month. In 2019, my 3 paycheck months fall in May and November, making for a bit of an unusual year as they normally fall in June and December.
One year ago I wrote Build Wealth With A 3 Paycheck Month and one year later, I am still trying to harness the power of the 3rd paycheck to expedite my mortgage paydown.
Journey To $100K: May Update
At the beginning of every month, I sit down with my cup of Trader Joes Light Roast Coffee and print out a google calendar (free). This unassuming, black and white calendar is where my paycheck strategizing occurs. I pair up which bills will be paid, with which paychecks. Every month it is a dance between income and expenses.
When a three paycheck month comes along things get interesting. The income side of the equation grows while the expenses side should stay the same, in theory at least.
With that extra income floating to the top, like the foam on warm beer, it is my job to scrape off the excess and put it to work. This is exactly what happened in May. Well, kind of, let me explain.
If you want to follow the $100k savings journey from the beginning you can start with:
May was a peculiar, but not an unexpected paradox. I anticipated an increased income in May due to the 3rd paycheck, but I did not expect the increased spending that came with a swollen bank account.
- Part lifestyle inflation and part credit float, our expenses were much larger than I had anticipated.
- The credit float from our April vacation to the Boston Marathon finally made its way into our expenses in the form of a big fat credit card bill.
- My wife and I worked several extra shifts at the hospital in May. Incidentally, our dining out budget was almost double what we normally spend. After working all day, the last thing on our mind was cooking dinner for our family. This lead to higher eating out expenses. Chick-fil-A and Chipotle be damned.
- Our grocery expenses were $1,300 in May. I still can’t figure out how we spent that much money on groceries. I suspect it was from a lack of meal planning and too many trips to the grocery store.
When the battle of May expenses and May income concluded, we finished May with a 44.76% savings rate. This remains a level of savings I celebrate but below the savings rate for March and April. Incidentally, 40% was our approximate average savings rate for 2018.
I hope with future raises and controlling lifestyle inflation we can slowly get to a place where saving 50% of our income is not so difficult.
Recap of 2019 Goal
Mission 2019: Our family will save $100,000
Yes, for 2019,
I set a goal I’m not sure I can achieve I set a goal I am achieving. A stretch goal that pushes me to the edge of what is possible.
Why chose a goal I am not sure I can accomplish? The one-word answer is motivation. The whole purpose of goal setting is to lean into discomfort. By setting an audacious, uncomfortable goal, I am reminded to spend less, earn more and save the difference.
The 2019 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 (VTSAX) = $18,000
- 2019 Savings = $100,0000
$100,000 saved in 2019 is: $8,333 per month, $3,846 per paycheck, or $274 per day
Quite frankly, our family finances are in unchartered territory. First, because I have no benchmark to compare our finances too, and because I have never kept track in this way. Second, because we seem to be saving more than I ever thought possible.
I acknowledge that for the last 3 months I say that the coming month will not be as bountiful as the next but alas each month we continue to accelerate our savings.
Why is this? The primary reason is that we have automated much of our savings. Each payday, I have engineered our savings accounts to sweep money out of our checking and into various savings vehicles.
The secondary reason is that we are working much more than we have in the past. My wife and I have both been working extra hospital shifts due to a nurse shortage. While our spending has increased slightly it has lagged our ability to save more.
May Initiative Failures
These were 3 initiatives that we had planned for May that were utter failures.
We could only muster 6 no-spend days in May. Our ugly habit of nearly daily trips to the neighborhood grocery store took its toll.
Starbucks less than a couple of blocks from our house has become a real problem. My children have leveraged their mothers love into after-school trips to Starbucks for those creamy delicious frappes with that thick layer of fluffy whip cream. When does a treat become a habit? I’m not sure but I think we are getting to that point. We spent $200 at Starbucks in May.
As previously mentioned, we have a terrible habit of realizing that the evening is upon us and we haven’t made plans for dinner. It is almost embarrassing to admit because it goes against every financial independence rule ever created. In May we spent $1,300 on groceries. Ack!
Meal planning saves hundreds of dollars per month by eliminating trips to the store and by cutting down on food waste.
Every family has a problem category, and the food budget is ours. I own this truth and work every month to change our ways, but bad habits die hard.
Journey To $100k
This is where we stand with our Journey at the end of May.
May in all of its 3 payday glory, has catapulted us across the 50% completion mark. I don’t know if we can maintain this pace into the back half of the year. Traditionally, summer equals more play and less work for our family. I suspect this summer will be no different. Between the multiple camping trips and hikes in the Cascade Mountains, I don’t see our income being able to support the level of savings we have experienced for the last 5 months.
I guess you will have to check back later to see if we were able to pull this crazy stunt off. You can subscribe in the box above to get every update delivered to your inbox. Thank you for reading.