Year End Finances

I spent $23,723 in 2009.

In 2008 I spent $24,251. Last January I predicted that this year I would spend $28,200. Let’s see how I spent all this money.

The breakdown:

$8,502 Rent

$2,422 Restaurants

$2,320 Groceries

$2,170 Car Insurance/Parking/Gas/Maintenance/Tolls

$1,963 Travel / Vacations

$1,440 Video Games / Electronics / Hobby Stuff

$1,130 Utilities

$1,100 Education (Books)

$694 Public Transportation

$279  Clothing

$1703 Misc.

Here’s how it compares to last year by category

2008        2009    Category        Difference

$6,260     $8,502     Rent +2,242

$1,721     $2,422     Restaurants +701

$2,331     $2,320     Groceries -11

$1,628     $2,170     Car Stuff +542

$362        $1,963     Travel +1,601

$1,872     $1,440     Hobby Stuff -432

$741        $1,130     Utilities +389

$2,408     $1,100     Education -1,308

$422        $694        Public Transportation +272

$148        $279        Clothing +124

$1,762     $420       ATM Cash -1,342

$4,596      $1,283      Misc. -3,313

$24,251  $23,723   Total -528

So I crept up in most categories but some big savings in Education, cuts in ATM withdrawals and far fewer uncategorized, miscellaneous purchases saved me and I came out ahead this year by $500 over last year. More importantly I beat my expectations of spending over $28k this year.

How The Predictions Played Out

Last January I made predictions about how I would spend my money this year. Here’s how things lined up:

Rent Prediction: $9,000 Actual: $8,502

Education Prediction: $2,000 Actual: $1,100

I expected law school to be pricier than it is. Most of 2008′s education costs were from the law school application process.

Groceries Prediction: $2,400 Actual: $2,320

Eating Out Prediction: $1,700 Actual: $2,422

I really need to improve the eating out numbers. Especially since this year I will have time on my hands to cook at home.

ATM Cash Prediction : $1,200 Actual : $420

I actually did much better on this than I had hoped.

Gas Prediction $1,000 Actual $1,126

Public Transit Prediction $450 Actual $694

Auto Insurance Prediction $450 Actual $358

Auto Maintenance Prediction $500 Actual $120

Clothing Prediction $600 Actual $279

I had actually planned to spend a lot more money here with the hopes of forcing myself to become a bit hipper. – Didn’t work.

Travel Prediction $1,650 Actual $1,963

Hobby Prediction $800 Actual $1,440

An unplanned new video card and PS3 are responsible for this.


Last Year’s Goals

I had 5 goals last year. I met 3 of them.

1. Re-establish 6 month’s of living expenses – Done

2. Max out IRA contribution – Didn’t do it

3. Pay off student loans by May – Done

4. Open a new brokerage account and deposit $16k – Didn’t do it

5. Get 401k over $15k – Done

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2010 Predictions/Goals

1. Set aside $1,000 for future EMT training

2. Set aside $3,000 for transition period from unemployment ending to part time work starting

3. Grow IRA to over $30k

4. Lower school tuition costs with scholarships to below $30k for 2L year

_

2010 Budget:

$9,000 Rent

$1,000 Education

$2,600 Groceries

$1,200 Eating Out

$400 Gas

$350 Insurance

$400 Utilities

$100 Auto Maintenance

$600 Summer Parking

$700 Public Transit

$600 Clothing

$1,800 Travel

$600 New TV

$600 New Bike

$250 New Bread Machine

$1,000 Hobbies

$1,500 Misc.

$1,080 Health Insurance

$23,780 Total

So this is an encouraging number. Almost exactly at 2009 levels plus a new tv, bike, bread machine and plenty of money ear-marked for travel, hobbies and miscellaneous. I am also hoping to set aside $1,000 for an EMT course in the spring of 2011, and 3,000 extra dollars to cover living expenses in the summer of 2011 when the unemployment runs out, just in case I have trouble getting a p/t job while I finish off my last year of law school. Unfortunately that means to reach all my goals I would need $27,780, which is about $1,200 more than what my net income will be next year. My taxes for next year are a complete mystery as well due to confusion about how my tuition money is going to be taxed. I could owe a couple grand or get several grand back, I don’t know what to expect there.

Transportation costs ought to be much lower since I won’t need my car regularly. I need to hold onto it though because I may get an internship next summer that requires it, which will require expensive summer parking fees. Perhaps I would forgo the bicycle in that case until 2011. I will know by February if I have landed an internship that does not require a car , which means I could forget about the gas, insurance, maintenance and parking fees all together plus net a little money by selling the car off. Though I would need to then spend a little money on car rental fees from time to time, but it would still be a net gain. It also might be fun to build a solid bike from parts by picking up used parts at yard sales here and there, instead of having something built for me, in which case the costs would probably be <$200.

This is the first time in my life that I’ve had to pay for health insurance.

Long-Term Projection

This is the part where I recalculate when I will be financially independent.

Last year I predicted that I would be financially independent sometime in 2013 and retired around 2016. Things have changed a lot since I was laid off two months ago and won’t be contributing to my savings for the next two years.

It is difficult to make predictions at this point since things will depend on how long it will take to get a job after graduation, its pay rate, and how long I stay in that job. Also, my tuition costs and unpredictable financial aid package will be factors. So I have to make some assumptions. #1. I will land a job within six months of graduating that will pay $40k/year. #2. I will also have a 2nd p/t job starting in my 3rd year of law school and will continue to work weekends in that job until nearing retirement. I will be able to live off the income from the weekend job and dedicate my entire main salary to savings.

Here is my predicted liquid assets at the end of each year:

2010: > $40k

2011: > $54k

2012: > $75k   Graduate from Law School / Start Working

2013: > $115k

2014: > $160k

2015: > $216k

2016: > $277k   Financial Independence

2017:>  $344k

2018:> $418k

2019:> $500k    Retired at 35


$500k – $600k Retired. This is about the number I need to hit for a comfortable ‘retirement’. Which basically will be a time in my life when I do whatever I want, not necessarily a time when I stop earning an income all together. I would likely continue to work, since I plan to enjoy what I do. This would be a good point to quit the 2nd job if I were so inclined. It might be a good time to quit all together for a period to go on some sailing/long-distance hiking/biking/camping adventures for a couple of years only to come back and start a new phase of my career. Or I could just drop out all together, it’s a long way off.

$250k – $300k Financial Independence. This is about the number where I could build a little cabin in the woods and, if I were content with reading books all day, going for local hikes and scrounging things together when I wanted to build a new project, I could get by quite comfortably without ever working again. There are people who do so with much less, but this is the number I would be comfortable with. If I absolutely despise my work and can’t stand the thought of another 3 years of it, I may well allow myself to quit one or both of my jobs when I reach this milestone. But I don’t see that happening.

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