Wednesday, January 14, 2009

2008 Income and Expenses

On Monday, I recapped the changes in my net worth in 2008. Now it's time for a look at last year's income and expenses. This year I decided to compare 2008 vs. my budget and also against 2007 to see how my spending habits might have changed. (Click on the image to see a larger version.)

Income notes:

  • Salary increase was just the usual annual raise. Wish I could continue to be so blasé about that, but I already know I won't get any raise in 2009!
  • Bonus increased nicely in 2008, though this was by no means guaranteed so I budgeted quite conservatively for that after some debate about putting any budget number in at all.
  • Tax refund increased nicely as that is based on my first full year of having mortgage interest to deduct.
  • Investment income was way down, no surprise-- this includes dividends and capital gains from both retirement accounts and my other investments at E*Trade.

Expense notes:
  • This year's big increases were Charity, Travel, and Miscellaneous. I took an extremely expensive vacation which sucked up about 3 years' worth of vacation budget. Under miscellaneous, I bought a new laptop. As for charity, I keep feeling guilty that I don't give enough so I tried to up that this year.
  • Gifts Given is a bit skewed as I returned a few hundred dollars' worth of stuff in '09.
  • Medical is up because of the various shots and pills I needed for my vacation, as well as increases in my health insurance premiums and co-pays.
  • Housing is also up a bit as I screwed up one of my mortgage payments which resulted in an entire month's payment going towards the principal. Nothing wrong with that, it was actually kind of a happy accident. (Here I am counting repayment of principal as an "expense" even though I still "have" that money in the form of home equity.)
  • Big decreases were Telephone (no more long distance relationship), Clothing (for no particular reason, I guess I just managed to keep my weight stable enough), and both Household and New Home-related Expenses. Last year I was still buying more miscellaneous hardware and cleaning items, and I finished buying furniture. I still have more decorating I'd like to do eventually, but I really forced myself to put that on hold for a while.

The bottom line is that due to lower investment income and a few expensive splurges this year, my net savings were lower than in 2007. But I still managed to keep most lines of my budget well under control and sock away a pretty good percentage of my income. The Net Saved amount includes $15,500 deducted from paychecks that went into my 401k, and $12,735 in investment income/401k match that was automatically reinvested in those accounts. The remaining $14,975 is cash savings that I deposited in bank accounts and managed not to spend.

I was pleasantly surprised when I reviewed these numbers. Throughout the year, I was worried that I was losing my frugal habits and spending way too much, but I guess I managed to make up for it in other ways. I'd still like to be saving more, especially given the appalling hit my investments have taken. And 2009 will be a year where I really have to make ends meet on less, since I'm sure any bonus I may get will be much smaller than last year's.
I haven't begun to tackle my 2009 budgeting and goals, but I'll do that soon... and of course YOU, my dear readers, will be invited along for the ride!


Gord said...

I don't know how you do it. You're tracking everything! It must take an incredible amount of energy. I tried to do it with Quicken some years ago, and I ended up with stacks of paper slips that had to be processed. I gave up in frustration. Now, I budget with a formula and it forces me to keep everything under control. It is simplicity defined.

I did notice one thing you could save on. Telephone. $1,016 is a lot of money. I've used Vonage for 3 years now and had no service problems. Voice quality has been excellent, it is full featured....voicemail, caller id, and all your calls, in or out, are detailed on the website.

In Canada, I pay $39.99 a month and get unlimited calls, local, Canada, USA, Puerto Rico and Europe are all free. Cheap rates to everywhere else.

Only 2 things are that you must get a Vonage modem (it's usually free on special offers) and the 911 service is separate. Your 911 call goes to the Vonage call centre, your address is confirmed, and then they send the call to your local 911 call centre. There could be a one minute delay. The question is if that's worth the savings.

Anonymous said...

Hi Madame X,

I am still waiting for more stories about your awesome vacation! I thought awhile back you said you were going to do a more in depth post...


mOOm said...

Something I didn't know - the $15,500 annual limit on 401k contributions doesn't include direct contributions by the employer? I thought it did?

We now use Skype for international/long distance calling.

mOOm said...

Sorry, I'd forgotten all about that - I went back and checked my records and found I was doing just that max-out in the US in 2007. And the total employee-employer maximum is $46,000 per year, which I didn't know:

Here in Australia the concessional tax rate contribution (contribution taxed at 15% rather than your marginal rate) is maximum of $A50,000 but there is no specific number in there which must be an employee contribution.

Anonymous said...

I'm always amazed by how much you spend on FOOD. $ Remember the reader who asked if you were fat? LOL!

Anonymous said...

It's NYC. Going out to dinner is the main social activity. I am frugal in everything except for restaurtants. It is basically my biggest expense.

Mike said...

Shouldn't tax refund really go as an offset to Taxes Withheld in the Expenses section instead of Income? Otherwise both I and E are overstated when you have too much tax withheld. E in the year of withholding, I in the year following when you file. You don't "make more money" when you withhold greater than your tax liability.

Anonymous said... are very good in tracking all your expenses and sticking with your budget. it's hard with all the temptations.

kudos to you. =)

Anonymous said...

Don't do Vonage! Everything is fine and dandy - until you try to cancel the service. They invented all sorts of hoops and catch-22s so that you can't get out. For example I canceled by calling them and talking to multiple reps, but then they kept billing me. When I called about it they said that I forgot to call them again to confirm the cancellation. I think it took me close to 5-6 very aggravating phone calls to settle this, plus they overcharged me - non-refundable of course - for several months. Of all my bad experiences as a consumer, Vonage has been the WORST.

Madame X said...

@ SingleMa-- I couldn't understand how your food bills were so low! I do eat out sometimes, but not all that often. Over $1000 of the Food amount was for liquor, so I guess the problem is that I'm a drunk, not that I'm fat!

@ wx27-- I know it seems weird to count a tax refund as "income," but that's how Quicken automatically sets it up. I've thought about offestting the taxes paid, as you describe, but since the offset should really be against the previous year, it didn't seem to make sense!

Living Almost Large said...

Why are you giving the government a free loan? Don't get such a large refund. I hope you are changing it this year.

Anonymous said...

How about your blog income? Does that go to charity, or is it included in your income?

Madame X said...

Scott, I do donate my blog income to charity. I've been keeping it all separate, both the income and donations, which are under $1000 per year.

Anonymous said...

That's great you donate blog income to charity. I can surely understand food expenses; I bought Tropicana OJ64oz=$3.50sale, 10ct Eggo Blueberry Waffles, 24oz Aunt Jemima Original syrup= $3.99 sale, 2L Coke= $1.5sale at grocery store; total $11.18; other states, ~$9-10. Net worth being same as 2006 or 2005 is not bad, esp now you have your own condo studio. Most equity networths put us back in July-2002 to March2003.

An iMperfect wIfe said...


Details about the vacation! Would love to see the play by play with photos!

Also, WOW! That entertainment budget. Is that really only $250 a year? DH and I spend twice that and we thought we were frugal. Our $10/month to netflix allows us 1 additional outing each month... or a half of one concert ticket...

I know you don't count your gym as entertainment but that's why we workout at home. Is NYC really that full of free entertainment???


Anonymous said...

Gord - I'd give quicken another shot now (its improved a lot over the years in getting things automated). If you just use your credit/debit cards for everything (and use ACH debits instead of checks, use direct deposit), and you "teach" quicken over a quarter which transactions go into which categories, this all gets totally automated. What little I spend in cash then just goes into a little "Misc" category, so I never have anything to keep up with and input. I just occasionally download into quicken now and almost everything gets automatically assigned to categories. Its so easy easy to automate everything now, the one problem I've found is to force myself to look at my accounts once a month just to make sure no unauthorized charges occured.

This real-life budget is so helpful for comparing. I've tried to find a collection of real-life budgets on the web with no luck (I know, I know, everyone is different, but it really helps me to see these, cause if someone is making around the same as me and spending only half as much in one category, I at least know that is a good candidate category for improvement) Anyone know of such a collection?

Angie said...

I am thinking that if your "Misc." Category is your 3rd largest expense. And 10x larger than several other categoreies. That you should break it out further into categories so you can improve.

Anonymous said...

M. X,

Given how well you write, even if your blog income is not a lot, I think it's very generous of you to donate the income from it to charity.

Anonymous said...

I am a single professional who makes 41K at regular job, and running a side business earning an extra 2K a month in gross (but not net) income. I am considering leaving w-2 job and focusing on growing my little side business.

I spend 600-800 a month on food as I eat out a lot. I would say I also spend a lot more on entertainment than you do.

But I noticed for a single person I am spending a lot more on health costs. My health insurance is over $400 a month in premiums (not including copays, prescriptions, etc . . . ). The total cost of my insurance if I had to pay the full amount would be over 1100 a month but my job covers $750 of it. Why so high? Because my job forces single employees to pay family rates. It sucks. And my work requires I have insurance with them even if a spouse (which I don't have) has insurance or the fact as a young single person, I could probably find insurance cheaper on my own. I really like my job but I hate how it makes me do this--basically subsidizing the health care costs of those with actual families.