Last month I accepted Lanny’s challenge to save 60% of my income.  As I discussed in my post about my decision, I mentioned that I have been very bad about tracking my expenses and I have never put together a tracking mechanism to calculate my savings rate.  Well that has changed and I am now watching my expenses like a hawk.  In order to save 60% of my income, I need to watch all income and expense sources closely to figure out where I can trim the fat.  Now that September is over, the questions is…Did I save 60% of my income??

Savings Ratio

Before disclosing my savings rate for September, I want to briefly discuss my expectations.  When I first read about Lanny’s savings challenge, I thought he was crazy.  With a new car, a house or rent, insurance, etc., 60% seemed like such a tall task.   Also, at the time his article came out I was in the middle of moving and swiping my credit card left and right.   When the move was over, life settled down, and my spending habits fell back to the norm, I began thinking that I could do it.  My rent was cut in half and that was my largest monthly expense.  So if my largest fixed expense was cut in half, there was no reason I couldn’t hit 60%!  After estimating my expense, my initial guess and expectation for my savings rate was 40%.  Lets see how I did!

My September Savings Rate was 48.56%, below my goal of 60% and above my initial expectation of 40%.  My breakdown of income and expenses follows.

Income

There were 3 contributors to my income this month: salary, dividends, and an AT&T bonus rewards card.  Hopefully my income and dividends will continue to climb each month and this total will slowly increase.  However, for October and November I expect this number to decrease due to lower dividend incomes and the loss of the one-time AT&T Rewards card.  At a minimum this total should be $3,000/month.

Expenses

I broke down my expenses into the following categories and discussed my spending for each category below.

1. Apartment:  This includes my portion of rent ($325), cable/internet ($44.25), and utilities ($33.77).   The only room for improvement would be if I decided to cut the cord on cable to save half of my cable/internet bill.  Unfortunately for me I love watching sports games live, so if I cut the cord it would most likely result in me watching sports games at a bar.  The ensuing bar tab for each separate game would far exceed the $22/month I would be saving.
2. Car: This includes my car payment ($360.83) and insurance ($90).  I have been researching ,test driving, and brainstorming alternative ways to cut down this expense.  Expect a lot of discussion about this monthly expense going forward.  I am hoping to bring his expense to $400 by the end of the year!
3. Entertainment:  September was a busy month for going out since it was one of the last nice months of the year.  My girlfriend and I attended Cleveland’s Oktoberfest (I had the best brat and latke at the festival!), saw the Black Keys at Quicken Loans Arena, attended two other smaller concerts, and watched some prime-time football games at the bar with friends.  This accounted for about $300 of my entertainment expenses, which I very cheap for the memories and fun times the events produced.  I also spent $90 to attend a golf outing to support a local school districts scholarship fund.  I’m not very good at golf, but the event was for a great cause and I had a great time hanging out with family and friends all day.  Lastly, I spent $30 to visit my old roommate in Detroit and attend the Detroit Lions and Packers game.  The $30 could have been a lot worse though.  fortunately for me the cards were falling for me on the blackjack table!   Going forward, I expect this category to decrease to below $300 going forward since a lot of the events I described were one-time events.  Since the weather is turning, the options of festivals and golf outings are declining.
4. Gas: I love my Camry, but the 25 MPG in the city can really make a dent in my savings account.  As I discussed above, I am kicking around ideas on how to lower the expenses associated with driving.  Gas will be a major component of this decision and any future decisions will be focused on improving my fuel efficiency. I would love for this expense to be below
5. Travel: My girlfriend and I split a LivingSocial for a weekend getaway.  It will be relaxing and the package included messages and other relaxing events.  It was too good of a deal to pass up!
6. Cell Phone:  I have a basic smart phone plan.  Luckily my company reimburses a portion of this expense since I travel a lot.   Otherwise this expense would be double.
7. Food:  I split this cost with my other half and the category includes grocery bills, lunches out, and quick dinners to Chipotle, Wendys, etc.   This expense is actually a lot lower than I expected.  I could probably shave $25 from this category by making sure I pack lunches every day instead of forgetting (Yes, sometimes I honestly forget to pack a lunch and I have to spend $5-$6 grabbing a meal).  It is a costly mistake that I will improve continue to try to improve upon going forward.
8. Other: Unlike Lanny, I do not cut my own hair.  I will pay a premium to have somebody at GreatClips cut my hair for 10 minutes.  It is worth every penny!

Conclusion

My first month of tracking my savings rate went much better than I thought.  However, after writing about my expenses, there is still plenty of room for improvement.  My entertainment expenses were high because of the many events I attended and my frequent trips to the bar.  Maybe I need to have a give and take going forward.  If I anticipate my expenses will be higher for one-time events, maybe I should stay in a couple of nights instead of attending the bar.  That way I can reduce the impact of entertainment and still ave those great experiences.  My gas expenses were higher because of all the driving I had this month.  Even with an automobile change coming in the future, I still could improve this by finding alternative means of travel, walking, or potentially investing in a bike to use for shorter trips instead of driving.  Lastly, forgetting to pack a lunch cost me $25.  It is an easy fix and a stupid mistake that lowered my savings rate by .8%.  Overall though, I am very happy with an initial savings rate of 48% and think it is a very solid benchmark going forward.  Hopefully I will continue to improve each month and reach 60% soon!

What was your savings rate this month?  What do you do to cut down your entertainment expenses?  Any tips for my automobile expense going forward?

-Bert