Phew, thank goodness for the market’s performance this quarter! If not for the sustained bull run the market’s been on, we would have likely tanked our metrics these past few months. I actually thought that September was going to be our first month showing a decrease in net worth since we started our FI journey, but the gains on our investment portfolio saved us by just a hair. We live to die another day! Below are the nitty gritty details on how we did (and what went wrong) this quarter:
Goal 1 – Increase savings rate to 50% of after-tax income
We started out strong with a respectable 45% savings rate in July, but closed out the quarter with our poorest month yet: 37% in September. There were a few reasons for the decrease in savings, the first being that our oldest started pre-school in August. Other than the mortgage and food, pre-school tuition is the largest line item in our budget making up 8% of our take-home pay. Though we knew how much tuition was heading into the new school year, it’s been a little bit of an adjustment trying to work it into our budget after a summer of tuition-free bliss.
The other culprit this quarter arose when I realized after reading Bayalis Is the Answer’s post on how RSUs are taxed that we have seriously underestimated our tax withholdings this year. There’s nothing I hate more than an unexpected bill at tax time (thanks to Mrs. BITA for saving me from that fate), so I have started funneling 3% of our monthly budget towards the check that we will inevitably have to write to Uncle Sam in April.
Lastly, we have just been having too much fun at the Single Income Life household and paying dearly for it. Lots of splurges this quarter, including too many trips to Starbucks (don’t judge), dinners out and a last minute trip to Yosemite. Now the fun is over and we’re left to deal with this nasty financial hangover.
The aggregate result of all of this unchecked spending was a paltry 37% savings rate in September. That 37% means that we didn’t saving anything in our retirement/FI accounts outside of 401(k) contributions, a first since we started our FI journey. Fortunately though, I am pleasantly surprised to find that we are still at a 51% savings rate on a year-to-date basis. So glad we saved as much of our annual bonuses as we could back in January! Looking ahead to the fourth quarter, we’ll be making tweaks to our budget to ensure that we hit that 50% mark by the time Dec. 31 rolls around.
Goal 2 – Increase monthly college savings by 25%
We upped our automatic monthly contribution by 25% in January and haven’t thought about it since. Thank goodness for automation!
Goal 3 – Increase net worth by 20%
We upped our net worth by a depressing 1% per month this quarter, which I actually consider a “win” given how much money our savings accounts bled this quarter. The culprit this time around: a kitchen renovation gone horribly wrong. More details to come in a future post but to make a long story short, we decided to renovate the kitchen in our rental property but poorly budgeted for it AND started it at precisely the wrong time. The result: an unexpected $6k-$8k hit to our investment property reserves/savings. Ugh! Being a landlord can be painful at times.
Fortunately, the markets really helped us out this quarter and we managed to eek out a 3% increase in net worth from Q2. I’ll take this over a decrease any day. Year-to-date, our net worth is up 17% which means our 20% goal is still within reach. I’ll still need a little bit of help from the market to get us there, but I’m feeling hopeful on this one.
Well, that’s all I have for now, friends. I hope your quarter went well and that your fall season (if you have one) is going well so far. The holiday season is right around the corner and I’m psyching myself up to stay diligent during these last few months to make sure we meet our goals for the year!