Savings rate challenge results – March 2020

Nine months down, three to go – I’m hitting the home stretch!

Well, March is just a sea of red when I look at the variance sheet in my spreadsheet. Every expenditure category is over budget (although, to be fair, there are some line items that have no specified budgeted figure because they’re so ad hoc it’s difficult to predict them). So, for this month’s results, I’m going to have a closer look at each primary category to see what’s going on.

First of all, I did actually receive higher than budgeted income due to a one-off payment that was agreed to by the government and my union, designed (I think) to compensate for what is now about eighteen months of dragging out our Enterprise Bargaining Agreement negotiations. This helped to balance things out a little. I’ve made it a habit to save these rare windfalls, although I did put a small portion of the net extra towards some Splurge spending.

Household expenses were over by quite a bit, primarily due to having bought myself a new ergonomic keyboard for my computer. Now that I’m working from home for the foreseeable future, I decided to invest in something that didn’t irritate me to use. I’m still getting used to the different hand/wrist positioning, but it’s definitely more comfortable than a straight keyboard. The other slightly higher expenditure in this category was on my mortgage. Although rates have been going down for quite some time, I’ve continued to pay what I was originally paying by adding some extra on the variable part each fortnight. Having recently amalgamated my split fixed/variable loan, the difference in what I was paying before compared to what I would need to set it at to maintain the previous amount was not enough to bother changing the payment amount for the month.

Food and groceries was also over, primarily due to having bought a few extra items here and there to put aside in case I might need to self-isolate if I came down with coronavirus. So far, so good, thankfully, but it’s wise to keep a little extra on hand just in case. I’ve never really done this before as I don’t have a chest freezer, and my fridge isn’t all that big because I’m a single person household, so I can’t really store all that much. Most of my diet is made up of fresh foods, too, so hoarding isn’t practical anyway given their limited shelf life. I’ve tossed up whether to get myself a chest freezer, but I’m not sure I can justify it in the long term as it’s just an added expense both in itself and in future electricity costs.

Personal item costs were the killer category this month, and were over primarily because I decided to splurge a little on a few new clothing items. Being a plus size, clothing can be quite expensive. The brand I wear most is not cheap, and I unfortunately missed out on a 50% off deal that popped up about a week later (grrrrr!!!). I also stocked up on some of my regular skin care products because they had a promotion where I got a free picnic set (plates and cutlery in a nice little compact holder) that will be great for the periodic barbecues that my group of friends have every so often – although it may be a while before I get to use them now! The skin care will get used regardless, so all I’ve really done is brought the cost forward for those items.

Most other categories were over, but not by huge amounts. Utilities was a bit over, but it seems that may be related to an ‘underlap’ in a previous month – my last gas bill was considerably lower than normal, but they seem to have compensated for that in March. Electricity and water were pretty much at their expected levels.

Of course, as usual, the discretionary costs were high-ish – somewhere in the middle of previous months’ dollar values. Eating out and takeaway was high, but not as high as it’s been in other months, and I bought a birthday gift ‘out of season’ due to the item I wanted being 30% off the usual price. In comparison to the previous months of this financial year, March’s discretionary spending was actually the third lowest month so far. Maybe I should count that as a win of sorts?

The wash-up

Due to the bonus income this month, the boost to my regular savings resulted in those savings representing 42.96% of net income. However, the net cash flow was -6.34%, resulting in an overall savings rate for March of 36.62%.

Thoughts and future actions

I have to admit, with the current stock market volatility, I’m glad that my focus is on paying off my mortgage rather than investing. While it might mean an inability to take advantage of lower prices on ETFs at the moment, I’m too much a product of my upbringing to be able to overlook both the financial and psychological value of owning my home outright. I also took at peek at my superannuation account during the month, and it has basically lost all the value it had accumulated during this financial year. Hopefully things will calm down a bit by the time I do my next net worth update at the end of June.

In looking at my goals, I’m pleased to note that I now have almost 10 months’ living expenses saved, which may turn out to be a major blessing should things change on the employment front. I would not be surprised if permanency as a feature of government employment were to become a thing of the past – I’ve seen jobs advertised as “ongoing” rather than permanent at the federal level and interstate, so I expect to see this trend extend to state and local government eventually.

I’ve also had to cancel a holiday I had planned for July, due to the restrictions on movement introduced by the government in response to the coronavirus crisis and the subsequent cancellation of the event I was going to attend. This is a bit disappointing, as I didn’t get to go away anywhere last year, but luckily it was only an AirBnB booking which was fully refundable at this stage, so I won’t lose any money. There’s always (hopefully) next year. I’m also keen to do some shorter breaks – long weekends away, rather than a week or more at a time, though I may do these as mid-week trips to reduce the accommodation costs. There are plenty of places that I’ve never had the chance to visit, so I need to start putting a list together in preparation for when it’s possible to travel again.

The eating out / takeaway line item should reduce considerably for a while. I’m committing to minimising this line item in April, especially now, when takeaway foods may potentially be prepared by someone who is infected with, but asymptomatic for, coronavirus. This is a pretty good motivation for avoiding foods that I haven’t prepared myself!

Some other things I’m working on are small actions to help reduce costs. I’ve already stopped buying a coffee every work day, although now that I’m at home and have daily access to my Nespresso machine – I normally only use it on the weekend – I’m using it once a day to have something approximating decent coffee. However, this means increased milk usage, so I may need to buy stronger varieties of coffee and add extra water to make something more like instant coffee to which I can just add a splash of milk. I’m also embracing the half flush on the toilet to reduce my water bill, inspired by this post by LateStarterFIRE (although I can’t bring myself to do the whole “if it’s yellow, let it mellow” thing either), as well as reducing the time I spend in the shower. (I’ve always liked to luxuriate in the water, but that’s not good for my water bill nor for the environment.) It’s also occurred to me that I have sufficient underwear and clothing that I could do laundry fortnightly rather than weekly, so that too will be a change going forward. I’ve started doing some bulk cooking in the slow cooker to create multiple meals that can be refrigerated or frozen to make my grocery dollars go that little bit further, and I’ve just bought myself a mushroom growing kit, as mushrooms are something I use almost every day. I’ll see how that goes, being a notorious plant killer, but surely it can’t be that easy to kill off fungi. I’d like to be more interested in gardening and growing my own food, but it’s really not my thing. I might try something small-ish to grow just enough to cover what I use regularly. It’s important to know your limits, I feel. 😀