every dollar

Our Financial Year in Review – Tracking Every Dollar in 2017

I track where every dollar we earn and spend ends up. The process can be tedious at times, but provides a lot of insight into how we live. I post monthly money updates, but also like to zoom out and take a look at the full year.

Some Context

We are fortunate. My wife and I are in our super-early 30s, barely 30 really, age is just a number, who’s even counting. We both work corporate peon cubicle jobs in pragmatic fields. Our salaries are nothing to balk at, we live in a small house, have no kids, and carry no debt – not even a mortgage.

We’ve been incredible lucky in life. We both come from great families, are healthy and have enough natural intelligence to get by without too much of a struggle. While our providence is neither rare nor special, we’re trying to go about things ever so slightly differently than most in our lot. Instead of using our good fortune to be mindless consumers we try to create surplus and bank it for our future. What follows is a reconciliation of that goal.

Where Did our Money come From?

every dollar

All of our income is coming from our jobs. My wife is nearly a decade into her high-demand career and has a nice salary to show for it. I was a bit later to the adult-ing game and have been in accounting for about 7 years. I might seethe over the tedium of tracking debits and credits, but I sure can’t complain about the predictably decent pay for accountants.

Gross wages is just what it sounds like, our pay before taxes or anything else comes out. I’ve also added in the insurance premiums our employers cover for us. The last piece is the amount of matching contributions provided at our jobs.

Our employers kick in just about 5% of our salaries as matching contributions to our 401ks. I also have an employee stock purchase plan (“ESPP”) that receives matching funds and my wife gets a little bit of money added to her health savings account (“HSA”) every year.

While salary is obviously the bulk of our pay, it’s interesting to see that employer provided benefits make up 11% of our total compensation.

Our total compensation is $14,556 more than 2016 – a 7.1% increase! I received a bonus early in the year and was promoted in the back half which really bolstered our earnings.

Where Did Our Money Go?

every dollar

We had $218,000 of total compensation, which is a ton, so where did it all go?

We spent $55,000 in 2017, which is a $6,000 drop from 2016! Hey that’s not too bad 🙂 If you’re interested, I did a detailed post on our 2017 expenses. We spent 25% of our total compensation, which means we’re doing a pretty decent job of avoiding lifestyle inflation.

26% of our total compensation went to mortgage principal. No, we don’t live in a $2M house with a $5,000 mortgage – the $56,000 is high because we paid off our mortgage early. In May 2017 we became completely debt free. The financial motivation for paying off a low interest rate mortgage early might be debatable, but the feeling of freedom is not. Bye bye mortgage, see you never.

We plugged 16% of our gross compensation (19% of our salary) into our 401ks. I certainly appreciate that making a lot of money makes it easier to save alot. It’s important to figure out what is best for your individual circumstance, don’t just blindly follow Rules of Th(d)umb and plug in 10%. For us, as much as we’re allowed to save tax deferred is the right choice, but it may not be for you.

$20,000 went into my ESPP. I don’t really advocate owning individual stocks, but when your company matches 20% of your contributions it’s hard to say no.

We paid $41,000 in income, social security and medicare taxes in 2017. I go into detail on our total taxes paid in this post. For this analysis I took out sales and property tax and included them in expenses since they feel more discretionary.

We spent $11,000 on health insurance premiums in 2017. We’re young, healthy adults with a clean medical history and it still costs nearly $1,000/month for high-deductible insurance plans. Luckily our employers cover most of it.

How Did it Grow?

every dollar

Our net worth climbed $150,800 in 2017!

We added $56,000 to our savings in 2017. You can see in the “Where Did it Go?” section that it consists of $36,000 in 401k contributions plus $20,000 to my ESPP.

We also threw $56,000 at our mortgage principal and paid that puppy off. For our net worth calculation I include the purchase price of our house minus the mortgage outstanding. I don’t include the unrealized appreciation of our home value, mostly because I don’t think our home value rising is a good thing.

The remainder of our net worth increase is attributable to market growth. Our investment balances are getting reasonably substantial which means a strong stock market can have a big impact. The $39,000 in market gains is like having a 3rd income. The market can obviously go down too, and when that happens it’ll have a negative impact on our net worth.

Our total net worth increase is basically identical to 2016, though 2016 was bolstered by $20,000 more in market growth. We made up that difference in 2017 by earning $14,000 more and spending $6,000 less.

That’s a Wrap on 2017

It was a very strong year for us financially. Things are really starting to shape up for future us. This post is a solid summary of our 2017 financial lives; I’ll link to related content below if you’re interested in more detail on any of the areas covered.

Thanks for reading 🙂

If you’re interested in tracking your net worth, I highly recommend using Personal Capital. It’s the bomb and it’s free. What more do you want.

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2017

2016

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