For the past couple of years I’ve been casually using excel to keep track of our finances. A couple of months ago, I realized that we had doubled our savings in just one year.
Over the course of just 12 months, we managed to increase our savings by 96%!
As I mentioned in our introduction post, our first year of marriage was a financial failure. We saved a whopping $4,500 which ended up being less than 6% of our combined income. Heading into our second year of marriage, we were determined to make some changes.
Today on the blog, I want to take a more personal approach to share how we doubled our savings in just one year.
How We Doubled Our Savings
We Lowered Our Expenses
The first thing we had to do was get our spending under control. We thought we had been living frugally and not spending much, but when it came time to look at our credit card statement, the truth was staring us in the face. We were overspending all over the place.
This isn’t an exhaustive list of all the ways we cut and trim to save money, but these are a couple of the steps we took to lower our spending this past year.
Downsized our living space
When we got married we were living in a 1250 sq. ft. two bedroom, 1.5 bath townhome with a back patio, six closets and two parking spots. We had more space than we knew what to do with, but it came at a cost. Our monthly rent was $1200. The first choice we made was to downsize to a one bedroom.
Thankfully we were able to find a steal of a townhome that is running us $725 per month. This is $475 less a month than we were spending and is $400 below the average rent price for 1 bedrooms in Houston.
It is a huge sacrifice for us comfort wise, but we know that it will pay off.
We desperately wish we had more space, but the money we’re saving on rent, utilities, and a closer commute all together add up to a whopping $600 a month.
Yearly Savings: $7200
Slashed our Restaurant Spending
Like most people, we love to eat out for any and every occasion. Our birthday? Let’s get dinner. Friend’s birthday? Let’s get drinks. Saturday morning? Time for brunch. Sunday after church? Lunch with friends.
While we weren’t doing all of those all the time, our monthly restaurant spending was over $300! When I first sat down to total it all up, I couldn’t believe it. Our eating out budget for this past year has been $150. Is this still too much? Definitely. But it’s a start in the right direction.
Check out our recent post, How meal prepping can save you $215,000
Yearly Savings: $1800
Increased Our Income
For both the first and second year of our marriage, we had the exact same income. We started our first year of marriage with a combined salary of $80,000 but I found myself unemployed for several months and our income ended up at $60,500 for the first year of our marriage. While unemployed I sought out the opportunity to start grad school, seminary, and shortly after began working part time. My wife had gotten a small, cost of living raise.
Our combined salaries ended up being exactly equal to the total income we brought in that first year, $60,500.
You’d be surprised just how many people you know are searching high and low for babysitters they know and trust. We started out babysitting for just one family and my sister and over the year had several families calling us regularly. We ended up bringing in more than $400 for the year, but that’s how much made it into our savings account.
If you want to get started, make a simple post on Facebook or Instagram advertising that you are looking for ways to make a bit of extra money and are offering your services to babysit.
SeekingAlpha is a contributor style platform where authors can write and publish article covering individual stocks, investment strategies, etc. Contributors earn a base pay of $35 per article plus $0.01 per page view. Over the past few months I’ve written three posts and have earned around $280.
The investment gains below were largely due to some stock picks that have done exceptionally well: Apple, Johnson & Johnson, Shopify, and Hannon Armstrong Corporation are a few of my high-flyers from this past year that have each gone up over 30%.
Fidelity Account +24.5%
Roth IRA +20%
Trading Account: +19.5%
Clearly, I choose to invest actively rather than passively. But I am beginning to transition away from stock picking to index funds.
Our Plan for the Rest of 2017
Now here’s the shocking fact. We truly did most of this without following a set budget. Like most people, we put one together but then we never stuck to it. My wife and I both got substantial raises of $4000 and $6000 respectively for the 2017-2018 year.
Not to mention, this past July we inked ourselves a side-gig of doing Social Media Marketing and SEO for a local small business. We have the opportunity to work anywhere from 5-15 hours a week making $25 an hour. We hope to average 5 hours a week, giving us extra $500 per month of pre-tax income.
Our combined income for the next year is $76,000, giving us a $16,500 salary bump year over year. We’ve got out FI train on the tracks and now we are adding fuel to the engine!
As we look towards the rest of this year, we have a few bucket list items to cross off.
- Car Loan Pay-Down: An extra $1000 each month. $8,200 remaining on the loan.
- Contribute to my wife’s 403B in TIAA to get the school’s 4% match
- Max my 2017 Roth IRA
- Open and max my wife’s Traditional IRA through Vanguard
We’re making more, saving more, and giving more than we ever have. We recognize that God has blessed us tremendously over this past year and we plan to continue giving 10% of our post-tax income, before pre-tax contributions to the church where I am employed. We are also supporting a close friend as he goes on mission overseas to the Middle East.
I hope this small snapshot into our life can give you some motivation and practical steps to take in your own financial journey!
What steps are you taking in your finances to make the most of the rest of 2017?