2020 quater 1

Family Spending Plan (Budget) and Net Worth Update: 2020 Q1

High-level Summary

  • We came in 26% under budget for the quarter, thanks due to the Coronavirus.
  • Our net worth remained unchanged, despite lower stock market returns.
  • My partner in crime (aka my wife) made a giant leap toward our progress to FIRE.

At the time of this writing, we are approaching 5-6 weeks under quarantine. Which really just means that we aren’t leaving the house for much besides groceries and the occasional stroll around the neighborhood for exercise. For me, however, the clocks started when we officially pulled our daughter out of daycare, which was about 3 weeks ago.

As you might expect, we aren’t spending much these days since we are cooped up in the house. We came in under budget in almost every category, except food. I guess you can say we’re eating a lot more than just rice and beans these days.

Much to my surprise, our net worth remained virtually unchanged this quarter. That’s because my wife took her entire bonus and sent it to her student loan servicer to pay down her balance. So even though our investments (assets) are lower for the quarter, paying down our debt (liability) helped us maintain or balance.

I use Personal Capital to keep track of our spending. Given how many different credit cards we use to manage our household finances, I find that this is the best free online tool available to help me keep track.

Housing, Transportation, FoodTop 3 Spending Categories

Housing, transportation and food represent the bulk of the average household’s expenses. For our family, this trio represented 49% of expenses in Q1.

49% is a bit misleading because the denominator this quarter is much lower than usual. To put it another way, if all we did was pay our mortgage, get gas and buy groceries (which is what life has been like the last few weeks), this number would be 100% of expenses.

In January, our grocery spending was right in line with our budget. February, I started seeing the writings on the wall about about the coronavirus and I would grab just a few extra non-perishable items during each weekly grocery run. So we went just slightly over budget, but not enough to raise any red flags. In March it became clear that our grocery runs should be limited so we started buying more in bulk and more non-perishables. As a result, our costs exploded and we spent more than double our budget.

No major developments on the housing and transportation front!

Daycare

Because of the situation we are in, our daycare provider gave us the option to either withdrawal our daughter or pay half the price while she is out. We want to make sure they are in business after we get through this, so we opted to pay half for the foreseeable future.

Additionally, our youngest was scheduled to start daycare and we postponed this indefinitely, which should also save us some additional coins.

Travel

We spent NYE in Orlando last year and added a trip to Austin and San Antonio before heading back home. Most of the charges cleared in January and so they got included Q1 expenses.

Clearly we aren’t traveling at the moment. I am, however, tracking flights to several destinations and have booked a few on Southwest, using points in many cases. Their cancellation policy is a big win in times like this. Im hopeful this virus will be cleared up by May so we can take advantage of the low rates.

Other Bills

The top 5 spending categories represented 77% of our spending during Q1. The remaining 23% goes toward utilities, cable / internet / phone, etc. BORING!

Net Worth Update

At the end of December, I thought it was very possible for us to cross the 500K threshold by the end of Q1 based on:

  • My wife committed to using any bonus she receives from work towards paying down her student loan debt
  • The stock market was booming
  • Zillow should more accurately reflect the value of our home

Well, two out of 3 isn’t bad. Our net worth remained unchanged from last quarter, and i think we’ll be here for a while.

My wife followed through with her commitment and paid down her student loan balance. She’s now beating me.

The stock market took a 30% dip from its highs. It has since recovered a good amount, but there could be more pain to come. We have no idea what the futures holds.

Zillow did in fact increase the value of our home by 35K. Maybe they do this every year going into the spring real estate season. The current number is more closely in line to what I would expect to get for our house if we were to sell. Note: to make things easier for myself, I simply take Zillow’s value for our home at the end of the quarter and plug into my spreadsheet. No questions asked.

Bottom Line

Overall, Im happy with our financial position at the end of Q1. Assuming we actually beat this virus, stay healthy, and things return back to normal, we’ll be in a strong position to make it an epic summer!

What does an epic summer look like with 2 kids?

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