Here at Saving the Crumbs, we believe that a fulfilled life means living efficiently and frugally. But what does that actually mean? We can spout off carefully crafted descriptions of subjective measures of a “simple yet fulfilled life” but that doesn’t prove much, does it? Whenever I see claims like that, I’m always curious what the actual numbers are. My nerdy brain craves some objective measure. So in the interest of doing what I wish others would do and also to give a reference point for our readers, I am sharing with you our financial picture over the last few years since we’ve been married.
A couple of notes as we get started.
Taxes – Taxes are either reflected in the Total Income line or else it is subtracted out in the Living Expenses line. In some years we had self-employment income tax that was not withheld from our paycheck and so was paid manually. But taxes are accounted for in these numbers in one way or another.
Insurance – We were responsible for our own insurance coverage during these years. So not only do these numbers include our auto insurance and later home owners insurance in the latter part of 2013, we paid for our own health insurance coverage this entire time as well.
Giving – As Christians, we practice the tithing principle of returning 10% to our church, but we also give an additional 10% to other charities or ministry needs/activities. We believe that giving is a crucial component of leading a meaningful life. So we strive to live more simply so that we can give more now, not just amass huge amounts of wealth to give later (a key value here at Saving the Crumbs). We broke that portion of our total expenses out as a separate line item because it is the single largest portion and needed to be separated in order to give an accurate picture of how much we actually spent to live.
Debt – We do not have any debt, apart from a home mortgage starting in the last quarter of 2013. If we did, that would significantly alter these numbers.
Net Profit – This is the amount that we had left over at the end of the year. This is the number that we refer to as the amount “saved” out of our total income. These funds are free for us to allocate as we see fit. So they are saved for future purchases (i.e. downpayment on our house), for an emergency fund, or invested (i.e. as additional mortgage payments or Roth IRAs).
- We were married in late 2010, so 2011 was our first year as a married couple.
- We rented a small 650 square foot, one-bedroom apartment.
- I was a full-time graduate student for the entire year.
- I worked for my tuition and that income mostly came as a tuition waiver and doesn’t show up in our records as income. This was done to prevent a tax penalty on us poor grad students, for which I was grateful! It also means that my tuition doesn’t show up in my expenses.
- My work at school also paid a small stipend of around $500/month which does show up in the income figure.
- Deb worked part-time at a nonprofit organization; the bulk of the income came from her.
- In 2011, we lived on 48% of our income.
- We saved $8,752, which was 32% of our income.
- We had to move to another one-bedroom apartment that cost a little more in mid-2012.
- I was a full-time graduate student for most of this year. Graduated debt-free! Woohoo!
- I started working in the last few months of the year for a nonprofit organization (different from the one my wife works at).
- Deb continued her job at the nonprofit, went fulltime, and got a slight raise.
- In 2012, we lived on 39% of our income.
- We saved $16,959, which was 40% of our income.
- Both of us worked full-time in our respective nonprofit organizations for the entire year.
- We bought our first home in August 2013!
- The downpayment for the house, closing costs, moving expenses, furnishings, and other expenses needed to get the house livable came out of our savings that had been building up previously. We did not need to cash flow those costs so they are not included in the living expenses listed here.
- The property we bought has a second, small guest house on it that we were able to collect rent on for the last few months of the year.
- We lived on 28% of our income.
- With the remaining 50% of net profit, we applied nearly all of it to the house to increase our downpayment up until August and then as extra mortgage payments after we closed on the house. Essentially, we now live on half of what we make and plow the second half into savings and paying the house off early.
- We saved or invested into our house $33,193, which was 50% of our income.
Notice that as our income increased from year to year, the percentage that we spent on living expenses decreased. While we did spend more in absolute dollars, we did not inflate our lifestyle in proportion to our increased earnings. In fact, we decreased it.* Perhaps more than anything else we hope to promote through this blog is the idea that just because you have more money, it doesn’t mean that you have to spend it! Far better to save it!
Here’s a more visual comparison of how we did across these three years.
Want to know about our thinking behind this? Curious what strategies and techniques we use to keep our costs low? Stay with us at Saving the Crumbs and we’ll be sharing much more in future posts.
Do you have a burning question for us that just can’t wait? Leave a comment below, we’d love to hear from you!
*As of this writing in May 2014, we are on track to not only decrease living expenses as a percentage of our income but also the actual dollar amount as well. This is to be expected as we continue to refine our Crumb Saving techniques.