theFIREstarter

Good ‘moro my fine FIRE folks!

I’m going to do something rather daring and try to pack everything I did in two posts last year into just one post!

So let’s keep things as concise as possible, you know what’s going on here… let’s dive in…

expenses

A graph, last Tuesday

Well there’s a nice graph to give you an overview of our expenses over the last 3.5 years.

Anyone who’s been following remotely closely will know that we were nowhere near our spending budget for the year, but let’s find out by how much shall we?

Headline figures

Now listen carefully, I will explain zis only once. Each table will be in the same format, and from the left we have:

• 2018 Yearly Budget – This is what me and Mrs T knocked up roughly one crazy night in January ¹. What we think hope we’ll end up spending in 2018.
• 2018 Delta – The difference between 2018 Budget and what we actually spent in 2017. As you can see here we are aiming to spend the best part of £5.5K less this year. A tough ask perhaps but it’s something good to aim for. Red here is not necessarily “bad” but means we need to spend less in this category, so I guess it’s bringing our attention to it (green will mean we have budgeted more than we spent last year)
• 2017 Monthly Average spend
• 2017 Yearly Budget
• 2017 Actual Spend – As you can see we “slightly” overshot the mark here. Not good, but more details on why/how/where below.
• 2017 Delta – The difference between the actual 2017 spend and what was budgeted. Red means we went over budget, green under.
• Yearly 2016 Spend
• 2016 Delta – The difference between 2016 actual spend and 2017 actual spend. Red means we spent more in 2017, green less.

So, despite budgeting £1000 more for 2017 than we spent in 2016, we still done our budget by £5.5k… that’s not exactly peanuts! As you can see, we’ve remained optimistic and budgeted roughly the same amount for 2018. It’s a big ask but I think it’s something good to aim for, and I’ll be far more on top of things this year.

It is definitely fair to say that the year of the big chill as I decided to call 2017, although was a good idea in principle, went a little bit too far the other way!

Maybe 2018 could be called “The year of balance” or something like that instead 🙂

Now, onwards to the breakdown of expenses!

I won’t comment on every line, only ones where big budget changes or over/under spend happened.

Household stuff

As you can see here we went over budget by £1419 which was in the main down to food/supermarket ² shopping so this will be a big area of focus this year, and I will be keeping on top of it rather than my attitude last year which was… “Oh we’re massively over budget in groceries again, oh well”.

Most of the other categories are a wash and not really much we can do about them so groceries is definitely the one to go after here. How are we going to cut out? Simples: Shop at Lidl far more often and stop buying crap. The new budget of £3900 works out at £325/month, which we’ve based on £300/month as a base spend and an extra £50/month for months where we are hosting parties and whatnot (e.g. BBQs in the summer). We started out with £300/month here but I just think that is unrealistic given our previous figures. I’d rather have something that is achievable because otherwise the target just gets conveniently forgotten about (as it did last year).

Going out/Holidays (Fun stuff!)

Weirdly we were under budget on Holidays, which I think is because our trip to France came in a fair bit cheaper than expected.

Going out was the big “over” spend here though and by a very long way. I guess we just thought our low “going out” spend from 2016 would continue, but apparently having a young child does not impede you from living your normal life as much as I thought it would 🙂 . Yes, it turns out that is only really in that first year, then it’s (almost) back to business as usual.

Anyway, we’ve budgeted £1166 for 2018 less than we spent last year. And I think this is entirely reasonable because we had about 5 weddings last year compared to this years 1. We tend to spend around £200/wedding on average so that is nearly the whole budget cut right there, so just need to be a bit more frugal on other days/nights out or just have slightly less of them to hit this target.

The holiday budget is less because we are having less, and cheaper holidays. We were fairly accurate in forecasting last year so hoping this will be the same this year. Definitely no surprise hols this year as we are choca-block already and there is not enough time in the year to squeeze any more in!

Transport

We actually came in under budget last year, and even spent a little less than in 2016. We’ve already had quite a big car bill in January which is why we’ve allowed a bit more again this year.

Personal Care

We were pretty much bang on target last year, and very similar to 2016 spend, so hoping this can remain consistent again in 2018.

Home & Garden

This category can obviously swing a lot depending on what home projects get taken on in any given year. So it’s not worth basing on what has been spent before. Having said that, we spent £2623 in 2016 due to kitchen makeover and a few other bits, and £2080 mainly because I decided to rip out our garden decking and give it a patio instead. This was unplanned because the decking basically started falling apart, hence the blown budget by £1060. No biggie.

This year we’ll likely spend a little more sprucing the garden up, and think the dishwasher is on it’s way out so have budgeted for that. Plus £600 to cover any more random DIY things that come up (might redo the downstairs toilet, is probably the main thing that needs doing now).

Lifestyle

As you can see this covers a whole selection of “wants” that are really totally optional to live the good life. But hey let’s face it, they are quite nice to have if you can afford it while still saving! Clothes is obviously the ridiculous category here so “we” are trying to cut this back to a not exactly harsh £1000/year in 2018.

Gifts & Charity

I’m donating 10% of my matched betting profits to charity each year ³. My target income for the betting is £7500 so £800 for Charity sounds about right. As mentioned we have less weddings this year so “gifts – other” should be comfortably less than last year, which is where most of the budget got blown.

Hobbies & Sport

All green on last years budget here which is good, although a shame to see the “Gym” category not seeing much action. Very happy with my golf spend especially as it included a £200 membership fee to my local indoor golf simulator place which I signed up to in December so that takes me through the whole of this year and will give me my golf fix for very cheap! Anyway, as you can see have left this much the same as last year.

Admin

We’ve increased this in 2018 because I’ve already spent over £100 on a new passport, which goes in this category. Not much else to say really!

Financial

This was large last year due to a tax bill, but should be back to a negligable spend this year.

Children

Not sure why I’ve labelled this “Children” as we only have one of the little blighters 🙂

Anyway, can’t see any major expenses coming up for little miss TFS, compared to last year where we had to buy a new pushchair, car seat and so on. So have chopped a bit of from what we spent last year.

income

Ah the Yin of Income to expenses Yang.

Although we overspent by ~£5000 in 2017 according to budget, we also “earned” around £5000 more than expected as well, a very nice surprise indeed.

I say “earned” because some of our income is not really earned at all, such as the Solar panels, who do all of the work themselves yet the money somehow gets paid into our bank account, along with investment and interest payments which also do not feel earned at all.

The bulk of the unexpected income came from from some investment income from my work share plan which paid out a random huge dividend, which was pleasant to say the least. Both me and Mrs T earned slightly more than expected as well in our normal day jobs.

I fell short of my Matched Betting profits target of £9000 or £750/month which was a bit silly as I took about 4-5 months of in the end. I still ended up making £7303 which is not exactly chump change, so I’m pretty happy with that! I’m keeping the same target this year, but with most of the easy offers gone this is actually going to be a lot harder, but I have a few new things up my sleeve along with the no lay accumulators which are still going well[/ref]A full article on how these work is coming soon, promise![/ref]

Anyway, here is how the whole of our income broke down, along with 2018 budgeted income to compare.

In the above table, red in the first “Delta” column means we’ve budgeted to earn more in that category, so I guess it means that we need to pay a bit more attention to that one to make sure we hustle enough to hit it (e.g. Matched Betting). In the 2017 “Delta” column green means we earned more than we budgeted for, nice to see a lot of green in that column!

As you see, I’m expecting a slight increase in income for us this year, which is mainly because of another “kind of” expected big payout on the investment income, which again is via my work scheme. This is totally out of my hands so if it doesn’t come I am happy to just scratch that off the target and adjust the goals accordingly. I’ll update you throughout the year if that does or doesn’t happen, natch!

savings rate

Above you can see is a nice graph of how our savings rate has taken a dive over the last 3 years 🙂

Not really surprising considering I’ve chopped my hours by 25% and we’ve plussed one our family member count.

Still… our overall savings rate in 2017 was still well into the positive at 22.82%

net worth and all of that flim-flam

This is a nice graph to look at. A steady rise in Net Worth continues despite a fairly low savings rate. The market has done a lot of the heavy lifting here in all fairness, and you can see the “Liquid freedom” graph slightly flattening out. Liquid Freedom is pretty much just all of our cash and investments that doesn’t include things locked up in Pensions or SIPP, i.e. stuff we can access relatively quickly if we need it.

Despite the Liquid Freedom part of the graph flattening out, it’s still gone a decent chunk, as the headline figures show below:

Excluding house equity: £156,524 / £23,446 / 17.62%

Including house equity: £239,021 / £28,506 / 13.54%

Liquid Freedom: £67,344 / £6,332/ 10.38%

Once again this year my focus is going to be on increasing the Liquid Freedom pot as much as possible, but more on that in my yearly goals review/setting post which will be coming up shortly.

Well that pretty much wraps it up! I hesitate to ask but…. what do you think guys!?

And how was your 2017? Hopefully a bit less spendy and a bit more savey than ours was? 😉