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Welcome to another monthly savings report!
For 17 months I posted a debt payoff report at the end of each month while paying off our mortgage. And for a year now, I have posted a savings report at the end of each month now that we are completely debt free.
I should have called them spending reports during the first seven months after paying off our house, because though we were saving over half of our take-home pay, we were spending it on all sorts of things we had looked forward to while hacking away at the mortgage. Doing home updates, buying new furniture and decor, buying a brand new lawn mower, new kayaks and a new-to-us truck, attending three matches of the FIFA World Cup in Russia – these were some of the ways we celebrated our debt freedom during those first seven months.
It all came to an end on September 1, 2019 when we began a new financial goal of saving to purchase our first cash-flowing asset completely free and clear – but we’ll talk about that more in a few minutes.
First, let’s take a look at how we did with our budget, savings, travel hacking cards and net worth in February.
We did really good this month and came $79.02 under budget! It was such a short, rainy month that we didn’t do a whole lot other than spending a few days in Nashville. Plus, we had a credit on our electricity bill the past couple of months from where our provider used the deposit I put down about five years ago, so February’s bill was only $4.00. That definitely helped!
Our monthly budget is zero-based, and you can view it at any time here (and if you like the format, you can get a free, customizable copy here!). This is the real, live, actual budget that we put together at the beginning of each month, and I spend a few minutes each weekday morning balancing it against our checking account and four credit card accounts.
Our zero-based budget is a little different than most because after paying off our mortgage in January of 2018, we decided to begin living and basing our budget on $2,400 per month, an amount is about $300 less than the lower of our two incomes. Three factors went into this decision:
- For the security that comes with knowing we will experience no change in lifestyle and would not even need to touch our emergency fund if one of us lost our jobs.
- It forces us to prevent lifestyle inflation as our income slowly continues to increase over the years.
- To enable us to work toward achieving our ultimate goal of financial independence.
This $2,400 comes from my husband’s income, and he is paid biweekly. Therefore, we normally leave $1,200 from his paycheck in our checking account and transfer the excess to the Ally savings account we set up for our current $100K savings goal (I’ll give more details about this goal a little further down).
Oh, and as for my paycheck – we have 100% of it set up on direct deposit to the Ally savings account.
We brought home $6,234.43 this month, which is a standard month for us -four weekly paychecks for me and two biweekly paychecks for Ron. No overtime on hubby’s paychecks this month, which is just the way I like it.
Of that amount, $3,606.66 was saved toward our $100K savings goal (more on that in a minute, I promise!). These savings consisted solely of my take-home pay plus the interest that was earned in our Ally savings account this month. Our savings rate
Below is a breakdown of our savings:
- February 7: $888.79 (my entire paycheck)
- February 14: $888.79 (my entire paycheck)
- February 21: $888.79 (my entire paycheck)
- February 25: $51.50 (interest earned from our Ally savings account)
- February 28: $888.79 (my entire paycheck)
It was a very predictable month since I’m a salaried employee and earn the exact same amount (any guesses as to the amount?) each week. We normally save hubby’s biweekly earnings above $1,200, which was $227.77 this month, but we decided to leave this amount in our checking account to add a little padding to our buffer (Nashville drained it a little as usual). I think we did okay without it!
Credit Card Updates
This month we met the spending limits for both of the new travel hacking credit cards I opened at the end of December, the Chase Southwest Rapid Rewards® Premier Business and the Chase Southwest Rapid Rewards® Premier. I’ve wanted to earn the Southwest Companion Pass ever since I opened my first travel hacking card at the end of 2017, and these two cards will get us there fast!
We started using these cards on January 1 and have used them for every single purchase we’ve made since then. The spending has been very intentional, and each transaction amount was logged on a spreadsheet until we hit the spending limits – $3,000 for the business card and $1,000 for the personal card.
We will receive 60,000 bonus points from the business card and 40,000 from the personal card, for a combined 100,000 points. We have currently earned 4,269 Rapid Rewards® points, so a little less than 6,000 more to go until we receive the Companion Pass for the rest of 2019 and the entirety of 2020. I will list Ron as my companion, and he will get to fly for free (excluding taxes and fees) with me on Southwest flights during that time! I’m so excited for BOGO flights, especially since Southwest will soon be offering flights to Hawaii!
To learn more about the four credit cards I currently have, click here.
Net Worth Updates
I tracked our net worth for the very first time on July 15, 2017, and I have been tracking it on the 15th of each month since. We experienced our largest increase in net worth this past month in the amount of $10,432 since January. In addition to finally experiencing an increase in our investments for the first time since August, taking advantage of the two “extra” paychecks we received in January sure helped us along!
To ready February’s full Net Worth Report, click here.
All in all, February was a great month for us! Continue reading below for the details of our current goal of saving $100,000 that I mentioned earlier.
Our Current Savings Goal
What: Save $100,000 in two years to purchase our first rental property in cash.
When: We started at $0.00 on September 1, 2018.
Where: East Tennessee.
Why: After becoming completely debt free, this is our next step toward our ultimate goal of being financially independent. And why cash? Because this is new for us and we want to be as safe as possible. Plus, neither of us have any desire at this time to owe anyone anything ever again.
How: We decided after paying off our house to live on less than the lower of our two incomes, and the amount we chose is $2,400 per month. Since Ron is paid biweekly, we transfer every penny he earns above $1,200 to the Ally savings account we set up for this goal. In addition, we save 100% of my pay by having my weekly paychecks direct deposited into this account.
For more details about this goal, read my announcement post here!
Wrapping Things Up
My paycheck on February 28 brought an end to our first six months of saving toward this goal, and we closed out those six months with $25,621.96 in our Ally savings account.
The significance of hitting $25K was huge for me, because it means that we met a quarter of our goal amount in a quarter of our goal timeline. We are right on track to hit $100K in two years!
We saved an average of $985.46 per week and $4,270.33 per month since September 1, 2018. Our average savings rate of our take-home pay over these past six months has been 62%.
Since we started our previous major financial goal of paying off our house on the exact same day back in 2016, I like to compare our progress along the way. The image below is a comparison of how much principal we paid each month versus how much cash we have saved for our new goal.
While paying off our house, we lived on the higher of our two incomes while using every cent of the lower income as extra mortgage principal payments, and we immediately switched to living on less than the lower of the two incomes as soon as we made our first debt-free budget on February 1, 2018.
I’m enjoying seeing how much this switch has enabled us to save, especially considering how much overtime my husband was working while we were paying off our mortgage!
I’m really happy with our progress, and I’m looking forward to seeing how we do over this next quarter! I can’t wait to see if we can reach $50K in savings by the end of August!