2020 Financial Year In Review: WOWZER!!! 51% Savings Rate.
April 5, 2021
Why do I write about personal finance? Because I always think about money and time, and cost effectiveness and efficiency. Why do I write about personal finance to you? Becuase I always think about the earth and how are we to save this world, if not together. I figure I’m just doing what I always do, just out loud – think about my personal finance, your personal finance and also the world’s carbon-budget planetary finance and maybe some will find it interesting enough to wander to the blog and read about it. If they remember my name Dr. Plastic Picker and it encourages them to sign a petition or reduce their plastic use, than I’m doing something other environmentalist aren’t. I stop by other personal finance blogs and sprinkle some environmentalism in the comments here and there.
Yesterday I spent a few hours updating our personal finance spreadsheet, and going through all the expenditures for 2020 and calculating our savings rate. Our lives are hardwired to maximize time together and minimize buying unnecessary things now – so we don’t really budget. There is never anything I look at and want, but cannot afford. Because the key is that things, whether they be cars, purses, watches or clothes, and experiences, whether they be vacations, restaurant meals or concerts, that cost something never really make me happy. I don’t desire any of it. If I have to pay for it and it’s expensive, it’s likely not worth our time nor money. Lifestyle creep, where your life starts becoming more expensive as you get older is a real thing. Some of the frugalities we used to emply at the beginning of our financial lives seem extreme now. But since we are living with the earth in mind, truly it dovetails with just spending less. Our savings rate for 2021 without our forced retirement savings was 42% and with retirement savings was 51%. I don’t do any personal finance gymastics, my entire mortage including principle is calculating as a cost. I’ve always thought it hilarious that some personal finance bloggers only put the mortgage interest as a cost. We still have 70,000 in students loans from medical school left at a very low interest rate. Mr. Plastic Picker and I both paid for our medical school which was Crimson University and not cheap. The way I figure it our total income is the amounts that hit our bank account after we pay taxes. And then our total costs are the expenditures mostly our mortgage, school loans, car payments, electricity, water, donations, food, internet/cell phone and a lot of still “stuff.” Retirement savings is savings. College savings is savings. I divide total savings/total income and get a percentage. That is it. I just use an excel spreadsheet that I’ve personalized for our family for years. The average savings rate in the country is much less than 10%. We are at 51%.
I won’t post actual numbers, and the personal finance part of this blog is geared toward physicians so I completley understand that some living in our very high-cost of living area have to stretch to cover the minimums of housing and food. But for physicians especially for the young physicians that I’ve spoken to, personal finance is not rocket science. You have to save money to have money to invest. And then invest your money in things that aren’t too risky. Stable residency real estate and index funds. I had a young resident ask me if I bought BitCoin. As I don’t think BitCoin is real, I just looked at him and wondered about his future? I don’t have BitCoin.
And that is in. Spent the weekend going over the last few credit card statements to be able to finish the personal accounting for 2020. We have our taxes to file for 2020, and that prep work helps me get everything ready. Updating us for the 2021 numbers will be very easy. I thought it was going to take me a long time to update us on all our financial house-keeping tasks, but I sat at my desk next to my husband who was working an overtime shift and it was very fun and easy. My desk is now cleared and the statements are all filed away and organized. More importantly my spreadsheet and my mind are organized and I know where we are. We have an amount that we are going to invest soon, but waiting to see where. But how we got to where we are is that having that extra savings, we have always made those savings work for us. We invest it. We did not buy a Tesla, and in fact paid off our last two small car loan balances. Mr. Plastic Picker has less than 10,000 in school loans left and it’s at a ridiculously low percentage. We may pay it off just because it’s so annoying. I’m still waiting for our three simultaneous mortgage refinances to go through. I won’t make any moves until that is done. The appraiser came by last week, and it was ridiculous how much the house had appreciated. It’s make believe value and eventhough I updated our spreadsheet, I didn’t go out and buy myself something. I know it’s a bit make-believe value as I still need to live in this house. But it’s nice to see the number go up. Indeed, it was one of the main reasons we moved to this house because knowing real estate is based on quality of schools, quality of contructions, square footage of the lot, and also that the rising housing values of the more posh neighborhood just north of us would give our investment in our primary home more chance for appreciation. Indeed the house we sold to buy this house, has appreciated X amount since we sold it but our house has appreciated more than double that in value. Plus there was more room to be able to improve our house now as it has a bigger lot.
That is it. That is what I did on Sunday, in addition to puttering around the house and stopping by to get four bags of used clothing from a family member. We still wear hand-me-downs. It makes sense for our pocketbook and for the earth.