January 1st marked my first full calendar year of tracking my income and expenses using a budgeting program. I still made a lot of mistakes by misclassifying things and entering data wrong; kinks that I’ve now ironed out. (I think)

I started a fresh budget as of January 1st and with what I learned in 2011 I hope to have an even better record of my financials for 2012. Some people argue against tracking pennies in and out and some argue for, I think the most important thing however is taking something, tracking it and learning from it. Which is exactly what  I did. I can’t wait to look back five years from now and see how far I’ve come!

I started out tracking every penny, now I’m a little bit more relaxed about it. This is what I learned from tracking my expenses in 2011:

1. Houses are expensive. Don’t buy one unless you have the cash, or cashflow to support one. I spent more than I earned for a good part of the summer because I was renovating my house and it cost me a lot of cash. Ouch. If you buy an older house there will be things to fix, I usually blame this on “old-house-arthritis”. It’s only natural.

2. Contrary to my expectations I TRIPLED my networth! I started out 2011 with a networth of $7,146.07. At the end of December it was $22,615.97.  (If you’re curious where I’m at now, check the financial progress bars on the right!) I don’t think I would have achieved this without setting goals and tracking my progress.

3. I was accurate with my food budget. My average spending on groceries per calendar month was $200.76, right on target!

4. Travel is important to me and I can do it on a budget. I spent $2,667.41 on travel in 2011.This includes one 6 day camping trip to Isles de la Madeleine and one two week trip to The Netherlands and Denmark. I’ll be increasing, possibly doubling, this budget for 2012. Travel delights me and I’m willing to sacrifice in other areas to make it happen.

5. I spent much more on clothing than I planned to! Partially because I lost some weight, decluttered and replaced 80% of my wardrobe… partially because… well just because I overspent. Tallying in at almost $1,900 for the year, ouch. I know I’ve also spent a good amount already so far in 2012… lifestyle inflation of sorts?

6. The reality of big debt. I wasn’t in BIG debt to begin with, my debt was managable, I know some of you have debt that is barely managable.

During 2011 I spent about 55% of my net income on repaying my student loan, the interest on it, paying my regular mortgage and my small $100 mortgage prepayments. That’s more than half of every single paycheque just to debt payments.

Of course I didn’t have to pay my studentloan off so fast and all at once but I did because I wanted more freedom. This amount of debtrepayment is completely unsustainable.. it’s tiring, annoying and frustrating. I’m happy it’s over :). Having the student loan paid off reduces my debt obligations to 16.8% of my net income. (debt obligations to my total housedebt)  Of course I still have plans to prepay my housedebt… but I don’t have to… if I don’t want to. This also means that approximately 66% of my monthly income is disposable income, I can live on a third of my current  income. I don’t make a lot of money, I gross about 40K a year at this point but I find it very freeing to know these stats, to know my limits. It’s given me a good basis to start 2012 off right and it’s also empowered me to begin investing (again) and really start saving.

Have you ever tracked your pennies? What did you learn about yourself?

PS: For avid readers this post is eerily similar to another post I wrote just under a year ago, funny how you can make certain realizations more than once.

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