In December 2016, I hit a point in my life where I felt like I no longer had control over my finances. I was hemorrhaging money, but felt like I had nothing to show for it. So, I decided to get help before I dug any deeper and signed up for LearnVest. I wrote about my experience with the program after about three months in this post.
Throughout the year, I’ve given intermittent updates on my finances in life lately posts, in my 2017 goals check-in, and in my 2018 goals post I published last week. The topic of money is always a popular one—and I understand why, I love reading about how others manage their finances. My goal is to write a blog I’d want to read, so even though money can be uncomfortable to talk about, I wanted to give you all a long update today about where I’m at with Learnvest and how I spent my money in 2017.
Several things to note before we dig in. First, to protect my own privacy, I’m going to talk about everything in terms of percentages, as opposed to dollar amounts. Second, I keep my blog finances—both revenue and expenses—separate from my personal finances. In LearnVest, I only track my personal finances, so anything referenced below excludes the money I make from my blog and any expenses I incur—hosting/domain fees, supplies for posts, pro plugins/apps—because of the blog. Lastly, I’m not a financial planner, so everything below is simply my experience, not a professional recommendation.
(Trust me, you do not want me running your financial life!)
01. WHAT LEARNVEST HELPED ME ACCOMPLISH /
What I love about LearnVest is that you get a comprehensive Action Plan so you know where your finances are going, but then your financial planner assigns you any action items as “challenges” over a period of time so that you don’t feel like you have to do everything in the 30-page document all at once. They also send you articles to read that relate to the challenges that you’re working through so that you have a good understanding of why you’re doing something.
Over the past year, Learnvest has helped me accomplish the following:
- I set up a high-yield online savings account as an emergency fund. Previously, my emergency fund was another regular savings account with my regular bank. LearnVest suggested I move this fund over to an online bank to take advantage of the high annual interest rates. They don’t take commissions or kickbacks from any companies they recommend, which helped me trust their recommendations. If you want to move your savings over this year, they recommend Barclays and Ally.
- I made sure I had all the necessary insurance. My LearnVest financial planner helped me determine whether or not the short- and long-term disability insurance provided by my employer was enough and helped me assess how much life and umbrella insurance I needed. As one of the challenges, LearnVest also has to document the items in your home, especially valuables, so that should you ever need to make a claim on your renter’s or home insurance, you have a list and pictures of everything.
- I put a power of attorney, a medical power of attorney, and last will and testament in place. These were actually easier to set up than I anticipated since I have no significant assets and I don’t have children. Because my affairs are relatively simple, I used LegalZoom, which has an easy wizard (it’s essentially fill-in-the-blank) and attorney review once you’ve competed your documents using the wizard. You also can schedule a call with an attorney to discuss anything prior to finalizing your documents. The hardest part of this process was setting up my medical power of attorney, since I had to think through what my last wishes would be. This process actually lead my family to have a meeting recently about what we all wanted should tragedy strike, and although it can be a tough conversation to have, I think it brought everyone a lot of peace of mind because we have a plan in place.
- I switched my 401(k) contributions from a traditional 401(k) to a Roth 401(k) and started increasing my contributions by 1% every six months. For some background on the difference between these types of 401(k)s, I recommend reading this article, but essentially, with a Roth 401(k), you’re paying taxes on your contributions now, but you won’t pay taxes on any of your contribution earnings like you would with a traditional 401(k). Before I made the switch, I made sure my company matching program was also eligible on the Roth 401(k). My take-home pay did drop a little bit after I made this change since I’m paying taxes on my contributions now, but, for me, it wasn’t anything dramatic and I like knowing I’m squirreling money away. A note that choosing between a traditional 401(k) and a Roth 401(k) really depends on a lot of factors, like your age and overall financial situation—so if you’re unsure, I recommend talking to a pro.
- I learned budgeting habits that allowed me to save for larger goals. I talk more about the LearnVest system for managing money in the original post I wrote on the program, but essentially, LearnVest helps you establish a weekly budget you should stick to for all your flexible spending, and then helps you save money overtime for expenses you only incur sometimes—like doctor’s appointments, travel, wedding gifts—and for long-term savings goals. This system, combined with LearnVest’s online tracker, is really what helped me feel like I am in control of my spending and allow me to have a better idea of where my money is going. Once I had a better idea of my spending habits, I was in a better position to reform bad habits.
02. WHY I CANCELED MY LEARNVEST MEMBERSHIP /
Knowing all of the above, it might surprise you that I ended up cancelling my LearnVest membership. Since it was only $19 a month after the initial set-up fee, I debated whether or not I should keep it—especially since if you want to re-enroll, you have to pay the setup fee again. However, I decided ultimately to cancel it.
I spent the last year working through many of the action items my planner had set up for me, which I talked about above. I relied on my planner a lot during this time, and frequently reached out to him with questions. I also worked closely with him to determine a budget that would allow me to save to move into my apartment, and then once it was ready to move, he helped me determine what I could afford. It was really important to me that I wasn’t “house poor” and still had money after I paid rent to do the things I wanted to do—travel, go to restaurants and bars with my friends, pay for my exercise studio memberships. And, over the course of the last year, anytime I came into an unexpected sum of money—i.e. a tax return, a large payment from freelance work—he helped me figure out where that money was best invested.
After I moved into my own apartment back in August, my planner helped me re-configure my flex spending budget, my fixed expenses budget, and my savings contributions. At that point, I didn’t have the same need as before to be in constant contact with him since my big move and the financial repercussions from that were under control and I’d completed most of the items in my action plan that required his assistance. So, I decided to forgo paying the $19/month, and instead, have been following the LearnVest plan on my own since November. I still keep track of all my expenses through their online tracker, and plan on using their budgeting system moving forward.
Should I ever need a professional for complicated questions or when I am at another crossroads in my financial life, I’d definitely sign up for LearnVest again because I had such a positive experience. In the interim, I’m relying on my OG financial planner, my Dad, for any advice since he’s a CPA and has never steered me wrong.
03. HOW MUCH I SAVED THIS YEAR /
Ok, now let’s get into the really juicy stuff—my personal finances over the past year. Because of the LearnVest online tracker, it was really easy to do a deep dive and pull this data.
I contributed approximately 15% of my earnings this year into savings. This 15% either went into my 401(k) or into my long-term emergency savings that I try not to touch unless things are really dire. I did borrow money from that account several times this year to help front money to pay for costs from the move or for a trip, but I paid the money back when I could.
As I mentioned in my 2018 goals post, one thing I’d like to accomplish this year is to save more money. If I were to quantify that number, I’d like to see my savings for this year closer to the 20% mark. I plan to continue increasing my 401(k) contributions so that should help, but I’d also like to increase the amount of liquid cash I have on hand in my emergency account.
04. HOW I SPENT MY MONEY THIS YEAR /
When looking at where the other 85% of my money went, I spent 41% of the remaining funds on fixed expenses, which are the bills I have to pay every month no matter what. Here’s a breakdown of what those are for me and how much I spend on them:
- Rent (35%)—Eek, it’s no surprise that rent is the largest chunk of my fixed expenses, especially in an area as expensive as the DC metro. In August, my rent increased $500 from what I was previously paying. As such, I have a feeling that this coming year, my rent will be a higher percentage of my fixed expenses. 35% is definitely a higher portion of my income spent on rent than most would advise, but I’ve accepted that as my reality since I wanted to live in a highly dense, transit-oriented community.
- Utilities (3%)—At present, I pay monthly for cable + wifi, water, and electricity. At my old place, I also paid for gas. I definitely miss having someone to split these bills with, so I’ve been conscious of my usage. My phone bill is paid by my employer, so luckily, that’s not a fee I incur.
- Metro (1%)—I used the Metro to commute to work until August (now I walk!), but still rely on it to meet friends for happy hour in the city or to catch a quick ride to spin class. I’m often going only three or four stops, which I think helped to keep this percentage low.
- Subscriptions (1%)—I am not a subscription junkie, so Spotify, Dropbox, and Lastpass are the only things I categorize here.
- Orangetheory (1%)—I’ve only been a member since June, and started out at four classes a month. Now, I’ve upped to eight classes a month, so I wouldn’t be surprised if next year, this jumps a percentage point or two.
I spent the other 59% of the remaining funds on flexible spending, which are expenses that vary month to month. Here’s a breakdown of what those are for me and how much I spend on them:
- Groceries (7%)—I was surprised at how high this number was considering I probably only cook about half my dinners and lunches. However, this number also includes wine, anytime I bought food for entertainment, the breakfast food I always have on hand, and sometimes various sundries—paper goods, medicine—also get rolled into my grocery bill.
- Fast Casual (2%)—I was surprised about this number, too, but mostly how low it was! This is how I categorize all my meals that don’t require a server, so think sweetgreen, Chipotle, Potbelly, the like. On average, I get at least three or four salads from sweetgreen a week, and at $10 a pop, those do add up fast! However, after looking at these numbers, this category really isn’t a budget buster for me, so I’m not going to worry about my overpriced salad addiction as much in the new year.
- Restaurants (5%)—This category includes any happy hours, dinners or lunches that required a server, and all my bar tabs. While I definitely could often do without that last drink for health purposes and it’d be an easy way to save more money, this category isn’t killing my goals either.
- Uber (2%)—This may seem low, but I can assure you that this two percent was still over $100/month on average, which is especially laughable since I live within walking distance of a Metro and own a car. I never feel guilty when I take Uber for safety reasons, but I’d like to avoid using it for convenience when I can!
- Travel (13%)—It should surprise no one that travel is one of the things I spent the most money on this year! I have no problem with this number, and expect a similar one in 2018. This is an area of my budget I prioritize since I want to embrace this time in my life when it’s easy for me to travel. A note that I log all Ubers, restaurants, bar tabs, and costs associated with travel under this category, as opposed to their respective categories so I have a better understanding of what each trip I take costs.
- Shopping (10%)—Yikes. My online shopping addiction is definitely what derailed my goals over the last year, and this is an area I want to majorly cut back in over the coming year. I definitely made some impulse buys I later regretted, but I did invest a lot this year in upgrading my basics—I bought better undergarments, I replaced old booties and sneakers, I purchased a new workout wardrobe, and I bought a new winter jacket. Those things will all last me into the new year, so hopefully that reduces some of the temptation.
- Home (6%)—This category includes any purchase I made for my apartment. The majority of it this year was home decor, but it also includes household items like paper towels, soap, laundry detergent, and those sorts of things. Some of the latter got logged in groceries and vice versa, but overall, I think this is representative of what I spent.
- Weddings (4%)—This year, I a bridesmaid in two weddings and an attendee at one. Like travel, I log all wedding-related costs in this category, so everything from hotel and airfare to hair and makeup is included. At present, I have no weddings on the calendar next year, so that will be an area where I can save some money.
- Spin Class (2%)—I didn’t include spin class in subscriptions because I buy class packages, as opposed to having a monthly membership. I typically buy 20-class packs, and buy a new one once I’ve used all the classes. I’ve been regularly spinning two to four times a week since March, so I expect this number to be similar this year.
- Personal Care (2%)—I’m lucky that I had very few medical expenses this past year, and only got my hair done three times. I also log all my CVS purchases under this category, but typically only shop there when I need something urgently since there’s one across the street from my office. Other than that, I don’t spend a ton in this category.
- Entertainment (3%)—I logged all the books I purchased for my Kindle and the fees for concerts, museums, and plays I went to in this category. It’s not a huge money suck for me, but I was surprised I spent more in this category than I did on Uber!
- My Move (3%)—I know my building will try to raise my rent when my lease is up in September. So I can best assess if it is more cost effective to stay or to move, I tracked all the costs directly related to my move and all the Target runs I went on as a result of my move. If my new rent here is less than that amount, I plan to stay.
Whew! If you hung with me for this long, cheers to you! I’d love to know what your financial goals are for the year and if you have any tricks of the trade for managing your money—let me know in the comments below. Feel free to reach out if you have any questions about LearnVest or anything I mentioned in the post! Here’s to a fiscally responsible 2018. x