This month I wrote about the power of incrementalism. Budgets and spending reports are exactly that, incrementalism in action. Standing alone, no budget or spending report will help you. But consistently doing them will incrementally improve your financial situations.
So even though my reports are the worst performing post on my site I will still do them, because they are there to help me keep my finances in control.
Since starting these budgets in March I have realized exactly how large food expenses are. We spend on average north of $450 per month just on food. That is $5400 per year. And this expense will never go away. (I have been doing monthly spending reports since 2011- but I tend to look more at the numbers rather than actually the spending).
This got me thinking, isn’t the media always telling us how fast food is too cheap and accessible. Helping to contribute to the obesity epidemic. So I had a look into how expensive home cooking is and compared it to takeaways.
To my surprise. Takeaways are actually quite expensive. And intuitively it makes sense. Say there are 21 meals in a week, and if you were to buy takeaways for every meal, they would have to be consistently cheaper than $10 to be cheaper than our grocery bill.
Sure, some takeaways come in at lower than $10, but others can be more. And you would have no money left over for any other snacks or drinks through the day- let alone household consumables that are also in our grocery bill.
The media is wrong. Takeaways are expensive. Sure they have the unhealthy aspect correct.
Spending in July
Everything has been on track for July. It has felt like an ordinary month. I bought some timber to build a second raised garden ready for planting in the summer. But other than that we have kept our head down trying to recoup from the expensive skylights in our house.
I did manage to scrape another $4800 to invest with. $1000 actually came from funds withdrawn from my peer to peer investing– which hasn’t been going as well lately.
- Groceries $596.34.
- Utilities $355.73. In winter our utility bill goes up as we start to use more gas for heating.
- Rubbish Collection $176.00
- Mortgage $4000. Our monthly mortgage payment has increased from $3600.
- Investments $4800. With $1000 coming from withdrawal out of my peer to peer account
- Dining out $203.13 We went out for a nice evening to farewell a friend leaving for Canada for 2 years.
We are continuing with the incremental approach to paying the mortgage and investments, Pay ourselves first when it comes to these. We are still saving for the next big expense to come out mid-August.
This has been the first month in as long as I can remember that my mortgage expensive have been near a third of my spending. Remember it is generally thought that housing cost is considered un-affordable if they are above 30%.
By this definition, my housing has been un-affordable since day one. Everyone situation is different. But if you really want to own a house and are committed to paying down the mortgage quickly then the 30% rule may not apply.
Then again, my thinking has evolved and I am not convinced paying the mortgage down as fast as possible is always the most efficient use of your money. But it feels great seeing that large number decrease.
Portfolio in July
Here is how my portfolio looks for July.
I have been continuing to diversifying away from Peer to peer investments. As I mentioned last month it needs to be more diversified as a large chunk is in Peer to peer lending, which hasn’t been performing well recently. The returns on the current lending are great, it’s just been difficult to fund new lending. There is a large chunk of cash not being utilized.
The size of my portfolio has also been growing well. This month saw a 9.4 % growth in size. However, many of my index funds have shown a decrease in value from last month. There has been a lot of talks around about how we are now approaching a downturn.
I’m not too worried. I am in it for the long run. So downturn or not I will still keep investing and let dollar cost averaging work for me.
Goals for 2018
Increase my investment to $12,000 p.a
One of my main goals for 2018 was to increase my portfolio by $12,000. This was over and above my investment into my Mortgage. So far I have invested a total of $8832. That is 74% of my goal. So I’m ahead of my goal!
Total portfolio >$50,000
By the time the year is through, I am aiming for my portfolio to be greater than $50k. It’s currently sitting at $44K, and with another $6K to be invested over the next half-year, I’m on track to achieve this too.
I believe that you have to set achievable goals, otherwise, you will be overcome by frustrations trying to achieve unrealistic goals. I think I have set my goals too achievable and need to rethink them.
To that end, I’m going to make a more detailed plan to reach $100k invested.
Last month I had a goal to keep our groceries below $600– We scraped in and got it down to $596. For August we are aiming to again keep it below $600. It’s going to be hard as we do like our food!
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