Our 2016 Finances Exposed!
Yep, it’s that time of year again.

It’s time to look back at the past year’s finances in the Crumb Saver household.  We’ve done these annually now, so you can catch up on previous years here: 2015, 2014, 2011-2013.

2016 was a year fraught with financial change in our home. Here are just a few of the things that happened this year:

  • It was our first full year on only one income. (Yes, our earnings dropped significantly.)
  • We increased our charitable giving by 5%.
  • A growing child means a growing appetite. Our little girl definitely eats above her weight class.
  • We had not just one but TWO plumbing related emergences early in the year that cost us well over a thousand dollars.
  • The last of our labor and delivery expenses came in this year as well.

Surely, with such expensive financial changes, we must have totally nuked the budget, right?

Well, let’s have a look at the numbers.

The Numbers

  2016 2015 2014
Total Income: $44,719 $68,053 $70,464
Tithe/Charitable Gifts: $11,653 $14,556 $15,842
Living Expenses: $11,177 $16,067 $15,992
Net Income (Amount Saved): $21,889 $37,430 $38,630
Percentage Saved: 49% 55% 55%
2016 2015 2014
2016 Finances
2015 Finances
2014 Finances

A Disclosure

In full disclosure, one significant expense we had during the year that we didn’t include in this report is $9500 spent on replacing the decks on the two homes on our property.  The reason we didn’t include them in our totals is because that was money that we had saved up in previous years that was allocated to this project, and it would have totally skewed the picture of what we’re trying to show in this report which is how much we actually spent TO LIVE.  Feel free to add that number back into the total expenses if you feel that is a more accurate account for the year.  In that case, our savings rate for the year drops to 28%.

Analysis of the Numbers

  • As you can see, our income dropped by over $23,000 compared to the past year.
  • Also, you will see that our savings rate dipped below 50% for the first time in a long while. Shocking, I know, but there’s a reason for that.
  • The major reason why our savings rate dropped was because we made the decision last year to increase our charitable giving to 25% of our income, up from our previous 20% commitment. There is a reason for that decision that perhaps we will share in a future post.
  • So while there have been some rather large changes in the past year that decreased our income and rate of savings, don’t miss the fact that the actual dollar amount of spending for the year was the lowest ever!
  • Yes, you read that correctly, we only spent $11,177 the ENTIRE YEAR to live. And if it weren’t for those pesky plumbing problems, we could have come in under $10,000…

It boggled us how we spent so little last year when we ran these numbers last week.  We reran the numbers and double-checked our math, and it is indeed what it is.  It’s even more surprising since we “let loose” and bought a ton of stuff over the holidays. From kitchen appliances, to gardening tools and supplies, to 10 fruit trees for my home orchard, stuff for the baby, and more!  All useful stuff and none purchased at full price to be sure, but still hundreds of dollars of discretionary purchases nonetheless!  Yet, we’re left with the fact that we spent only around $930 a month this past year to live.

How did this happen?!

Living on $11,000

As I’ve mentioned previously on this blog before, when we look to slash the budget, it’s far more effective to take the ax to the largest, recurring expenses as a one-time adjustment which can result in significant savings month after month.  This sure beats the painful pinching of pennies for each individual purchase that occurs every time we hit the checkout line (or Amazon shopping cart!).  This, in essence, is the reason why our budget was so trim even though we basically threw caution to the wind for a few months and binge-shopped for stuff.

  • Mortgage. As we’ve documented before, we paid off our house in July 2015.  So 2016 was the first full year that we had no house payments or rent to worry about.  Our mortgage was “only” around $600 per month, but even that amounted to over $7,200 per year—a significant percentage of our spending.  This is one of the biggest reasons why our total expenses this year were so much lower than before.
  • Utilities. Deb and Baby Crumb Saver spent lots of time at home in 2016 compared to when we were childless and both in the workforce.  It’s true that our energy usage went up, but by only $1.61 for the whole year. (Really!) I attribute this largely to an unusually mild winter and summer, but still some credit must go to our summer and winter energy-saving habits.  Our monthly electric usage averaged $54.33 in 2016.  However, with our investment in solar panels, our actual monthly electric bills amounted to $0 all year.  We generate more than we use, so we’re still getting paid on average each month for electricity.  Check out our 2-year solar panel update report to get more details.
  • Gas. Since I work from home and Deb’s at home now too, we hardly drove during the year.  So our spending on gasoline and vehicle maintenance decreased a lot too.
  • Auto Insurance. We still drive our old, reliable 2002 Honda Accord that’s worth less than $2500 Blue Book value.  That means insurance is CHEAP and we only buy the minimum coverage needed and pay around $30 per month.
  • Health Insurance. We switched to Obamacare in 2016 from Medi-Share since the addition of a 3rd member in the household qualified us for lower rates.  This, coupled with an employee health insurance benefit I receive from work (which wasn’t applicable to Medi-Share) resulted in us saving over $1200 in health insurance premium expenses in 2016.
  • Cellphone Service. We are still using Cricket Wireless for $40 per month for unlimited everything for 2 iPhones.  There is lots of great competition in high-quality, low-cost, pre-paid cell phone services now, so there is potential for further savings in this area.
  • Other Recurring Expenses. Other recurring expenses we have include: Life insurance, home insurance, property tax, fire department fees, garbage disposal, water.

When I tally up all of these combined recurring expenses, we spent less than $475 on these things each month.  That means to get up to the $930 per month that we were spending in 2016, we spent another $455 each month.  That included our food, household supplies, and the random emergencies that came up, along with all that year-end shopping we did!

Breaking It Down Monthly

So let’s take a look at our expense categories broken down to show how these numbers look on a month-to-month basis.

Categories Annual Total Monthly Average Notes
Housing & Utilities $3,408 $284

Home insurance, property tax, water, fire dept, cellphone.

NO mortgage or electricity!

(Electricity would have been $54.33 a month if not for solar panels.)

Insurance $1,800 $150 Health insurance, auto insurance, life insurance, etc. but not home insurance
Automobile $288 $24 Gasoline, oil changes, vehicle maintenance, emissions check, registration, etc.
Household Supplies $3,180 $265 Household, cleaning, garden, tools, personal hygiene, and misc. In 2016 this included the major plumbing repairs and the year-end shopping spree. (I bought fruit trees…lots of fruit trees…)
Groceries $581 $48 Includes groceries, but not eating out.  Dining out is classed under “Recreation”. Deb’s written a series on our grocery-shopping habits.
Recreation $756 $63 Eating out, gifts for people, plane tickets, and other fun things.
Baby $1,164 $97 Includes all purchases related to the baby, plus the medical bills for labor and delivery.
Total: $11,177 $931

So What About Those Savings?

We’ve looked mainly at our spending for 2016, but don’t forget that we still socked away nearly $22,000 in savings.  So where is all that money going?

  • HSA. As we mentioned before in our post, What is an HSA and How Does It Save Me Money?, we got a high-deductible health plan so that we can save into a Health Savings Account.  It is the most tax-advantaged type of saving account available, with many flexible ways of spending.  We maxed out deposits of $6750 for the year.
  • Roth IRA. We also maxed out one of our Roth IRAs in 2016 for $5500 to save toward retirement. We’ve written previously about a Christian perspective on saving for retirement, plus some thoughts on retirement accounts.
  • College Savings. We put away $250 a month toward our daughter’s college savings fund, plus any gift money that she received.  We opted for a regular taxable account with Vanguard rather than a 529 or ESA.  You can read more about our thoughts here: How We’re Saving for College–and How We’re Not.
  • Car and Home Improvement. If you’ve been tallying up, the previous three accounts received $12,500 of our savings in 2016.  The remaining $9500 went toward other short-term saving goals like a new upgrade vehicle (planning to purchase used, of course) plus additional home improvements like the deck I mentioned earlier.

We automated the savings for the HSA, Roth IRA, and College Savings so it didn’t take any effort on our part to save, and we peeked at the end of the year to see that our savings have grown rather significantly.  To see how we think about goal-oriented and savings-driven budgeting, check out our post on How to Budget for Maximum Savings.

Better Results With Less Effort

In many ways, 2016 was a paradox for us financially.

  • We lost one income and gave away more, but we spent less than ever.
  • We now earn far less than the US median household income, but we feel more financially free than ever.
  • We thought less about money and loosened up more than usual, but it still didn’t tank our budget.
  • We had multiple costly emergencies and expenses throughout the year, but we could barely tell in the final accounting.
  • We exerted less effort to manage our money, but ended up with arguably the same or better results.

How is it that it took less effort, less attention, less fretting and less stress despite all of the financial changes in the year?  I attribute this reality to several things:

  1. Habits. We’ve developed habits so we are accustomed to living frugally. A lot of things (like our food budget) was on auto-pilot and simply because of force of habit, we didn’t spend much.  We just kept doing what we were used to, and it felt effortless because it’s become habitual. (Although Deb says she loosened up and splurged a lot more on food this year.)
  2. Simpler Wants. Closely related to the last point is the fact that we’ve accustomed our taste to enjoy simpler pleasures.  So it doesn’t take a high level of “spending stimulation” to give us that “buzz”.  Plus, the very things that we now want happen to be things that are less expensive. When I’m able to buy a $40 fruit tree for half price, it gives me as much (if not more) pleasure than buying a discounted iPhone. And it most certainly makes me happier than blowing hundreds of dollars going to an amusement park!
  3. Strategic Budgeting. As mentioned before, we optimize our cost reductions, spending, and investing to make sure the things we do result in the largest, recurring, long-term benefit.  Paying off the house, owning only one old (but reliable!) car, picking a low-cost, prepaid cellphone carrier, for example all helps to reduce effort down the line.
  4. Automation. Flowing from the last point, once the master strategy is in place, we try to automate the process.  It’s easier to just have an automatic deposit into our investment accounts at a set time each month, rather than having to manually move that money.  It’s too easy to say, “Oh! I’ve got all this extra cash…there’s this toy I’ve been eyeing…”  Auto-pay for recurring expenses that won’t change from month-to-month is also a great way to reduce effort in managing our money.
  5. Intentional Investing. We intentionally invested money into systems and assets that would result in savings down the road.  Paying off the mortgage and installing solar panels are two of the biggest.  It was hairy and intense when we were paying those things off, but now we reap the benefits with no further output of effort.  Taking a step further, saving intelligently for things like retirement, health expenses, and college will help reduce the effort in the future when we run into those needs.  So we must not reduce current effort at the expense of future ease.

So while it appeared to take little effort for us in 2016, that was only the result of years of effort prior to get us to this point.  The process of building your frugality muscles might be exhausting, but once you’ve bulked up, maintaining takes a lot less effort.

If the thought of spending less and saving more causes you to perspire because of the painful effort that you think you must go through, know that the pain CAN be temporary.  Cut in the right places, invest in the proper systems, train yourself to have new habits, transform your tastes, stick with it and before long you just might be surprised at how much you’ve managed to save up!

So how did 2016 look for you?  What other tips do you have for saving more in 2017?