This Blog Post was originally distributed by the Newsletter "Financial Idiot". You can find and subscribe to it here.
DISCLAIMER: I'm an idiot and this isn't financial advice! You can lose money when investing, and you should never invest money you don't own or you can't afford to lose. I'm not responsible for your decisions!
I hope you all had a great time coming into 2023. It's time to talk about finances again, so welcome to a new Issue of Financial Idiot. And how could you find a better way to spend a few hours in the new year: maybe building a new Budget?
As I've written in Issue #006 - Why would you need a budget? I'm heavily tracking my expenses, subscriptions and income. This year I've stepped up the game even more and got each Subscription its category to see where my money is running.
Let's start with a brief overview of last year's Budget:
Fixed Costs per Month (1502€/Month): This category held everything from my Apartment to my Car. Insurance, Heating, Electrical Power, … .
Fixed Costs multiple times a year (68€/Month): Again, fixed costs but those which were paid quarterly or every half year. Some insurance and GIS (if you live in Austria, you know what I mean), and church (which I got rid of last year).
Variable Costs per Month: As the category says, everything that is only partially plannable. Groceries, Drugs and Health, Car Maintenance, Software and Subscriptions.
As you can see, the Software and Subscriptions category is one large category where I've entered everything that came along over the year. Netflix, for example, is also included in that category. Most of the time, I've budgeted 300€ for that category. Most of the months, it worked out to be enough. After creating the "new "Budget, it turned out that 300€ a month wasn't enough for that category. I was a bit shocked, but let's look at the new Budget as a whole.
Instead of having Apartment Insurance mixed with other insurances and a general look at the variable and fixed costs, I've changed to have a group of smaller groups that belong together.
One group for the Apartment includes the Mortgage, Heating, Insurance, and Electrical Power and another for my Car, which has leasing, insurance and associated subscripts (mainly the connectivity package).
Following that is a group of variable costs covering Groceries, Smoking, fees and stuff I've forgotten.
After that comes another small group for investing, covering my ETF savings and some crypto savings plans.
And then there is the largest group of Categories: Subscriptions, followed by another small Group for Cryonics.
I hope you've got a good overview now, as we will dig deeper into it, starting with the Apartment Categories.
- Mortgage: 470€ A Large increase to last year as the ECB is raising the general interest rate.
- Mortgage Insurance: 10€
- Insurance: 41€
- Operating Costs: 330€ Another significant spike with more than 80€ more per Month than last year. Although the homeowner declared why they increased the cost, I'm not sure they will increase that much over this year. Maybe I will get a large refund next year.
- Electrical Power: 100€ I made a small increase from 80€/Month to 100€/Month. With the already decided cost brake by the Austrian Government, I should have plenty of a buffer for next year's bill.
- Heating: 120€ Not a significant increase, but I have a new heating billing provider because the old one retired, so better be safe than sorry.
That totals up to 1.071€ / Month - around 37% of my monthly income. Let's continue with my Car, a Tesla Model 3.
- Parking Space: 70€ Just at the start of the year, I rented a parking spot in a garage around 10 minutes from my Apartment. I had the neighbour's kids playing around my (and other) cars recently again, and I see soccer ball imprints from time to time. Although every damage would be covered by insurance, I've had enough (and yes, I talked to the parents of the children several times). So I'm moving my Car to a safer place. Another benefit is that it will also be protected from hail and similar.
- legal protection insurance: 8,20€
- Leasing: 340€
- Insurance: 185€ Another significant increase I wasn't expecting. But the last insurance provider cancelled all vehicle insurance contracts of a large contractor. So my insurance was cancelled with it. Luckily I found a good service provider that specialized in electric vehicles relatively quickly.
- Connectivity: 10€
- TeslaScope: 4€
- Charging / Other: 50€
Another big sum of 667,20€ a month. Around 23% of my monthly income. So now, 60% of my monthly payroll is already eaten up by two "primary" categories. Let's continue with some "variable costs ".
- Interest Rate: 50€ I'm counting any bank fees and other similar expenses with this category. Usually, only 10€ is used for the account maintenance fee.
- Smoking: 20€, another category I created freshly. I will be using it to track expenses for cigars or cigarillos, along with the occasional lottery ticket.
- Groceries and Eating: 300€
370€ a Month or another 13% next up, a small category for investing.
- Crypto Investments into Polkadot: 40€
- Crypto Investments into Ethereum: 40€
- ETF Savings Plan: 200€
280€ a Month (nearly 1%). 74% of my monthly income is now spent. Before we come to the large portion of Subscriptions, let's look at the smaller Cryonics category.
- Tomorrow Bio Fee: 10€
- Life Insurance: 67€
77€ a Month (let's ignore the small percentage)
Now for the overwhelming last part, subscriptions. I'm not going into detail on them as this would burst the frame of this Newsletter. Many of the listed subscriptions are paid yearly. Still, if you want a good overview of where your money is running monthly, you have to list them anyways. I've divided yearly subscriptions by 12 to get these values.
- Fanhome KITT: 65€
- Fastmail: 6,50€
- Asfinag: 8,35€ (highway vignette)
- VISA: 5,75€
- HTL Weiz alum association: 1,25€
- Tesla Club Austria: 12,50€
- ÖAMTC: 12
- GitHub CoPilot: 8,50€
- SimpliTV: 10€
- iTunes Match: 2,10€
- Jetbrains: 17,50€
- tricount: 0,60€
- Medium: 4,25€
- pretzel.rocks: 5,10€
- YNAB: 8,40€
- Streamlabs: 12,10€
- SetApp: 16€
- Ghost.org: 8,40€
- Warhammer+: 4,60€
- Disney+: 7,50€
- MailerLite: 7,60€
- Grammarly: 12,50€
- Parqet: 7,40€
- Twitch.tv / Steady / Ko-Fi: 4€
- Reddit: 2,50€
- 1SE: 5€
- Zwift: 15€
- 1Password: 3,20€
- raindrop.io: 2,55€
- Amazon Prime: 10€
- Boldking: 6,50€
- Netflix: 18€
- Spotify: 10€
- GIS: 28€
- Internet: 47€
- Mobilephone Plan: 16€
I am totalling up to 441,65€ or 14% of my monthly income. 88%, well 90%, of my monthly payroll is divided into the categories written above. As you can imagine, with that, I'm putting a lot of pressure on myself.
Looking at these numbers now, I'm already thinking about eliminating subscriptions. Without a 13th and 14th salary in Austria (by law), I would have a difficult time building up any savings.
Speaking about building savings, my financial focus in this new year is to build up a rainy day fund of at least 5k€. From my calculations, that should be possible. Still, a considerable expense is coming up in May: a three-week Miami vacation. I think I will know if I can reach that 5k goal in June or July.
The second significant goal for this year is to pay an additional 5k€ into my Mortgage. Interest rates will keep rising, and paying off a lump sum will reduce overall interest payments significantly.
I hope you got a good overview of my financial situation and got the trigger to do your own now. Knowing where money flows significantly helps to identify holes that need to be plugged. Some categories can be refined, but others, like my Apartment & Car categories, can't be changed because they depend on outside factors. Well, unless I sell my Apartment and Car.
Other expenses could be regularly checked, like insurance or electric power providers. In my case, the giant adjusting screw is subscriptions. I don't use all of them to the extent I should be using them, and in the next Budget showcase Newsletter, you will see some of them gone or replaced by others :)
Coming to an end now, I would like to hear from you! It would be great to showcase some community budgets (of course, anonymized if you want). Since I'm living alone, it would be interesting to see how a couple manages their expenses.
I hope to read you in the next Issue when we look at my current portfolio again. Thanks for reading!