The Resolution 2019: Wrap-up

In 2018, I posted monthly about my spending tracking. After feeling like it had become too much the focus of my blog, I moved away from it in 2019, although I continued to track spending (along with virtually everything else quantifiable in my life as I do). But with 2019 having come to a close already, I figured I should at least share how my spending went, and how I hope to continue to make strides forward in 2020. Below is another instalment of The Resolution 2019: Wrap-up. Better late than never? I hope so.

The Resolution

Despite high hopes in 2019, I didn’t meet my spending goal of $24,000 CAD. The year started out with a planned purchase of new tires for my truck, which somehow snowballed into much more work on my truck – some ‘necessary’, some less so – in the subsequent months.

Although this alone didn’t put me over the top, I found it difficult to come back from an early deficit. In total, I spent $37,644 CAD. More than $13,000 of this fell ‘outside’ of my day-to-day budget, in the form of vehicle repairs and improvements ($7,163) and other non-necessities such as camping equipment ($1,032) mountain biking gear ($499) and a new surfboard ($1,142). That is to say, I managed to adhere to my budget month-to-month, but failed to resist several larger and far less necessary expenses. When these ‘extraneous’ expenses are subtracted from my spending for the year, I actually met my spending goal.

As it is said in Mexico, and as I said in 2018, poco a poquito.

Little by little.

Things Learned

Plans change.

As I’ve said before, ‘Always have a plan, rarely stick to it’. You’ve got to have a vision for where you want your life – or even your day – to go or you’ll be forever sleepwalking. However, you’ve also got to be resilient and learn to understand that things don’t always go exactly according to plan. And that’s OK too. Given that you have no control over this, it seems that it can either ruin your day – or even your life – or not. The choice is clearly yours.

This time last year I was effectively debt-free and planning my ‘retirement within the year’. Now here I am looking at another 1-2 years of work and have replenished my debt-load handsomely. However, I have also added and furnished an entire new level to my home, a big upgrade to my own living situation from my bachelor suites below. In addition, I have increased my rental income prospects as well.

Because all of this comes at a cost, I am carrying some debt again and have resigned myself to working a little longer than originally planned in the short term, all in exchange for an even stronger version of financial independence in the medium to long term than I had ever envisioned before.

Spending snowballs.

We might go a while being really frugal and meeting our budgeting goals, then suddenly make a big purchase. It might come in the way of an unexpected expense or an impulsive decision. What I’ve come to learn is that it’s not always this first purchase that creates problems. Rather, it’s the ones that follow.

It seems that this first purchase often opens the floodgates to subsequent purchases. Almost as if we feel it’s more convenient to only have to open our wallet once, even if it means emptying it completely rather than waiting until we can actually afford or truly ‘need’ the next thing. It’s a strange psychological phenomenon that I’ve noticed and I think that only by becoming aware of it can I try to control and correct for it in the future. Because ultimately we can rationalize anything, including spending on unnecessary shit.

Cars are Expensive.

As I mentioned, I spent over $7,000 on my truck in 2019. Add in gas ($2,291) and insurance ($746) and we’re up over $10,000 for the year.

Since buying the truck in 2016 for $16,800* I have spent $9,294 on upgrading and maintaining it and an additional $7,383 on operating costs like gas and insurance.

That may seem like a large number. And that’s because it is. During this time, I’ve only put about 20,000 miles on my truck, and don’t use it to commute. At this rate, it could last another 10 years or more! I use it in a rather harsh environment here in The Baja, where destinations are rather spread out and walking and biking is not a truly sustainable option due to the extreme weather at times.

My point is that it’s easy to convince ourselves that we ‘need’ a vehicle, but let’s not start to delude ourselves into thinking that they’re affordable or even ‘cheap’. Seeing the costs all tallied up can be powerful, and can often help us to gain some perspective on our actions. To me, it’s becoming clear that owning a car is just as expensive as buying a car.

Interest adds up.

Because I am a Canadian working in Canada and living in Mexico, things are not always conventional. For instance, for a home expansion project much like I completed this year, one might normally borrow against their home on a home equity line of credit, or something similar. These tend to come at pretty good rates – comparable to one’s mortgage.

However, I had to use a combination of my existing Unsecured Lines of Credit, Personal Loans and cash savings in order to complete this project, which ultimately means carrying some debt at a higher-than-ideal rate.

In total, I spent $5,237 CAD on interest in 2019. This is much more than I should be spending, highlighting how carrying debt can quietly chip away at one’s wealth.

In 2020 I will spend less than $4000, and in 2021 and beyond I will spend virtually zero on interest. When I consider that over the course of a 25-year mortgage on my property, I would spend over $110,000 on interest, I should be coming out far ahead in the end.

Budget

In 2018, my annual budget was $14,756. Clearly, that didn’t quite work out. I overshot my $2000/year auto maintenance bill by about $6000, and the rest is largely history. As much as I’ve learned that the snowballing of ‘big’ expenses can really do damage, I still believe that over the long haul so can seemingly less important ‘small’ expenses. Therefore, I am always trying to reduce my regular expenses as well.

This year, it has actually increased to $14,960. I finally caved and upgraded my nearly 6-year-old phone, which is a part of this increase. But considering my failure to meet this budget last year, an increase may not actually be a bad thing and may be closer to a true reflection of reality.

Despite increasing a few expenses such as monthly phone bill, I also managed to eliminate some expenses such as my storage unit in Canada, thanks to the magic of my closet at Mom and Dad’s.

In reality, if I can keep my spending below $24,000, 2020 will be a financial success. But it’s still a good idea to have a budget of your actual costs as a guide if nothing else. If you are far overspending your budget, then there’s clearly something amiss. The budget can act as an indicator for that.

That’s A (2019) Wrap-up

Ultimately my net worth increased by about 18% in 2019, and with increased rental income and further reduced spending, could increase yet another 50% during 2020. At the end of the year I plan to be completely debt-free yet again, with a 3-unit income-generating home paid for free and clear.


*including $1,800 sales tax

4 thoughts on “The Resolution 2019: Wrap-up

  1. Jim

    There’s no date on the post – so was wondering if you adjusted future rental income/ debt free target for the pandemic impact?

    1. Thanks for reading!

      Rental income has definitely taken a hit so far, but luckily I don’t expect much in the summer anyway, so if things are better by the fall next rental season should go fairly well.

      In any case, rental income is a small part of my current income, so it shouldn’t set the date back too much as long as the impacts are mostly short term rather than long term. Here’s to hoping that the next few months go well! (I currently can’t even go home to Mexico, which is much more concerning than rental income in general)

  2. For 2020 we adjusted our budget up – to reflect what we actually spent in 2019. Our 2019 budget was set to allow us to retire in 5 years, with a savings rate close to 60%. We routinely overspent each month though, and it became stressful to manage our own spending and the feeling of constantly failing to meet a target spend. So we just loosened the purse strings this year, and reset our budget to a 50% savings rate. We more or less stay within that range. We are spending more, so pushing retirement out, but somehow feel better about it. Strange the psychology of this

    1. Yes, my budget itself hasn’t really moved, as there is no actual expenses to put in to fill its place, but instead of assuming I will adhere to that I am really just trying to spend less than $24,000, which gives me a leeway of about $9000. This should be enough if my truck doesn’t have another very bad year!

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