Announcing My 2020 Budget Projections

Originally published/last updated on myearlyretirementjourney.com on Dec 24, 2019. 

Hello there,

Since landing my latest job, I’ve been poring over my budget spreadsheet. Trying to see if I could get any closer to early retirement. Unfortunately, the needle hasn’t tipped the scale much.

In 2018, I grossed $98,500 at call center #1 with overtime pay and a bonus. At my new call center, I’m salaried at $100k with no bonus in 2020 because I started after Sep 30, 2019. My hourly rate increased from $45 to $48. Seems fine on paper but because it’s salary, I can make no more than that in a year. The best I can hope for in terms of increase in 2020 is that $1/hr cost of living increase I used to get Q1 at call center #1. We shall see.

At the end of the day, at least I have a salary I can base income and expenses on for 2020. It’s just nice to have something to anchor the start of the year. I don’t really have too many other interests, so this helps.

Here’s what I have projected for 2020.

GROSS SALARY: (yr)	$100,000	($48/HR)
401k DEDUCTION	$19,500	(PRE-TAX)
NET SALARY: (yr)	$54,000	GROSS – 401K -OTHER PAYROLL DEDUCTIONS Source: SmartAsset
SPENDING TARGET:	$26,000/ yr	($2,167/MON)
POST-TAX SAVINGS TARGET:	$26,000/ YR
TOTAL SAVINGS GOAL:	$45.5K/YR	TOTAL = POST-TAX SAVINGS + 401K  (45.5K = 26K + 19.5K) Up $500 from 2019
Wiggle Room	2k	*Can be for extra savings or extra spending

Not much has changed since 2019 since my salary hasn’t changed much.

Let’s start with pay. The 401k contribution limit for 2020 went up. So that’s usually where I start and work my way down. After that is deducted plus over $3,000 in healthcare deductions and taxes, I’m left with about $54k in take-home pay. Last year my projected take-home pay was $52k.

I’m still keeping the $52k from last year’s budget though since I’m not sure about the HSA and I want to have that wiggle room for error. So from $52k, I’d liked the idea of spending half and saving half. So we’ll carry that forward in 2020.

I haven’t yet hit the $26k goal for expenses, so I’m carrying that forward as well.  Similarly with $26k as a post-tax savings goal. They are good goals to reach for.  For example in 2018, my expenses if I remember correctly were around $33k, and near the end of November 2019, I was around $30k, so I’m happy with that progress. I get close enough that it doesn’t feel like a failure and it’s just out of reach that I keep trying.

Here’s what that the breakdown would look like in 2020.

There are just some minor changes for 2020.  In expenses, my student loan decreased by about $40 to $530 due to all my pre-tax savings. Win! Housing is going up by $100 to around $1,100. That brings my housing expense up to 50% of my budget. I don’t like that, but I’ve been slow to make a change.  My goal is to find a cheaper place to live; I’m even thinking of moving out of state. Even though housing is a bit cheaper say in the Mid-West or even about an hour away from here, when you add in utilities, I’d only be saving about $300/mon. To me, it just doesn’t seem totally worth it. I know, it’s crazy. That’s a completely emotional decision.  Moving is just so bleh. I’ve been gnawing on this housing bone for over 2 years now and I just end up doing nothing by default.

So far, I’m still loving my $400/mon allowance for Everyday Expenses. I use a pre-paid Bluebird card so I never go over and I can still feel free to spend and not feel limited or restricted or have to use an envelope system or totally budget everything.  There’s been a couple times when I’ve run out of money before the next deposit, and I’ve had to wait to buy something non-essential (e.g. take-out) so that’s how I know it’s working for me. So for me, it’s a good system. Credit cards aren’t for me at this point in my life.

One financial goal strategy I’d like to pursue is finding a part-time low-stress gig that covers my student loans and eventually spreading my wings to find something that covered all my living expenses until I retire early.  I’ll keep you updated on that.  I tried a side-hustle in 2018 and it negatively affected my health, so I’m treading lightly here.

As for the Savings part of the chart, most of it is pretty much the same as it was in 2019.  My 401k is taken out throughout the year. I know some personal finance bloggers max it out near the beginning of the year, but I haven’t tried that. I like the set-it-and-forget it method to personal fiance.

My Roth IRA is set to auto-deposit with my broker.

As for the other post-tax savings, one strategy I’ve used is to have 75% of the target amount set to auto-deposit in my brokerage account throughout the year. I hoard the other 25% in a regular savings account in case things come up. Things that come up include large personal or health expenses, a trip, or helping out family members. Also, my spending target is just that – a target. I’m still striving for it. I don’t want to feel strapped for cash because I’m so focused on reaching early retirement. There is a psychological component in personal finance for me, so this is one tool I use to help ameliorate feelings of angst.

And finally there’s the $2k of wiggle room. Everything on this chart is an estimate, a projection. The $2k is just the difference between the $54k I projected as my net income in 2019 and the $56k I’m projecting as my net income in 2020. And the way I track my income and expenses, I still haven’t been able to get everything to add up to 100%, so there’s that.

There you have it. Hope you achieve some financial freedom in 2020!