Confession: Coming Clean About Our Expenses

I’ve been spending a lot of time lately peering in to my personal finance spreadsheet.  This is the spreadsheet that shows all of our major assets, our income, our expenses and our liabilities.  The assets and liabilities really haven’t changed much.  Here’s a quick rundown of the major stuff:

House: $340K

Lake House: $155K

Toyota Truck: $9K

Honda CRV: $24K

Boat: $8K

Yamaha Quad: $4.5K

And a number of investment accounts which I won’t total out here (where the majority of our net worth sits).

All of the assets are paid for with the exception of the “House” and “Honda”. We have a reasonable mortgage that is much less than the house is worth and a small amount owed on the Honda.  Everything else, including the lake house, is paid for.

That stuff is all pretty static.  What I’ve been paying the most attention to is our income vs expenses.  I’ve always prided myself on keeping our expenses at about 50% of our after tax income (Including after 401K contributions).  For those of you that have been around here awhile you’ll notice that there is an asset up above that I haven’t been completely up front about.  The Honda CRV was purchased about 6 months ago.  I broke every rule in the book and bought it new because my wife wanted it.  She is very good about not spending lots of money and doesn’t purchase lots of clothes, shoes and all those other things that some of the more “high maintenance” wives would so I really didn’t mind buying this car, although we could have saved ourselves a bit if we’d simply followed the basic rules of buying a car.  (using a broker, buying used etc etc).

Anyway, I opted to finance about $10K of the cost because I didn’t want to reduce my emergency fund.  I could have paid cash for the entire purchase, but I decided it was worth the monthly interest (at 4%) to keep a cash cushion.  Unfortunately that payment has pushed us to spending about 54% of our after tax income.  I’m no longer at my 50% expense limit and it’s really bothering me.  Yes, things are still rosy at our house financially but I’ve declared war on the balance of that car and am throwing a few thousand a month at it to wipe out the balance.  I’m looking forward to the day that I see our monthly expenses below the 50% mark.  I think we’ve got about 3-4 months to go.