Where did it all go?
January 12, 2009 made for an interesting and life changing day in my household. This day marked my last with my former employer – an employer with whom I had maintained a 12.5 year affair. In fact, this had been my lone employer for my entire adult life. The break-up was friendly, we parted amicably – buy-outs were offered to most of our… (tough habit) their North American workforce and after so many years on the road along with the thinly veiled signals conveyed by a buyout offering, my wife and I decided it was time to make a move. The money simply greased the skids so to speak.
So it is on a day like this, you begin to recall times during your shared history that previously seemed lost to the passage of time. Gee, I certainly was younger and thinner back then. I was also, at once smarter and less aware as well. Upon finishing grad school I was starting a dream job that would surely allow me to make my mark on the world. I would become wealthy and powerful – but in the good way.
Such hubris comes with the territory. Each spring future world-changers are paroled from learning institutions around the country. Some actually do impact the world but most grow numb and blindly become more grist for the mill.
So it was at this intersection of recall and reality, just as I’m about to step into our Get-out-of-Debt car that I asked myself, “What happened, Where did it all go?”
In June of 1996 I started a job paying in the mid 30’s. I earned regular raises during most of that time and ended with a salary considerably higher, but what became of those dollars? Had I paid attention to their paths in and out of my bank account or were they merely a flowing stream in which I once swam? I know that in recent times I’ve managed to dam up the flow of cash into my life and release downstream only what is necessary but that was not always the case.
So in true case study – and budget nerd – fashion, I turned to my beloved Excel spreadsheets determined to answer all the questions. Needless to say, I did not like all that I found.
Over the last 12 years my approximate spending has resembled the following:
· Taxes 30.00%
· Housing 19.00%
· Vehicles 8.00%
· Utilities 7.00%
· Food 4.50%
· Savings 3.00%
· Blow/Misc (planned) 3.00%
· Clothes 2.50%
· Student Loans 2.50%
· Wedding 2.50%
· Vacations 2.50%
· Furniture 2.50%
· Insurance 2.00%
· Unknown 11.00%
Clearly I am working with estimates here because I do not have 12 years worth of receipts. However, I did scan 12 years worth of Tax Returns and my recent budgets for my anchor points.
At first glance the numbers don’t seem too far from what one might expect but as with anything the devil is in the details.
I know that my vehicle expense is high – as both a percent and raw dollar because I’ve made the bad decision to buy a brand new car on one occasion, a brand new motorcycle on another, a high priced used car once, and a high priced used motorcycle at another time – and I carried payments around with each of these purchases.
My furniture expense does not jump out, but I’ve never paid with straight cash – always financed
Savings is low with no real reason to explain
But the most glaring is the Unknown column. On one hand 11% does not sound too bad until you realize that it represents roughly half of my housing budget for 12.5 years. I also know that 11% represents very nearly $100k in real after tax dollars. Wow, now that’s scary. Finally, I know that I’ve managed my budget pretty well over the last 5 years meaning that this leakage happened early in my career when my earnings were much lower. This might more than double the leakage as a percent of my early earnings and surely these were dollars that could have been put to better use – for example, I finally paid off my student loans just last year after schlepping them around for more than a decade.
So clearly a message of this exercise is to pay attention to your spending. Perhaps my 11% gap is small relative to your situation but it is still a considerable hole in the bucket. It also represents an amount that most certainly would have allowed me to achieve at least one of the visions I entertained upon leaving school – that of not driving a Get-out-of-Debt car 12 years later on the last day of my then dream job!