I'm generally a pretty big fan of transparency, and one way I try to promote this is writing up our finances every few years ( 2022, 2020, 2018, 2016, 2014). This is also useful to me: putting things into a form where others can understand it is pretty good for getting myself to really understand it!
This post uses the same approach as last year, which is almost the same as before then. Numbers are monthly, based on 2023 spending:
- Donations: $6.2k (48% of 2023 adjusted gross income)
- Taxes: $3.4k
- Income tax: $1k
- State tax: $400
- Social Security tax: $900
- Medicare tax: $200
- Property tax: $800
- Childcare: $4.3k ($200/workday, three kids)
- Housing: $2.7k
- Note: this is tricky; see details below on how this is calculated
- One time expenses (all time)
- Purchase and all one-time expenses up through the 2022 update: $1.1M
- Major one-time expenses since the 2022 update: $19.4k:
- Bathroom renovation: $14.5k
- Porch roof replacement: $1.5k
- Replacement fridge: $1.8k
- Shower leak: $1.6k
- Ongoing expenses, covering the whole house including the tenants' unit:
- Electricity: $271
- Gas (Heat): $202
- Water/Sewer: $165
- Other: $165
- Rent income: $4.1k
- Retirement saving: $3.7k (all pre-tax)
- Other savings: -$6.4k (see below)
- Medical: $244 in pre-tax health insurance, ~$400 in post-tax co-pays etc
- Food: $732 (two adults, two kids, one toddler)
- Other: $1k
- Includes phone bills, taxis, car rentals, clothes, vacation, stuff for the kids, and other smaller expenses.
- Because we are no longer tracking our expenses to the dollar, the distinction between "Other" and "Savings" is an estimate.
Here's a summary of our monthly spending as a table:
| Category | pre-tax | post-tax | total |
|---|---|---|---|
| Donations | $0 | $6,167 | $6,167 |
| Taxes | $0 | $3,400 | $3,400 |
| Housing | $0 | $2,793 | $2,793 |
| Childcare | $0 | $4,275 | $4,275 |
| Medical | $244 | $400 | $644 |
| Food | $0 | $732 | $732 |
| Other | $0 | $1,000 | $1,000 |
| Savings | $3,750 | -$6,000 | -$2,250 |
Comparing to previous years and adjusting for inflation, still monthly:
| 2024 | 2022 | 2020 | 2018 | 2016 | |
|---|---|---|---|---|---|
| Donations | $6,167 | $35,870 | $23,614 | $14,750 | $16,053 |
| Savings | -$2,250 | $7,065 | $9,277 | $1,875 | $1,974 |
| Taxes | $3,400 | $15,217 | $5,301 | $5,188 | $5,447 |
| Housing | $2,793 | $4,022 | $3,892 | $3,438 | $2,461 |
| Childcare | $4,275 | $5,978 | $3,313 | $2,125 | $4,566 |
| Food | $732 | $748 | $904 | $938 | $303 |
| Medical | $644 | $773 | $784 | $933 | $417 |
| Other | $1,000 | $1,087 | $602 | $1,400 | $388 |
Here's this as a chart:
The biggest changes with 2024 are:
Donations are down a lot, because our income is down a lot. We're still going for 50%, though I'm still unsure whether this makes sense given that our workplaces are both altruistically funded.
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Savings are down a lot, showing up as negative above. A lot of this is an effect of the amortized approach I'm using for the housing accounting (more). Above I have our housing as $2,800/month, but a lot of that was effectively pre-paid through the downpayment, dormers, mercury spill, solar, heating upgrades, etc. and at the time was counted as 'saving'. While we did spend $14.5k on gut-renovating the first floor bathroom, that's the only really big expense in the last two years: our house expenses have slowed down a lot. And we refinanced in 2021, spreading our remaining payments out over another 30y and dropping our rate from 4% to 3.375%.
All together, if you just look at it on a cashflow basis (how much money left our bank account to deal with housing less how much came back in as rent) over the past two years we've averaged spending of -$442/month. That is, we've brought in enough from rent to cover the portion of our housing that we didn't pre-pay, with a bit left over. This is enough that, on a cashflow basis, we're not spending down our savings and are actually saving a small amount of money.
This all feels awfully messy, but I guess handling this kind of complexity is why accounting is a profession.
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Taxes are much lower. A more detailed view:
Most of what's going on is that we're earning much less money, and so pay less in tax. Our income tax was maybe $5k higher this year than it should have been because half our 2023 donations ended up formally in 2024. It's also interesting that Social Security tax is now a much greater proportion: this is because it's 6.2% of wages up to contribution and benefit base, which was $160k in 2023. Since it's only linear up to that cap, and for many years I was earning more than the cap, it's grown as a fraction of our taxes.
Housing is down a bit because rent has increased (partly Boston getting more expensive, partly renovating and renting out the backyard office).
Childcare is down a bit because we're now doing a nanny share. While the rates we're paying are a bit higher than the end-of-2021 numbers I used last time, each family now pays 2/3 of what they would pay if the nanny were watching only that family's children.
This is the first time I've included inflation in one of these posts, through a combination of it having a larger effect than before and my previously being too lazy to include it.
When I write this post in 2026, what do I expect to be saying?
I think there's a good chance we'll have switched from giving 50% to some form of salary sacrifice. If we do, our pay, donations, and taxes will all be a lot lower.
Childcare should be similar: the nanny share is working and I expect we'll do something similar at least until our youngest starts kindergarten in Fall 2026 (and will show up in the 2028 update).
I'd like to hope I have a better way of accounting for housing and savings in general and have gone back and redone all my previous numbers under the new system, but since that sounds like a ton of work I doubt I'll have done that.
I put about a 10% chance on AI, war, or other major events in this timeframe changing things enough that everything is weird in hard to predict ways.