Friday, February 12, 2021

COVID-Era Spending Changes Revisited

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That Vince boiled cashmere funnel neck sweater I like so much is finally on sale in pretty much all of this year's colors, including the medium blue color I'm somewhat tempted by. Many of their other sweaters from this fall/winter season are also on sale, including this cashmere donegal turtleneck. (Though alas, I don't think current sale prices are better than what was available during the most recent Black Friday/Cyber Monday sale period.) 

Back in August, I wrote about how COVID-19 social distancing and lockdowns changed my spending. Now that K and I have spent quite a few more months living a socially distanced lifestyle - it's been almost a full year now - I figured I should update my analysis to see if my main prediction - that "it's likely most of my spending changes from the [first] five months of COVID-19 lockdown could persist through the end of the [calendar] year" - turned out to be true. This post also serves as a sort of "spending year in review" for 2020. 

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Now that I have all my 2020 You Need a Budget ("YNAB") data to work with, I've adjusted the methodology for this analysis. Last time, I compared my average monthly spend for the entirety of 2019 with my average monthly spend in the full months for which I had data available from after COVID shutdowns started, namely April through July 2020. This time, I feel like comparing my spending for each full year - 2019 versus 2020 - makes more sense, even if January through mid-March 2020 weren't affected by COVID shutdowns. When averaged out over the entire year, the extra non-COVID era-compatible spending - e.g., at restaurants - from January and February 2020 is fairly negligible. 

This time around, I've also modified the list of spending categories omitted from the analysis. Like last time, I'm still leaving out my student loan payments and charitable contributions. Unlike last time, I'm now including my taxes (which increased slightly in 2020, but by a relatively negligible amount when averaged out over the entire year) and gift-related spending for my friends and family, the building staff at my apartment, and the non-attorneys at my workplace (which stayed about the same between 2019 and 2020). 

With regards to my student loan payments, I've ratcheted up the amount I pay each month significantly over time - for instance, I was at $4,800/month last August and am now at $5,100/month - so it'd throw off the analysis to include them. It's also a spending category I could pull back on significantly, if needed, because my minimum monthly payment after refinancing is only ~$1,600/month. And if all goes well, by August or September of this year, I'll be completely done repaying my student loans for good and will never need to worry about them again! 

As for charitable giving, I omit it from this analysis because it's so discretionary. Before 2020, I was admittedly not great about making charitable giving a regular part of my monthly budgets. In earlier years, particularly when I still had a negative net worth of five or six figures - recall I only hit "net worth zero" for the first time in April 2019 - it was something I struggled with because the hours I spent on pro bono work were clearly so much more valuable than any amount of money I could hope to give at the time. Now that I'm in a much stronger financial position than before, however, I can give more regularly (~$2,630 total last year, all from after the COVID shutdowns began in March). 

When I calculated my COVID-driven spending changes last August, I found I was spending an average of ~$1,300/month less than usual. This time around, when comparing my full-year spending for 2019 and 2020, I saw I spent an average of ~$980/month less than in 2019. So that's approximately $320/month less in COVID-driven reduced spending than I originally calculated back in August. (Keep in mind, though, that charitable contributions were omitted each time, so both measures of my "savings" from COVID social distancing should arguably be reduced by the ~$200/month I donated last year.) 

So what changed? Where did that other $320/month in reduced COVID-era spending or "lost" COVID-driven savings go? 

Food spending is definitely the main area where my average monthly expenses have creeped up significantly since last August. It probably accounts for the largest chunk of the $320/month in "lost" savings. 

While social distancing, we've been cooking all our meals at home - no restaurant food even from takeout or delivery - so all our food spending is on groceries. We get some groceries in-person, primarily from Trader Joe's - it's the most affordable grocery store option in my immediate neighborhood - and we also increasingly rely on grocery delivery services as the pandemic drags on. Grocery delivery-wise, we use a local small business, Southeast Asian Food Group, for Asian vegetables and pantry staples and we also use the fairly expensive NYC-based Freshdirect for western-style groceries. Both options are definitely more expensive than relying solely on Trader Joe's, particularly once delivery fees and tips are factored in. Occasionally, we'll also make a delivery order for special treats from, say, Murray's for fancy cheeses; Nomz for pre-made, frozen noodle soups; or from Milk Bar or See's Candies. 

I've always been extremely cagey about exactly how much I actually spend on food because I find the number too embarrassingly extravagant to report. Because I live in NYC, both groceries and restaurants were already on the more expensive side of average compared to most other parts of the US. Furthermore, in pre-pandemic times, my job - biglaw and then biglaw-ish private legal practice - sometimes became so busy that even the prospect of cooking a Blue Apron or Hello Fresh meal in the evening could drive me to actual tears and managing a subscription to such services could become a serious mental burden. In other words, before the COVID shutdowns started, we ate out - whether via delivery, takeout, or sitting down in restaurants - for almost every meal. We barely cooked three or four times a week! 

As reported last August, after we started cooking every meal and even while we were already starting to use grocery delivery services somewhat frequently, I was saving at least ~$450/month on food expenses compared to pre-pandemic times. These days, I'm definitely saving less, though I'll be coy about exactly how much less. 

Our groceries have gotten more expensive in large part because we've been going out in-person to Trader Joe's less and less. At the start of the COVID shutdowns, we went approximately once every four to five weeks, and now it's more like once every six to eight weeks. Accordingly, we increasingly rely on more expensive grocery deliveries since we're not shopping as much in-person. (Among other things, we originally weren't buying meat anywhere but Trader Joe's, and now we buy meat from the more expensive Freshdirect somewhat regularly.) I've also gradually been buying more special treats more frequently to try and make us feel better as the pandemic drags on, some of which are unusually expensive, including an extra-fancy highly seasonal cheese or two

Fountain pens also account for a not insignificant share of the $320/month in "lost" savings, though nowhere near as much as the food expenses. I only discovered the fountain pen hobby last July, and while my participation had already escalated rather quickly that first month - with at least ~$240 spent - it picked up even more momentum later in the year! 

As I became more experienced with using fountain pens, I ended up jumping into getting two discounted Lamy 2000s, a fairly expensive pen that was still ~$140 to $160 each at the sale price. And I've also bought other pens - though typically far more modestly priced - as well as quite a few more bottles of fountain pen ink because I love being able to use a wide variety of colors.  

So far in 2021, I've chilled out considerably when it comes to new fountain pen and ink purchases. I have been buying other stationery: in January, I started trying out washi tapes and stickers in my bullet journal and other notebooks for the first time. But that's a far more affordable habit than new fountain pens or ink. So I expect to "recover" a good amount of the share of "lost savings" caused by fountain pen-related purchases. 

Miscellaneous home goods, paper products, and PPE, which I didn't flag as a specific category of changed COVID-era spending behavior in my previous post, also account for some of the spending changes between 2019 and 2020. (Though because my increased spending in these areas had started by last August, I'm not sure these categories account for any of the "lost" savings.) 

Now that we cook every meal at home, we've purchased many small items for our kitchen that we would otherwise have dragged our feet on indefinitely. Once Lysol or Clorox wipes were back in stores a few months into the pandemic, we stocked up five or six containers' worth, which would normally be a two year-plus supply for us in pre-pandemic times, but might only last a few months now. PPE - mainly just face masks, though we also ordered face shields we haven't yet used - are also a completely new COVID-era spending category for us. Toilet paper, other paper products, and certain other supplies cost us more now. I used to be able to order everything from Target, but they've often paused shipping on high-demand items like hand soap or toilet paper throughout the pandemic. I typically rely on Staples or Freshdirect for such items now, both of which are more expensive. 

This year, I may end up spending a bit more than usual on items for the home. I started picking up even more new things for our kitchen in January, and like JENKR, I find myself in a bit of a "nesting" mood and interested in yet more things to make life at home more comfortable. I occasionally find myself thinking about ultra-fancy cookware - the new Le Creuset "Agave" color is, in my opinion, their best teal yet, noticeably richer and deeper than their "Deep Teal" shade - though I think I'll refrain from any actual purchases. After all, I'm prioritizing my student loans right now, and also, we have no storage space for any more cookware. (That 12'' Lodge Cast Iron Skillet from January pushed us to our absolute limit, cookware storage space-wise!) And our IKEA or bargain-bin Macy's cotton sheets and duvet covers, all from 2017 or earlier, are really starting to show their age, so I sometimes find myself thinking about all those popular direct-to-consumer bedding brands. 

How has your spending changed due to COVID-era life? Did your COVID-era spending habits change over time last year? 

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