My personal finance journey – 2005

Yes that’s 2005, not 2014! I’m slowly working my way through my old financial records (more emphasis on slowly than working) to discover what I did with my money when I wasn’t paying attention. So speed your deLorean up to 88 mph or slip into a magical hot-tub if you’re fresh out of flux capacitors, and journey back to 2005 with me!

What’s gone before

I arrived in the US to work in Michigan at the beginning of the millennium with a carry-on bag for belongings and a small balance in a German bank account. I stayed in Michigan for the subsequent couple of years until 2004 when my job relocated to Alabama, so I went with it and bought both a house and a small car.

In 2005 I was living alone as Ms. DivLife was still getting her immigration application sorted out. I had a largely uneventful year enjoying the thrills that is “home ownership”. Work wasn’t too stressful for once as the major project I was working on had ended.

2005 year summary

Average Living Expense $ 5,017
Security Ratio % 0
Expenses % 89
Investments % 0
Savings % 11
Wet Worth $ -125,521

Living Expenses

This is represents both mandatory expenses (rent, utilities etc.) and discretionary expenses (movies, music etc.). I spent just over $60,000 in the entire year which is way more than I spend these days.

Security Ratio

The percentage of living expenses paid for by my dividend income portfolio. This number was easy to calculate as I had no investments.


I was living without any budget or financial plan and it shows – I spent almost 90% of my income which is awful! Aside from basic living expenses, I spent most of my income on ‘discretionary’ purchases – computing / electronics, movies, compact discs (remember those?). One of my larger purchases was a sofa set (which we still use nearly 10 years later) so that was one of my better uses of money!


I had no investments nor even the idea that investing was possible except for my contributions to the company’s 401(k) plan. I don’t include retirement accounts in these financial reports which is fortunate as I have no records about what my 401(k) was doing that year.


The fact that I managed to save even 11% of my income was more luck than judgment on my part. My ‘Savings’ consisted of a ‘high-interest’ savings account earning 0.55% interest at Chase bank.

My personal finance journey in 2005

The wet worth number is negative because it includes my mortgage debt but not the value of the house. However there’s still a largely upward trend to the numbers as I was regularly paying off my car loan and mortgage in addition to the 11% savings rate that I attained.

Here’s the long-term view, showing the progression from 2000 through to 2014 as I work to fill in the gaps in the middle.

Spending breakdown

Here’s a summary of my expenses in 2005. Due to a couple of missing bank statements (*), I have no idea on how I spent about $8,000 dollars that year, so I cleverly named that spending category “No Idea”.

Home: Mortgage 11,959.38
Electronics 8,532.19
No Idea 8,199.23
Car Payment 7,732.32
Home Improvements 5,151.62
Groceries 4,525.93
Business Trip 1,631.79
Travel 1,565.49
Home Phone 1,246.15
Dining Out 996.24
Utilities: Electricity 983.46
Mobile Phone 928.92
Car Insurance 908.70
Gasoline 773.96
Medical 713.53
Miscellaneous 667.22
Homeowners Association 600.00
Movies 589.55
Utilities: Water 530.02
Other 1,962.48

It’s a little alarming to see the “Electronics” and “No idea” categories ranked second and third highest – these are what I now call discretionary expenses as they represent “nice to haves”. I’ve since managed to curtail upgrading my PC every year with the latest hardware.

I suppose in hindsight it makes sense that Home Improvements was fairly high as I had to buy some furniture after buying the house as I had almost none in the apartment I rented before. Although I only ended up with a bed, dining table, chest of drawers and aforementioned sofa – I won’t be getting any calls from Martha Stewart to come view my interior design skills.

The Groceries category probably includes a lot of CDs and DVDs as I grouped any spending in my bank statement from Walmart as Groceries. I’m fairly sure I was buying one or two DVDs a week there.

The Others categories is a collection of everything else to simplify the diagram. It includes Video Games ($400), Cash ($300), Books ($300), Car Service ($240), Tax Filing ($210), Gifts ($150), Clothing ($135), Music ($100), Home Repair ($60), Utilities:Gas ($50) and Bank Charges ($38).

About the year in 100 words

January: 5 million people start the new Year homeless after the Tsunamis at the end of 2004. February: YouTube was founded. April: Pope John Paul II dies, Prince Charles gets married and the Airbus A380 makes its first flight. May: The identity of Watergate’s Deep Throat is finally revealed. July: London was attacked by terrorists killing 52 people. August: Hurricane Katrina makes landfall in the US with over 1,836 deaths. November: A British man is reportedly the first to be cured of HIV and the first face transplant is performed in France.

Business news from 2005

Interest rates increased again over 2004 levels to 3.75%. The US economy grew at 3.3 %, a slight reduction from the previous year despite the impact of Hurricane Katrina. The S&P grew 3%, the Dow Jones lost 0.6% and the Nasdaq gained 1.5%.

Some of the larger corporate mergers this year: Citigroup [C] acquired MetLife, Bank of America [BAC] acquired MBNA (the nation’s second largest bank), eBay [EBAY] acquired Skype, Cisco [CSCO] acquired Scientific Atlanta, Seagate [STX] acquired Maxtor, Proctor & Gamble [PG] acquired Gillete, Whirlpool [WHR] acquired Maytag, Adidas [ADR] acquired Reebok and SBC [T] acquired AT&T but continued using the AT&T name.

Largest companies in 2005

Here are the ten largest companies in 2005 by market cap.

Rank Change Company Ticker Market Cap ($B)
1 General Electric GE 382 (+28%)
2 +1 Exxon Mobil XOM 380 (+44%)
3 -1 Microsoft MSFT 262 (-4%)
4 +1 Citigroup C 234 (-10%)
5 +4 British Petroleum BP 221 (+26%)
6 Wal-Mart WMT 212 (-18%)
7 NEW Royal Dutch Shell RDS.B 210
8 NEW Johnson & Johnson JNJ 199
9 -5 Pfizer PFE 195 (-25%)
10 NEW Bank of America BAC 178

HSBC, Intel Corporation and AIG lost their places in the list, replaced by newcomers Royal Dutch Shell, Johnson & Johnson and Bank of America. Exxon overtook Microsoft to claim the number 2 spot.

(*) No bank statements were intentionally destroyed in the making of this report – I’ve just managed to lose them in the last 9 years.


Quote of the day

Security depends not so much upon how much you have, as upon how much you can do without.

10 thoughts on “My personal finance journey – 2005”

  1. I really enjoyed this overview. It’s not often someone provides an in-depth analysis of their previous spending habits like you have done here. No point worrying about the past as you could have still been heading down that same path as before instead of taking responsibility for your financial future like you are. Great stuff.

    I’m looking forward to the following updates to fill in the gap.

    Mr. Captain Cash

    1. Hi Mr. Captain Cash,

      I’m glad you enjoyed the post. Looking back at prior years gives a great contrast to how I’m managing money now. I’m even much happier building a path to financial independence than I was building a DVD collection!

      Have a great Christmas and wishing you every success in the New Year!

  2. This is a fascinating overview. I think my report would show a really similar picture, except without the savings part. It’s kind of embarrassing that we were so ignorant in days gone by, of only we could be had a lesson from our future selves, eh?

    At least we can look back and say, no way, I’m not making that mistake again! We have our whole lives ahead of us to make sound decisions.

    I’m curious though, what promoted you to go back 9 years and read through everything?

    1. Hi M,

      Definitely! Learn from the past, live in the present and look to the future. For me the most embarrassing thing is that I knew about budgeting back then; I just didn’t really care.

      And why I’m doing this is a great question! There are several reasons – one is to see what I could learn from previous mistakes (being charged for not paying bills on time, incurring bank fees and not reporting duplicate transactions on my debit card that look like errors). I think it’s useful to show that I didn’t manage money all that well in the past and to contrast that with what I do now.

      Plus I more or less started from scratch here in the US in 2000 and kept most of my financial statements, so documenting my progress from the start of the new millennium made sense to me. I have many folders of old receipts and statements that I really don’t need to keep but I’m a bit of a pack rat so I’ve been sorting through them as I do this and scanning some to keep electronically.

      Best wishes,

  3. That’s a nice report. Provides a good view into our mindset from years ago and this will definitely help to learn from the past.
    The top 10 companies is an interesting list. I wonder how many have actually increased their market cap in 10 years since then, let alone being in the top 10.

    1. Hi DGJ,

      Five companies (MSFT, XOM, JNJ, WMT & GE) remain in the list now – they’ve all increased in value with the exception of GE which has dropped 8 places and lost more than $120B since 2005. Apple and Google are two mainstays of the top ten now that weren’t present back in 2005. Apple only entered the top-ten list in 2010 and Google in 2014.

      Thanks for stopping by and I hope you had a great holiday!

      Wishing you a happy and prosperous New Year,

    1. Hi DFG,
      I’m hoping things will go faster once I reach 2009 when I had more electronic records but for now it’s slow going to scan and reconcile statements. It’s interesting and somewhat therapeutic though so I don’t mind!

      Hope you had a great Holiday and best wishes for a happy and wealthy New Year!

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