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Budget Performance
Old 12-18-2017, 09:08 AM   #1
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Budget Performance

End-of-year is a good time to see how I'm doing on my budget.

Since I retired in June of 2016, the last vestige of my pre-retirement finances was my 2016 income taxes in early 2017. Come February 2018 I'll be able to produce a "clean" 12-month running average of retirement expenses.

Peeking ahead, it looks like I'm actually within a few hundred dollars of my budget!! Lots of individual line items turned out differently, but I always knew there would be unexpected gains and losses.

Interesting note, the categories Food and Health Care (which includes insurance premiums) are running neck-and-neck for the #1 position. The next three categories are Automobiles, Utilities and Leisure. After that, Housing fell just below Gifts. I finished buying the big stuff for some renovations more than 12 months ago and now I'm seeing the benefits of having no mortgage.

Anyone else doing a year-end check-up on your budget? How'd you do?
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Old 12-18-2017, 09:22 AM   #2
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I keep track continuously on a percentage basis.
As of now, 96% of the year has gone by and we've spent 82% of our budget.

That's great, because next year will have some extra large expenses (new car, etc.)
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Old 12-18-2017, 09:43 AM   #3
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Last year we overspent our budget by a small amount.

So this year I decided it was time to increase the budget! It had been at the same total $ since 2010.

No worries this year - we are well under. It doesn't look like we'll be above last year's spending either.

Our budget is a loose gauge of what me might (and could) spend and is mainly useful for planning as well as setting limits for gifting and charitable donations. Large one-off items aren't included as we dip into savings for those.
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Old 12-18-2017, 09:54 AM   #4
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I was just looking at mine and my expenses crept up. Planned on saving $1375 month (40% of income) but that didn't happen. Will use GD's laptop to take a look at where that other 375 month went.

Cursory look on phone shows pluses & minuses:
- Started year at barely in 7 figures, now solidly there
+ 2 long trips down (Belgium / Luxembourg / Amsterdam & South Korea / Japan) and just paid off a 3rd (Australia 2/26/18-3/11/18)
+ still no debt
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Old 12-18-2017, 10:46 AM   #5
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I blew the budget for the first time ever in my ten year retirement . I was at 5% instead of 4%. New air conditioner including new ducts and moving the system, painted the house , went to Europe for three weeks , Took my daughter, SIl and grandsons to disney world for a week ( the real budget buster ) and paid for a trip to Cuba .I also bought a new car but that money came from my surplus that has been building .Next year back to budget !
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Old 12-18-2017, 10:54 AM   #6
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Using the 4% rule and adjusting for annual inflation, we should have withdrawn (spent) 5% of our initial portfolio amount this year. We will be very close at 4.7%.
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Old 12-18-2017, 11:44 AM   #7
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Oh yes, we shoot for 60K/year now, includes everything, property taxes, HC, car insurance and so forth. We will be 1 or 2K over this year. I'm glad I finally learned how to budget. When with mega corp, DH and me pretty much watched the spending, but never had a solid budget. Put lots of $$ away and saved, but did not keep track on paper.
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Old 12-18-2017, 12:30 PM   #8
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While I do track expenses by category, my approach is to withdraw 3% and as long as I keep to that, I don't care if categories are over or under. I would have had a nice surplus this year if I hadn't funded over $10K of travel expenses for next year but I stayed within 3% so I'm happy. You can't take it with you.

What's been interesting is the change in spending since DH died in late 2016. Health insurance premiums down by $2,600 (he was on Medicare), alcohol down 40%, utilities down by $1,000 (switched from full cable package to Google Fiber plus Netflix plus Magic Jack), out-of-pocket medical down $2,400. Groceries down only about 25%, which surprised me. Travel way up, clothing up 80% (from $300 to $540!).
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Old 12-18-2017, 12:31 PM   #9
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Quote:
Originally Posted by braumeister View Post
I keep track continuously on a percentage basis.
As of now, 96% of the year has gone by and we've spent 82% of our budget.

That's great, because next year will have some extra large expenses (new car, etc.)
Similar story here... 2017 withdrawals + taxable account cash dividends + decrease in checking/savings/credit card accounts suggest that we'll spend about 85% of our target spending.... and that spending includes DD's wedding which was not in the targeted withdrawals.... all good because we are planning on a new kitchen next year.
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Old 12-18-2017, 05:22 PM   #10
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Should be in the low 3% range this year. But next year the kitchen gets a remodel.
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Old 12-18-2017, 06:10 PM   #11
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We track each month's expenses, so no big year end surprises, but we have gone over budget a couple thousand this year and substantially on travel, lower on home expenses and medical (knock on wood). The travel overage is all for next year's February trip, so no biggie. We are still quite a bit ahead of where we thought we would be on assets, so we aren't too worried, unless we get used to spending freely. If not now, when??
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Old 12-18-2017, 07:02 PM   #12
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So far my best estimate says I'll be spending about $345 less this year than I had planned. So, I'm happy about that, and surprised that it is so close. WR will be about 1.6% and I will probably use the excess next year for buying the new SUV I am thinking about getting.

Big expenses this year were not too bad, and included two dental implants, and house upgrades. I had my front porch columns replaced with beautiful new ones. Also we had a gateway made in the fence between our back yards.
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Old 12-18-2017, 07:14 PM   #13
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This year we blew out any spending plans by remodeling a condo and buying a new rental/beach house on the Jersey Shore and having to furnish it. We also bought a car and paid an attorney for estate planning. Spoiling our new grandchild and funding a college savings plan took away some cash too. Oh, and letís not forget buying funeral planning and the purchase of cemetery plots. It was an expensive year. We look forward to our quarterly look at our net worth to see if the stock market gains kept up with our excessive spending. The Jersey Shore house will hopefully provide some income this year.
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Old 12-18-2017, 07:57 PM   #14
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So far living on 4% of portfolio and taking all of the 4% from my taxable account as I am delaying SS and on the ACA Healthcare. Even with the 4% coming from one taxable account, the account is growing instead of getting to principle. I know this could change at any time, but it sure is nice for now. I did a Roth conversion, just enough to pay no taxes on the conversion this year. I am getting ready to stretch the budget a little in 2018 with 2 months in Florida staying warm and playing golf.
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Old 12-18-2017, 08:04 PM   #15
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I overspent the budget by 3% (plus a car, but I count that as reserve, going start running my budget like my HOA does, the "yearly" budget, plus the big ticket items being part of the "reserve" so when I buy those, just take out of the reserve, no impact to the yearly budget.
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Old 12-19-2017, 04:36 AM   #16
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I had a "budget" for this first year of RE, but it was really just an estimate, as our WR is quite low and we can spend more if we like. The estimate was 1.3% WR plus my modest pension and we will have spent 1.4 of a larger pot with the market this year. We also replaced our two cars with one new one, the cost of which I will spread out over several years in my calculations.
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Old 12-19-2017, 05:16 AM   #17
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For this year it looks like my planned vs actual budget will be within a a few hundred dollars or so. Not a big deal. I way over on my medical budget line item for the year. That was offset by the savings of missing out on a nice vacation due to post-op recovery time-line. Used my Management Reserve to help out DD with down payment on new car.

-----

In the almost 7 years since I FIRE'ed my actual expenses for each year have been all over the place from my "target". Some years $10K under my planned/budgeted, some years $10K over. Some years just about right on.

Going over budget has been the years when I get double or triple whammy of unplanned expenses, going under my budget...well that would be no (or no significant) unplanned expense.

Just an old w**k habit, I always start the year an 8-10% "Management Reserve" line item in my budget.
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Old 12-19-2017, 05:21 AM   #18
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We also replaced our two cars with one new one, the cost of which I will spread out over several years in my calculations.
+1 We spread new car costs over 5 years.

Overall, we are under budget by about 4%. Alsmost all of it is because we came under budget for travel related expenses this year.
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Old 12-19-2017, 07:30 AM   #19
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2017 was my last work year and I spent $15K on home repairs and improvements, about 2x the average. Spending in other categories is similar to previous years. Spending will increase in 2018 as I get the house ready for sale and replace an old car but I have savings to help cover these planned items. I donít see myself having a normal budget until 2019.
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