Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 07-07-2010, 12:22 PM   #141
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,532
Status update:

I finished up my first quarter's worth of data. The results were surprising to me in that we didn't spend as much as I assumed we would spend. Taking out expenses that I likely won't incur during ER, and adding in some lumpy annual expenses that I know will happen (but haven't happened yet), I find that we are only spending roughly $20,000 a year on basic living expenses.

That figure includes some very hefty technology purchases that I don't foresee making as frequently in ER (or the remainder of the year). But we really didn't have any major appliance expenses nor did we have any major home expenses (like new HVAC, new roof, paint the house, etc).

Our cash tracking was very accurate. $4 went unaccounted during the quarter. It is accurate mostly because we don't have a lot of cash transactions - probably 3-4 per month.

I ended up splitting the "Walmart"-type expenses, and allocated out clothing costs, automotive, "fun"/toys, home maintenance/repair, etc from the grocery/household expense category that comprises most of the walmart purchases.

In terms of time requirement, it takes about 30-45 minutes to copy/paste the credit card transactions and checkbook spreadsheet transactions into a temporary working spreadsheet, clean/format the data and then categorize it and paste it into the expense tracking spreadsheet. A little cumbersome, but it works. It goes a little smoother each month. Going to quarterly expense tracking wouldn't take 3x as long as monthly, so I may switch to that - only problem is I may forget what "Amazon $14.35" is for after 3 months. I also may spend another 30 minutes or so during the month entering in a random cash transaction and splitting up the "walmart" purchases into categories.

Overall, this was a good exercise and it will help me quantify spending in categories that I had been guessing at before. I think we are more conscious of our discretionary spending, since I know I'm going to be seeing a summary of the expenses at the end of each month and the numbers won't lie to me. I plan to stick with the expense tracking at least for a whole one year period in order to catch the seasonal variation in spending over the course of a whole year.
__________________

__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-09-2010, 12:39 PM   #142
Thinks s/he gets paid by the post
Bimmerbill's Avatar
 
Join Date: Jan 2006
Posts: 1,631
$20K ?? Does that include housing?
__________________

__________________
Bimmerbill is offline  
Old 07-09-2010, 01:01 PM   #143
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,532
Quote:
Originally Posted by Bimmerbill View Post
$20K ?? Does that include housing?
It does not include mortgage, but includes utilities, home repair/maintenance, lawn care/landscaping, taxes, insurance, etc. Basically what I'll be paying in FIRE with the house paid off.

It also doesn't include health insurance or dental premiums since those come out pre-tax and won't be subsidized in FIRE. Nor does it include child care expenses that partially go away in 1 month and would completely go away during FIRE. I keep track of all these expenses, just saying that $20000 a year covers our basic expenses besides health/dental insurance.

When I take my current spending, add a ~10% fudge factor, new car fund, add in likely health insurance and dental premiums, and a $12000/yr fun/travel expense, we get $43k a year in projected FIRE expenses.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline  
Old 07-09-2010, 01:08 PM   #144
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,532
I don't want to mislead with the $20,000 expense figure I cited. It doesn't include some expenses that we currently incur and other expenses that would increase in FIRE. It is just the core expenses that we will incur during FIRE to maintain our current standard of living (but before adding in some known expenses that will increase during FIRE).

I'm doing this math: [Total current expenses] - [Expenses that won't occur during FIRE] + [Additional Expenses we will incur during FIRE].

I actually didn't reduce our gasoline or auto maintenance expenses any, however I guarantee without the daily 50 mile round trip commute, DW won't be putting 12,000 miles a year on her car. That consumes roughly $1200 a year in gas alone that I didn't account for.

I'm tracking these expenses to give me a more informed estimate of what future FIRE living expenses will be.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline  
Old 10-08-2010, 10:39 AM   #145
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,532
UPDATE:

6 months into the expense tracking experiment, things are going great!

I just finished getting September's expenses into the expense tracking spreadsheet last night. So now I have six full months of expense data that covers a number of "lumpy" one time expenses.

Our core or bare bones expenses are running at an annualized rate of $19000 a year after 6 months of data (for our family of 4). Major expenses not included in this figure (for a variety of practical and personal reasons) are mortgage (that will be paid off), student loans (may be paid off or reconfigured so that nothing is due), health and dental insurance (health may be free due to government subsidies in 2014), vacation expenses, car replacement, and educational expenses. Due to the exclusions, that is why I call it barebones, but it also reflects roughly those expenses that will remain the same in FIRE. In establishing a true FIRE budget, we would of course add in all the pertinent spending that we plan but that I have excluded from the $19000 figure cited previously.

It's a good feeling knowing that we could fund the barebones expenses at a withdrawal rate of 3.5-4% given our current portfolio levels.

Of course the remaining mortgage debt, while small, is non-negligible. But it could be easily paid off by 2 years of unemployment for DW and I (should such a horrible event as a layoff for each of us occur ). So I guess we are technically FI if we were to be "fired" all of a sudden. Just got to run the score up a bit more before jumping off the gravy train. And get close to 2014 for some free/cheap govt health bennies!

On the fun side, our vacation/travel expenses are $2500 YTD and probably reflect 80% of what we will spend this budget year (ending March 2011). Our "barebones" budget includes a line item for entertainment/toys/fun/alcohol that I consider essential and non-discretionary, so vacations/travel are on top of the entertainment/fun category, and vacations/travel I consider truly discretionary.

In terms of the practicalities of my expense tracking, I have stuck with my original plan. Entering cash expenses as they occur (or shortly thereafter) into the tracking spreadsheet. Reconciling cash balance on spreadsheet vs cash in our wallets monthly and writing off a "cash" expense each month for unaccounted expenditures. This has amounted to $7 during the six month period. I copy/paste or download the CC statements each month and copy/paste my checkbook spreadsheet and then massage the data into my expense tracking spreadsheet. Still takes ~30 minutes to do incl. reviewing the results and QC. A lot of the time is figuring out what the transactions are for, or labeling them (ie 8 amazon.com purchases - what in the heck did I buy last month!!??).

So far expense tracking has been a successful endeavor and I think I will make it a permanent task in the management of our personal finances. I realize it would be great to have at least a few years of data to rely on to know exactly what we are spending in order to set a more precise budget for FIRE (acknowledging budgeting/spending will be rather imprecise ).

(FYI, I'm posting updates as much for my own benefit as for others' interest)
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline  
Old 10-08-2010, 10:58 AM   #146
Thinks s/he gets paid by the post
simple girl's Avatar
 
Join Date: Sep 2006
Posts: 2,505
I've been tracking our expenses very closely since January of this year as well. So far, we are running over budget by about $10/day. The areas where we are going over are groceries, dental expenses, electric bill, misc "cash" (haven't gone into detail on this category), car repairs and gasoline, gifts given to others, travel/vacation costs, "misc" entertainment fund (again, need to detail this out more next year), clothing, and eating out.

This has been an excellent exercise for us to do, and I will keep it up. We are able to identify the areas where we can cut back as well as those areas where we need to adjust the budget to reflect our true expenses more accurately. I am feeling much more confident estimating the amount of money we truly will need to FIRE.
__________________
simple girl
less stuff, more time

(49, married; DH 53. I am fully retired as of 2015 (well ok, I still work part-time but only because I love the job and have complete freedom to call off if I want to travel with hubby for work), DH hopes to fully retire 2018 when he turns 55 to access 401K penalty-free...although he may decide to do part-time consulting)
simple girl is offline  
Old 10-08-2010, 11:07 AM   #147
Thinks s/he gets paid by the post
Keim's Avatar
 
Join Date: Feb 2007
Location: Moscow
Posts: 1,128
I just bought Quicken and have been loving this aspect of the program. Makes analysis of expenses easy.
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
Keim is offline  
Old 10-08-2010, 11:28 AM   #148
Thinks s/he gets paid by the post
simple girl's Avatar
 
Join Date: Sep 2006
Posts: 2,505
Quote:
Originally Posted by Keim View Post
I just bought Quicken and have been loving this aspect of the program. Makes analysis of expenses easy.
I have Quicken and love it, but we put almost all of our expenses on the credit card (pay in full each month), so it doesn't help us fetter out the details of those expenses. Also, we have other outflows I don't consider in our budget (a rental mortgage we won't have at time of FIRE), and so it includes things I don't want included...making the analysis "messy" for our situation. Plus, I also feel like having to enter each expense by hand into an excel spreadsheet increases my awareness of our spending habits much more.
__________________
simple girl
less stuff, more time

(49, married; DH 53. I am fully retired as of 2015 (well ok, I still work part-time but only because I love the job and have complete freedom to call off if I want to travel with hubby for work), DH hopes to fully retire 2018 when he turns 55 to access 401K penalty-free...although he may decide to do part-time consulting)
simple girl is offline  
Old 10-08-2010, 12:19 PM   #149
Thinks s/he gets paid by the post
Keim's Avatar
 
Join Date: Feb 2007
Location: Moscow
Posts: 1,128
Mine does fine with the CC expenses.
__________________
You can't enlighten the unconscious.
But you can hit'em upside the head a few times to make sure they are really out...
Keim is offline  
Old 10-08-2010, 12:37 PM   #150
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,948
I'm spending the same amount as last year, except for

(1) bought my brand new Toyota Venza in cash last January (had been saving for it for ten years), and

(2) spent another $10K or so to fix up my house and landscaping so that it will hopefully sell (but if/when it does, I'll be buying a cheaper home up north which will more than reimburse me for this)

I don't have any idea of how to consider these expenses. I think I'll just congratulate myself for staying within my usual basic spending and consider these to be one-time expenses that were already taken care of.

Despite these two big "oddball" expenses, today I have a substantially larger nestegg than I did on the day I retired. I suppose that is due to the economic recovery.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now  
Old 10-08-2010, 01:16 PM   #151
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
We started living on our (reduced) retirement budget on July 1st and so far so good. Expenses are down about 15% from last year. The reduced budget inspired me to cut some recurring expenses that had outlasted their raison d'etre. We bought a new mattress and a new iPad for DW. The county sent us a whopper of a tax bill. But we managed to stay on budget nonetheless.
__________________
FIREd is online now  
Old 10-08-2010, 01:51 PM   #152
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
bbbamI's Avatar
 
Join Date: Dec 2006
Location: Dallas 'burb
Posts: 9,039
So far this year we've spent 1.76% of the balance of our portfolio at the beginning of the year. T Al's spreadsheet came in mighty handy...

I don't want to go over 3%....mmmm, looks like I won't....fingers crossed...
__________________
There's no need to complicate, our time is short..
bbbamI is offline  
Old 10-08-2010, 02:38 PM   #153
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,901
So far this year, I'm pretty much on par. Categories that I spent more than budgeted are medical (got some unexpected dental expenses this year) and gifts (to help care for a friend's four legged friends -- gotta spoil them "kids"). But I've spent less in some categories to balance that out. Just had a discussion about budgeting with someone the other day. I explained, it's kind of like flossing. At first, it seems very cumbersome and tedious but after a while it's second nature. Plus, there's a big advantage to sticking to it.
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is online now  
Old 04-11-2011, 12:12 PM   #154
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,532
Thread Update:

I completed my one year trial run of detailed expense tracking. Success! I kept track of all expenses throughout the year. I stuck with my original plan more or less, and updated my spreadsheet mainly at the end of each month using copy/pasted credit card statements and copy/pasted checkbook spreadsheet entries (supplemented with an occasional manual entry for cash expenses or to split a big walmart/target purchase into multiple categories). The DW was receptive to this tracking effort, and diligently (with a roll of her eyes) reported to me all cash expenses more than a buck or so.

After one year, I had $10 in "cash" expenses that went unaccounted for. Otherwise, everything was categorized into some spending category.

For the curious voyeurs, my "essential" or "bare bones" spending ended up at $22,000 for the year and when I lump in some discretionary spending (mainly vacations) it was $26,000 a year. This is for a family of 4 (including 2 young children).

Not included in these quotes of annual expenditures were mortgage payments (they go away if I choose to pay off the mortgage), child care expenses (not necessary when I ER), and student loan payments (during ER, I think I will qualify as low income so as to avoid paying most or all of these loans).

My goal in tracking detailed spending was to figure out what I would be spending during ER on the basics. The answer there was $22000 a year. Then I need to subtract out some work related expenses (mainly auto/gas) and add in a bunch of stuff like health insurance (which may be cheap/free come Jan 1 2014), more fun/discretionary spending/travel funds, and amortization of big capital expenses like auto purchases, roof, a/c, etc.

Going forward, I'm committed to tracking my expenses in detail like this long term. It will help me refine my spending target for ER, and also to see "where is the money going". Not that we are spendthrifts, but there is always the chance that some spending will grow out of control.
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline  
Old 04-11-2011, 12:56 PM   #155
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,456
Thanks for the update, Fuego. Oddly, I just restarted this practice in our household, including the eye-rolls, with the same intent of recognizing patterns of spending and monitoring the categories we know are out of whack with our goals.
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline  
Old 04-11-2011, 01:00 PM   #156
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Quote:
Originally Posted by Sarah in SC View Post
Thanks for the update, Fuego. Oddly, I just restarted this practice in our household, including the eye-rolls, with the same intent of recognizing patterns of spending and monitoring the categories we know are out of whack with our goals.
Sarah, can you tell us more about the eye rolling part?

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline  
Old 04-11-2011, 01:13 PM   #157
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,532
Quote:
Originally Posted by Sarah in SC View Post
Thanks for the update, Fuego. Oddly, I just restarted this practice in our household, including the eye-rolls, with the same intent of recognizing patterns of spending and monitoring the categories we know are out of whack with our goals.
I hope your DH is giving you the good-natured, appreciate eye rolls that I get from DW. Or at least that is how I interpret them.

Do you use a spreadsheet or Quicken?
__________________
Retired in 2013 at age 33. Keeping busy reading, blogging, relaxing, gaming, and enjoying the outdoors with my wife and 3 kids (5, 11, and 12).
FUEGO is offline  
Old 04-11-2011, 01:28 PM   #158
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,456
I'm getting those DH/DW exasperated eye-rolls, yes. Ha, I'm pretty sure that you are a veteran of the eye-rolling wars, even though you are blissfully unmarried!

And how's this for old school, Fuego: I'm using the 3x5 notecard method advocated long ago by Joe Dominguez. Yep, I did a re-read of YMOYL a week or so ago and started thinking about that whole "spending in alignment with your goals" stuff again.

But I also use Quicken, this is in addition to keeping up with the receipts and such--what I want to capture is what we spend cash on, and also make us stop and think about our daily purchases a bit more and spend less "automatically" on things.
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline  
Old 04-11-2011, 01:30 PM   #159
Full time employment: Posting here.
 
Join Date: May 2007
Posts: 530
Quote:
Originally Posted by FUEGO View Post
Thread Update:
Not included in these quotes of annual expenditures were mortgage payments (they go away if I choose to pay off the mortgage)...
This is probably obvious but don't forget that the property tax and escrow (for homeowner's insurance, etc) portions of your mortgage payment don't really go away. When I first started planning to pay off my mortgage and RE, I managed to forget those little tidbits!
__________________
ksr is offline  
Old 04-11-2011, 01:32 PM   #160
Thinks s/he gets paid by the post
simple girl's Avatar
 
Join Date: Sep 2006
Posts: 2,505
Quote:
Originally Posted by FUEGO View Post
Thread Update:
For the curious voyeurs, my "essential" or "bare bones" spending ended up at $22,000 for the year and when I lump in some discretionary spending (mainly vacations) it was $26,000 a year. This is for a family of 4 (including 2 young children).

Not included in these quotes of annual expenditures were mortgage payments (they go away if I choose to pay off the mortgage), child care expenses (not necessary when I ER), and student loan payments (during ER, I think I will qualify as low income so as to avoid paying most or all of these loans).

I'm quite impressed at your spending for a family of 4. I too, continued to track our spending all through 2010, and we ended up spending more than I had estimated: total for the year almost $47K for just two of us. If I back out what we paid for rent/mortgage, the total comes to $39K...comparing this to your $26K, well, wow, let me just say I don't know how you do it! We are pretty conservative in our spending. My hat is off to you!
__________________

__________________
simple girl
less stuff, more time

(49, married; DH 53. I am fully retired as of 2015 (well ok, I still work part-time but only because I love the job and have complete freedom to call off if I want to travel with hubby for work), DH hopes to fully retire 2018 when he turns 55 to access 401K penalty-free...although he may decide to do part-time consulting)
simple girl is offline  
Closed Thread

Tags
budget, expense, track


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
What budgeting tools and methodology do you use? ProspectiveBum FIRE and Money 61 08-31-2009 11:16 PM
Simple Expense Tracking kjpliny FIRE and Money 10 10-11-2007 05:24 PM
Drugstore.com offers eligible HSA expense tracking... mykidslovedogs Health and Early Retirement 1 08-16-2007 11:30 AM
budgeting for deductibles lazygood4nothinbum FIRE and Money 11 06-21-2007 02:37 PM
Budgeting for and during ER wildcat Other topics 64 06-10-2005 05:09 PM

 

 
All times are GMT -6. The time now is 07:50 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.