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Re: Did Your Spending Surprise You?
Old 09-04-2006, 12:13 AM   #21
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Re: Did Your Spending Surprise You?

When I started ER, we thought we had a handle on living expenses, and college expenses. DW had kept records of varying detail for years. But when I started adding things up right after ER, something was wrong. Expenses were actually running quite a bit higher. I took it all over, and set up my own system.* Just excel spreadsheets. After the first year of ER, I had enough solid data to summarize using pie charts, etc. to look at where it was going.

Excluding college, Insurance premiums of all types were, and still are, our single biggest expense category. Also, Real Estate taxes were increasing rapidly (no state income tax, schools funded locally $$). And Cash withdrawn was not balancing known cash expenses.* Seemed like a big cash leak.

Can't do much about insurance till last child graduates college, and is off of our car insurance (will be one less car then, too).* At that time, I plan on dropping my term life insurance, as the premiums will really start to turn up then, and the real need for it will be over.

Fixed the cash leak - Don't use cash, except for newspaper, real minor stuff. At one time, using a credit card for small purchases was frowned on by stores, but since every purchase these days is at least a few bucks, using plastic is no problem. With plastic, I divy up the costs on the monthly statement into the different expense buckets on my spreadsheet. What little cash we use is now accounted for, within reason.

College expenses are up a lot, compared to, say, 2002.* Mostly due to the decision to allow TX flagship schools to set their own tuition rates, knowing that they will keep them moderate.* Hahahaha, you know how that went! To say nothing of the big one, college "fees".* There is a fee for everything. "Fees" are now about another 75% above and beyond tuition.

Also I spreadsheet returns on the supply side, every January. Starting with equities, then bonds, showing returns, and cumulative returns (eq + bonds), then adding in cash-like, then cash. Very graphic how the very poor returns on cash were bringing down our overall returns.* That convinced DW to look into dumping every cash account we had, and shop for better returns. That has been successful, but have to review at least once a year, as who was eager for business last year can become non-competitive this year.

Now that we have been at this for a few years, I think we have a very good handle on where the $ goes.
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Re: Did Your Spending Surprise You?
Old 09-04-2006, 12:42 AM   #22
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by mb
. . . My excuse for the long post is that I was wondering if many of you were surprised when you first starting looking at expenses and did you choose to do anything about the surprises and did you benefit from it?* (Although maybe I just wanted to vent on my "blown budget.")

MB* * * *
Of course we were surprised by a few things. That's kind of the point of tracking expenses -- to find out where your spending isn't accurately reflecting your goals and values (short and long term). Sometimes an expense surprises you, but once you think about it, you decide it is still worth spending the money. Other times you think, "We're spending that much for that? What were we thinking?"

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Re: Did Your Spending Surprise You?
Old 09-04-2006, 06:09 AM   #23
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Re: Did Your Spending Surprise You?

we were blown away when we figured out just for the 2 of us eating out and food for the house was costing us over 1,000 a month here in nyc.
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Re: Did Your Spending Surprise You?
Old 09-04-2006, 07:33 AM   #24
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Re: Did Your Spending Surprise You?

Extremely timely post for me as DW and I are about to sit down and have this very discussion. I handle all finances and cringe every month at the Visa bill and the ATM withdrawals. We make decent income but spending seems to just naturally keep up. With sophomore in college, senior and sophomore in H.S. education expenses in near future will be significant. Chances of ER may depend on getting handle on discretionary spending. Should be fun!
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Re: Did Your Spending Surprise You?
Old 09-04-2006, 02:50 PM   #25
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by donheff
As ER approached I started tracking expenses and was horrified a bit surprised by how much we spend and on what.
That's basically why I decided to start tracking expenses. According to my gross estimates we can ER now even at the higher spending rate that I mentioned above. Over that last 20 years we saved 20-40% of gross income so I just didn't worry about expenses. But in R expenses are the important variable so I decided that it would be a good idea to get a better understanding of where the money is going.

Quote:
Originally Posted by Telly

Can't do much about insurance till last child graduates college, and is off of our car insurance (will be one less car then, too).
College expenses are up a lot, compared to, say, 2002.*
These are the things that I'm starting to thing about now. What additional expenses will start-up or increase in the future? DW will start driving next year and DS two years after that so insurance will be up. I'm budgeting for a U of CA school for both of them now.

Quote:
Originally Posted by BarbaraAnne
It is all worth it, however, because vacations, good times and watching your kids grow up are among the joys of life. By tracking the outgo however, we are make sure we are always aware of the financial side...
This is the way I feel. Although the most important investments you can make in your kids are probably non-financial I can think of no better financial investment either. By this I mean activities and learnng experiences not clothes and electronic toys. (Might make a difference on them "boomeranging" after college too!)

The trips and camps mentioned above are well worth the cost. I'm not going to cut back on those expenses. It's more a matter of just getting an understanding of where it is going. I'm currently paying private school tuition (included in the ER buget) even though the local schools are OK and if they decide to go to Stanford or MIT I would also like to help with that but those are the things that could blow an ER. Since my family is still relatively young these expenses are not well defined.

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Re: Did Your Spending Surprise You?
Old 09-04-2006, 05:43 PM   #26
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Re: Did Your Spending Surprise You?

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Can't do much about insurance till last child graduates college, and is off of our car insurance (will be one less car then, too).
We got DD off of our insurance the day she left for college. That will only work if the college is far away, I guess.
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Re: Did Your Spending Surprise You?
Old 09-04-2006, 08:13 PM   #27
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by TromboneAl


We got DD off of our insurance the day she left for college. That will only work if the college is far away, I guess.
There might be a special rate for occasional use by college student on break.
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Re: Did Your Spending Surprise You?
Old 09-04-2006, 08:27 PM   #28
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by mathjak107
we were blown away when we figured out just for the 2 of us eating out and food for the house was costing us over 1,000 a month here in nyc.
We were beyond even that figure while I was still working. For all our household stuff we'd buy at the supermarket including cleaning supplies and personals, and our Visa charges for eating out, we were in the $1700/month range. We were quite frugal in most all other areas, so it wasn't a huge drain, but the eating out got trimmed back going into ER.
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Re: Did Your Spending Surprise You?
Old 09-10-2006, 11:33 AM   #29
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Re: Did Your Spending Surprise You?

As most of you know, Billy and I are Perpetual Travelers. When we are on the road, unless we rent an apartment or condo, we eat out most of our meals.

Since we travel a good deal of the time, when we do finally get home, we tend to stay at home and cook. In the way we track our expenses, we do divide between groceries and dining out, with some dining out considered to be entertainment and not just 'food.'

In our piece Priceless Retirement http://www.retireearlylifestyle.com/..._article_6.htm, we list our net spending in all categories.

I recently did an update to June of 2006, and the net annual spending was still $24,000 but the categories shifted a little. That only makes sense.

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Re: Did Your Spending Surprise You?
Old 09-10-2006, 02:39 PM   #30
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Re: Did Your Spending Surprise You?

Akaisha,* you guys amaze me!* (In a good way).* * If I recall correctly, you also maintain a small condo or some sort of "home base" here in the US, right?*

We were working last night again on our ER budget.* There seems to be a huge disconnect between what I read here - comfortable lifestyles for $50,000 and less - and my calculation of needing $70,000 to live in a way that actually seems frugal....* Where have I gone wrong?*

I know we've discussed budgets ad nauseum around here, but I'm interested in any specific comments about where I may be off base.

Mitigating factors -*
*Still paying $430/ mo. on a 4.75% mortgage

*About $2,500 a year net cost to maintain S.O.'s house as a rental

*$600 a month budgeted for health insurance etc.,

*A travel and recreation budget many might consider excessive.* I know as we become more experienced in finding low-cost travel options this may not really be necessary, but I also know we've blown $3,000 - 4,000 on a two-week trip before....and we want to try out the RV lifestyle with a rental for a few months... Travel is the most important part of ER for us.

Here's where we're at:

$8,700.00* *House and utilities
$17,400.00* Insurance and taxes
$7,800.00* * Food and restaurants
$11,300.00* Misc. Household (everything from clothing to pet food to charity and gifts)
$2,400.00* * Home(s) maintenance, repair, remodel
$3,600.00* * Vehicles
$6,000.00* * Recreation, entertainment (scuba, classes, sports events, etc.)
$10,800.00* Travel
$2,000.00* * Major expense fund

$70,000.00

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Re: Did Your Spending Surprise You?
Old 09-10-2006, 03:17 PM   #31
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Re: Did Your Spending Surprise You?

I too am amazed. I took their published total of $24, 000 pa, and their category breakdown, and turned it into per person, per month expenses. I know that some of it, esp. housing is cheaper for two, the rest should be basically per person. Also, since they maintain two homes, (one floating and one stationary, the per 2 people figure should be useful there also. Looked at this way, their achievement is even more amazing.

(pp, pm): Housing $270; transportation $210; Food $120; Entertainment $100; Medical $120; Communications $30; All else $150.

And this with world travel, and a home base! Amy Daczyn, gnash your teeth!

Ha
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Re: Did Your Spending Surprise You?
Old 09-10-2006, 05:04 PM   #32
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by Sheryl
Here's where we're at:

$8,700.00 House and utilities
$17,400.00 Insurance and taxes
$7,800.00 Food and restaurants
$11,300.00 Misc. Household (everything from clothing to pet food to charity and gifts)
$2,400.00 Home(s) maintenance, repair, remodel
$3,600.00 Vehicles
$6,000.00 Recreation, entertainment (scuba, classes, sports events, etc.)
$10,800.00 Travel
$2,000.00 Major expense fund

$70,000.00
It's hard for me to tell where you may be high (relative to me anyway) without more detail, but my travel budget is worse bigger than yours, recreation smaller (cultural events can actually be cheaper than sporting events--helps to be near a college town), we don't have pets any more and have scaled WAY back on charity and gifts as well as clothing and other personal items & services--I consider my volunteer work as being in lieu of donations.
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Re: Did Your Spending Surprise You?
Old 09-10-2006, 05:48 PM   #33
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Re: Did Your Spending Surprise You?

Regarding Sheryl’s totals, I don't think that the maintenance on the rental home, or any income taxes should be counted. These should be offsets against income, not counted in living expenses, as they will change with income. Presumably Sheryl and BF are making a net profit on the rental; if not they will soon sell it. And the income taxes will go down when/if they retire or partially retire.

Ha
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Re: Did Your Spending Surprise You?
Old 09-10-2006, 09:20 PM   #34
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by HaHa
Regarding Sheryl’s totals, I don't think that the maintenance on the rental home, or any income taxes should be counted. These should be offsets against income, not counted in living expenses, as they will change with income. Presumably Sheryl and BF are making a net profit on the rental; if not they will soon sell it. And the income taxes will go down when/if they retire or partially retire.
Good point, Ha. I am still not sure how to figure that in the budget. It is actually not a net profit now, but we are assuming that the net expense of $2,500 is more than ofset by the growth in value of the home. Or we could move there, and rent my house. Or sell them both and build something. Many options.

Thanks for the thoughts. Astro - glad to hear my travel budget isn't so crazy after all.
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Re: Did Your Spending Surprise You?
Old 09-10-2006, 09:36 PM   #35
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by Sheryl

Here's where we're at:

$8,700.00* *House and utilities
$17,400.00* Insurance and taxes
$7,800.00* * Food and restaurants
$11,300.00* Misc. Household (everything from clothing to pet food to charity and gifts)
$2,400.00* * Home(s) maintenance, repair, remodel
$3,600.00* * Vehicles
$6,000.00* * Recreation, entertainment (scuba, classes, sports events, etc.)
$10,800.00* Travel
$2,000.00* * Major expense fund

$70,000.00
Agree you should not include income tax in your budget as it is not a living expense and is not comparable with any one else's budget.

The big component still here that many people don't have in their $30-40k budgets is mortgage payments.

If you take those 2 items out, you might have something to compare against.

Also not clear to me whether the vehicle category is for current auto payments or the reserve fund to replace vehicles. If the latter, you are quite short shy of your needs, e.g. 2 vehicles @ $25k each replaced every 10 years would be $5k per year excluding repairs and gas. Your major expense fund won't cover the difference.
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Re: Did Your Spending Surprise You?
Old 09-10-2006, 10:14 PM   #36
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Re: Did Your Spending Surprise You?

Quote:
$2,400.00 Home(s) maintenance, repair, remodel
Unless you guys are extreme do-it-yourselvers, $2.4K/y on home maintenance and remodeling (!) sounds very low, especially given your stated spening levels elsewhere. Are you sure that number will survive collision with reality as your house ages?
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Re: Did Your Spending Surprise You?
Old 09-11-2006, 12:57 AM   #37
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by AltaRed
Agree you should not include income tax in your budget as it is not a living expense and is not comparable with any one else's budget.
So far in RE, I've found that local, state and federal thugs all insist I pay taxes.* So, rather than get beat up, I budget for and pay them.* *
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Re: Did Your Spending Surprise You?
Old 09-11-2006, 09:56 AM   #38
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by Scrooge
Unless you guys are extreme do-it-yourselvers, $2.4K/y on home maintenance and remodeling (!) sounds very low, especially given your stated spening levels elsewhere. Are you sure that number will survive collision with reality as your house ages?
Well, "we" ARE extreme do it yourselfers - S.O. is a contractor. If he's not working he's always building or repairing something. And his son is an electrician. But even tool and material costs could be an issue. Something to examine more carefully. Thanks.
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Re: Did Your Spending Surprise You?
Old 09-11-2006, 10:03 AM   #39
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Re: Did Your Spending Surprise You?

Quote:
Originally Posted by AltaRed
Also not clear to me whether the vehicle category is for current auto payments or the reserve fund to replace vehicles. If the latter, you are quite short shy of your needs, e.g. 2* vehicles @ $25k each replaced every 10 years would be $5k per year excluding repairs and gas. Your major expense fund won't cover the difference.
The $3,600 is just for gas and regular maintenance (plus a few brake and muffler jobs). You make a good point about the major expense fund not covering replacements. My plan is to buy a new or lightly used vehicle with "extra" (i.e. not FIRE) cash just before we ER. SO has a Toyota pickup. Then we will drive them forever.

I have been making a maybe not so smart assumption that if our spending is less than we have allowed (4%, roughly), and the market does better than we have allowed for, and maybe I inherit a little from my family, there will be something there to buy another car in another ten years. Not the most rational plan I ever heard. But at some point you need to "wing it."

Thanks to all for the consideration an input.
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Re: Did Your Spending Surprise You?
Old 09-12-2006, 11:14 AM   #40
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Re: Did Your Spending Surprise You?

Here are our actual expenses (two people in household).*

This excludes college expenses, including a trip to visit DD ($1700 total). Taxes are low due to a larger than usual refund. Housing includes prop taxes, insurance, and utilities.

Note that we do not feel at all deprived with this level of spending.

Code:
Spending Pie Chart for 9/11/2005 - 9/10/2006		

Health Ins / Medical	6066	23%
Groceries		5169	20%
Housing		5086	19%
Transportation	3729	14%
Income Taxes	2839	11%
Other		2600	10%
Travel & Entertain	 810	3%

Total		26290	100%
Attached Images
File Type: jpg PieChart.jpg (12.9 KB, 102 views)
Attached Files
File Type: jpg_thumb PieChart.jpg_thumb (19.4 KB, 0 views)
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