EXPENSES: Anyone feel like they are out of control?

[ERD50]

Those are crazy unmanaged expenses that most on this ER forum are not familiar with. You are badically playing what I aptly call poor defense. Or put another way "playing bend over defense". ...

I think you are taking a lot for granted. Everyone's situation is different. There are differences in family size and in cost of living in different areas. Just because someone is spending more than you are doesn't mean that person's expenses are "unmanaged" or are "crazy." Further, different people have different priorities. ...

+1 to Katsmeow. This sounded familiar to me, and a quick search brought up this recent post:

http://www.early-retirement.org/forums/f28/modeling-help-and-sanity-check-70226.html#post1407391

I would still like to hear Al in Ohio explain how one can live as nicely on less than $75K as they can on $150K. That would be enlightening.

Again, it's not that people can't be happy on $75K, but I just don't see how it can be 'just as nice' as a $150K budget. In a multiple choice question, who would choose $75K over $150K?

-ERD50

 

[bld999]

I ran those numbers and my costs came out to $1,000/yr. We drilled the well 15 years ago and have since spent $15,000 replacing the submersible pump twice and the pressure pump once. You may have better luck with submersible pumps (a lightning strike fried one of them) and be money ahead if that's the case.

I hope I have better luck than that, hadn't considered lightning...

 

[Katsmeow]

Posters with water wells, what is a fair annual assignment for a pump replacement or other significant maintenance cost?

I don't have a water well now but did have one at our last house. I remember we had a repair that cost just over $2000. Also to get into the backyard with the needed equipment a section of fence had to be taken down and put back up (cost a few hundred dollars to have the fence company put the fence back up). I think we had one other repair that was a couple of hundred dollars. This was over about a 5 year period.

 

[aja8888]

I had a well years ago in Connecticut. Darn water had dissolved iron in it and it came out when pumped and aerated. I don't remember what I paid for the filtration system and the monthly filters, but it was significant. Plus, it never got it all and the inside of toilets turned orange.

 

[iibgdi]

What part do you consider to be crazy?

Ha

Well, for starters, the cost of cell phone service is outrageous. Just 15 or so years ago, none of us had cell phone expenses. Certainly not $3,000/year worth.

Satelite and cable...I can remember when it was $15/month. Now it's nothing to spend $125-150/month.

So just those 2 alone are huge expenses that we didn't have in the past. YES, I realize the trade off and the great advances in technology that we have seen and are now able to take advantage up but $4-5,000 for a family to add to their budgets from what they were paying 15-20 years ago has made a big impact on families.

I will also add that LP gas just went to $5.00/GALLON this week. OUCH! And of course, as luck would have it, we are below 20% in our tank so will need a fill here pretty soon.

600 gallon tank......you do the math.....I think LP was just over a dollar previously? I don't recall.....

 

[iibgdi]

I just added up all of my "fixed expenses" that I am billed for each month which now includes all the things I didn't show in my OP such as mortgage, taxes, insurance etc it does NOT include the following:

Food
Clothing
Medical expenses (not health ins)
Home maintenance
Auto maintenance
Lawn care (fertilizer etc)
Snow removal
Entertainment/travel/vacations

I am at $3,928/month and $47,137/year in expenses without those things listed above. Yikes.

 

[photoguy]

I am at $3,928/month and $47,137/year in expenses without those things listed above. Yikes.

What expense level would you'd like to achieve?

In your post you mentioned having a 5000 sqft house -- even with cheap housing in the midwest this is much more than most have. So I'm guessing your income is also commensurate and you can easily afford these costs?

 

[JakeBrake]

The numbers are from Quicken for the past 12 months.

Cable TV $935.54
Garbage $84
Electric $3,363.00 (All electric 3,000 sq. ft. house. Two HVAC systems)
Telephone $779.14 (landline with DSL)
Water $398.75 (rural water association)
Wireless $906.37 (three dumb cellphones)
HOA $0 (don't have one)

Total $6,466.80

 

[daylatedollarshort]

+1 to Katsmeow. This sounded familiar to me, and a quick search brought up this recent post:

http://www.early-retirement.org/forums/f28/modeling-help-and-sanity-check-70226.html#post1407391

I would still like to hear Al in Ohio explain how one can live as nicely on less than $75K as they can on $150K. That would be enlightening.

Again, it's not that people can't be happy on $75K, but I just don't see how it can be 'just as nice' as a $150K budget. In a multiple choice question, who would choose $75K over $150K?

-ERD50

I will take a stab at this.

Some of the difference would go to taxes - SS, state and federal, say that is $25K. A $75K household with kids and some AGI adjustments might get $15K in ACA tax credits. If the kids are in college, maybe there's another $10K in financial aid and tax credits at the lower household income.

That would bring the differential to $50K, with $25K needed to be made up by cutting annual expenses. If the $150K household has not been too thrifty, they might be able to cut $25K total by reducing each budget line item: price shopping insurance, renegotiating the cable bill, increasing insurance deductibles, getting prepaid cell phones, getting rid of the land line, shopping at Costco, swapping out a low cost hobby like kayaking or biking for a golf or a tennis club membership, etc.

I don't think most of those changes would impact their day to day quality of life. Maybe the hypothetical family would actually have more fun and excitement kayaking than playing golf.

I'd still take the $150K over $75K.

 

[obgyn65]

Using the OP's cost items :

Cell phones: about $2000 (including iPad)
Satellite: 0
Internet/phone: about $300, the rest is included in monthly assessments.
Electric: $240, the rest is included in monthly assessments.
LP: $0
Garbage: $0
Rural Water: $0

Also live in upper Midwest.

I am currently working on a budget and have discovered that my basic expenses are kinda crazy.

These are annual #'s.

Cell phones: $3,060 (3 smartphones, one dumb phone)
Satellite: $1,344
Internet/phone: $924 (We are kind of stuck with our internet provider and the phone is included)
Electric: $2,099
LP: $1,400
Garbage: $264
Rural Water: $676

Total: $9,768 ***Edited as I found a mistake in my spreadsheet

That's not including home or auto insurance, life insurance, taxes, mortgage, cabin payment, food, entertainment, health insurance (through wifes work) etc.

The kids are Sophomore and Freshman in college so hopefully, the electric and LP go down! The water will go down slightly.

I'm sure one of the first question will be location....We live in the upper mid west. In a small subdivision outside of a small town. Our house is only 10 years old but it is fairly large so that does help explain how high the electric and LP is. (just over 5,000 sq ft counting main floor and basement.)

what are other peoples expenses?

 

[target2019]

Again, it's not that people can't be happy on $75K, but I just don't see how it can be 'just as nice' as a $150K budget. In a multiple choice question, who would choose $75K over $150K?

I would choose 75k. The other 75k would go to spouse. That would ensure my happiness!

 

[Mulligan]

iibgdi, Our annual, similarly Midwestern expenses for all you listed are $8,100 per year. I love/am addicted to my smart phone, DH needs his for his consulting business, we stay home and watch lots of TV and sports, so our cable bill is what it is, I need my reliable internet since I telecommute, our light bill is crazy, but at this point I'm not losing sleep over it. I'm with you on this: I find this inconceivable, and frankly don't want to live that way. We lived off that much in the early 80's, and it was a pretty meager existence. To each his own. Honestly, we did not notice our light bill going down all that much when our kids moved out. We also had that wishful thinking. Just really didn't happen. Interesting thread!

I hate giving money away if I know someone else is paying less than I am on something. But to me it's more about "score keeping" than life changing budgeting, so I am more like you. Saving a few bucks to give up a "luxury" simply isn't worth it to me unless a person is deficient spending. I do not have a smart phone, but it's not because of the cost. I checked my landline phone bill from early 90's and it certainly was way higher than a persons smart phone bill is today. I am not going to scrimp on my cable bill and miss out on my sports. I have natural gas heat which mitigates costs a bit to others who live in cold areas like myself, but I am not dropping the thermostat to save a few bucks and have to wear sweatshirts and jackets all day. The big savings for me is where the bigger money is at. I keep an old car and save on insurance, taxes, and car payments, wait patiently to find super deals on my vacations, and eat out at restaurants that are not expensive.

 

[Sesq]

I think about cutting the cord and pairing it all back, have for years. But it just works these days, and if OTA and netflix didn't, then I'd hear about it and have to fix it. So I guess at this point part of my payment is a protection racket.

 

[iibgdi]

What part do you consider to be crazy?

Ha

What expense level would you'd like to achieve?

In your post you mentioned having a 5000 sqft house -- even with cheap housing in the midwest this is much more than most have. So I'm guessing your income is also commensurate and you can easily afford these costs?

Yes, we can afford it but every time I look at what I COULD be saving I get frustrated. Particularly when I hadn't put a pencil too it in some time. The sticker shock was surprising.




Someday in the near future we will start looking at downsizing the house since the kids are gone. But until that time, I'm treading water.

Fortunately, we have no other debt than the house and a small cabin..(under $400/month total expenses for cabin). We drive 10 year old+ cars too.

 

[RunningBum]

I hate giving money away if I know someone else is paying less than I am on something. But to me it's more about "score keeping" than life changing budgeting, so I am more like you. Saving a few bucks to give up a "luxury" simply isn't worth it to me unless a person is deficient spending. I do not have a smart phone, but it's not because of the cost. I checked my landline phone bill from early 90's and it certainly was way higher than a persons smart phone bill is today. I am not going to scrimp on my cable bill and miss out on my sports. I have natural gas heat which mitigates costs a bit to others who live in cold areas like myself, but I am not dropping the thermostat to save a few bucks and have to wear sweatshirts and jackets all day. The big savings for me is where the bigger money is at. I keep an old car and save on insurance, taxes, and car payments, wait patiently to find super deals on my vacations, and eat out at restaurants that are not expensive.

That's pretty much how I look at it too. We have some similar things we spend money on or cut back on, and some different ones, and it's not important to list which ones. What's important is, if you can afford it, to be free to spend money where it will bring you safety, health and/or enjoyment, with some level of value. I look to cut back where it doesn't provide enough of any of those things.

 

[W2R]

Someday in the near future we will start looking at downsizing the house since the kids are gone.

Well, then it sounds like the problem will take care of itself, assuming you move to a house around 1500-2000 square feet, for example. Sounds like great motivation for downsizing.

 

[jkern]

2100 sq ft SFH in San Fran bat Area. Family size 1.5 (Daughter in college).

Utilities:

Cell (1 iphone): $ 525
Gas/Electric: $ 1500
Water: $ 400
Garbage: $ 360
TV/Landline/Internet: $1950

Total: $ 4,735/year

Personally, I like having these services. The cost is what it is! If reducing cost was my goal, I could eliminate services like cell, TV, landline, etc. I would probably work if I couldn't afford these bills.

 

[Letj]

Here's mine, 2013, 1500 square foot condo in urban St. Paul MN:
cable/internet: $932.37
landline: $407.30
gas/electric: $1272.07

No cell phone; a landline still works out just fine for me. I hate Comcast with a passion and would love to cut the cable but haven't been able to yet. My water/trash bills are included in my monthly association fee, so I don't have the break down for those. They're not much.

You and me both. I hate Comcast so much that I've put up with Verizon's lousy landline service just because I refuse to go with Comcast again.

 

[Gumby]

I think just throwing out our numbers for these things, while it might be interesting, is not particularly helpful to the OP. So I will share what concrete actions we have taken to reduce the numbers that trouble him.

Cell phone -- for many years (prior to smartphones), we had cell phones with a monthly plan with rollover minutes, etc. It was expensive (>$65.00/mo. in 2007, if I recall correctly). One day, it occurred to me that I really did not use my phone much at all. In fact, reviewing about 6 months worth of bills, it seems that I only talked for 16 minutes during that entire time. So we ditched our plans and got pay as you go phones. You load money into the account as and when you want to use the phone. If you want constant availability, it requires loading $25.00 every 3 months. or $8.33 per month per phone. ($16.66 for the two of us). Unfortunately, the young wife just got a smart phone for Christmas, so we're back to a plan (at least for her). We shopped around and got a T-Mobile plan for $30 per month)

Cable/internet -- this is an area where we could do much better. We pay $134 per month for basic cable TV and internet. But I almost never watch TV , and the young wife mostly sleeps through re-runs of Law and Order, cooking shows and wedding dress shows. I would bet we could cancel the TV part and save at least $50 per month. You can watch plenty of TV shows through streaming Netflix at $8.07 per month. And I've heard that one can watch TV through Hulu for free.

Phone -- we pay $27 per month for a landline. Including it in the cable package would cost more. We could try to go cell phone only, but I like being able to use the phone when the power is out (plus, we have rotary phones in the house).

Electric -- the single biggest savings on electric was replacing the 120 gallon electric water heater that was here when we bought the place with an indirect water heater attached to the furnace. Another major factor in reducing our electric bills was replacing light bulbs. As the incandescent ones burned out, we replaced them with CFLs, until we were all-CFL. We've now started replacing the CFL's with LEDs. We are not too bad about leaving lights on in spaces we don't need, but one option would be motion detector switches. We average $100 per month on electric ($16.50 basic charge, plus $0.20 per KWH).

Heating oil/Natural gas -- we have hot water radiators for heat. When we bought the house 22 years ago, the boiler was a gigantic 100 year old coal fired unit that had been converted to heating oil. It was supremely inefficient, so we soon replaced the boiler with a new oil fired unit. Two years ago, after concluding that heating oil would always be more expensive per BTU than heating oil (at least here in New England), we had a natural gas conversion kit installed. It cut our heating bill in half and has now paid for itself. We will likely replace the whole thing with a modern efficient gas unit in 5 years. Other things that we have done to help in this area include installing additional insulation in the attic, installing chimney top dampers (it is a very old house and the chimneys were built with no dampers) and installing programmable thermostats to cut the heat back when we are out of the house at work during the day and while we are sleeping. All of these were easy DYI projects. We're down to $142 per month for heating fuel (for context, it is a 2505 sqft house in coastal Connecticut).

Garbage -- can't offer any ideas here. Ours is included in our property tax.

Water -- we installed low flow shower heads. I am also attentive to toilet flappers that do not seat properly and to dripping faucets. We also found that we don't really need to water the lawn nearly as much as we once did. We're running about $40 per month.

 

[Mulligan]

That's pretty much how I look at it too. We have some similar things we spend money on or cut back on, and some different ones, and it's not important to list which ones. What's important is, if you can afford it, to be free to spend money where it will bring you safety, health and/or enjoyment, with some level of value. I look to cut back where it doesn't provide enough of any of those things.

I agree with cutting back where the perceived value is not there. For me, this is fluid, too. Keeping my car expenses low for now are important to me because I want to clear off my college debt for daughter and my new roof. Maintaining my monthly savings goal is of more value to me than a nice car. Once I have cleared up the other short term expenses, then I will buy the new vehicle as I will still be able to maintain my savings rate.

 

[daylatedollarshort]

Yes, we can afford it but every time I look at what I COULD be saving I get frustrated. Particularly when I hadn't put a pencil too it in some time. The sticker shock was surprising.

Someday in the near future we will start looking at downsizing the house since the kids are gone. But until that time, I'm treading water.

Fortunately, we have no other debt than the house and a small cabin..(under $400/month total expenses for cabin). We drive 10 year old+ cars too.

I wouldn't feel bad comparing your budget to some of the ER bloggers extremely low budgets. Those blogs are made to sell the dream, not the reality.

Most of those "budgets" would not pass a completeness or reality test if posted here for a review. In the real world, people wear clothes, somebody in the family need contacts or glasses, people take their kids to the dentist, the house eventually needs a new roof, people take vacations that cost at least gas or air fare and usually a lot more, cars need to be replaced, roofs need to be replaced, etc. Then of course there are the big things people should budget and save for, some of which happen at some point to most real families over time: divorce, death, disability, long term care, raising grand kids, helping aging relatives, major surgery, cancer, car accidents, house fires, etc.

The biggest expense for many households is housing. Downsizing can have a huge impact. New construction houses in the U.S. have really crept up in size over over the years -

The Righteous Small House: Challenging House Size and the Irresponsible American Dream by Jason McLennan — YES! Magazine

All that extra space costs money not just for the house itself but taxes, furnishings, insurance, repairs, heating, cooling, and yard work. People, especially relatives from Europe, used to ask us why we had such a big house when it was just the two of us. I guess the real answer is we were stupid. We just never really thought how much our house was costing us and the trade off between house size and early retirement.