Expenses Redux

[haha]

A brief look at my last two years of expenses shows that 75% go into just 5 categories.

From largest, they are federal income tax 32%, rent 24%, groceries 8%, health insurance 6% and car 4%. (Car is just gas, maintenance and insurance, no payment or sinking fund.) And this is 75% of almost $60,000, for a single guy living in a 500 sq ft apartment. I guess I ain't Joe Dominguez.

Ha

 

[LOL!]

Your priorities are screwed up. When I was single, my top 3 budget expenses were: sex, drugs, and rock&roll. I didn't even own a car.

 

[OAG]

Got me looking: Income Tax: 8%, RE Tax: 8%, Utilities/Condo Fee: 6.5%, Groceries: 3%, Auto: 2.5%, All Other Expenses: 6%. Leaves only Savings: 66%.

HaHa you need to get married, and/or buy a condo. You are still looking for a Condo are you not? The other I will leave alone.

 

[haha]

Got me looking: Income Tax: 8%, RE Tax: 8%, Utilities/Condo Fee: 6.5%, Groceries: 3%, Auto: 2.5%, All Other Expenses: 6%. Leaves only Savings: 66%.

HaHa you need to get married, and/or buy a condo. You are still looking for a Condo are you not? The other I will leave alone.

LOL! As will I. I expect that my taxes will go down because the last couple of years I have traded out of some successful long term gain situations. OTOH I will soon start SS and also be forced to begin MRDs, so I am not sure about this.

I find it interesting that your property tax + condo fees and utilities while not quite as much as my rent, are considerable anyway. Housing just costs a lot, however you get it.

ha

 

[bongo2]

I don't normally consider income taxes an expense, but that's almost 50% right there. Housing, food and kids' activities get me to a little over 80% quick.

 

[Sarah in SC]

I, too, am disappointed that your top items aren't any more fun than that!

Mercifully, for housing expenses, we've just go our prop tax and H/O insurance combined equal just $1,600 a year, so we get to spend more on "entertainment".

 

[Alan]

A brief look at my last two years of expenses shows that 75% go into just 5 categories.

From largest, they are federal income tax 32%, rent 24%, groceries 8%, health insurance 6% and car 4%. (Car is just gas, maintenance and insurance, no payment or sinking fund.) And this is 75% of almost $60,000, for a single guy living in a 500 sq ft apartment. I guess I ain't Joe Dominguez.

Ha

That's a lot of Federal income tax - did you really pay $19,200 tax on a gross of $60,000?

 

[FIRE'd@51]

That's a lot of Federal income tax - did you really pay $19,200 tax on a gross of $60,000?

He didn't say 60K was his gross - he said it was his expenses. However, he did give enough information to get a pretty good estimate of his gross.

 

[haha]

That's a lot of Federal income tax - did you really pay $19,200 tax on a gross of $60,000?

My gross was not $60,000. My spending, including tax was a little less than $60,000.

Whoops, I see that Fire'd @51 already answered this.

I, too, am disappointed that your top items aren't any more fun than that!

You are not alone with this thought Sarah.


ha

 

[Moemg]

I, too, am disappointed that your top items aren't any more fun than that!

Mercifully, for housing expenses, we've just go our prop tax and H/O insurance combined equal just $1,600 a year, so we get to spend more on "entertainment".

I'm moving to South Carolina . My property tax & h/O insurance is $8,500.

 

[Alan]

My gross was not $60,000. My spending, including tax was a little less than $60,000.

Understood. In that case it is not useful for me to compare as my spending in RE will be 1/3 (I hope) of current earnings. My taxes last year were 70% of my expenses.

 

[FIREd]

A brief look at my last two years of expenses shows that 75% go into just 5 categories.

From largest, they are federal income tax 32%, rent 24%, groceries 8%, health insurance 6% and car 4%. (Car is just gas, maintenance and insurance, no payment or sinking fund.) And this is 75% of almost $60,000, for a single guy living in a 500 sq ft apartment. I guess I ain't Joe Dominguez.

Ha

When taking into account income taxes, my five top expenses (representing 65.2% of total) for the last 12 months are:

Income tax: 28.9% (fed + state)
Housing: 15.6% (mortgage + property tax + repairs + insurance...)
Groceries: 7.7%
Utilities: 6.5%
Cars: 6.5% (repairs, property tax, insurance, gas)

It still leaves us 27.2% of total for fun stuff (travel, eating out, entertainment, etc...).

 

[Marquette]

Pareto strikes again!!

I did some Pareto graphs for a call center to QA their phone people. Of the 20-30 data points that were graded on each QA session (and these were all y/n questions 'did the agent offer this, did the agent attemt reconciliation for that, did the agent read the t&c, etc'), it was consistantly 4-5 questions that accounted for 85% of the training issues.

 

[Alan]

Pareto strikes again!!

I did some Pareto graphs for a call center to QA their phone people. Of the 20-30 data points that were graded on each QA session (and these were all y/n questions 'did the agent offer this, did the agent attemt reconciliation for that, did the agent read the t&c, etc'), it was consistantly 4-5 questions that accounted for 85% of the training issues.

I think Pareto struck in the wrong thread - I don't see the relevance to this discussion

 

[Marquette]

I think Pareto struck in the wrong thread - I don't see the relevance to this discussion

~80% of expenses are consumed by just 5 categories!

It's magic!

 

[Alan]

~80% of expenses are consumed by just 5 categories!

It's magic!

now I understand

 

[chinaco]

I think our total tax bill (income, RE, sales, etc) is probably middle class America's largest single expense category.

 

[W2R]

I expect that my taxes will go down because the last couple of years I have traded out of some successful long term gain situations.

So, you will not be paying these unusually high taxes routinely. Good.

If I understand your budget correctly, your "after tax" budget other than rent would be just $26,400/year or $2200/mo. That does not seem excessive to me, especially considering your location.

Your health insurance is only $3600/year, and that seems like a bargain!

If you owned your own home outright, your expenses would decrease considerably. You could buy a small house outright that didn't have condo or HOA fees. Then your housing expenses would be little more than property tax and insurance. These can be low, especially in a small, inexpensive home. However, such a dwelling may not be an option in your desired neighborhood.

So, I would suggest that actually your major expense is living where you live. From your descriptions of your neighborhood, it is probably worth it. Given that everything is close by, if I were in your shoes and wanted to tighten my budget, I would cut back on the $200/mo car expenses, though cutting back on insurance is not usually a good idea - - maybe you can use less gas (?) Or do you really need a car? Maybe a bicycle and an occasional cab ride would cost less in what I envision as your downtown location with everything nearby.

 

[HFWR]

If you owned your own home outright, your expenses would decrease considerably. You could buy a small house outright that didn't have condo or HOA fees. Then your housing expenses would be little more than property tax and insurance. These can be low, especially in a small, inexpensive home. However, such a dwelling may not be an option in your desired neighborhood.

My housing expense, in cash outlay terms, is $836/mo, which covers the mortgage + PT + HOI. Plus, I get some of that back by itemizing on the tax form.

But there are mucho dinero that do not show up in that simplistic view.

The lawn needs mowing, fertilizing, and watering. The shrubs need trimming, which requires Olympic laddering skills, 2-3 times a year. The sprinkler system requires continuous maintenance. I have a mysterious roof leak around my chimney that no one can find, and no one wants to tackle, unless of course I contract to get roof job. The last guys I called for an estimate had to borrow my ladder to get on the roof. They weren't hired...

I could also use all new windows, the fence will need replaced soon enough, faucets and toilets are forever needing attention...

Adding in the time and money involved in these "routine" maintenance items makes the equation much less attractive. Plus, I'm getting to the point where climbing a ladder, or mowing in 100 degree heat, or crawling under a sink to fix a drain or replace a faucet do not have the appeal they might have once had, even though I'm quite capable of doing most of my own repairs and maintenance. And getting contractors to even show up, let alone do a good job, requires the patience of Job, nerves of steel, and the lawyering skills of Robert Shapiro. PITA, in other words.

 

[W2R]

In my case, I own my own home outright, and property tax plus insurance is $200/mo. New Orleans is a real armpit when it comes to crime (sorry, hope I didn't offend anybody), so I bought a bigger, more expensive house than I needed in order to get in the safest of neighborhoods. Otherwise, T&I would be lower. I specifically looked for a well kept up house with a new'ish roof, and despite Katrina I suppose that maintenance plus tax, insurance, improvements, and my lawn guy has brought my total housing expenses up to maybe $300-600/mo, depending on maintenance requirements that year.

I expect these expenses will be a whole lot less than that in ER due to the lower housing costs in my planned ER location. But in ER, I want to hire someone to do ALL the yardwork, not just the mowing. Maybe a landscaping company will do that. So, I might end up spending quite a bit on that.

Looking at things this way, owning a house is not as cheap as it might seem.

 

[haha]

So, you will not be paying these unusually high taxes routinely. Good.

If I understand your budget correctly, your "after tax" budget other than rent would be just $26,400/year or $2200/mo. That does not seem excessive to me, especially considering your location.

Maybe I made an error when I wrote this. It costs me a few hundred less than $40,000 per year, or $3300 per month.

On the health insurance cost, don't forget I have Medicare, so better than no Medicare but still a long way from low.

If you owned your own home outright, your expenses would decrease considerably. You could buy a small house outright that didn't have condo or HOA fees. Then your housing expenses would be little more than property tax and insurance.

True enough I suppose, but I don't know where they might exist in the city. What would exist would be far out- the land is too valuable to not wreck these houses and build townhomes or condos anywhere close in. And they would be old, and they would still be expensive, and one would have to be very careful about neighborhood.

Given that everything is close by, if I were in your shoes and wanted to tighten my budget, I would cut back on the $200/mo car expenses, though cutting back on insurance is not usually a good idea - - maybe you can use less gas (?) Or do you really need a car? Maybe a bicycle and an occasional cab ride would cost less in what I envision as your downtown location with everything nearby.

I perhaps would not need a car, but I would lose a lot or have to be bugging others to borrow theirs, or give me a ride. I think my car expenses are pretty low- last year I only drove 8000 miles!

I have a hard time finding the almost-free lifestyle that a few board members do find. I am sure it is out there somewhere though, if I just keep looking.

Ha

 

[Moemg]

I have a hard time finding the almost-free lifestyle that a few board members do find. I am sure it is out there somewhere though, if I just keep looking.

Ha

you may find it but I'm pretty sure you would not like the location .

 

[Dawg52]

I have a hard time finding the almost-free lifestyle that a few board members do find. I am sure it is out there somewhere though, if I just keep looking.

Ha

Munis, sleeping bag under a bridge, local soup line. There you have it.

 

[Khan]

I expect these expenses will be a whole lot less than that in ER due to the lower housing costs in my planned ER location. But in ER, I want to hire someone to do ALL the yardwork, not just the mowing. Maybe a landscaping company will do that. So, I might end up spending quite a bit on that.

Looking at things this way, owning a house is not as cheap as it might seem.

As I get older, there is less stuff I can do myself.

Another housing expense is that after 10, 20, 30 years, stuff wears out. I've lived here for 30 years this month, and the house was ~30 years old when I bought it.

Have replaced: windows, doors, wiring, outgoing plumbing, all appliances, roof, siding, patio cover, boiler, sump pump...; if I stay much longer will have to replace incoming plumbing, sewer connector, entire heating system, internal gas lines...

After the cat dies I'm moving to a small apartment.

 

[Alan]

After the cat dies I'm moving to a small apartment.

We had two 14 yr old cats when we moved from a large house to a much smaller apartment. The cats were outdoor cats and we did worry about how they would adapt, but they seemed to love being inside and never wanted out.

They both died when they were age 16 (within months of one another). Now we are house AND cat free.