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01-02-2011, 01:43 PM
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#121
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Well, I am not one of them Khan, but I suspect they are not 5 times happier.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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01-02-2011, 01:52 PM
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#122
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Posts: 5,350
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Quote:
Originally Posted by NW-Bound
Well, I am not one of them Khan, but I suspect they are not 5 times happier.
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5X my spending would be $60,000/yr. If I were still working to support my spending then I don't think i'd be any happier at $60K than $12K. However, if I were retired and didn't have to work either way then i'd be happier at $60K for sure. I'd be happier living on $12K while retired than $60K while working. So the important thing isn't how much I spend but whether or not I have to work to support that spending.
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01-02-2011, 01:54 PM
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#123
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Recycles dryer sheets
Join Date: Jan 2006
Posts: 346
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I spent $23,764 this year. On top of recurring expenses of about $19,500 I had a $1300 vacation, $1200 garage door repair, new laptop purchase of about $500 and new dishwasher of about $750. Next year I'll be around $30,000 as I have about $10,000 in house expenditures planned.
I should point out, no mortgage here and I don't count things like retirement account contributions as an expense. Also does not include taxes. If taxes were included it would have been around $28,000 just for taxes so more than my actual expenses...lol.
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01-02-2011, 01:57 PM
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#124
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Quote:
Originally Posted by Nords
It'd be great to have a tripwire when you whip out your smartphone or credit card-- "Amount remaining this month on 'entertainment' category: $7.43"
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There's that article about the guy with the wallet that is harder to open, the lower the amount in your checking account.
This Wallet Gets Harder to Open As Your Bank Account Depletes - Techland - TIME.com
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01-02-2011, 02:03 PM
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#125
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Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
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Quote:
Originally Posted by kumquat
I'm also a believer in "don't ask, don't tell". We had a very unusual year, money wise, spending
- $X on day to day living, including discretionary items
- $2X on gifts (among other things, both kids bought houses and we helped with the down payment)
- $2.5X in various taxes (mostly CG as I had to exercise a bunch of former mega-corp options before they expired)
Still our portfolio is bigger than it was a year ago, so all in all it was a good year financially.
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Right but I also have those exact same items. I treat loans/gifts as "capital" items and the tax on my stock options are treated as an offset to the option gains. This makes it very clear what my ongoing "operating" expenses were. Income or similar taxes really are a reduction in income in my opinion. Mixing them in with other expenses just complicates things. But if it works for you....
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01-02-2011, 02:19 PM
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#126
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Dryer sheet wannabe
Join Date: Dec 2010
Posts: 13
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Household/Personal Expenses/Auto $35,642.50
Excludes income taxes paid, but does include property taxes paid (part of "maintaining" the household).
The above would be what I'd use to calculate emergency funding - so we have $40,000 in emergency funds (1 year +/- unplanned household/personal/auto expenses).
If I added in "business expenses" - I operate a home based business that incurs fees like credit card processing, office supplies, postage etc. that would add in: $12,107.22.
Stats: 39 and 43 year old, 1 child (3 year old), no mortgage/no debt.
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01-02-2011, 02:20 PM
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#127
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Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
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After reading some of the more recent posts it is clear that the amount of your expenses isn't really important as long as it's within a reasonable SWR. In my case the challenge was to forecast what my SWR would be after all my deferred incentive compensation was cashed out. This cash out period was 5 years after retirement and very levered to my previous employers stock price. I am still one year away from total cash out but have realized a good portion of it. So I have been forecasting what the portfolio will be after all cash outs and made sure that our current spending is equal to the forecasted dividend on the portfolio (plus pension when it starts). Pretty complicated ,eh?
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01-02-2011, 02:45 PM
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#128
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,244
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Quote:
Originally Posted by scrabbler1
While this thread is about expenses, they can't be looked at totally in a vacuum. If an expense such as income taxes rises because the income itself rises, then it is not very relevant to the overall expenses because the money to pay those increased income taxes will always be available to pay them from the increased income.
If the income source is not a recurring one (which for me was an large, unexpected short-term cap gains distribution from a bond mutual fund), and was not part of the budgeted income, then I am not concerned about the taxes somehow busting my budget. I do have to be more careful about planning how and when to pay the additional taxes via estimated tax payments and the annual April tax payment the following year (to avoid any tax penalties).
And W2R, it is interesting how close our expenses are to each other's.
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But the question was what you spent... not how close to your budget... which IMO includes EVERYTHING where dollars went out, even if taken from the paycheck (if you still have one)... now, you can say that you spent X dollars and of that 20% was taxes because of .... but saying you spend .8X is not total spending...
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01-02-2011, 03:16 PM
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#129
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,154
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I never take into account income taxes as part of my budget and I never report it as part of my annual expense reporting. Those taxes get taken off the top before I even touch the money and they have everything to do with what my taxable investments do and nothing to do with my spending. I count all other taxes, like property taxes of course.
Audrey
__________________
Retired since summer 1999.
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01-02-2011, 03:29 PM
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#130
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Thinks s/he gets paid by the post
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,342
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I don't track my spending closely but last year I spent about $19,200, including a one time gift to a friend (who really needed the money) of $1500 and an overseas trip that cost about $1750.
I mention these two extras not because I'm deluding myself that they are "not really spending", but because they represent what I think of as non-recurring expenses which could possibly be cut if I needed to spend less in any particular year.
Some other item of non-recurring expense will almost certainly come up this year though, so yes, I spent about $19,200.
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01-02-2011, 04:39 PM
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#131
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
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Quote:
Originally Posted by Shawn
I bought a 2010 Honda Fit. I base my expectation that it will last 30 years on the length of time my 1980 Toyota Corolla has lasted.
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I have heard good things about the Fit. Should be a good Fit for LBYMers!
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01-02-2011, 04:42 PM
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#132
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Full time employment: Posting here.
Join Date: Mar 2005
Location: Punta Gorda, FL
Posts: 828
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I spent $ 21,000 in taxes and $`12,000 on health insurance right off the top. That is for the two of us. Kind of hard to get by without paying those two. I guess I could skip the health insurance, but that is going to be mandatory soon anyway.
Ive run some numbers and could probably get by on about $30,000 not including taxes and insurance. Maybe when the health subsidies start I should look into just pullling out $30,000 or so taxible a year.
We general figure 75,000 after tax, we just got carried away this year.
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01-02-2011, 04:56 PM
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#133
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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OK, everything we spent about $242,000
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01-02-2011, 05:00 PM
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#134
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
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Quote:
Originally Posted by deserat
Nords,
Thanks so much for being open and sharing this information - it helps my husband and I think realistically about the expenses we have/might have when retired and gives us a range of targets to meet with our income streams. I find this very generous of you towards this community and personally really appreciate it. In fact, I believe that anyone coming to this particular thread along with a few other selected ones would have a wealth of information on how to manage early retirement from many different perspectives.
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You're welcome!
You should see the Christmas card we got from a shipmate. She retired in June (at 34 years of service) in Belgium.
She and her spouse just returned to America last week...
__________________
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Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
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01-02-2011, 05:07 PM
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#135
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by aaronc879
5X my spending would be $60,000/yr. If I were still working to support my spending then I don't think i'd be any happier at $60K than $12K. However, if I were retired and didn't have to work either way then i'd be happier at $60K for sure. I'd be happier living on $12K while retired than $60K while working. So the important thing isn't how much I spend but whether or not I have to work to support that spending.
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True. One always gets a bit more pleasure with an incremental spending, provided that there is not too much pain associated with bringing in that income.
What I meant to say is that beyond the basic needs, we get to the diminishing return point pretty quick. At least it is for me. So, doubling the expenses does not bring about twice the pleasure. And then, there's the effect called "hedonic adaptation". One gets used to the new "stuff" and it loses its effect quick.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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01-02-2011, 07:16 PM
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#136
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,698
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Quote:
Originally Posted by ziggy29
This is why I look at both total spending and total spending apart from taxes.
If I look at the amount I need apart from taxes, I can get a rough idea about how much more than that I would need for taxes and add that to my total required pre-tax income when I retire. And the amount I would need for taxes is a LOT lower than the taxes paid now (and there would be no Social Security taxes, at least under current law).
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What you describe is just what I did in the years leading up to my ER in 2008. I had a projected budget for each major item, including taxes. However, I had a subtotal for all the expenses excluding taxes because as I varied the income projections, the amount of income taxes also varied.
As my previous post implies, I calculate my projected income taxes based on what I consider "typical" income. That is, only the monthly and quarterly dividends from my various mutual funds. I do not include any cap gains distributions because they are highly variable from one year to the next (and may be zero). And, as I wrote earlier, if I have any of them, I can in theory use those distributions to pay the taxes on those same distributions although if I reinvest them automatically I still have to find the money to pay the taxes.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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01-02-2011, 07:26 PM
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#137
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,698
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Quote:
Originally Posted by Texas Proud
But the question was what you spent... not how close to your budget... which IMO includes EVERYTHING where dollars went out, even if taken from the paycheck (if you still have one)... now, you can say that you spent X dollars and of that 20% was taxes because of .... but saying you spend .8X is not total spending...
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I understand that. But, because I no longer work and have nothing withheld from my investment income (i.e. dividends and cap gains), I handle my estimated tax payments just like any other expense. I have to write a few checks each year to pay for them. However, unlike my other expenses, this expense is driven mainly by the amount of the (taxable) dividends I receive. So, if those dividends or cap gains have an unexpected spike like they did in 2010, then my estimated taxes will have a similar spike. No other expense I have rises in proportion to my income.
This is why I prefer to exclude my income taxes due. Or, I can include the portion of the income taxes resulting from the spike in investment income. The amount of income taxes based on my "typical" income sources is about $2,300.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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01-03-2011, 10:48 AM
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#138
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by aaronc879
That's odd interesting. I feel like I don't belong after seeing the excessively high amount that most people here spend. Most of the people here spend more per year than most people I know earn.
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If you had a wife, 2 kids, and a mortgage, it isn't that hard.........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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01-03-2011, 10:50 AM
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#139
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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Quote:
Originally Posted by LOL!
OK, everything we spent about $242,000
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That's a BIG number......congrats!
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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01-03-2011, 10:52 AM
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#140
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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My largest expense is housing, property taxes and mortgage payments together are almost $3000 a month (accelerated principal payment plan). Looks like I could easily live on $2500 a month once the house is paid off............
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)
This Thread is USELESS without pics.........:)
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