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Old 05-01-2008, 06:13 PM   #41
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I have friends who have broken 100 but they do so by not following the rules. I don't begrudge them or look down on them for doing so; I do disagree with their approach and I don't do it that way for myself. I am really hoping one day that I will break 100, and when I do I know that it will be because I really scored less than 100.

A similar thing happens with FIRE and expenses. I can claim that I spend $12K per year by excluding certain categories or types of expenses when in fact Quicken tells me the true number is more like $60K. Unlike golf, where the result is unjustified bragging rights, in the case of the 4% rule if I mentally exclude certain costs I run the risk of pretending myself into an unsafe SWR situation. Put another way, even if I mentally exclude taxes (or vacations, or charitable giving, or roof replacements, or whatever) from my annual expenses, I sure as shootin' better include them in my spending when I am figuring up whether I am spending less than 4% of my FIRE stash. To not do so represents a certain kind of peril which can be avoided.
Great analogy! As long as one is aware of reality and not pretending when computing SWR and needed nest egg size, I supposed it doesn't matter what they include or exclude.

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In a similar vein, I think it is far better to measure and track 100% of one's finances for at least a year before retiring and ensure that spending is "4% safe" than to say, "Oh, I can cut back on spending this or that and get my spending down to $X and so I can retire now", which is even better than just guessing at one's expenses without tracking. YMOYL makes a similar point when it suggests tracking one's income and expenses over a long period of time. I have done so and I know for a fact that my expenses have tracked right around $5k per month for a number of months. Knowing this represents an increased degree of certainty and therefore security to me in my FIRE planning.
I would go one step further and suggest that it might even be smart to track 100% of one's finances for five years before retiring, if possible. Some years my emergency fund remains pristine and untouched, and then there are years when large expenses pop up one after the other.
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Old 05-01-2008, 06:39 PM   #42
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I forgot to mention I sometimes substitute Tyson breaded chicken sometimes for the pasta meal on some days, slightly more expensive per serving, more like 50 cents a serving (including either meijer/on sale heinz ketchup) (national brand ketchup is a bit ridiculous, it can be more than half off if it is on sale) instead of 40 cents for pasta. It depends on whether I have not been feeling "full" lately (I can tell when I a not getting enough protein from this, vegetable/fruits are much harder to gauge so I do those regularly). The milk I drink also provides some protein. I also may substitute peanuts for pretzels as well if I am feeling less fulfilled than I would like from what I am eating, it costs about the same per serving (I particularly like honey roasted).

The rest of my income goes towards maxing my Roth each year and setting aside the rest for the eventual tuition loan payments I will have when I graduate. I previously had 3.1% aggregate interest federal loans subsidized by a state program, but that program just died, so I will be probably be saving less money and instead put the money directly towards tuition to avoid as much of the 8.5% federal grad+ loans as possible, which I don't consider a good deal.

As to my health, yes, I am very healthy, I haven't been sick in about 6 or 7 years, my BMI is just a bit below optimal for my height (I am 6' 3), so that means I am a bit thin. I am usually laid back, rested and not too stressed, despite a stressful and demanding schedule.
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Old 05-01-2008, 06:49 PM   #43
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You are doing wonderfully, Plex, and it sounds like you are probably getting better nutrition than a lot of people who spend much more for their groceries. It's good that you keep track of your BMI so that you can be sure you are getting sufficient food.
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Old 05-01-2008, 07:16 PM   #44
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Originally Posted by SecondCor521 View Post

A similar thing happens with FIRE and expenses. I can claim that I spend $12K per year by excluding certain categories or types of expenses when in fact Quicken tells me the true number is more like $60K. Unlike golf, where the result is unjustified bragging rights, in the case of the 4% rule if I mentally exclude certain costs I run the risk of pretending myself into an unsafe SWR situation. Put another way, even if I mentally exclude taxes (or vacations, or charitable giving, or roof replacements, or whatever) from my annual expenses, I sure as shootin' better include them in my spending when I am figuring up whether I am spending less than 4% of my FIRE stash. To not do so represents a certain kind of peril which can be avoided.

In a similar vein, I think it is far better to measure and track 100% of one's finances for at least a year before retiring and ensure that spending is "4% safe" than to say, "Oh, I can cut back on spending this or that and get my spending down to $X and so I can retire now", which is even better than just guessing at one's expenses without tracking. YMOYL makes a similar point when it suggests tracking one's income and expenses over a long period of time. I have done so and I know for a fact that my expenses have tracked right around $5k per month for a number of months. Knowing this represents an increased degree of certainty and therefore security to me in my FIRE planning.

2Cor521

Good point ! I tracked my expenses for seven years before I retired. I saw some places I could cut back if I needed to and some places I wanted to cut back on . Since I retired I'm at less than 2.5% so according to many books I should be spending more . Funny thing is after years of budgeting I'm not sure I can . I buy nice clothes , good food , lots of presents , partially support my mother ,give to charities ,entertain and travel .What else is there ?
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Old 05-01-2008, 08:57 PM   #45
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I've been tracking monthly expenses (no mortgage, doesn't include taxes or private school tuition) in a couple dozen budget categories for about 5 years. Our average for a family of 3 (including one voracious teenager) for the last 12 months is $5750/month. That's much less than half our gross income. My projected ER budget for just the 2 of us will be $4500/month. Nearly half of that will be two items: health insurance + groceries. We eat organic as much as possible, consider it a health investment, but it is a significant expense, and might get a closer look in retirement. I'm budgeting $400/month for travel in retirement, $250/month for dining out. We live well, don't feel deprived, could live on somewhat less if necessary, but would rather not.
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Old 05-02-2008, 01:04 AM   #46
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I live in northern California - San Francisco Bay Area - arguably the most expensive place in the country (although I live in one of the less expensive cities in the Bay Area).

Last year was a little higher than normal for income tax. Normally it's about 50K/yr. However, it's still somewhat ironic that I get taxed about twice what I spend. I think the government needs the will power.
Your budget looks very similar to mine (except I rent instead of paying down a mortgage - not much of a choice since I moved to the Bay area in 2005 ). Nearly twice as much in taxes as in expenses, rent is over 40% of expenses and student loan debt is another 10%.

Not only do I not feel deprived, but I really can't imagine what else I would spend money on. I eat out, take decent holidays, leave town most weekends to play, and have more than enough stuff.
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Old 05-02-2008, 06:49 AM   #47
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Yes, I spend 100/month of groceries. As mentioned, I never eat out, except maybe once a month, and put that under Misc. I only eat out for purely social reasons, it is almost physically painful for me to be spending 3-4 times as much on food than I normally would. I live in the Midwest and buy my food at Meijer. 90% of what I buy is on sale, 8% is low cost staple itmes and 2% are "splurges." usually just one or two items.

If I am working, I bring a low cost microwave meal, something in the $1-$1.50 range (often healthy choice on sale). Also go through 75 cents in snacks. However, my work provides some fairly decent green tea for free, which offsets the extra cost of the convenience meal, I usually go through 8-10 cups.
Looks like you are doing a great job of LBYM. Glad I don't have to do this but a good way to go when you are on a tight budget. I will eat a health choice dinner on a rainy day, but I couldn't eat these on a daily basis. I bet you are a very thin person. Which is not a bad thing.
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Old 05-02-2008, 07:30 AM   #48
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I know several people on this board were married to real spenders but I do not understand how you can not still accumulate money . From your posts I wonder if it is just that you finally started LBYM at a later age . My first husband was a spender but I was still able to squirrel away some money and then I spent seven years as a single Mom and saved enough to put my children thru college . So how can people possibly get to be in their fifties with no savings and high earning potential ? I'm not being facetious I truly don't understand .
I don't understand it, but have seen it happen with other people and for the life of me I simply cannot fathom what they are thinking. A good friend tried to explain it. He believes that "fate" will decide if he has money, and if he doesn't have it, then "it wasn't meant to be". This guy is not stupid; he's a regionally well-known and respected aircraft mechanic, is a mechanical genius, has his Airline Transport Rating pilot's license (not an easy rating) and is qualified to fly left front seat in a number of multi-million dollar jets. Owners of those airplanes don't let stupid people fly them.

He's also the one who said that I have a "controlling personality" when it comes to finances because I think it is necessary to save for unknown future needs, and asked "What is all that money in the bank doing for you?" My response is that it gives us options. I tried to use the analogy of him knowing how to manage fuel among tanks on a long flight compared to managing money in his life but he didn't get it. Just a blank look.

Just a whole different outlook on life I suppose. Live for the present and let the chips fall where they may in the future. But it helped me understand my ex's behavior because I saw the same type of outlook.
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