Poll: How long did you track expenses before ER ?

[freebird5825]

I downloaded a budget/expense Excel template from Microsoft's template library and slowly but surely customized it for myself. I entered data and maintained it for 2.5 years prior to giving my 6 week notice.
I despise spreadsheets, but I knew I had to bear down and get a handle on what my current (preFIRE) and projected (postFIRE) basic expenses would be.
I knew I had 7 years to go until I could draw my own deferred FERS pension. Since 2007 when I FIREd, I have been living on a modest CSRS survivor pension and my TSP account converted into an immediate fixed annuity earning 5.25%.
I assumed several things would go wrong (replace a car, furnace died, market went south, inflation went berserk, etc) and ran some what-if scenarios. I did have to replace a car last fall, and it did not dent my budget a bit.
I can apply for my deferred pension, eligible to collect in Sept 2014 under FERS MRA+10 rules.
Then the real party begins....wooooooo

Every 2 years, I go back and update the spreadsheet data. I'd rather eat liver but it has to be done.

 

[Southern Geek]

For me, about 20 years in Quicken. Of course I wasn't tracking for the purpose of preparing for ER 20 years ago, but when I wanted to assure myself of the numbers, I had 20 years of data to look back at.

I spent about 12 months analyzing the data before making the final decision to quit my job though.

Same here. Over 20 years of Quicken data, but I only really analyzed the 5-7 years prior to retirement.

 

[Bikerdude]

I didn't track expenses much prior to retirement mainly because I knew that I was making my basic needs with my current take home pay. Once I retired I did start a spreadsheet to ensure I was staying within budget and to project next years expenses.

 

[NW-Bound]

As I look at my expenses as downloaded and presented by Quicken after the fact (just a click on "update all accounts" does it), I pay attention to the expenses over the trailing 12-months. That should catch any worrisome upward trend. If it stays below 3.5% WR, then party on.

What I like about using something like Quicken is that if I wonder how much I spent on any particular category such as fuel for my motorhome for last year, just a few clicks show me that. Same as other posters, I do not bother to break down amounts spent at Costco into food or toiletry or other sundry items. It's not something I would change whether I know or not, nor the biggest items to worry much about.

 

[scrabbler1]

I began keeping better track of my expenses back in 1989 when I first bought the co-op apartment I live in today. Back then, I did not own a PC so I used a piece of paper with columns for income and my major and easily trackable expenses, and one row for each month.

In the early 1990s, after I began investing in mutual funds in a taxable account, I created a summary sheet for my expenses and included categories for nonwage income while separating out the co-op expenses into taxes, interest, etc. which I already knew from the 1098 forms.

In 1995, I bought my first PC so I not only created spreadsheets for all the stuff I had been keeping track of on pencil and paper but created new spreadsheets which not only did calculations but also built up a database by putting all the years together side by side. I created a spreadsheet with a checkbook register linked to a skeleton version of income tax forms, a vital spreadsheet for my everyday use.

In 2001, when ER first appeared on my radar (I switched from working FT to PT), I created another key spreadsheet which looked forward as opposed to simply recording historical expense data. I began projecting income and expenses in a potential ER down the road. I eventually added a worksheet with projected SS benefits and a budget for my part-time working years into ER. This is a vital spreadsheet which replaced my back-of-the-envelope system I used for my monthly budgets in my FT working days.

 

[Midpack]

We started tracking expenses in detail about 10 years before retirement, using homegrown spreadsheets. I tried Quicken several times, never warmed up to it.

Fortunately DW and I are naturally LBYM and debt averse, so we've spent less than we made since before we married 34 years ago even though we didn't track expenses. We had loose budget figures in our heads, but we only occasionally sat down and tallied up what we were spending by expense category (every couple of years maybe).

 

[NW-Bound]

Here's another reason I want to track expenses, something we never did in our full-working years. I want to see what are truly discretionary expenses, vs what are essential. I do not want to fool myself that I can cut back in case of economic bad times if I really cannot.

So, perversely a lot of discretionary expenses is a good sign. Included in this category would be charity donations, gifts to family members, travel expenses, toys, extra cars, etc... I will even throw the expenses for the 2nd home in there.

And heck, if things get really really bad, even my main home can be let go. Who says that I need more than my little 8'x25' motorhome*? So, me worry?

* Well, DW does, actually.

 

[Katsmeow]

I've often wondered how much I've earned or spent in total over time. I would be curious to know whether you have kept a cumulative total, and in what ballpark it is.

Not really, mostly because of differences in software that I used. For the first several years I used Managing Your Money. After it went kaput, for years I kept that data and a copy of the program electronically, but I lost it when a hard drive and my back up went bad at the same time.

I do have a summary of expenditures by category from 1993 on with one year in the mid-2000s where I changed programs during the year and ended up losing some data and the data is incomplete. I have some underlying data from that time period but during that period I used Microsoft Money, Quicken, and YNAB at different times. I also used different versions of these programs not all of which is totally backward compatible so some of the data I have is not easily accessible. But it is interesting to look back at what I spent back then. I've never thought to look at the cumulative number.

 

[sengsational]

DW used to roll her eyes back in her head when I attempted to sit down with here and go over each line item. So I just threw in the towel on that task.

Same thing here. But the data built-up before the towel was thrown was the basis for the monthly transfer. She got budget responsibility for all the stuff she typically bought, including groceries and her cloths, among other things. The side effect? "Me: Oh, that IS a nice pair of boots (thinking: what does that make 12 pairs now?). What's for dinner? Her: Bologna sandwiches".

Here's another reason I want to track expenses, something we never did in our full-working years. I want to see what are truly discretionary expenses, vs what are essential. I do not want to fool myself that I can cut back in case of economic bad times if I really cannot.

DW (and I, to some extent) actually do a rough "split category" when going to Super Walmart or the like, but only if it's something 'big'. As much as we spend on cars (10% of total spending [sans income tax]), I thought we should be able to punch in "essential", "social", etc on the dash for each trip and get that split, hehe.

 

[tuixiu]

I want to see what are truly discretionary expenses, vs what are essential. I do not want to fool myself that I can cut back in case of economic bad times if I really cannot.

Man would that be a struggle staring at the word "beer" on the piece of paper...

 

[NW-Bound]

Even in hard times, one can justify beer if he classifies it in the "food" category, so that it has a higher priority than soap or deodorant. Problem solved.

 

[ERD50]

Even in hard times, one can justify beer if he classifies it in the "food" category, so that it has a higher priority than soap or deodorant. Problem solved.

And if you make it yourself, the ingredients are taxed at the lower food rate in IL (barley, oats, wheat - those are food). So sure, it is in the food category (Liquid Bread as the Monks called it).

edit/add - to address the OP, like some others I have never tracked expenses at the micro level. But I've been tracking at the macro level, which is EZ. We have only two accounts that bills are paid from, so I add up total withdraws, subtract anything that was a 'transfer' (IRA contributions, and things we bought for others and they paid us back) - that number is what we spent. And I add in any planned/amortized purchases (replacement cars, expected maintenance) - something that many fail to account for.

-ERD50

 

[jimnjana]

I voted 1-2 years. I used a spreadsheet. Took the data and used it as a budget guide for the first few years of retirement. Most budgeting now is just reviewing the checking account balance a few times a month.

 

[Elbata]

I have never tracked expenses nor ever kept a budget.

But I do admire you folks who do. It must really be cool to see where all the monies go.

 

[daylatedollarshort]

I try to follow a budget for some variable monthly expenses now, like groceries, household and eating out.

I don't bother with the fixed expenses like health insurance premiums, because they are, well, more or less fixed. And things like medical are what they are. We don't go to the doctor more or less than we need to due to what is or is not left in the budget. We have pad in the budget if we have a high home repair or medical expense year.

 

[keegs]

My CR provides a tracker called FinanceWorks. It categorizes transactions and charts them for you. It's usually pretty good at this although I sometimes have to manually categorize or re-categorize some transactions. It's very helpful and it's free to members.

 

[Brett_Cameron]

I started with loose leaf paper and pencil in the 80's, tracking spending, estimating income and taxes, etc. I bought my first computer in 1993 and have gradually built a truly glorious spreadsheet that makes it a lot easier and more fun.

 

[Independent]

Here's another reason I want to track expenses, something we never did in our full-working years. I want to see what are truly discretionary expenses, vs what are essential. I do not want to fool myself that I can cut back in case of economic bad times if I really cannot.

So, perversely a lot of discretionary expenses is a good sign. Included in this category would be charity donations, gifts to family members, travel expenses, toys, extra cars, etc... I will even throw the expenses for the 2nd home in there.

+1

It's easy to say "We'd cut back somewhere". It's more useful to say "This is the list of things that we enjoy today, that add up to $XX,000, that we would live without."

 

[Live And Learn]

+1

It's easy to say "We'd cut back somewhere". It's more useful to say "This is the list of things that we enjoy today, that add up to $XX,000, that we would live without."

It's also useful in understanding the level of risk in the budget. If you have a lower discretionary expense level (as I do) then it might even make sense to do OMY to build a larger buffer.

 

[brett]

I knew our fixed expenses. Just went through the bank chequing account for ebill and Visa payments. Added them up. Added about 30 percent for variances and for travel that we intended to do.

Three years later we are, over that three year period of retirement, bang on our annual after tax budget.

We really do not/did not analyze it down to the last category/last dollar. Not interested in doing that. We are careful spenders who focus on value.

 

[daylatedollarshort]

We cut a boatload of expenses to semi-ER. It was wild how much we cut just by 100s of little things that knocked off us both working full time another decade - LED bulbs, drying racks, reducing paper towels and napkins, using Entertainment coupons, making our own natural cleaning supplies, getting a 2% cash back credit card, getting rid of the land line, negotiating the cable bill, changing grocery stores and just a bunch of little stuff that all added up.

We still live in the same house, drive the same cars, and have the same basic lifestyle - only a lot more free time. We just had to learn to spend our money more efficiently.

Every $100 a month cut meant needing $60K less in the nest egg over a 50 years retirement ($100 a month X 12 months a year X 50 years).

 

[dtbach]

I have never tracked expenses nor ever kept a budget.

But I do admire you folks who do. It must really be cool to see where all the monies go.

+1 on this. I tried a few times but thought it was wasting time I could do other stuff with. I just take out 3.5% and that seems to be enough to pay all the bills month after month.

 

[jkern]

I've been tracking expenses for 25 years. For retirement purposes, I think 2 or 3 years would be sufficient.

 

[NW-Bound]

...I have observed that over the last 3 years, our non-recurring and unplanned expenses have run around $10K/yr easily. Examples include home and car maintenance, health expenses, etc... Nothing alarming at this point, but we do end up spending more than we thought.

My budget for these 'accrual' type / lumpy expenses is 11k / year so your 10k makes sense to me.

I forgot to say that the above $10K/yr "occasional" expenses did not include the $10K/yr healthcare deductible that we exceed 3 years in a row. And that has been paid out of an HSA account that we had built up to $40K from years of perfect health. As I already counted the yearly HSA contributions as expenses, I kept this HSA account off my Quicken portfolio.

I consider that HSA prepaid healthcare expenses, which I will definitely tap in my later years. I could not believe I drew on it so soon. It's just to show that one can never know.

 

[jcretire77]

I've tracked my expenses for more than a decade. Married again about two years ago and we have not co-mingled our assets yet. My DW and I are so similar in regards to finances that we each had almost equal assets and equal pay. I spent more each month this last year, but together, less than 6K / month. Budgeting for retirement 7.5K (taxes, more travel) + 2K / month health care which is high where we live and we both are in good health and no debt.