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Old 12-30-2014, 05:27 PM   #41
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So your role changed, but your spouse's stayed the same. Same here, but I keep pumping money in (was: paycheck, now: brokerage accounts), and she keeps spending it!
Isn't that her job?
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Old 12-30-2014, 05:53 PM   #42
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Well, my wife takes care of the spending side too, but it is spending "for us". In fact, the idea of having a 2nd home and the RV comes from me.

Indeed, we never have separate accounts, and she spends little for herself. But recently, coming back from a trip to visit an out-of-state friend, she announced that she had spent several $K to buy some jewelry for our daughter as our wedding gift. That was not in any spending plan!

It is amazing that Quicken shows that our WR is still only 4.06% this year, despite other heavy expenses like improvement and repair on both houses, and partial cost for our daughter's upcoming wedding. Yes, if it weren't for this and for that, I could live on 2%WR.

Yes, back to the thread topic, I am fully and constantly aware of what we spend. Every day when I look at Quicken to see how my stocks and MFs are doing, the other side of the equation, the expenses, also stare me in the face.
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Old 12-30-2014, 11:13 PM   #43
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We started serious tracking our spending using spreadsheets in the late 1980s, when we were trying to figure out why our savings weren't growing... and discovered we were spending several thousand dollars more than our income Tracking helped us identify the culprits. We used the spreadsheets for a couple of years, then CA-Simply Money - I think because it was much cheaper than Quicken, or maybe even free. But then we moved to Quicken in 1997.

With many years of data we focus more on identifying variations... we know now when certain expenses will peak in a year and can better plan for that. It also helps us focus on the "heavy hitters" - those areas than make up the bulk of our spending for which we can make inroads on reducing our expenses. Seeing how the categories trend over the years helps in in future planning. We've been able to cut expenses 30-50% in several categories as seeing the trends motivated us to look for alternatives.

Now that we are FI, we are still saving but feel more comfortable doing it at a reduced rate. For example, if we do something that cuts spending in a category by $500 over the year, we'll feel comfortable increasing spending by $200 in another more "fun" category. Still LBYM, but not the need to go as "deep" as before.
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Old 12-31-2014, 09:43 AM   #44
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I have tracked continually since I got an IBM XT. The biggest pita is splitting Walmart receipts...groceries, cloths, gifts, medicines...you name it.
My Quicken file goes back to 1997 (and various other means for tracking for about 5 years prior), so I can relate to your comment on the receipts. I was greatly pleased when grocery and other store receipts went from a simple list of prices to including individual item names. Made detailed tracking so much easier.
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Old 12-31-2014, 10:20 AM   #45
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My Quicken file goes back to 1997 (and various other means for tracking for about 5 years prior), so I can relate to your comment on the receipts. I was greatly pleased when grocery and other store receipts went from a simple list of prices to including individual item names. Made detailed tracking so much easier.
I'm looking forward to the day that there's a QR code on the receipt that has the spending category totals (with tax allocated) buried in that miriad of tetris-like blocks.
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Old 01-01-2015, 01:16 PM   #46
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We do not track our spending so out of curiosity I just did a spreadsheet...

Seems a bit high but I guess it is what it is. We are a family of 4. For many years we did quicken and did a lot of tracking of categories and such but stopped doing this a long time ago. Any thoughts on whether we are blowing our money?
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At the beginning of this year I signed up at one of the online money management sites, linking my checking account and the credit card I use for most of my day-to-day spending. It's easy, and I'm looking forward to having almost all of my spending data in one place for some end-of year evaluations.
OK, so I've now finished a January 1 download of 2014 expenses from Personal Capital to a spreadsheet and - after some minor sorting and summing for category subtotals and adding in payroll deductions that never make the bank account - for the first time ever I have a categorized list of where all the money went.

There were a few surprises, and some opportunities identified. YMMV, of course.
  • Total housing expense was more than I expected after adding everything together: mortgage, house utilities, property taxes, insurance.
  • Same for total auto expenses and hobbies.
  • Over $120 a week in ATM cash flew out of my wallet. Work lunches, vices and garage sale / convenience store purchases probably represent about half of that. I've made a resolution to put more of my small cash purchases on a credit card in 2015 so I can track a greater % of expenses via software.
  • A few thousand dollars was spent on a secondary credit card and is in the "other" category. I'll link that one to Personal Capital today so those expenses can be categorized next year.
  • The information economy is expensive. Cable, a newspaper subscription, internet, Netflix and phones add up to a big number. There's room to economize some, but being a sports fan may limit the savings opportunities.
  • $2400 on clothing and dry cleaning!
  • $3000 at restaurants, not counting work lunches paid in cash. Not too bad, considering the total includes picking up the bill for two sizable celebration dinners.
  • Categorization helps a lot in identifying and zeroing in on expenses that are likely to be reduced significantly when I ER in few years (roughly when DD #2 finishes college and gets off the payroll). I could name most of them before this exercise, with tuition and college R&B being the two largest. FICA / medicare deductions, life insurance premiums and professional dues added up to a bigger number than I expected.
  • Interest income doesn't count for even a rounding error these days.
It feels good to get my year started this way. I've upped my ER game significantly, without much work.

My total effort for the year was somewhere around 7-8 hours, including an hour for initial account setups, about 5 minutes a week to review transactions for correct categorizations, and 3 hours of work on New Years' Day.
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Old 01-01-2015, 01:24 PM   #47
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It feels good to get my year started this way. I've upped my ER game significantly, without much work.
You sure have! Congrats on making this big step. It just gets more and more interesting, the further you drill down into it.

Every day I count the money in my wallet, record what cash was spent and on what, and "balance my wallet", so to speak. It only takes about 30 seconds by now because it's a habit. Doing this took a lot of the mystery out of where my ATM cash goes. I used to just record it as "ATM", but drilling down into this category can be interesting and fun.
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Old 01-01-2015, 02:46 PM   #48
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  • Over $120 a week in ATM cash flew out of my wallet. Work lunches, vices and garage sale / convenience store purchases probably represent about half of that.
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Every day I count the money in my wallet, record what cash was spent and on what, and "balance my wallet"... drilling down into this category can be interesting and fun.
W2R, I'm fairly confident that "interesting" would apply if I followed your advice to the letter, but for me there's a quick-to-appear point of diminishing returns on the fun part.

Besides, for some of that cash spending, Dr. Heisenberg's principle applies: "The more precisely the position is determined, the less precisely the momentum is known in this instant, and vice versa"
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Old 01-01-2015, 03:11 PM   #49
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That doesn't seem excessive, for a family where one or more people are working, unless everyone wears an employer-supplied uniform/jeans and sneakers every single day. (Since you pay for dry-cleaning, I assume that's not the case). Heck, I spent over $600 on athletic clothing and shoes in 2014, and all the clothing was on sale. My shoes cost $100+ a pair.

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O.
  • $2400 on clothing and dry cleaning!
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Old 01-01-2015, 04:14 PM   #50
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No longer working, what we spend for clothing is so low it must be down in the same level as what we pay for spices for cooking. Other than getting socks and underwear, I have not bought anything new for quite a while.

Recently, when my T-shirts got so worn and needed replacement, my wife went through her storage boxes and pulled out spanking new T-shirts that she had been squirreling away. These are either souvenir T-shirts we bought in our travel, or like the promotional ones that her megacorp handed out. The date on one that commemorated a charity drive: 1994!

I thought I'd get to spend some money on a new suit for my daughter wedding, but so such luck. My wife dug out some suits and had me try it on. Other than needing another inch or two added to the slack waist, they still fit. I guess I won't be getting anything new now.
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Old 01-01-2015, 05:04 PM   #51
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If you are spending $63K now you should evaluate which expenses will drop off in ER (education? mortgage?). Will $90K cover taxes, health insurance, and the $63K? Will your assets return sufficient funds to safely spend $90K. If both answers are yes you are good to go.
+1

We track expenses very closely, but it's mostly a curiosity thing. The only use is that some categories might go down after a big change (like kids moving out, or quitting a job, or just plain aging), and more detail may help you think about the relative sizes of those changes.
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Old 01-02-2015, 04:56 PM   #52
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Recently, when my T-shirts got so worn and needed replacement, my wife went through her storage boxes and pulled out spanking new T-shirts that she had been squirreling away. These are either souvenir T-shirts we bought in our travel, or like the promotional ones that her megacorp handed out. The date on one that commemorated a charity drive: 1994!

I thought I'd get to spend some money on a new suit for my daughter wedding, but so such luck. My wife dug out some suits and had me try it on. Other than needing another inch or two added to the slack waist, they still fit. I guess I won't be getting anything new now.
Perhaps I have too vivid an imagination but this just conjures up an image of a small, neat lady leaning over a huge wooden bin only slightly smaller than a dumpster stored in the basement, arms a-flying, clothes a-flinging until she triumphantly says "Aha! Found it!"
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Old 01-02-2015, 08:13 PM   #53
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It's not a big container of a dumpster size but several boxes of the type to hold bond paper reams (500 sheets/ream, 10 reams/box). And they are not stored in the basement but stacked up in our closet. And the old suits were hanging in the closets of the spare bedrooms.

And last but not least, the little lady doing all this squirreling is mighty cute too.
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Old 01-03-2015, 01:15 AM   #54
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I have an accounting and finance degree. The finance degree made me realize I do not need to do the accounting. The category I tracked was the amount I invested every year. How any other money was spent was of little importance but I'm assuming it was to sustain life and have fun.
Awesome.
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Old 01-03-2015, 09:57 AM   #55
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[*]$2400 on clothing and dry cleaning!
The Consumer Expenditure Survey says that the average for households made up of "husband and wife with children" was $2,461 in 2013. So it looks like you are about average. http://www.bls.gov/cex/2013/combined/cucomp.pdf
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Old 01-03-2015, 01:09 PM   #56
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As previously mentioned, my keeping track of expenses with Quicken is mainly to see if I exceed the self-imposed goal of 3.5%WR. But I found it interesting to look back to see the variation in different categories over the years. I knew about the years when we had big unusual expenses like home repair, vehicle purchase, or charity donations, but the most unexpected thing is our grocery expenses. It went down significantly in the last few years. The grocery expenses for 2014 were only 65% of those for 2012.

So, I looked a bit deeper, and the only thing I saw was that we now go to Costco much less often, and shop more at Fresh-n-Easy and Sprouts. Costco sells in big quantities, in contrast with the latter stores who sell in smaller packages. As we rarely throw food away and eat it all, we are really eating a lot less than we used to. Whoa! Maybe drink less too.
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Old 01-03-2015, 01:57 PM   #57
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I have carefully tracked expenses for the past ten years, and I have gotten to where our year-end spending regularly is within 1% of my starting estimate. We don't do this to impose budget discipline of any sort - we spend as much we want, whenever we want. Rather, it is more to understand precisely how much we'll need to cover in retirement. I also know where to cut should things run tight - primarily fancy overseas vacations, dinners out and wine.
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Old 01-03-2015, 02:48 PM   #58
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I find it impossible to make exact plans for contingency, other than to leave a lot of headroom for the unanticipated.

I started running Quicken only in mid 2010, hence only have accurate data for the four years of 2011 through 2014, but always have a rough idea of what the recurrent charges are. It is always the lumpy "one-time" charges that add up. But then, perhaps it's because of the available headroom that I allow myself to spend.

In the past 4 years that I have accurate data, 2011 was my biggest year: younger son still in school, and us helping daughter with a big down payment on a house. But I still had part-time income, so we did not at all hesitate with our generosity. And our expenses were higher still in earlier years, but I did not have the category breakdown.

My daughter's home has appreciated to 180% of what she paid, so we felt pretty good. If nothing else, I hope we showed her the advantage of having savings, read cash on hand, to buy things on sale, whether it's real estate or stocks.

The next year, 2012, saw my expenses dropping to 73% of 2011, and I started to think that my worry would be too much money I would not know how to spend. Ha!

My expenses then climbed back up, and were 22% higher in 2014 than that low year of 2012. It is still significantly lower than 2011, however. And my stash has grown too, but I cannot count on that every year.

So, my plan in retirement is still the same as when we were working. Leave plenty of headroom relative to what we think we need, because we will always manage to use it up.
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