Never good at tracking spending/budgeting

[RobbieB]

I just guessed and estimated, ran a bunch of calculators and did it.

[Omega]

I can appreciate this post. I've recently decided to seriously think about retirement and it was suggested that I carefully track my expenses. I have no idea how to really do that! It's easy enough to figure out how much came in and how much went out, but I'm not even sure where to start for exact numbers on food, toiletries, gas etc.

I've been looking at apps and am considering Wally. Anyone use Wally or similar?

[kgtest]

I like to see where I came from and where I am heading, so I budget.



I have some high level categories, that roll-up into 3 expense "buckets" or pie pieces (Red, Green, Blue)



One bucket is RED: Taxes, the other is insurance, then we have daycare and FEES(Yes I try to track my fees).


The next bucket is GREEN: Mortgage (good debt), Retirement Contributions (401k 403b, Roth, 529, HSA)


and my final bucket is BLUE: I call this my delta, this is what I have leftover as discretionary to spend. Includes travel, groceries etc.



I've tried to project into the future and I've realized that my RED piece of the pie shrinks, expanding my blue piece of the pie. The idea being the closer I get to FIRE, the more GREEN I want to see in my pie.

[Ronnieboy]

Thanks for all the replies.

The hard truth is yes I am lazy about going about the process. I believe (with my ball park figures) we are <5 years to early semi retirement and that should be enough to kick me in the butt to nail everything down.

I like the checking account in and out because everything goes through that for us too. Roth-IRA, after tax savings, all expenses.

Time to batten down the hatches and get the rest of the way to the shore of early retirement!

[mountainsoft]

Quote:

Originally Posted by Ronnieboy I know the mantra about retiring early is to know your expenses. I have never been good at tracking our expenses down to the penny or even having a budget. It has always been ball park figures. So I thought of two ways to to get a rough figure of what we spend or what we would need to replace to be as comfortable in retirement

Like you, we're about five years away from retirement. I determined how much we would need in retirement using methods similar to those you describe. I approached it both ways, until the final result was fairly close so I knew I wasn't over looking something.

For the first method I looked at our federal tax return to see how much we earned for the year. Then I subtracted items from that amount I knew we would not have after retirement. Things like saving for retirement, union dues, parking fees, life insurance, and other items I determined by looking at pay stubs to see what expenses were being taking our of our paychecks.

For the second method I downloaded checking and credit card transactions from my bank. Then I sorted through them adding up things like eating out, car repairs, utilities, groceries, and other items we had spent money on.

After calculating everything out with both methods, I think I was only a couple hundred dollars difference between the two. So I am confident how much we actually need to live on each year.

Then I added new expenses we will have after retirement, like healthcare and slight increases in recreation and travel spending.

Of course, expenses change over time so I keep an expense estimate chart and update it once a year or so just to make sure our needs have not changed.

[walkinwood]

ER is a risky endeavour and we all try to reduce / understand that risk as much as possible.


Since you use credit cards for everything, keeping track of your detailed spending is easy. I use Quicken, but other money management/budgeting software also allows you to download transactions from credit card companies directly into the software. Keep categories simple & few. It may take some time & effort to get started, but maintaining it doesn't take much time at all. I do it once a week - maybe - and then about once a month (or two) I do an "expense report" and we eyeball it to see where our money is going.



It is an easily learned skill and one that will serve you well when you're on a "fixed" income. It becomes a zero sum game. What you spend on item A, you don't have for item B. Knowing where your money is going and whether it is giving you the appropriate satisfaction is important to know.

[NW-Bound]

A nice thing that comes out from tracking expenses is that I can look up past records if I forgot when we had the house painted, or bought that pool pump to see if it is still under warranty, etc..., without having to dig up various files.

It is really painless. I hit "auto download" once each day on Quicken, and that's mainly to capture any trades or dividend payouts. Then, looking at the expenses, I would enter a personal note of "pool pump" to that particular charge. I can later search for these keywords to find out when I bought it. And of course, I would be sure to have that pool pump classified under "Home Maintenance" so I could see if my homes are truly money pits.

PS. Just searched for it. Yes, on Oct 14, 2014, there was an expense of $1454.62 with the above label. If I ever needed any info, it's all in there.

[audreyh1]

We started downloading transactions and assigning categories in a Quicken almost 30 years ago so tracking has been super easy for us.

When we started planning for retirement, it was very easy to project spending on this historical data, plus of course I had to estimate how thing might change.

I still have a budget for planning purposes, but it’s not very rigid. It’s more of an inflated “wish” budget that we usually don’t exceed, but it does let us set aside funds for charity and gifting.

The historical repository in Quicken is very valuable. I’m often looking up things or running reports to answer a question.

[Fireup2020]

DH is both impressed and amused by my OCD spreadsheets...take the advice here...find a system that works with the way you think so you will actively USE it. You’ll thank yourself soon!