How much did you spend in 2010?

[Danmar]

I do not track income taxes separately but instead treat them as a reduction in income. All expenses must be paid with after tax dollars (except alimony). I will not mention the dollar amount of expenses but they are very large. No porn from me.

 

[dm]

Our average spending in 2007, 2008, and 2009 came out to be around $72,000 not including taxes. No debt.

This year we spent $92,000 , not including taxes and $30,000 we spent on a new car. The budget busters were $15,000 to one of the kids, $5,000 for a new motor in the truck, and $3,500 on travel trailer repairs. Hopefully we will do better in 2011.

 

[Nords]

Reading all the porn here got me excited to try (again) to track expenses for the coming year. Just a quick gander through the check book makes me think we "spent" something upwards of 100K this year, but that's misleading. So many "expenses" are tax related in one way or another. These are non-recurring or discretionary. They really aren't related to daily living.
How, for instance, does one account for the non-recurring "expenses" such as realtor fees for the sale of a property? That didn't even come out of the check book. How, too, do folks account for their tax payments? Do you count 2010 taxes in 2010 or when they are actually paid (some in 2009 - carry overs, some in 2010, estimated payments, some in 2011 catch-up for e.g., extra Roth conversion in the final quarter of 2010)?
How do you account for taxes paid on e.g., Roth conversions, in general. Realistically, you could look at the taxes as "owed" because you own a TIRA. If you pay the taxes, aren't you really just exchanging one asset for another? A $100k TIRA is the same as a $70k Roth (100 minus 23k Fed taxes and 7k state taxes roughly)?

The only answer that we've agreed works for everyone is "Whatever works best for you".

GAAP doesn't apply here, unless you want it to. The advantage of this kind of thread is that you see the different ways people look at things and you can pick off the techniques which work for you.

Personally I count the taxes in the year they're paid, although of course some are for the previous year. I don't show every single one-time event because I'm more interested in tracking expenses in the same category from one year to the next. When a poster expostulates about the high rate of inflation we'll be able to say "Depends on what kind of spending you're talking about", and point to the data.

2011 will be our first full year as empty-nesters. I'll finally be able to make some meaning comparisons to parenting expenses.

When we (someday) decide to sell our rental property, I'll look at its current cash-on-cash return vs what we'll get when the after-fees after-taxes amount is invested in a CD. Right now 3-4% cash-on-cash is lookin' pretty studly, but we'll see how I feel about that if three-year CDs get back up to 6.25% while I'm fixing plumbing leaks.

 

[haha]

I think there is a lot of creative figuring going on . I only spent this amount but it doesn't include this or that . That is fudging the facts . You total up all your expenditures and the number you get is reality . Anything else is a fantasy !

I spent -$4500, hedonically adjusted.

Ha

 

[W2R]

Reading all the porn here got me excited to try (again) to track expenses for the coming year. Just a quick gander through the check book makes me think we "spent" something upwards of 100K this year, but that's misleading. So many "expenses" are tax related in one way or another. These are non-recurring or discretionary. They really aren't related to daily living.

How, for instance, does one account for the non-recurring "expenses" such as realtor fees for the sale of a property? That didn't even come out of the check book.

Yes, and how about profits from the sale of that property? If you subtract the realtor fees from the profit, buy a new downsized home, and still have money left over from the sale of your previous home, did you spend negative money? To me that is difficult to handle so I would just mention that realtor fees and profit were ignored. But others might choose differently.

How, too, do folks account for their tax payments? Do you count 2010 taxes in 2010 or when they are actually paid (some in 2009 - carry overs, some in 2010, estimated payments, some in 2011 catch-up for e.g., extra Roth conversion in the final quarter of 2010)?

How do you account for taxes paid on e.g., Roth conversions, in general. Realistically, you could look at the taxes as "owed" because you own a TIRA. If you pay the taxes, aren't you really just exchanging one asset for another? A $100k TIRA is the same as a $70k Roth (100 minus 23k Fed taxes and 7k state taxes roughly)?

Other than doing one's tax planning very thoroughly, there isn't much we can do about taxes, it seems to me. For example, a wealthy person may spend more on taxes on his investments than a less wealthy retiree might spend on everything combined. The wealthy person could live on Ramen noodles and shop at Goodwill, and he would always spend more than the other guy (and get nothing for it other than staying out of trouble with the IRS). So, I don't see the value of including taxes. Others differ.

Basically, I've given up in the past. I think we'll try it again and see how 2011 works out. I've been depending upon looking at the difference in the "stash" and if it doesn't go down (or doesn't go down much) I've felt pretty good about our situation, knowing that many of our expenses are discretionary.

Hoping this time 2012, I'll be able to "show you mine" when you "show me yours".

The only answer that we've agreed works for everyone is "Whatever works best for you".

Exactly. It is helpful to many of us if you are clear about your methodology, but thankfully we don't all do these computations in lock-step.

 

[audreyh1]

We bought a house (paid cash) and bought furniture and A/V equipment and even dishes and such. We really had very little to move in with. 2010 expenses were pretty darn high. I don't think I'm going to report it! LOL!

We had money already set aside for a lot of these expenses, so they have had their own budget category.

Audrey

 

[NW-Bound]

I just recalled that I have been paying for my kids college costs, and although state U does not cost nearly as much as private schools, it is still a sizeable expense. With only one kid left, and just one more year at that, things are looking up. That's more money I can afford to blow out the tail pipe of the RV. But I still need to look into tactically shifting some more money into the energy sector, just because it is the thing to do.

I spent -$4500, hedonically adjusted.

The minus sign had me thinking that you derived less worldly pleasure compared to last year, but the smiley made me not so sure.

 

[haha]

The minus sign had me thinking that you derived less worldly pleasure compared to last year, but the smiley made me not so sure.

Nope, it means that whatever I spent I derived more satisfaction than it cost.

Ha

 

[NW-Bound]

Proof that deflation is alive and well. Sounds like a winner.

But I guess it's personal deflation, which each of us needs to seek out for his own, meaning your experience may not be shareable.

 

[landover]

We spent approximately 16500, here are the details

1133 Car
2667 Grocery
333 Phone
267 Elec
4200 Rent
3733 School
178 Medical
222 Clothes
3044 TV+Furniture
267 Misc
222 Books+dress
============
16267 TOTAL

There are invisible expenses, like car, appliance, etc. depreciation, company paid health insurance, internet. I was aiming for 24000 but somehow was not able to reach that.

 

[Linney]

Reading all the porn here got me excited to try (again) to track expenses for the coming year. Just a quick gander through the check book makes me think we "spent" something upwards of 100K this year, but that's misleading. So many "expenses" are tax related in one way or another. These are non-recurring or discretionary. They really aren't related to daily living.

How, for instance, does one account for the non-recurring "expenses" such as realtor fees for the sale of a property? That didn't even come out of the check book.....

As Nords already said: "Whatever works best for you".

I track the usual categories + subcategories for Utilities, Housing, Food, Recreation, Transportation, etc etc. I also have a special category called "Extraordinary" for those things that simply don't fit into any of the standard buckets. I keep track of the yearly expenditures for both Ordinary and Extraordinary. I have 7 years of data now, so not only do I know how much we spend on the ordinary day-to-day expenses, I'm getting some good insights into the range of extraordinary expenses that our ER budget will need to handle. This is very useful information for retirement planning!

If this method appeals to you, feel free to use it. Or use any of the other methods that other posters are using. Don't let the variability of expenses stop you. Variable, one-time expenses are part of real life. Pick a method, any method!, and start learning more about how your own personal spending patterns really work.

--Linney

 

[Ronstar]

I quit tracking during 2010, so I don't know how much we spent. I don't really care as long as net worth goes up and working hours go down.

 

[RonBoyd]

Why a Budget Is Like a Diet — Ineffective

Part of the reason so many people spend too much, or fail to stick to self-imposed budgets, is because parting with our money has become an abstraction in our increasingly cashless society. Credit cards provide immediate gratification, but no immediate consequences. Plucking actual dollars from your pile of cash, research suggests, is more painful, and leads you to spend less.

There’s another factor that prevents people from being model financial citizens (besides, of course, uncontrollable circumstances like joblessness). As a species, humans are notoriously poor at following through with their plans. Sticking to a budget — a dirty word even among many financial planners, who prefer the more euphemistic “spending plan” — feels too much like dieting. And we often fail at both for the same reasons: too much focus on the restrictions, not enough on fun.

 

[Moemg]

I include everything in my spending amount . Mainly because I am afraid to cross over that 4% mark so I include taxes ,remodeling and large expenses . I now see a lot of people do not do it that way so I concede that my way while rigid works for me but it's not for everyone .

 

[Midpack]

My spending included absolutely everything (even one time purchases) except income taxes. I exclude inc tax because I am still working and won't pay anywhere near that much when/if I retire - my spend tracking is used to model future spending.

I know what I paid in taxes, it's outrageous!

 

[HFWR]

I include everything in my spending amount . Mainly because I am afraid to cross over that 4% mark so I include taxes ,remodeling and large expenses . I now see a lot of people do not do it that way so I concede that my way while rigid works for me but it's not for everyone .

I swear that this year I'll really track all my spending...

It's complicated, and especially so because I'm lazy, and because I'm still slogging to the mines every day. I track all the major expenses - PITI (or is that PITA?), utilities (including water, sewer, refuse collection, cable, internet, mobile), auto fuel and insurance, med/dental insurance, haircuts, toll tag charges... I started tracking groceries last year, but fell off the wagon early. I do know that I spend around $25/wk on groceries, with 2-3 major Costco runs a year to stock up on meat, coffee, and such, that run around $150 apiece. This doesn't include a fair number of restaurant meals...

Also, started tracking med/dental expenses, but fell off that wagon too... I have the info, just haven't compiled it.

All said, though, 2010 was an expensive year, starting with a major remodel, new roof, new chimney, new girlfriend... But these expenses were budgeted for a number of years, and came from savings, and hopefully most of them won't be repeated anytime soon. Well, except the GF...

Given what I make, and what I spend, while not precise by any means, I get a good feel for how much I need to FIRE. And, as I do now, if the bills are paid, including rainy day/new roof/new car slush funds, then all other money can be spent partying and/or traveling. Considering that a large chunk of current income is funding savings and retirement accounts, which I do not consider "expenses", if I can come close to the same income in retirement as I make w*rking, I should be golden.

Such is my rationalization for not tracking spending to the penny...

 

[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.

 

[Moemg]

All said, though, 2010 was an expensive year, starting with a major remodel, new roof, new chimney, new girlfriend... But these expenses were budgeted for a number of years, and came from savings, and hopefully most of them won't be repeated anytime soon.

Exactly how much do you budget for a new girlfriend ?

 

[HFWR]

Exactly how much do you budget for a new girlfriend ?

Not enough...

 

[ziggy29]

I won't have the final numbers until I upload all the credit card purchases when this billing cycle closes in a few days. But it looks like it will be about $72,000 -- with about 1/3 of that being taxes (fed income, SS, Medicare, property taxes). Apart from taxes it looks like we spent about $49,000 -- and probably could have easily lopped $10K off of that if we needed to and probably $15-18K if we really needed to.

 

[W2R]

I haven't worked through all my numbers yet, but it looks like my spending totals ~$21.5K.

This does not include income tax. I am single, my house is paid off, and while I am not wealthy, to tell the truth I can buy whatever I want if I spend that much. This is more than I am used to spending and includes a lot of discretionary purchases.

In addition to the above, I bought a car at the beginning of 2010 as a retirement present to myself, with money that I had set aside over 10 years. This will be my last car so there is no need to save for another.

Also, I withdrew several thousand temporarily to use for preparing my house to sell (painting and re-doing the flooring for the entire house, various repairs, and cosmetic work and upgrades) but kept track of every penny and will get it back from the equity after it sells. This is a loan to myself, rather than spending.

If I included all of the above, luckily I would still come in less than my 3.5% SWR (based on my 1/1/2010 portfolio value less the cost of the car) so I am not worried about it. I find the ~$21.5K figure to be helpful for me, because that this figure and my figures for previous years are reasonably comparable.

As mentioned above, all of my spending falls within my 3.5% SWR.

The set-aside for the car may have seemed confusing but it is just simple arithmetic; most of us do not include our entire net worth when computing SWR. Money for the car was set aside years before retirement, and was never considered to be part of my ER nestegg in my retirement computations.

 

[FANOFJESUS]

We came in around 14k for the two of us. Living modest in the midwest. It would be great if there were a poll on this question.

 

[REWahoo]

It would be great if there were a poll on this question.

Why not post one?

 

[FinanceDude]

$60,457.......... Of course, I have two kids at home, a mortgage, and a DW that enjoys shopping, but not too bad. Paid off one car, another will be paid off in April, then the house is the last big debt expense...........

 

[W2R]

$60,457.......... Of course, I have two kids at home, a mortgage, and a DW that enjoys shopping, but not too bad. Paid off one car, another will be paid off in April, then the house is the last big debt expense...........

Then you will be, in classic Dave Ramsey fashion, "DEBT FREEEEEEE!!!"