2017 Spending Summary and Analysis

[Gumby]

My first post from Texas...
Nice to meet all of you!

Welcome, friend. I look forward to hearing more from you.

 

[Sue J]

Here are our numbers for 2017. We live in a fairly low cost of living area. This is the total for the year for our normal monthly expenses.

Internet - 600
Property taxes - 2336
Homeowners insurance - 604
Elec, water, sewer, trash - 1844
Natural Gas - 660
Satellite TV - 1155
Car Insurance - 857
Life Insurance - 816
Medical Insurance (ACA w/ subsidy) - 2461
Groceries - 8183
Gasoline - 450
Other spending - 5125
Eating Out - 1300
Pocket Cash - 1500
Donation - 60
TOTAL - $27,951

FYI, to us the "Groceries" category is food, paper products, cleaning supplies, pet food. The "Other" category is all kinds of other stuff including bird food and feeders, clothing, car maintenance items, small gifts, small home maintenance items and misc etc.

In addition to our monthly expenses listed above we had these additional expenses

Home repair and purchases - 2536
Medical/Dental/Vision/ deductible out of pocket - 1214
Travel - 2373
Car Repair - 756

That brings the total to $34,830. To me that's very acceptable spending for the year as it's less than DHs pension. I made about $4900 in my very part-time job and it all (gross pay) went into my Trad IRA.

In addition to our regular spending we bought a 2014 car for cash - $12,458 net after selling an older car. And then we had a "once in a lifetime" cash gift of $10,000 to our son and DIL for their marriage, without a wedding celebration.

These last two big expenses bring our total for the year to OMG - $57,288 which is more than we've ever spent in a year! We will not need to buy another car for a long time and our other son isn't dating anyone so those two expenses won't be happening again in the near future. Glad we had the CASH!

Another notable item is that this is the first year that I had to take an RMD from my inherited IRA. I had to take $2401. The inherited IRA grew by $7832 but there is now more in there than on Jan 1, 2017 which makes me quite happy!

 

[Dawg52]

All this recapping of expenses reminds me of my old job. Nothing fun about that. I know my total w/d's and what I received from SS so have a pretty good idea how much I spent. Good enough for me. I'll leave the old devil dormant in the details.

 

[bobandsherry]

As I already stated, I think I will ignore it, thanks. I don't think that honestly including everything I spent buying a car in the year when I spent it, overstates what my spending is at all; if I spent the money, it is spent. That's reality, in my life anyway, whether I total the car in a month or keep driving it for 20 years. If I can buy something and keep my spending under 4% I don't see what the big deal is in owning up to having bought it that year.

It's all good. But as point of reference, if you had $30K cash and "spent" it by buying a stock or gold, would you consider that a spend of this year? What about if you had $300K and "spent" it on a home?

As you started this thread though it's all for fun, so indeed let's just party on.

 

[bobandsherry]

All this recapping of expenses reminds me of my old job. Nothing fun about that. I know my total w/d's and what I received from SS so have a pretty good idea how much I spent. Good enough for me. I'll leave the old devil dormant in the details.

Nah, doesn't remind me of my old job. I don't have to worry about deadlines (artificial or otherwise). I don't attend meetings or sit in on endless conference calls where nothing is accomplished. I don't have office politics and drama.

I DO have total control of my life balance and I get to do it when (and if) I feel like it. It's a hobby for sure. I really enjoy creating spreadsheets, doing analysis and other "work" type of things, but now on my own terms.

Some of us are just wired differently - that's what makes things interesting.

 

[Sue J]

All this recapping of expenses reminds me of my old job. Nothing fun about that. I know my total w/d's and what I received from SS so have a pretty good idea how much I spent. Good enough for me. I'll leave the old devil dormant in the details.

Oh but this is fun for me! I enjoy keeping track of things. I like to wrap up the year and look forward to 2018 and a whole new set of spreadsheets.

And I know I'm not the only one here......

But if it's not what floats your boat, don't do it.

Happy New Year!

 

[Dawg52]

Jut chalk me up as lazy. In fact.....doing nothing is what I do best.

 

[43210]

I'll take this as a chance to estimate a post-retirement budget (still working now).

I don't have a detailed breakdown, but have been tracking total credit card and bank spending for seven years, and it averages $32k per year (for a family of 5) with min $21k (<--2017) and max $39k.That includes almost everything, except payroll deducted items.

The only payroll deducted "spending" items are medical/dental insurance currently about $3.5k, but to be about $5k in retirement (employer subsidized).

[The payroll deducted items 401a/403b/457b/HSA, are "savings" (not "spending") as are IRA contributions that we make directly.]

[As for income taxes, it's really nothing to do with "spending", and not even much to do with gross income alone, since it is totally dominated by Trad vs Roth decisions. I can make AGI anything between 14% and 84% of gross income just with Trad vs Roth decisions, so it's all about multi-decade tax planning of when and how to convert pre-tax Trad assets to post-tax Roth and taxable account assets. Most of our assets are in Trad account which are "encumbered" with an "unrealized tax", and we can choose when to "realize" that tax. But it's not part of our "spending".]

Back to the budget, in the seven years of tracking, we didn't happen to have large items like new HVAC, roof, car (though two of those are looming) so the annual average should be increased a few $k for such things. Maybe some years we might have additional medical costs or other expenses, that hadn't been in our tracked years. Add a few more $k.

So maybe our post-retirement annual budget should be
$32k plus $5k plus a few $k plus a few more $k --- call it $45k to $50k.*

(Maybe not what the OP was asking for, but I needed to do this exercise anyway.)


* This doesn't count some initial one-off costs such as moving, and a new location may have different costs.

 

[Meadbh]

It's all good. But as point of reference, if you had $30K cash and "spent" it by buying a stock or gold, would you consider that a spend of this year? What about if you had $300K and "spent" it on a home?

As you started this thread though it's all for fun, so indeed let's just party on.

I don’t know what W2R would do. Here’s what Iwould do/have done:

If I had $30K cash and used it to buy stocks or gold, I would consider that an investment, not an expense. My cash allocation would decrease and my equity or precious metals allocation would increase. I would not have spent anything.

If I had $300K and bought a home, I would categorize it depending on the purpose of the home. If I bought the home to rent out, it would be an investment. Of course, if it were an investment, I would put a $100K deposit on the home, and borrow $200K of OPM (other people’s money) to leverage my investment. My NW statement would acquire a $300K asset and a $200K liability, and I would have invested $100K.

If I bought a $300K home to live in, no point in taking out a loan if I had the cash. I would sell my current home and subtract the proceeds, allowing for closing costs. The difference would be an expense if I was upgrading or a saving if I was downsizing.

 

[youbet]

I track our total spending and have a good idea of where it goes, but leave it at that. Our spending had been flat for a few years, this year went up due to increased travel.

This is very similar to our situation Michael. I see no reason for detailed tracking of spending, rather just a few major buckets such as income tax, property tax, medical costs and major one-time expenditures (remodeling projects, new car, major travel, etc.) and total spending. After that, ehhhh, I don't care. Our "other spending" bucket is relatively small and we tend to be cost conscious spenders.

The important thing to track, IMHO, is our time and how satisfied we are with how we're spending it. Right now we're having discussions concerning life style, activities and our satisfaction or frustration with the outcomes of various plans.

Early in retirement (we've been fully FIRE'd 12+ years), we tracked spending in significant detail. Despite the effort (and we didn't like making that effort, it was a drag) we never uncovered any data that drove us to make changes that increased our satisfaction with how we were spending our time in a meaningful way.

 

[Sue J]

If anyone else is interested in previous years version of this topic I tracked down a few-

http://www.early-retirement.org/forums/f27/2016-spending-84736.html
http://www.early-retirement.org/forums/f28/2015-expenses-80153.html

 

[youbet]

All this recapping of expenses reminds me of my old job.

+1

 

[foxfirev5]

I don't keep track either, I estimate a hundred grand.

Yep. Easy, there's more in the checkbook than there was at the start of the year

 

[bobandsherry]

I don’t know what W2R would do. Here’s what Iwould do/have done:

If I had $30K cash and used it to buy stocks or gold, I would consider that an investment, not an expense. My cash allocation would decrease and my equity or precious metals allocation would increase. I would not have spent anything.

{Other deets not quoted}

Yes, that's what most (all?) do - but an investment is an asset, so is an Auto. So why expense it all in the year you "pay" for the car when you haven't used up the "value"?

There is no guarantee that a stock or gold will appreciate in value. As value goes down would you show that then as "spend"? What if one of your stocks you bought went BK, do you write that off as "spend". I know you don't, but is there really a difference?

 

[REWahoo]

...but is there really a difference?

I'll follow your question with another - since GAAP doesn't apply, does it really make a difference how one individual on this forum accounts for their spending?

 

[youbet]

I'll follow your question with another - since GAAP doesn't apply, does it really make a difference how one individual on this forum accounts for their spending?

Why yes, yes it does. Traditionally, forum members want their way of doing anything to be the one correct way and all other methodologies to be considered "wrong."

 

[NW-Bound]

I had a few stocks that went bankrupt. I called it investment loss, but perhaps should have classified it as "educational expenses".

Why, the IRS even allows tax deduction for it, just like it does tuition costs.

 

[ivinsfan]

Why yes, yes it does. Traditionally, forum members want their way of doing anything to the the one correct way and all other methodologies to be considered "wrong."

This could be true however I'm on day 3 of at least 4 days of weather that won't go above zero, so I'll sit at the keyboard and argue about anything.

 

[bobandsherry]

I'll follow your question with another - since GAAP doesn't apply, does it really make a difference how one individual on this forum accounts for their spending?

Not to me, my original comment was how I'd show the spend.

I'd show the spend as an asset and then take depreciation (estimate) each year.

I didn't address how you or anyone else should.

 

[REWahoo]

This could be true however I'm on day 3 of at least 4 days of weather that won't go above zero, so I'll sit at the keyboard and argue about anything.

No you won't.

 

[ivinsfan]

No you won't.

It's either argue or shop so I better argue...

 

[NW-Bound]

It is true that there's a lot of residual value in a car, even though one loses a bunch after signing the paperwork, even earlier than after driving off the dealer lot as the proverbial saying goes.

And so, depreciating it over a number of years is the correct accounting principle. However, I would need to keep track of my vehicle values to update my networth, and as I do not even keep track of my homes, I will forget about my vehicles (which are old and not worth much anyway).

 

[bobandsherry]

It is true that there's a lot of residual value in a car, even though one loses a bunch after signing the paperwork, even earlier than after driving off the dealer lot as the proverbial saying goes.

And so, depreciating it over a number of years is the correct accounting principle. However, I would need to keep track of my vehicle values to update my networth, and as I do not even keep track of my homes, I will forget about my vehicles (which are old and not worth much anyway).

I really make it easy, I just lease and know what my expense is each year and don't have any unusual hits to me spend for "one time" purchase or maintenance items.

Based on my lease payments it would take over 9 years for my car to "fully depreciate" (purchase price including taxes / monthly lease payment).

 

[robnplunder]

Why yes, yes it does. Traditionally, forum members want their way of doing anything to be the one correct way and all other methodologies to be considered "wrong."

You are absolutely wrong on that.

 

[NW-Bound]

I really make it easy, I just lease and know what my expense is each year and don't have any unusual hits to me spend for "one time" purchase or maintenance items.

Based on my lease payments it would take over 9 years for my car to "fully depreciate" (purchase price including taxes / monthly lease payment).

When you lease or rent, the money is really gone so it's a lot easier. No argument there.

Come to think of it, many of my big expenses in recent years were for home repairs or improvements. There should be some residual values there, as even a repair is still worth something as it means my roof will not demand more money for a few years, or the exterior stain will not cause me grief for a while, etc... Tracking all that is tough, as who knows if the plumbing will not take its turn to cost me an arm or at least some fingers, or the AC, or the sewer line, etc...

And so, I just watch out for these non-recurrent expenses, and hope that they will not take turn hitting my checkbook every year. None did this year.
Fingers crossed...