wannabefire
Dryer sheet aficionado
I don't want to get into the debate on the specific number 4% or 3% or 25x vs. 30x (that is for another thread).
I have a question how people think about their annual expenses, they can be broken down into fixed and variable, or recurring & non-recurring etc.
When thinking about the 25x spend, do you include some annual placeholder for the lumpy expenses? They are lumpy in nature and you may not spend anything on one year, but have surprises or planned in other years.
My point is that it looking at 25x or 30x of regular expenditures is very different than also including ALL lumpy expenses and definitionally unpredictable. Maybe this is why some plan for 30x or 40x, depending on inclusion of these lumpy expenses as well?
Thoughts?
I have a question how people think about their annual expenses, they can be broken down into fixed and variable, or recurring & non-recurring etc.
- For instance, utilities, property taxes, groceries, cell phone, insurance etc. are all "Fixed" or "Recurring" in nature. You could argue that you can cut out the cell phone or save a few $$ on groceries.
- Then there are things that are discretionary like travel, charitable giving, hobbies etc. I would classify these as variable and would likely include in "recurring".
- Then there are lumpy expenditures like, automobile purchase, hot tub, deferred maintenance on home (house painting, furnace, irrigation fix, fence repair).
When thinking about the 25x spend, do you include some annual placeholder for the lumpy expenses? They are lumpy in nature and you may not spend anything on one year, but have surprises or planned in other years.
My point is that it looking at 25x or 30x of regular expenditures is very different than also including ALL lumpy expenses and definitionally unpredictable. Maybe this is why some plan for 30x or 40x, depending on inclusion of these lumpy expenses as well?
Thoughts?
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