2018 Spending Summary and Analysis

[jollystomper]

These categories were 90% of our expenses in 2018, the areas we tend to focus on:

Category	Amount	Comments
Taxes	56,230	work pay + severance + pension = lots of taxes
Charity	22,469	Probably the last year we can support them at this level
Vacation	18,343	Multiple international vacation trips
Gifts	11,121	Includes wedding of one of our sons
Household	9,060	Includes first new furniture purchase in 10+ years and tree maintenance
Mortgage payments	7,440	at 2.87% interest, not worth paying off yet
Medical	7,269	includes premiums and doctor bills
Groceries	7,109	Only 2 of us, but DW likes to cook for others
Auto	6,341	includes gas, fees, repairs, and insurance
Utilities	5,752	Electric, Cable TV, Internet
DW don't ask, don't tell	2,920	DW's personal fund (I have one as well, I just did not spend as much of it this year)

[steelyman]

Quote:

Originally Posted by Katsmeow I do break these out in my budget and keep a spreadsheet of just those expenses so I don't lose track of them. I periodically consider whether to cancel them. For some of them that I like to do periodically I tend to join for awhile then drop it and rejoin as needed. I have a NYT Digital subscription that was $15.99 every 4 weeks. I decided to drop it (keeping WaPo instead) and called to cancel. They offered me $4.32 every weeks for a year so decided to keep it another year.

I went ahead and redid the categories I use in Quicken so that the subscriptions are grouped and have sub-categories. I like that view better and remembered a couple I’d forgotten.

I decided that “subscriptions” are discretionary spending that, if I do nothing to opt out, will generate expenses billed on a regular basis, typically monthly or yearly.

My NYT subscription costs about twice your (original) amount because I have Sunday home delivery in addition to the digital version (includes two free bonus e-versions that I’ve given to friends). That’s billed on a yearly basis.

I also subscribe to Consumer Reports which I use infrequently but am glad for access. I also let friends use it every so often as needed. Also billed yearly.

Quicken for Windows is a subscription model for me, I use it so frequently and have let go of being annoyed at the every-three-year purchase requirement.

On the other hand, Parallels (software that lets me run Windows concurrently with MacOS) is not a subscription, I have to take action to upgrade versions. One day, it’d be great to drop that if a good Mac version of Quicken arrives.

And finally, those streaming video charges. I’m including Amazon Prime membership there, although it’s not clear how to break out the video/music bennies.

[Lsbcal]

Quote:

Originally Posted by street Beautiful! One day that is what we need to do but I hate to spend so much on a kitchen. LOL

Well this year I turned 70. Time to live it up a little.

[Dawg52]

I don't keep up with the details as it doesn't interest me. But my overall expenses came in around 3% in relation to my portfolio. Spent a little more than budget as I upgraded to a newer SUV. Social Security reduced my net wd rate to around 2%.

[tmm99]

Quote:

Originally Posted by W2R Exactly!!! Hopefully I can wait until after midnight to click it.... It's already dark here, and I don't drive after dark any more so online spending is my only temptation.

Stores here (Canada) closed at 6PM, so I got kicked out, but I shopped some more on amazon. I knew I could spend some more in 2018, so I blew some more dough at the last minute! You still have a few more hours left

[NW-Bound]

I do not have a fixed budget, so usually check my trailing 12-month expenses against the current stash size.

But now at year end, to conform with the thread topic, I have the 2018 expenses on hand. But do I divide that into the current value (year end), or that at the beginning of the year?

Ah, let's use the latter, as that is larger (I lost money this year). And the number is ... (drum roll)... 2.53%. And it could be even lower if I did not spend money on the DIY home energy storage project, which is more of a hobby than a home improvement.

I have been spending less and less each year. I cannot be too far from the bottom of the Bernicke's slide.

[flintnational]

We spent 3.83% of the mid-year value of the portfolio (retirement anniversary). That included a new vehicle purchase. Without the vehicle we would be under 3%.

[DEC-1982]

Quote:

Originally Posted by DEC-1982 I think we will be within 1% of "budget". I'll do the proper report on Jan 1 2019.

Well, after the calculations I find we are 4.9% over budget. Personal inflation was higher than govt. reported inflation.

[Dtail]

First full year of retirement.
WR% from the portfolio was 2.43%.
Actual spending WR% was 1.85%, so the difference goes to our emergency account outside the AA.
We came in 9% under budget. Our budget has only a little padding for expenses.
Out of 18 categories, 3 of them were +/- 1k diff from budget.
Travel was 35% under budget, but still spent just under 10k on 5 trips totaling 26 days.

For 2019, the WR% budget has been increased to 3% switching to a % of remaining portfolio concept.

[Scuba]

For our second year of ER, we withdrew 3.3%, and spent $3K more than we budgeted. The major reason was a conscious decision to buy new technology for ourselves - an iPad Pro and Apple Watch Series 4 for me, and iPhone XS's for both of us. We don't manage to a budget; we just spend what we want and analyze it later. If we need to make adjustments, we do. Our biggest spending categories are our home (mortgage, property taxes and HOA), healthcare (mostly insurance, thank goodness), and travel and entertainment. About 43% of our spending is in discretionary categories and could be reduced or eliminated if necessary.

For 2019, we are budgeting an 8.2% increase in spending and a 3.4% WR. There were several budget categories that came in above in 2018, offset by other categories that came in lower. Many of the higher spending categories we expect to continue (our dog is now on heart meds and has to have EKG's regularly, we're expecting larger medical costs and have decided we like gifting more than we originally budgeted for retirement). We may decide to spend even more on travel than we're budgeting for 2018 as DH is turning 60. Gotta blow that dough!

For those of you reading this who haven't yet retired, I share the feeling that many on this forum have expressed. Despite a lot of worry and number-crunching pre-ER, we are better off financially than I ever dreamed. We haven't even started pension or SS income at this point, our WR is barely over 3%, and I feel like we have a somewhat lavish lifestyle - lots of meals out at nice restaurants, generous gifts to family, friends and charities, and so far 8-12 weeks of travel each year of ER. We feel very fortunate to be in this position, and are so happy that we pulled the plug on w*rk when we did, at 56 and 57.

[scrabbler1]

Quote:

Originally Posted by scrabbler1 I don't keep track of nearly as many categories a some of the rest of you. I do keep track of some broad categories and a few sub-categories within them. I haven't yet done all the work on my expense summary spreadsheet and worksheet but I have a few quick-and-dirty general percentages. Housing expenses, meaning the total of my monthly co-op maintenance payments reduced by any property tax rebates is about 21% of my total expenses. Medical expenses, including the ACA subsidy I have to give back because I went "over the cliff" this week is about 28% of my total expenses. Income taxes spiked this year due to the huge cap gains distribution which threw me over the aforementioned cliff. They rose to 23% of my expenses. In my budgeting, I include only a basic level of income taxes based on the reliable monthly and quarterly dividends. If my income spikes because of unexpected cap gain distributions, I am not really concerned about being unable to cover the taxes because they will simply come out of the added income. Had that monster CG distribution not occurred, my income taxes would have been only 10% of my reduced income. The rest of my expenses are about 28% of my total expenses. Those include utilities, groceries, home+auto insurance, and everything else. I do break much of it down in my finished spreadsheet.

Some of my 2018 expenses I won't be able to finalize until I get the 1098 form from my co-op in about a month. And a few more of my more itemized expenses I can't do until my co-op releases its annual report in March.

But I was able to update my aggregate, big-picture spreadsheet which shows year-ended totals for spending and income and the effective WR. My expenses dropped slightly from 2017, mainly due to unexpectedly large state property tax rebate checks I got during the year compared to in 2017. My other major expense categories roughly canceled each other out, making my overall expenses about the same as they were in 2016. Even my medical expenses were about the same although more were from premiums as opposed to medical services.

The only tough category to classify expenses were my income taxes. I pay most of them via 4th quarter estimated taxes. Sometimes, I pay them in late December, sometimes in early January. I paid some of my 2017 taxes in December of 2017, but I will be paying all of my 2018 taxes this month, in 2019, so I can't really use a paid basis for this expense.

My WR rate for 2018 ended up being 1.9%, up from 1.8% in 2017 and 2016 (and 2012, 2013, and 2014). Part of that is due to my using the end-of-year balances in my mutual funds, which we know took a beating in December.

[tmm99]

I did some home reno this year that was planned and will continue this year.

As for the rest, I came about 20% under budget, and even if I include the "fun spending" from my freelance/hobby money (which I don't include as part of my income or budget... I save some off for taxes and the rest is spent for whatever), I came about 10% under budget. I will be putting aside the excess in case I need it in 2019 and/or beyond.

[socca]

2018 budget:
• necessities (taxes, housing, food, medical, auto, reserves): 51%
• savings (nominal): 25%
• discretionary: 24%
> allocated: 4%
> unallocated: 20%

2018 actual:
• necessities: 30%
• savings (nominal): 25%
• discretionary: 45%
> spent: 3%
> unspent: 42%

Effective actual savings rate: 67%

Summary: I need to do a better job of 'blowing that dough' in 2019. It would be useful to find some activities / hobbies that actually involve spending money.

P.S. If the U.S. gov't finances were run in the same way as my personal finances, the U.S. would run massive annual budget surpluses and would - eventually - evolve into the world's largest creditor nation. Difficult to imagine.

[W2R]

Quote:

Originally Posted by socca Summary: I need to do a better job of 'blowing that dough' in 2019. It would be useful to find some activities / hobbies that actually involve spending money.

From my observations here on the forum, I'd suggest:

1) Luxury international travel;
2) Collecting cars, boats, RV's, and/or personal airplanes;
3) Multiple expensive homes separated by hundreds or thousands of miles;
4) divorce;
5) gambling addiction.

Unfortunately I don't find any of the above to be very appealing! But they will accomplish the task at hand.

[NW-Bound]

Why not the most expedient method?

[socca]

Quote:

Originally Posted by W2R From my observations here on the forum, I'd suggest: 1) Luxury international travel; 2) Collecting cars, boats, RV's, and/or personal airplanes; 3) Multiple expensive homes separated by hundreds or thousands of miles; 4) divorce; 5) gambling addiction. Unfortunately I don't find any of the above to be very appealing! But they will accomplish the task at hand.

Falling in love with a lovely, high-maintenance princess would probably do the job. She could introduce me to the finer things in life (which I would probably dislike ).

[mrfeh]

Finally got around to calculating our annual expenses, something which I've been doing for the last 4-5 years, as we are on the verge of retirement.

Not going to list categories, but our total expenses (family of 3) were $45K. Of that, $32K is what I call "core expenses" - expenses that I know will definitely occur every year.

These numbers do not include taxes or health insurance premiums.

[Midpack]

We did OK in 2018, but mostly because we sold our boat while spending more too much on other categories (restaurants, concerts/theater, groceries, golf & vacations). Not sure what purpose this serves as we're all so different, comparisons are meaningless? I don't even read what others spend, I only have to fund the household below...

Category	Expense	Comment
Fixed
Allowance	$3,816	pocket money
Auto	$4,189	BMV, Gas, Insur, Maint/Repairs
Me Personal	$2,923	Clothes, golf, haircuts
DW Personal	$1,999	Clothes, hair/nails, other
Entertainment	$8,841	Restaurants, theater, internet, TV
Food & Liquor	$7,376
Misc	$402
Utilities	$4,111	Elec/gas, trash, phone, water/sewer
Variable
Gifts	$1,259
Home	$5,385	Insur, Lawn, Prop Tax, HOA
Medical	$312
Vacation	$8,628	Househunting mostly
Total	$49,241

Medical will go up 5-figures in 2019 now that we're both retired, and home expenses will go up too if we relocate as planned...

[jimnjana]

Don't track what we spend anymore. We did add about 10k of excess income into deferred spending accounts. We did start a monthly withdrawal from DWs Roth (<1%).

[deserat]

Quote:

Originally Posted by UtahSkier While looking at my shoes... Just DW and I. I categorize items from Walmart and Costco as Groceries. I try to move household items (like an Instapot) into the appropriate category. So, I think this number is pretty accurate. The credit cards tell no lies The grocery and alcohol numbers are consistent over the years and are budgeted as such.. This year's grocery spending was $429 over budget. The spirts category is a bit over budget as we have started stocking a small wine cellar. At least I know where to cut in a severe downturn!

Love the looking at your shoes comment! Do you still live in Utah? I was wondering if the booze budget was because it was damn near impossible to get or super taxed in Utah ;-) I lived there as a kid - is it still state controlled stores? Also, I love skiing and a nice hot spiced wine after a hard day skiing is de riguer!