2020 Spending Summary and Analysis

[W2R]

Perhaps you all are convincing me to do this daily rather than every month or two.

21 days to form a habit! Honestly I love doing this stuff and hopefully you will too if you decide to start doing it.

 

[W2R]

Haha, you do more accounting for cash than me. I do try to record all the cash expenditures, but have in my budget "Unaccounted Cash" for $20 monthly.

I don't have any planned for category "Unaccounted Cash", but if I am off by just a penny or so I don't care. That only happens a couple of times a year, so usually I am keeping track to the penny.

There are SO many times when I forget to enter an unusual cash expenditure, and keeping track this close helps me to remember everything. For example, this week I owed $3 to Frank because I only paid him $10 for some nonperishable food items worth $13 a few weeks ago. These were things he had in his pantry but didn't want, but I did, so I bought them from him but didn't have exact change. I paid him the extra $3 this week. I'd never have remembered that I did that if I wasn't balancing my wallet.

EDIT: And then, last February somehow I lost $23 dollars. I suspect that I was just being my usual insanely clumsy self and dropped it on the ground in a public place when fishing money out of my wallet for something else, or else maybe I thought the $20 bill was a $1 bill (and perhaps the same for a $5 bill) when tipping somebody. Anyway, I assigned that money to my "Miscellaneous" spending category, my only entry during 2020 within the subcategory "To Make It Balance". I never would have known that happened if I hadn't been keeping track.

 

[Gumby]

the tax bump (secure act) makes roth conversion too expensive during the bump

Now I see where you're coming from. It's hard for me to get my mind into that space, since the only thing I inherited from my parents was a bad attitude.

 

[SecondCor521]

the tax bump (secure act) makes roth conversion too expensive during the bump

Ah, OK, that I understand. Thanks for persisting with me.

 

[NW-Bound]

Then every few days I "balance my wallet", taking the previous amount that was in it and subtracting what I bought in cash since that time, to make sure I didn't forget to enter anything. That can be a little more challenging but I love doing it, especially the victorious feeling when it balances...

With Quicken downloading transactions from accounts, I do not often check the account balances as shown on Quicken vs. what is shown on the institution Web sites. I may do that once or twice a year, and surprise, they quite often do not match. The difference may be as high as a few hundred bucks. Somebody's computer is wrong!

Well, quite often the discrepancy is in my favor, meaning the institution's Web site shows that I have more money than what Quicken shows me on my computer. Early on, I tracked down the discrepancy, and this took a few hours because I have to backtrack from the last point when everything was balanced. I downloaded the monthly statements since that point, and it could be more than 12 months since I last looked, then painfully compared every transaction. Pain, oh pain...

And I found that most of them were caused by Quicken missing a dividend payout. I own mostly stocks, not MFs, and they take turn giving out dividends through the year. Either the institutions dropped the ball in reporting it to Quicken, or Quicken messed up, I will never know.

But as I mentioned, the error is usually a happy one, so now I just credit the difference into Quicken, and move on.

Just a few days ago, in looking through all the dividend payouts this year to prefigure out my taxes, I noticed that one MF account had paid no dividend this year. No can be, particularly as this one that is the 1st MF after-tax account I ever own going back decades calls itself an "income MF". A closer look at Quicken told me that the last recoded dividend was 18 months ago. Hah!

Back then, I found out that the downloading stopped working, and this being a smaller account, I just disabled the downloading to kill the error message, and promptly forgot all about it. And this being a smaller account, I gave it no attention while watching the larger ones daily.

After logging into their Web site and getting up-to-date information, I found myself a few $K richer, from both the missing dividends and the higher share price. Happy error of omission again.


PS. I also track spending accounts in Quicken, but do not care to the last penny because my wife takes care of paying them off each month.

One time, out of lack of better things to do, I looked into one of the credit card accounts as shown on Quicken, and saw that its balance was not zero after my wife paid it off. I forgot what the error was, but it took me some time to track it down to manually correct it.


PPS. My wife has her own spreadsheet, although I offered to install Quicken on her PC. She's happy with her system, and that's that. When I need to look up something, it's infinitely quicker for me on Quicken than scrolling through her multi-page Excel file.

 

[rodi]

I took my time looking at this... Waited till the year ended. LOL.

Family of 4, we spent $90,743.02 (Thank you Quicken)

That included everything. Taxes, tuition/housing for 1 semester at college. etc.

Previous year was closer to $150k - but 2019 included a new car and a family trip to Europe.

Big items:
Insurance: $21462.73 (Health was 1/2, homeowners, cars (with 2 teens), umbrella, etc.)
Groceries (includes booze): $10,951.22 Was down by $1k this year at $11k. Contributing factor might be that older son is vegetarian now.
Also had $6k of auto repairs/maintenance...

 

[Exchme]

Our spending was down about 18% with all the COVID changes, plus we got lucky and nothing serious needed repair (neither our stuff nor ourselves). As it worked out, we gave most of the savings to our kids as their incomes were more impacted-as soon as it starting getting scary back in March, we gave each a check. They all got back to work at least at some amount by May, so they didn't have a bad year overall, just a weird one.

 

[24601NoMore]

We came in at a little over $74K (family of 2, MCOL area), not including income taxes which I still have to calculate. "Core" spending - which we consider everything outside of Healthcare, Travel, Taxes and Lumpy Spending was ~$53K.

Category|Amount|Comments
Autos|10,646|2 leases - 'reasonable' cars, insurance, gas, fees
Charities|2,282
Covid19|499|Masks, Clorox, Hand Sanitizer or anything else due to COVID19
Entertainment|180
Fees|147|
Food & Dining|7,342|$5,791 Groc; $1K+ libations; Almost $0 restaurant due to pandemic
Gifts|1,030
Health Insurance Premiums|12,050|COBRA - DW; 1/2 yr COBRA, 1/2 "A"CA - me
Healthcare OOP|2,634|Deductibles and other out of pocket HC expenses
Home|13,796|Insurance, Property Taxes (Blue State - Yay!), HOA Dues, misc maint.
Lawn & Garden|2,825|Lawn & Tree Care, Flowers, Sprinkler service, etc
Lumpy Spending|7,298|$2K deck repair/seal, $1,750 House repairs, Appliances, Tech, etc
Misc|2,457|Delivery Fees & Tips, Holidays, Memberships, Online Services, etc.
Personal Care|605
Pets|290
Shopping|2,196|Computer Hardware & Software, Clothing, Small Appliances, Hobbies
Travel|0|No Travel due to Pandemic
Utilities|8,469|CRAZY! Water & Sewer - $1,800+; Cable + Internet $1,500+; Electric: $2,100+...

 

[Dawg52]

Don't have a clue and don't want to find out either. Best left unknown and never spoken of.

Although I majored in accounting and spent my entire working career in accounting/finance I have no desire to know the details of my personal expenditures. If I go broke I may regret it.

 

[Out-to-Lunch]

the tax bump (secure act) makes roth conversion too expensive during the bump

Now I see where you're coming from. It's hard for me to get my mind into that space, since the only thing I inherited from my parents was a bad attitude.

Ah, OK, that I understand. Thanks for persisting with me.

Can one of you who have become enlightened explain it to those of us who are still benighted? I won't be offended if you explain it as if I were five.

 

[Koolau]

Haven't tracked spending since 2011 (only year ever). I found a few "surprises" but seriously, a back of the envelope was within a few percent. Since spending the effort did NOT change my spending habits and we have "enough" without making any changes, I dropped the whole idea.

With that in mind, we DO track "spending" on charities and the kids. Most charities are deductible and we like to know how our kids' "inheritance" is going. So, in 2019, we doubled both charities and kids. Those are (far and away) our biggest "expenses" with taxes being a distant third.

Notable changes this year: 1/6 the spending on gasoline - haven't driven 1000 miles in 2019. Eating out - just the occasional take out due to Covid. WAY more on groceries. We used to eat out 4 or 5 times a week but now we eat at home. It's way cheaper, but it still adds up in the "food at home" category - which we don't actually track. NO travel since January (all the way to the Big Island!). Inflation has been significant on just about everything, though the CPI (or whatever) doesn't reflect that (another thread.)

So, it turns out, we've spent more this year than ever in our lives - even our big reno. years.

Just a thought on the spending on the ER forum. Just SWAGing it, it looks like the bulk of us spend between $20K and $200K. I think that must be nearly THE definition of "middle class." Heh, heh, not too many NetJets users or 3-McMansion families represented. As always, YMMV.

 

[SecondCor521]

Can one of you who have become enlightened explain it to those of us who are still benighted? I won't be offended if you explain it as if I were five.

Imagine you're an only child and your parent has a $1M traditional IRA. They pass away and leave it to you. you have 10 years to empty it because of the SECURE Act.

For the next 10 years, you take out $100K from the traditional IRA. It's taxed as ordinary income. You're thus in a high tax bracket.

You therefore don't want to do Roth conversions on your own traditional IRA during those 10 years, because you're already in a high tax bracket from the $100K from the inherited IRA. (Roth conversions are generally advised for when you're going to be in a relatively lower bracket.)

That's what I understood, anyway.

Does that help?

 

[Out-to-Lunch]

Imagine you're an only child and your parent has a $1M traditional IRA. They pass away and leave it to you. you have 10 years to empty it because of the SECURE Act.

For the next 10 years, you take out $100K from the traditional IRA. It's taxed as ordinary income. You're thus in a high tax bracket.

You therefore don't want to do Roth conversions on your own traditional IRA during those 10 years, because you're already in a high tax bracket from the $100K from the inherited IRA. (Roth conversions are generally advised for when you're going to be in a relatively lower bracket.)

That's what I understood, anyway.

Does that help?

Ahh, I see. Thank you for working on explaining that to me. I just wasn't seeing it.

 

[kgtest]

Imagine you're an only child and your parent has a $1M traditional IRA. They pass away and leave it to you. you have 10 years to empty it because of the SECURE Act.

For the next 10 years, you take out $100K from the traditional IRA. It's taxed as ordinary income. You're thus in a high tax bracket.

You therefore don't want to do Roth conversions on your own traditional IRA during those 10 years, because you're already in a high tax bracket from the $100K from the inherited IRA. (Roth conversions are generally advised for when you're going to be in a relatively lower bracket.)

That's what I understood, anyway.

Does that help?

Precisely This is what DW and I will be up against. Although I think her side is all after tax so perhaps we just get my side in the inherited tIRA. It would really incentivize me to quit my day job in terms of tax consequences.

I high income earner already in the 24% bracket...then gets hit with an extra 100k of income for 10 consecutive years. Interesting times. I'm already looking for cash options here anything to tuck a lil under the rug so uncle sam can't smell it.

 

[SecondCor521]

To be fair, the problem existed before the SECURE Act; the SECURE Act just exacerbated the issue and created the 10 year income bump.

The additional thing that I think @kgtest is alluding to is that for a typical case (or maybe just the typical case for someone here on this board), someone inheriting a $1M IRA from their parents is probably in their mid-50's and doing well themselves and may already be in the 22% or 24% bracket, so adding the $100K per year on top of that and it'll get hit pretty hard with taxes.

It could also make planning difficult for someone who has retired early and may be planning on Roth conversions already themselves and planning on having X years to do so before age 72, yet effectively having that X reduced by 10 somewhere along the line.

Again, first world problems.

 

[ExFlyBoy5]

I agree that keeping track of Amazon categories is hard, because the variety of stuff I buy there is large.

Same here. When I order things from Amazon I write them individually on my sheet, bracket it with the word Amazon beside it. Allows me to check my credit card statement before paying.

This may or may not be helpful, but you are able to download EVERY THING YOU HAVE EVER BOUGHT at Amazon. It used to be much easier, but there is a workaround for it and it's not instant like it once was. I will warn you...if you order from there often and don't keep track, the results may be...ahem...surprising.

https://www.komando.com/how-tos/download-your-amazon-order-history/752778/

 

[bingybear]

The secure act also reduced the availability of stretch IRAs which could spread the time significantly longer.

Also when you look at the hypothetical 1 mill IRA spread over 10 years.... the asset is still invested and will likely grow making more than 100k/year

 

[Out-to-Lunch]

Again, first world problems.

I am glad you said that.

Part of the reason for my earlier incomprehension was the utter foreignness of the concept of an inherited IRA. I was very grateful for the $8k inheritance I received.

 

[NW-Bound]

Speaking of passing along our retirement funds to our kids, I have been thinking about the same "problem" my kids may be facing.

If they suddenly have a 6-figure income from inheritance added to their already good pay, the tax may be so high that they decide to quit and to retire early. That itself is not a bad thing (they can then join ER forum to BS around like I do now), but the problem is the inheritance income will run out in 10 years, and they may not have enough other assets to sustain their ER. Plus, they may not have enough work years to have a decent SS to live on.

I hate to think that the money I leave behind may cause financial demise for my kids. For a financial success, we know that it's not what we make, but also what we spend.

And that brings us back to the topic of this thread. You've got to know what you are spending. Period.

 

[Out-to-Lunch]

Speaking of passing along our retirement funds to our kids, I have been thinking about the same "problem" my kids may be facing.

If they suddenly have a 6-figure income from inheritance added to their already good pay, the tax may be so high that they decide to quit and to retire early. That itself is not a bad thing (they can then join ER forum to BS around like I do now), but the problem is the inheritance income will run out in 10 years, and they may not have enough other assets to sustain their ER. Plus, they may not have enough work years to have a decent SS to live on.

I hate to think that the money I leave behind may cause financial demise for my kids. For a financial success, we know that it's not what we make, but also what we spend.

And that brings us back to the topic of this thread. You've got to know what you are spending. Period.

Or, it could take you back to the topic of a different thread: https://www.early-retirement.org/forums/f28/what-to-do-if-you-re-already-wealthy-107219.html

 

[RobbieB]

I remembered that B of A has an easy and fast tool for spending records, by the month. So I added up the last 12 months and it was 200 grand!

Woo-Hoo, Blow That Dough! But since half of that was landscaping and sheds, not too bad at all.

 

[CardsFan]

Imagine you're an only child and your parent has a $1M traditional IRA. They pass away and leave it to you. you have 10 years to empty it because of the SECURE Act.

For the next 10 years, you take out $100K from the traditional IRA. It's taxed as ordinary income. You're thus in a high tax bracket.

You therefore don't want to do Roth conversions on your own traditional IRA during those 10 years, because you're already in a high tax bracket from the $100K from the inherited IRA. (Roth conversions are generally advised for when you're going to be in a relatively lower bracket.)

That's what I understood, anyway.

Does that help?

But, doesn't that actually encourage Roth conversions by folks like me, with a large tIRA and only one heir?

I understand your point, but I don't think the "tax bump" will reduce conversions. I think it encourages them for folks with a large tIRA.

 

[kgtest]

A new deck on the house. The old one was beyond its life. New one is maintenance free, bigger, more functional and has stairs going down.

6x6 posts on 54" footings with 2x16 stringers. 54" wide steps, ceder color with bronce rail. Looks very nice. Also felled 3 trees to open it up for a nice view a 90' cotton and a couple boxelders. I hired a teee climber and groundsman and we worked together on the trees. I actually made money on that endeavour as neighbor wanted sime felled which paid for ny gear and help.

I helped with the deck too and saved some money being my own GC. Phase 2 in spring involves 7yards of stamped n stained floating slab and a screen porch with underdecking. Extra 1400 sw ft of outdoor space we can use now. BofA and Capital one paid for this. I'll pay them back in 18months. DW is super happy with it all.

Built 3 retaining walls this summer so its coming together. Lots of stone to lay yet

 

[RobbieB]

Cool. So how much did you spend in 2020?

 

[kgtest]

Cool. So how much did you spend in 2020?

Oh boy...you ask such a loaded question... I thought here I was in the blow that dough thread...ya caught me..now I gotta check standby...

Looks like debt paydown including mortgage was [-]$16,500[/-] $35,000 edit

Expenses were around...

~$75k. Family of 5 in chilly flyover country.

We also contributed a bunch to retirement but I don't count that as spending. One of our best years in terms of the numbers. Blessed.