2020 Spending Summary and Analysis

[almosttime]

I've decided to try to track expenses better in 2021. I'm struggling with how to keep categories separate. I look at the cc statement and see 6 charges from Amazon. some were household goods, some gifts. Same with farm store, dog food vs. A box of drywall screws. How do those of you that track categories keep things straight?

Take a look at YNAB. I did what you are currently doing and, like you, wanted to drill-down a bit more. I began YBAB at the beginning of 2020, and I now know where we stand Very happy!

 

[bingybear]

Fed and State income taxes were way more than our next highest spending category (Roth conversions), and will be for another 5+ years. Otherwise about the same, we compare to budget monthly so no year end surprises.

+1



but the secure act will likely kill the roth conversions--edit for me

 

[24601NoMore]

I mentioned income taxes in a recent post in this thread. How do you handle income taxes when it comes to categorizing expenses for a given year? Income taxes are sometimes paid in the year the income is earned, such as through withholding or same-year estimated tax payments. But income taxes may also be paid in the year after the income is earned, such as when filing an income tax return or when 4th quarter estimated income taxes are paid in early January of the following year.

There's a relatively simple Accounting approach for this. Create two Liability accounts called "Federal Taxes Payable" and "State Taxes Payable" (obviously adding City Taxes Payable or whatever else you need to track), either as "Property & Debt" in Quicken or equivalent in whatever tool you use. Then, have 2 corresponding Expense categories - eg: Estimated Taxes - Fed and Estimated Taxes - State.

Every month, go in to the Liability accounts (repeat for both Fed & State), and create a transaction in that account and use the corresponding expense category (eg: Estimated Taxes - Fed) just like you would if you were entering any other type of expense from say, a credit card or bank account and buying groceries or something else. That will assign the expense to that month from an Accounting perspective.

When you actually PAY your taxes, you'd have an entry in your Checking (or whatever account the $$ is coming from) that references the Liability (vs the Expense) account. The neat part about that is since you're listing the Liability account when you pay (eg: in January for Q420 taxes), your expense has already been recorded in Oct, Nov and Dec. The January entry is just reducing the Liability that's already been recorded.

This ensures your Tax expenses are accounted for in the year they were incurred, while still allowing you to track payment at the time actually made.

This is what I do, and it works great. Technically, it's the "right" way to account for everything from an Accounting perspective, although I realize that few probably bother to track it that way. But since you asked, that's how an Accountant would tell you to do it..

Hope that helps..

 

[PaunchyPirate]

I decided to do away with the "budget" portion of my expense tracking for 2021. For the first 2 years of my retirement, I tracked expenses into categories using Quicken. I also had a spreadsheet that had monthly "estimates" of my spending set up in advance. Each month, I would put my "actual" expenses from Quicken into the spreadsheet to see how I was tracking. So I guess this was a budget, even though I never intended to limit my spending to the estimated amounts. If I want something, I buy it.

After 2 years of retirement, I no longer feel the need to track my spending to pre-defined estimates. So the monthly tracking of actual to estimates will not be done this year.

I still will track the spending into categories in Quicken. I like doing that and it's easy to see where I'm spending my money through the year. I don't go into detail for some categories. For example, I have a single "Household/Groceries - Walmart" category that would include food groceries as well as cat litter and light bulbs.

 

[NW-Bound]

Most of the time, I don't bother to split, since it really doesn't cause anything different to happen. So if the category is "groceries with the occasional appliance", that's ok. But I'd probably have split that one, since I'd just guess at the appliance cost, plus tax, and it would only take a few seconds.

It's nice to have a lot of info on record in case you need it, but I am lazy, more like forgetful, and rarely split a receipt into different categories.

In the case of the $50 air fryer I bought at Costco along with consumables, the info would be more to let me know when I bought it, to know its longevity. Yes, I often look up Quicken to see when I bought something.

What do you know, yesterday during dinner preparation the doggone thing pooped out while my wife was grilling some chicken steaks. It's the thermal fuse again, which I replaced a couple of months ago as described in the "What you repaired" thread.

Good thing I bought a pack of several fuses, but this routine of replacing it every couple of months is getting old fast. I wonder if there's something else going on, but that has to be saved for the other thread. I have to log off now to go replace the fuse, my wife just reminded me.

 

[Out-to-Lunch]

Sounds like in order to have better results I need keep receipts for input rather than monthly cc statements. If no paper receipts as in amazon i better enter in my spreadsheet immediately. I don't use quicken, just excel spreadsheet.

I like the idea of trying to track vacation gas vs. everyday gas. We bought a 18' camper spring of 2020 and if we needed to make budget cuts it'd be good to know. At about 10 mpg fuel costs while towing can add up fast.

I agree that keeping track of Amazon categories is hard, because the variety of stuff I buy there is large. (For "normal stores," I agree with some others upthread that say close enough is close enough.)

I use Quicken, but you can do the same with your excel sheet. I start with Quicken having downloaded the CC amounts (and incorrectly categorizing the expenditure). I then go to Amazon and call up the page "Your orders." Then I just scroll through, matching the amounts and assigning to my preferred categories. Occasionally, but rarely, I will have to split an order if I ordered disparate items on the same order. In that case, the "Invoice" or "order details" link near each item is useful.

 

[Gumby]

... I start with Quicken having downloaded the CC amounts (and incorrectly categorizing the expenditure). I then go to Amazon and call up the page "Your orders." Then I just scroll through, matching the amounts and assigning to my preferred categories. Occasionally, but rarely, I will have to split an order if I ordered disparate items on the same order. In that case, the "Invoice" or "order details" link near each item is useful.

Same here. Again, it is minimal effort to get useful information.

 

[Dtail]

I record every expense every day, except on vacation. Takes a grand total of 5 minutes daily.

 

[SecondCor521]

+1



but the secure act will likely kill the roth conversions--edit for me

Why? In our family the SECURE Act is encouraging spending down the traditional IRA, since inheriting it now will cause a 10 year tax bump for beneficiaries. I would think Roth conversions would be similar in that they reduce the size of the traditional IRA.

I could see a marginal effect since I think the SECURE Act was also the one that raised RMD age to 72, so you can spread out your conversions over another year or two, but that doesn't sound like "killing" to me.

Not being critical or argumentative - just curious and wanting to learn other perspectives. Thanks.

 

[finnski1]

I record every expense every day, except on vacation. Takes a grand total of 5 minutes daily.

That's some serious discipline.
I reconcile my visa statements , checking etc, about once every 2 months or so. It does take me an hour or 2 but I enjoy doing it and still capture just about everything since I put everything I can on CC and checking account.
Put it all in my spreadsheets which I have diligently been doing since 2012.
I'm a bit of a numbers nerd so actually enjoy categorizing, noting year over year deltas etc.

 

[bingybear]

Why? In our family the SECURE Act is encouraging spending down the traditional IRA, since inheriting it now will cause a 10 year tax bump for beneficiaries. I would think Roth conversions would be similar in that they reduce the size of the traditional IRA.

I could see a marginal effect since I think the SECURE Act was also the one that raised RMD age to 72, so you can spread out your conversions over another year or two, but that doesn't sound like "killing" to me.

Not being critical or argumentative - just curious and wanting to learn other perspectives. Thanks.

your own words say it well.

 

[Gumby]

Don't know about SecondCor521, but I'm still confused. If the goal is to reduce your traditional IRA balance, you could do it either by just withdrawing or by converting it to a Roth. Maybe you could elaborate why you feel the Secure Act is killing Roth conversions. I worry that I am overlooking something.

 

[SecondCor521]

Don't know about SecondCor521, but I'm still confused. If the goal is to reduce your traditional IRA balance, you could do it either by just withdrawing or by converting it to a Roth. Maybe you could elaborate why you feel the Secure Act is killing Roth conversions. I worry that I am overlooking something.

Yes, I'm still confused too.

If I didn't like the 10 year tax bump on beneficiaries of a traditional IRA due to the SECURE Act, then I'd encourage the traditional IRA to consider Roth conversions to reduce the size of the traditional IRA and therefore reduce the impact of the 10 year tax bump.

I think someone is overlooking something, but I'm not sure who and what it is.

 

[slowsaver]

2020 Spending

Spent $57k this year. Very different patterns than previous years. Nearly 50% increase in groceries and 100% decrease in vacation packages. More on alcohol and less on restaurants (just DoorDash without alcohol).

Category	2020 Spent	Notes
Air Travel	$50.00	bag fee, January
Alcohol	$1,022.37
Auto - Fuel	$461.28
Auto - Maint	$376.71
Auto Insurance	$1,044.75
Cell Phone	$574.24
Clothing	$276.42
Computer	$202.67
Condo (HOA, +PropTax, Insur)	$4,795.68
Dance	$544.00
DH Spending	$6,005.00	New computer and weekly grocery deliveries for MIL
Dining	$7,329.82	DoorDash
Donations	$1,289.35
Education, Entertain., Guitar	$1,129.34
Gifts	$756.29
Groceries	$5,387.74
Health, Dental, Gym Fees (Yoga)	$915.00
Home & Garden	$9,571.98	New fence, lawn & patio in 2020
Home Owners Insurance	$1,450.00
Internet	$780.87
Lodging Hotels	$1,032.94
Misc	$216.55
Personal Care	$296.98
Property Tax (primary home)	$8,872.68
Public Transport, Uber, Tolls	$160.50
Utilities	$2,669.59
Vacation Packages	$0.00
Total	$57,162.75

 

[Retire2023]

I record every expense every day, except on vacation. Takes a grand total of 5 minutes daily.

+1
I record daily and check all accounts online as well. Have caught fraud a couple of times and gotten it corrected before the merchandise was even delivered to the fraudster. Hoping the police were there when they were "getting" the fly fishing gear ordered on OUR card!

Really doesn't take much time to do, but then being in accounting...numbers are my thing!

 

[bingybear]

look at the problem from the other side... not trying to reduce the tax bump for your heirs, but trying to prep for the tax bump from being an heir.

my attempt was to roth convert to move asset to never tax... thus reducing the tax bump

 

[Dtail]

+1
I record daily and check all accounts online as well. Have caught fraud a couple of times and gotten it corrected before the merchandise was even delivered to the fraudster. Hoping the police were there when they were "getting" the fly fishing gear ordered on OUR card!

Really doesn't take much time to do, but then being in accounting...numbers are my thing!

That's some serious discipline.
I reconcile my visa statements , checking etc, about once every 2 months or so. It does take me an hour or 2 but I enjoy doing it and still capture just about everything since I put everything I can on CC and checking account.
Put it all in my spreadsheets which I have diligently been doing since 2012.
I'm a bit of a numbers nerd so actually enjoy categorizing, noting year over year deltas etc.

My background is also in accounting, although more of my career was in financial analysis.
I do enjoy budgeting and tracking expenses. I love "playing" with numbers in general.
As @retire23 mentioned, I also have captured multiple fraud attempts over the years on a timely basis, as I check my cc expenses daily.
When I decided to cut down some expenses from the budget, my detailed analysis made it easy for the decision making process.

 

[finnski1]

My background is also in accounting, although more of my career was in financial analysis.
I do enjoy budgeting and tracking expenses. I love "playing" with numbers in general.
As @retire23 mentioned, I also have captured multiple fraud attempts over the years on a timely basis, as I check my cc expenses daily.
When I decided to cut down some expenses from the budget, my detailed analysis made it easy for the decision making process.

Yes that is a good reason to check daily. What I did was just have Bank of America send me an email alert every time my credit card is used. I then check the emails and if it looks good just delete the emails and do my bimonthly spread sheet thing.

 

[Rushmore]

I record every expense every day, except on vacation. Takes a grand total of 5 minutes daily.

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.

 

[SecondCor521]

look at the problem from the other side... not trying to reduce the tax bump for your heirs, but trying to prep for the tax bump from being an heir.

my attempt was to roth convert to move asset to never tax... thus reducing the tax bump

I've read the above several times but still don't understand.

From the heir's point of view, if they know they're going to face a 10 year SECURE Act tax bump, they probably want to be Roth converting now, ahead of time.

They could get stuck, if they have a lot of Roth converting of their own to do and then get hit with a SECURE Act 10 year tax bump...but that just means they're going to be in higher tax brackets and nothing they can really do. First world problem for sure.

Still don't understand the killing Roth conversion comment...everything we've said since seems to suggest Roth conversions are a better idea after the SECURE Act, not worse.

 

[NW-Bound]

Being forgetful and lazy, I am happy to let Quicken download expenses for me (we are nearly cashless and use credit cards all the time). I just go in after the download, and correct/add the categorization as needed. The classification is not as fine as some posters here do, but works well enough for my purposes.

For example, speaking of RV fuel cost, a few clicks on Quicken let I see that I have spent $16,383 on fuel cost for my motorhome towing a car, ever since I bought it. That's travel over a period of 10 years, and covering 43K miles. I did cross-country RV travel every other year, alternating with European trips, so did not drive every year.

 

[W2R]

I record every expense every day, except on vacation. Takes a grand total of 5 minutes daily.

That's some serious discipline. [...]

I record every expense every day too but for me it's not much discipline. It's what I do right after taking my shoes off, changing to more comfie clothes, and settling into my recliner with my laptop, once I return home. All part of the same routine. (Then if I order something from Amazon later that night, I record it when I order it.) They say that it takes 21 days to form a habit and once this becomes a habit then it is pretty much automatic.

As Dtail pointed out, it doesn't actually take much time and my guess would be more like 30 seconds than five minutes. For example today under Restaurants "$8.00 soup". There. That didn't take long to type. I haven't spent anything else today so far.

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, and checking to see if the result balances with what is presently in my wallet (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. At the same time I check my credit card purchases on their website, and then I check my bank accounts daily, to make sure anything paid from CC or bank was entered in my spreadsheet too. Again, quick and easy and only every few days.

I didn't keep track of my spending to the penny each day when I was working, but back in 2011 F told me about how he does this and I was SO impressed and instantly a convert! What a great idea. Anyone who loves numbers should try it because honestly it is so much fun. Or it is for some of us, anyway. More fun than a barrel of monkeys.

 

[bingybear]

I've read the above several times but still don't understand.

From the heir's point of view, if they know they're going to face a 10 year SECURE Act tax bump, they probably want to be Roth converting now, ahead of time.

They could get stuck, if they have a lot of Roth converting of their own to do and then get hit with a SECURE Act 10 year tax bump...but that just means they're going to be in higher tax brackets and nothing they can really do. First world problem for sure.

Still don't understand the killing Roth conversion comment...everything we've said since seems to suggest Roth conversions are a better idea after the SECURE Act, not worse.

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

 

[finnski1]

I record every expense every day too but for me it's not much discipline. It's what I do right after taking my shoes off, changing to more comfie clothes, and settling into my recliner with my laptop, once I return home. All part of the same routine. (Then if I order something from Amazon later that night, I record it when I order it.) They say that it takes 21 days to form a habit and once this becomes a habit then it is pretty much automatic.

As Dtail pointed out, it doesn't actually take much time and my guess would be more like 30 seconds than five minutes. For example today under Restaurants "$8.00 soup". There. That didn't take long to type. I haven't spent anything else today so far.

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, and checking to see if the result balances with what is presently in my wallet (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. At the same time I check my credit card purchases on their website, and my bank accounts, to make sure anything paid from there was entered in my spreadsheet too. Again, quick and easy and only every few days.

I didn't keep track of my spending to the penny each day when I was working, but back in 2011 F told me about how he does this and I was SO impressed and instantly a convert! What a great idea. Anyone who loves numbers should try it because honestly it is so much fun. Or it is for some of us, anyway. More fun than a barrel of monkeys.

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

 

[Dtail]

I record every expense every day too but for me it's not much discipline. It's what I do right after taking my shoes off, changing to more comfie clothes, and settling into my recliner with my laptop, once I return home. All part of the same routine. (Then if I order something from Amazon later that night, I record it when I order it.) They say that it takes 21 days to form a habit and once this becomes a habit then it is pretty much automatic.

As Dtail pointed out, it doesn't actually take much time and my guess would be more like 30 seconds than five minutes. For example today under Restaurants "$8.00 soup". There. That didn't take long to type. I haven't spent anything else today so far.

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, and checking to see if the result balances with what is presently in my wallet (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. At the same time I check my credit card purchases on their website, and then I check my bank accounts daily, to make sure anything paid from CC or bank was entered in my spreadsheet too. Again, quick and easy and only every few days.

I didn't keep track of my spending to the penny each day when I was working, but back in 2011 F told me about how he does this and I was SO impressed and instantly a convert! What a great idea. Anyone who loves numbers should try it because honestly it is so much fun. Or it is for some of us, anyway. More fun than a barrel of monkeys.

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.