Alex in Virginia
Recycles dryer sheets
- Joined
- Dec 23, 2012
- Messages
- 145
My $18K Annual Basic Expense Budget
A lot of people have a hard time accepting that I can actually have a basic living expense budget of $18,000 a year. They read “18,000” and they think I must be living in a hovel or in government-subsidized housing. I must be eating beans and rice 7 days a week. I must be letting my car, (he has a car?), my house (what house??!!) and my health fall apart. And I must be limited to spending my days in front of the boob tube sipping cheap Old Milwaukee beer.
OR -- I must be cooking the books to come up with that $18,000 a year figure. It must actually be something like $36,000 a year for my wife-and-I household. I must not be accounting for my health care being provided by my wife’s employer. Or something. Or all of it. But the $18,000 a year figure CAN’T be real.
Well, it is. And we’re going to go through it line by line. But first, we have to establish a context for my basic living budget -- and in the process (hopefully) answer some questions and lay to rest some misconceptions before they start mucking things up.
What About That Wife?
Am I married? Yes. Does my wife work and earn an income? Yes. Does her employer cover my health insurance? No. Do my wife and I share household expenses that otherwise would jack up that $18,000 number of mine? Nope. That’s right. No.
You see, due to business and job circumstances, my wife and I maintain separate households 102 miles apart. Separate houses. Separate electric, internet and satellite radio services. Separate household expenses right down the line.
We also have separate vehicles, for which we each take separate responsibility.
There are two line items in my budget that do benefit from marriage. Although I don’t know the actual amount, I know that our auto and long-term-care insurance carriers give each of us premium breaks for having bought 2 policies. And that’s the only marriage effect that I can see on my annual basic living budget.
Of course, it’s a whole ‘nother story when it comes to our entertainment and travel spending. Two can travel by car and stay in hotels just as cheaply as one. Two can get restaurant discounts a single diner can’t. And so on. But like I said, that’s another story.
This story is about my $18,000 a year basic expenses budget.
What About That Hovel -- and the Rice and Beans?
I live in a two-bedroom, one-bath non-subsidized 1150 square foot brick house set on 1.25 acres near the Shenandoah River. The house also has a full walk-out basement and an attached 500 square foot garage and workshop. Some might still say that’s a hovel, but it’s home-sweet-home to me. And it’s paid for.
I drive a very well maintained 1996 Dodge Dakota -- also paid for -- with 128,000 miles on its odometer. I like it very much, and it covers that 102 miles to my wife’s house every weekend just fine.
I never eat rice and beans as a main dinner dish. My dinner preference is to go heavy on meats and vegetables. My (monotonous sounding to some) breakfast most days is oatmeal with milk and fresh strawberries. A sandwich and apple cover my lunch. Snacks throughout the day could be yogurt, nuts, fruit or a bowl of cold cereal and milk. Oh, and my beer is Becks, my scotches are Chivas Regal and Speyburn, and my bourbon is Old Crow. (I know, I’m not too picky about bourbons.)
Anyway, you get the picture. (I hope.)
Okay, Alex, So Let’s See That Budget Already!
(my apologies but I don't know how to make it go into columns)
Cost Per Month
Housing
mortgage 0
(paid off)
r. e. taxes 49
home insce 47
home warr. 52
Repairs fund 150
(leveled at $3k)
Utilities
internet 57
land line 10
cell phone 10
electricity 100
(12-mo. avg)
heat oil & gas 50
(12-mo. avg.)
netflix 7
pandora 0
(free service)
Auto
auto loan 0
(paid off)
auto insce 28
maintenance 100
(accrued in a fund)
basic gas 35
(200 mi @ 20mpg)
Health Care **See Note 1 Below**
medicare (A & B) 105
supplemental 51
(medigap)
medicare (D) 18
(prescriptions)
ltc insce 176
(long term care)
dental insce 20
out-of-pocket 35
Groceries “Plus”
groceries 210
liquor 20
pet food 50
(3 cats, 1 dog)
Monthly Total $ 1380 x 12 months = $16,560
Annual Total $ 16,560 (post-tax)
Income Tax “Overhead” 740
**See Note 2 below**
Error Allowance 700
Pre-Tax Annual Total Budget $18,000
Note One: For a detailed look at my health care finances, please go to http://www.early-retirement.org/forums/f38/taming-my-healthcare-cost-monster-66527.html#post1318280.
Note Two: Factors in a $7100 standard deduction and a $3800 exemption for federal. Additional cushion "fudged in" for state.
My Discretionary Spending Pay-Off
Of course, every dollar I don’t spend on basic living expenses is another dollar added to my discretionary spending fund. That’s my pay-off for basic budget vigilance. By keeping my “have to” expenses lower, I have that much more money for my “want to” activities and purchases. More money for travel. More money for day trips, events, eating out, whatever. And if I don’t end up spending that money, my discretionary fund just keeps growing and growing.
For me, it’s a win-win.
What about you? How do you approach your budgeting? Are you squeezing your basic living costs to have more money for fun spending? Or are you opting to be more laid back about your basic living costs because you are comfortable with them?
Alex in Virginia
Other Recent Posts at Early-Retirement.Org
Sharing My FI/Retirement Journey (posted 11-08-13)
A lot of people have a hard time accepting that I can actually have a basic living expense budget of $18,000 a year. They read “18,000” and they think I must be living in a hovel or in government-subsidized housing. I must be eating beans and rice 7 days a week. I must be letting my car, (he has a car?), my house (what house??!!) and my health fall apart. And I must be limited to spending my days in front of the boob tube sipping cheap Old Milwaukee beer.
OR -- I must be cooking the books to come up with that $18,000 a year figure. It must actually be something like $36,000 a year for my wife-and-I household. I must not be accounting for my health care being provided by my wife’s employer. Or something. Or all of it. But the $18,000 a year figure CAN’T be real.
Well, it is. And we’re going to go through it line by line. But first, we have to establish a context for my basic living budget -- and in the process (hopefully) answer some questions and lay to rest some misconceptions before they start mucking things up.
What About That Wife?
Am I married? Yes. Does my wife work and earn an income? Yes. Does her employer cover my health insurance? No. Do my wife and I share household expenses that otherwise would jack up that $18,000 number of mine? Nope. That’s right. No.
You see, due to business and job circumstances, my wife and I maintain separate households 102 miles apart. Separate houses. Separate electric, internet and satellite radio services. Separate household expenses right down the line.
We also have separate vehicles, for which we each take separate responsibility.
There are two line items in my budget that do benefit from marriage. Although I don’t know the actual amount, I know that our auto and long-term-care insurance carriers give each of us premium breaks for having bought 2 policies. And that’s the only marriage effect that I can see on my annual basic living budget.
Of course, it’s a whole ‘nother story when it comes to our entertainment and travel spending. Two can travel by car and stay in hotels just as cheaply as one. Two can get restaurant discounts a single diner can’t. And so on. But like I said, that’s another story.
This story is about my $18,000 a year basic expenses budget.
What About That Hovel -- and the Rice and Beans?
I live in a two-bedroom, one-bath non-subsidized 1150 square foot brick house set on 1.25 acres near the Shenandoah River. The house also has a full walk-out basement and an attached 500 square foot garage and workshop. Some might still say that’s a hovel, but it’s home-sweet-home to me. And it’s paid for.
I drive a very well maintained 1996 Dodge Dakota -- also paid for -- with 128,000 miles on its odometer. I like it very much, and it covers that 102 miles to my wife’s house every weekend just fine.
I never eat rice and beans as a main dinner dish. My dinner preference is to go heavy on meats and vegetables. My (monotonous sounding to some) breakfast most days is oatmeal with milk and fresh strawberries. A sandwich and apple cover my lunch. Snacks throughout the day could be yogurt, nuts, fruit or a bowl of cold cereal and milk. Oh, and my beer is Becks, my scotches are Chivas Regal and Speyburn, and my bourbon is Old Crow. (I know, I’m not too picky about bourbons.)
Anyway, you get the picture. (I hope.)
Okay, Alex, So Let’s See That Budget Already!
(my apologies but I don't know how to make it go into columns)
Cost Per Month
Housing
mortgage 0
(paid off)
r. e. taxes 49
home insce 47
home warr. 52
Repairs fund 150
(leveled at $3k)
Utilities
internet 57
land line 10
cell phone 10
electricity 100
(12-mo. avg)
heat oil & gas 50
(12-mo. avg.)
netflix 7
pandora 0
(free service)
Auto
auto loan 0
(paid off)
auto insce 28
maintenance 100
(accrued in a fund)
basic gas 35
(200 mi @ 20mpg)
Health Care **See Note 1 Below**
medicare (A & B) 105
supplemental 51
(medigap)
medicare (D) 18
(prescriptions)
ltc insce 176
(long term care)
dental insce 20
out-of-pocket 35
Groceries “Plus”
groceries 210
liquor 20
pet food 50
(3 cats, 1 dog)
Monthly Total $ 1380 x 12 months = $16,560
Annual Total $ 16,560 (post-tax)
Income Tax “Overhead” 740
**See Note 2 below**
Error Allowance 700
Pre-Tax Annual Total Budget $18,000
Note One: For a detailed look at my health care finances, please go to http://www.early-retirement.org/forums/f38/taming-my-healthcare-cost-monster-66527.html#post1318280.
Note Two: Factors in a $7100 standard deduction and a $3800 exemption for federal. Additional cushion "fudged in" for state.
My Discretionary Spending Pay-Off
Of course, every dollar I don’t spend on basic living expenses is another dollar added to my discretionary spending fund. That’s my pay-off for basic budget vigilance. By keeping my “have to” expenses lower, I have that much more money for my “want to” activities and purchases. More money for travel. More money for day trips, events, eating out, whatever. And if I don’t end up spending that money, my discretionary fund just keeps growing and growing.
For me, it’s a win-win.
What about you? How do you approach your budgeting? Are you squeezing your basic living costs to have more money for fun spending? Or are you opting to be more laid back about your basic living costs because you are comfortable with them?
Alex in Virginia
Other Recent Posts at Early-Retirement.Org
Sharing My FI/Retirement Journey (posted 11-08-13)
