Tracking spending...

[DEC-1982]

It's weird but I track our expenses more closely now than pre-retirement.

+1 except for the weird part; I don't think it's weird.

When you are earning, there are 2 things you have some control over - income and expenses. Worst case, you can (hopefully) work longer or harder or get a second job or whatever to keep income continuing.

When you stop earning, there is 1 thing you have some control over - expenses.

 

[kcowan]

When we first retired, I set up a budget spreadsheet. Then when we looked at the actuals, we laughed. What were we thinking with that budget?

But we do maintain a handle on total spending, especially for extraordinary items. We also eliminated all excess spending in the first year of retirement: extra credit cards, charges from telcos and cable cos, use of electricity, etc. And our total spend is well below 4%.

And we often walk to places that we would have driven to when we worked. It is amazing how far you can walk and just enjoy the experience, even developing alternate routes just to explore.

And, of course, we take advantage of seniors' discounts, like shopping on Tuesday, eating at 5:30. In Mexico, comida is served from 2-4 in the pm, so we arrive at 4 for our first and main meal of the day, eating a light breakfast and dinner at home when it is convenient.

There is also Groupon for even more savings. To us, managing the spend line is more important than tracking. That is what got us minimizing telco/cable expenses initially.

 

[freebird5825]

I meticulously tracked spending for 2 years before I FIREd. I used a template from the Microsoft library and expanded upon the categories as I went along.
Once I had a firm handle on expenses, I was able to determine I could actually FIRE, even with 8 years to go until I could apply for my own deferred pension. I had access to plenty of emergency cash just in case.

These days I do a more macro level approach to tracking spending...my credit union just added FinanceWorks capability (free) to the accounts in late 2014.
I have one checking account set up for automatic withdrawal on every bill except credit cards, property/school taxes, trash, and water. I have a separate account used only for income via direct deposit. I manually do transfers from income to bill-paying account as needed. I pay the credit cards manually online so it forces me to review each monthly statement.

All I had to do was electronically link my two accounts, categorize a few transactions that FinanceWorks could not auto-determine, and voila.
I also get weekly email notifications from the credit union, telling me all balances, all upcoming bills, and other summary info. I also get notifications of large deposits, so that triggers me to do a manual transfer if I need to.
I do not get into extreme detail on the credit card payments from my bill paying account. I get a rough categorization from the cc year end statement.

Pretty cool, and all at no expense to me to use the FinanceWorks software.

 

[NW-Bound]

+1 except for the weird part; I don't think it's weird.

When you are earning, there are 2 things you have some control over - income and expenses. Worst case, you can (hopefully) work longer or harder or get a second job or whatever to keep income continuing.

When you stop earning, there is 1 thing you have some control over - expenses.

You mean we can't control our investment returns by buying/selling the right stocks at the right time, even going short when appropriate?

... Anyway, I quit all the tracking (except for one or two that I need for tax purposes). Today, I just keep track of my total network worth. As long as it is going up, I just don't worry about it anymore

I was also cavalier when the market rained money. But recently, the market god turns a bit stingy. Maybe he is only that way towards me. Darn!

 

[easysurfer]

I went from budgeting using Quicken when that was just checkbook balancing and budget program to stopping and just using a mental note to back to budgeting (but not with Quicken) when FIRE'd. Now I feel naked if I don't record my spending.

 

[brett]

I only track total monthly spend. The number was set up with flexibility since we tend to travel frequently. For the past 48 months the number has been right on when reviewed at an annual level (monthly can vary). Just increased the monthly number by 8 percent.

It takes 5 minutes to do each month. Just add up cash withdrawals (few) and electronic payments of rent, utilities, credit cards, etc.

What is surprising is that our lifestyle has changed enormously since that budget was set. House sold, renting, down to one vehicle, more travel, more money spent on healthy foods zero on fast/prepared foods, etc. Yet the number has been stable these past 48 months. Perhaps it was the extra ten percent margin for error that we added.


Like others I am more focused on our asset values since this drives and supports a portion of our living costs.

 

[BeachyBound]

Moneydance

When MSMoney left, I switched to Moneydance. It may not be quite as full featured as Quicken, but coming from MSMoney, I liked it better. It downloads transactions in Quicken format, so it's compatible with everything. $49, but no forced upgrades...I'm still running the 2011 version I originally purchased.

 

[W2R]

Every day I enter all my spending, to the penny, into an Excel spreadsheet. There I have columns for Date, Category, Sub-Category, Amount, exactly what I bought and how I paid for it.

Then I balance what I entered in Excel with my bank account balance, CC balance, and my wallet contents. At the end of the month, I add up the categories and spending for the month. I like my method of tracking spending and I am retired, so I have plenty of time to do it. It only takes maybe five minutes each day, if that. I look forward to doing this every day because it's my kind of fun.

 

[big-papa]

I was between jobs for about 10 months a couple of years ago and finally sat down and tracked spending via a spreadsheet. Fortunately, there was enough online history from the bank and credit cards that I could see where everything went for the previous two years.

Once I had that information, before creating the budget, I was able to quickly identify areas where I could get the biggest bang for the buck in terms of reducing spending: auto/home insurance, electricity consumption, etc. and an eventual house refinance once I was working again. Oh and I was on an ACA plan during that time, so it was in the budget. It was good practice for retirement.

After I was working again, we eased up a little on some things (like eating out) but kept most of the budget as it was. We also owned property in another state, which we sold, so that both added money back to savings and eliminated a number of items from the budget. Also, because we have a real budget now which represents significantly lower spending than just 2 years ago, we're now able to save close to 40% of my salary as we round the final curve before retirement.

We still track via spreadsheets. I have Mint, but need to dig deeper into it as well as checking out other more automated trackers since it's a pain in the rear to manually enter everything (though that exercise puts it square in your face exactly where the spending goes on an item by item basis)

At any rate, knowing where the money goes, knowing what's coming up in a few years (college for my daughter), along with eventual house downsizing, and running every retirement calculator out there gives me reasonable confidence that FIRE is just a few years away. It's also good to know that if circumstances warrant, we could FIRE today or take significantly lower pay/lower stress jobs and be just fine.

Big-Papa

 

[audreyh1]

I take a look at my spending every month or two to see how expenses are on track year-to-date, after all credit cards, accounts, etc. are reconciled.

This is a simple automatic report in Quicken - actually two, one is for the basic expenses, and another that adds discretionary spending such as gifting, one-off or large item purchases, major travel expenses, etc. Then I can compare it with how much of the cash I have left that I set aside for the year. I also calculate my "run rate" - i.e. my projected expenses for the year based on my YTD spending.

This spending review doesn't take much effort, as the reports are one click to generate, and the spreadsheet is easy to update. Most of the work is reconciling the credit card statements and bank accounts.

 

[ERD50]

I still don't understand how CC statement and bank statements gets one down to the granularity to see where the money is going and make decisions.

We spend a lot at Costco, and grocery stores for example. But that doesn't tell me much of anything useful. Everything from toilet paper and water softener salt is bunched in with discretionary items.

Do you people actually go line-by-line on the cash register receipt and categorize each purchase? And how do you identify things like buying a high grade of something versus a lower grade? If I wanted to further economize, I might learn that buying lower grades of bacon, hamburger versus steak, etc, might save me $X per month. But that would seem to take a lot of figuring, a lot of judgement, a lot of categories. What does entering a prime steak as "grocery" versus entering hamburger as "grocery" tell me - they just both come up as "grocery"? But there is a savings there if I want to pursue it, but how would I see it?

I know what my total spending is (it only comes from two accounts, I just add up the withdraws, and add back any reimbursements or 'transfers' (like moving money from savings to fund a Roth IRA contribution). But I really don't know the detailed breakdown - after utilities, mortgage, insurance, property tax, etc - the big hitters. We try to be careful with our purchases, looking for value. I'm not sure what I'd gain with a bunch of penny-level numbers - what would they really mean to me? What action could I take based on them?


-ERD50

 

[NW-Bound]

I don't bother separate out items from a receipt. For example:

* What I spend at Home Depot or Lowe's goes into "Home-Maintenance" category, unless it is a big ticket item of several hundred dollars like my garage steel cabinets, then it may get classified as "Home-Improvement".

* What I spend at grocery stores goes into "Food:Groceries". There are no separate categories for toiletries, nor for booze.

* I do care to separate out the gas for my RV vs. gas for the cars. The RV fuel cost is several thousand a year, and goes in "Travel:Fuel Expenses". The latter goes into "Auto:Fuel Expenses"

* There is no distinction between restaurant meals during travel or in town. It's eating out all the same. It goes in "Food:Restaurants".

* If I happen to buy some cheese from Costco when going there to buy a TV for example, which costs a lot more, then the whole receipt is considered "Electronics" and goes into "Shopping:Electronics".

So, it's not that hard, and requires minimal work once the credit card statements get downloaded.

 

[Danmar]

I have a "cash" expense line in my budget for everything like groceries, liquor, taxies, other small purchases made by cash. Have never tried to split this stuff out. Very consistent from year to year and only represents about 5% of total spend. Really non discretionary stuff with little value to me in knowing where it goes.

 

[audreyh1]

I still don't understand how CC statement and bank statements gets one down to the granularity to see where the money is going and make decisions.

We spend a lot at Costco, and grocery stores for example. But that doesn't tell me much of anything useful. Everything from toilet paper and water softener salt is bunched in with discretionary items.

Do you people actually go line-by-line on the cash register receipt and categorize each purchase? And how do you identify things like buying a high grade of something versus a lower grade? If I wanted to further economize, I might learn that buying lower grades of bacon, hamburger versus steak, etc, might save me $X per month. But that would seem to take a lot of figuring, a lot of judgement, a lot of categories. What does entering a prime steak as "grocery" versus entering hamburger as "grocery" tell me - they just both come up as "grocery"? But there is a savings there if I want to pursue it, but how would I see it?

I know what my total spending is (it only comes from two accounts, I just add up the withdraws, and add back any reimbursements or 'transfers' (like moving money from savings to fund a Roth IRA contribution). But I really don't know the detailed breakdown - after utilities, mortgage, insurance, property tax, etc - the big hitters. We try to be careful with our purchases, looking for value. I'm not sure what I'd gain with a bunch of penny-level numbers - what would they really mean to me? What action could I take based on them?


-ERD50

When I reconcile my credit card statements I look at each receipt. Most receipts will match one category such as "groceries". And Quicken automatically fills those in for me in most cases. But I buy various things from some stores, so sometimes it might be "software" or another time "entertainment" for example. And yes, I look at each receipt when I reconcile my statements and make sure the category is correct, including the very rare split. For travel spending it is broken out by lodging, dining, tours, transportation, etc. I find that level of granularity useful for trip planning purposes, and it's usually by receipt, not the items listed on the receipt.

Most of my Costco receipts are under grocery, but monthly there is at least one prescription purchase which will be a separate receipt, so I make sure that is listed as medical prescription - that might become important for tax purposes as well as budgeting. Or if we bought a ladder, or something for the garden, or home "office", or tax software those will go in different categories.

Sounds like pretty much what NW-Bound does. And I also have a major category fuel, and subcategories auto and motorhome. Same for maintenance, parts, repairs, registration, etc. I like to have the vehicle expenses split out.

So I make sure categories match before I run my YTD spending report to see the breakdown.

 

[NanoSour]

I use Mint to track everything. However, if it isn't a fixed monthly expense in gets lumped into a category I call "Household". This includes everything from food to back to school supplies to flowers for the garden. If it's not a fixed monthly bill, it's "Household". My fixed bill categories are:

Mortgage
Car & Home Insurance
Life Insurance
Medical Insurance
Electric Bill
Water/Trash Bill
Phone
Internet

Our 2015 budget has $4068/month in the household category and YTD we are under budget by just over $6100. That's the number I really care about and I don't care what the money is spent on. This has worked for me since 2005 when I started with Quicken.

 

[Corporateburnout]

When I reconcile my credit card statements I look at each receipt. Most receipts will match one category such as "groceries". And Quicken automatically fills those in for me in most cases. But I buy various things from some stores, so sometimes it might be "software" or another time "entertainment" for example. And yes, I look at each receipt when I reconcile my statements and make sure the category is correct, including the very rare split. For travel spending it is broken out by lodging, dining, tours, transportation, etc. I find that level of granularity useful for trip planning purposes, and it's usually by receipt, not the items listed on the receipt.

Most of my Costco receipts are under grocery, but monthly there is at least one prescription purchase which will be a separate receipt, so I make sure that is listed as medical prescription - that might become important for tax purposes as well as budgeting. Or if we bought a ladder, or something for the garden, or home "office", or tax software those will go in different categories.

Sounds like pretty much what NW-Bound does too. And I also have category fuel, and subcategories auto and motorhome. Same for maintenance, parts, repairs, registration, etc. I like to have the vehicle expenses split out.

So I make sure categories match before I run my YTD spending report to see the breakdown.

For the most part my Quicken budgeting and tracking are similar but I don't track to the level of details you do. For example my travel budget and tracking is one category that includes hotels, airplane tickets, restaurant meals, tours etc..

My grocery category covers everything we buy at Stop and Shop and Trader Joe"s. My computers and related supplies and software go into "other expenses" and we both have a cash category of $200/month to cover small items that we don't charge on a credit card.

This pretty much satisfy my tracking needs at this time.

 

[audreyh1]

For the most part my Quicken budgeting and tracking are similar but I don't track to the level of details you do. For example my travel budget and tracking is one category that includes hotels, airplane tickets, restaurant meals, tours etc..

My grocery category covers everything we buy at Stop and Shop and Trader Joe"s. My computers and related supplies and software go into "other expenses" and we both have a cash category of $200/month to cover small items that we don't charge on a credit card.

This pretty much satisfy my tracking needs at this time.

Yeah - I broke out travel spending into several subcategories around 2000 when we started traveling a great deal, and I needed the data for planning and budgeting purposes. At one point I was able to generate reports that showed how much we spent on each trip, because I added a name (don't remember what it was called - tag?). That was useful, in that it let me get a good feel for how much similar trips would cost in the future.

Then we went full-time in the RV, and we were traveling all the time - it was just part of our regular expenses, so I didn't use the Travel category for a few years.

Then back to a house, and it became convenient to break out Travel separately again.

 

[walkinwood]

We track all our expenses and find that Quicken makes it pretty easy to do. Each month I update an "Expense Report" that all our spending since ER. I call out any categories where we spent way above average or one-time expenses. It also contains the trailing 12 month spend vs the budget. That, to us, is the important number.

Over the years, I've reduced the number of sub-categories since we found the extra granularity didn't add anything. We don't budget per category.

Besides the comfort of knowing we are within our annual budget, this exercise shows us where we spend the money and it has helped us direct our spending to areas that we find more enjoyment/satisfaction.

 

[NW-Bound]

Yes, what I pay most attention to is the last 12-month expenses. If it is within reason, then there's no reason to worry.

I do not have a budget per se for each category. Still, I like to know what I spend on discretionary items like travel, gift, donations, and what it costs to carry the 2nd home. It is so that I know what I can cut down if the market tanks.

I do not break down toiletries and sundries household items from grocery receipts because they are the least of my expenses. In addition, those are for essential living, and if I worry about that, I must be in really bad financial shape.

Having some of the info on my fingertips is nice for other reasons. For example, looking at the electric bills for the 12 months preceding and after I changed my pool pump showed me that I saved roughly $250/year on electricity with the new variable-speed pump. So, I can recommend this type of pump to people because it pays for itself after 4 years.

Sometimes it is interesting to know some tidbits by playing with Quicken when I have nothing better to do. For example, I just saw that I spent $1700/yr for gas when I was still working part-time (wife already ER'ed), but only $500/yr in the last 12 months (not including RV fuel of course). And the grocery bills, including all household sundries were $5700 in 2010, but only $3000 in the last 12 months. Whoa! What's happening here?

 

[48Fire]

Congratulations prose3589! Great way to start!


I used Quicken for years, downloading credit cards, splitting COSTCO receipts to various allocations, etc. It helped explain to my wife when we didn't have any money for something, I could quickly see what we (over) spent on something.


Now, 2 years post ER, and I have fallen off the Quicken wagon. Little interest, little need, etc. More focused on enjoying life, not worrying about how many $5 beers I had.

 

[DEC-1982]

Do you people actually go line-by-line on the cash register receipt and categorize each purchase?

-ERD50

I enter all receipts manually into Quicken, and split costs into appropriate cost centers when needed. It's more work but it is also more accurate.

But to each his or her method.

 

[grasshopper]

I have used Quicken since 1995, I tag all trips which collects all expenses for that particular adventure. I also sub categorize pets So each dog gets a line and than all dogs get a line, same with cats, tortoises, wildbirds and guinea fowl. I like to do this as it also shows vet appointments or meds used.

so what did I do today.

 

[audreyh1]

I enter all receipts manually into Quicken, and split costs into appropriate cost centers when needed. It's more work but it is also more accurate.

But to each his or her method.

Most of my receipts/transactions are imported, and category assignment is mostly automatic, so all I have to do is review and make a few category reassignments for the exceptions.

 

[NW-Bound]

Most of my receipts/transactions are imported, and category assignment is mostly automatic, so all I have to do is review and make a few category reassignments for the exceptions.

+1

Just now, out of curiosity, when I tried to see how much I spent on gasoline back when I was still working part-time in 2010, saw on Quicken that I had several fill-ups costing in the triple digit. No way I could put that much gas in a car, so of course it had to be for the RV. And of course it was, as the date of the expenses corresponded to my 1st ever RV trip.

So, just a few clicks to move it from "Auto:Fuel" to "Travel:Fuel", and now the record is straightened out. Ah, I feel better now.

 

[2017ish]

I am glad to see I'm not alone in my quicken fetish.

Am now in the "starting to more seriously plan for post-work" stage, and the easy customization of the reports is nice. Rather than just the detailed spending/category reports by year, I am now occasionally running a "retirement expenses" report that strips out the work-related expenses and leaves us with baseline spending upon which we'll build. (Taxes, other than property, are stripped out--as we'll have 1) much more control over them; and 2) will be paying far less no matter what)

DW still doesn't see why I'd ever want to know how much we spent on groceries in, say, July of 1996--but you never know when data might be useful.