Expenses on a Level Playing Field?

[Dreamweaver]

I've seen a couple threads on here with people listing expenses in terms of $. I happen to live in California, and so I'm guessing my housing costs are near the highest in the nation compared to a similar house someplace else. Presumably, my income is also on the higher side than a similar job someplace else. I thought it might be interesting to level the playing field on the expenses by looking at them on a % basis and seeing how everyone compares:

My numbers as % of gross income:
Taxes 28%
Mortgage 22%
Savings & IRA 25%
Food 7%
Utilities 3%
Everything else 15%

 

[FANOFJESUS]

My numbers as % of gross income:
Taxes 5%
Mortgage 0%
Savings & IRA 73%
Food 10%
Utilities 7%
Everything else 5%

 

[FIREd]

My numbers as % of gross income:
Taxes 24%
Mortgage 6.5%
Savings & IRA 38%
Food 4.5%
Utilities 3.5%
Everything else 23.5%

 

[Bikerdude]

My numbers as % of gross income:
Taxes 21%
Mortgage 16%
Savings & IRA 0%
Food 7%
Utilities 6%
Everything else 50%

Single largest expense = Taxes

 

[cho oyu]

My numbers as % of gross income:
Taxes/FICA/etc.: 37%
Rent/Mortgage: 8%
Savings/IRA/401k: 40%
Food: 2.5%
Utilities: 0.5%
Everything else: 12%

Well, at least the savings is still slightly outpacing taxes.

 

[Lakedog]

My numbers as % of gross income:
Taxes 11.5%
Mortgage 0%
Savings & IRA 0%
Food 9%
Utilities 4.5%
Everything else 75%

Before retiring earlier this year, savings would have been the largest category at around 50%.

 

[MasterBlaster]

I happen to live in California, and so I'm guessing my housing costs are near the highest in the nation compared to a similar house someplace else.

Although California does have some pretty outrageous housing prices they do have one great advantage. And that's the way they treat property taxes under proposition 13. For someone who buys their house during the early working years and then holds it for decades and then retires "in-situ" they could have the paid-off house with very low property taxes. For many retirees their income taxes also drop significantly in retirement.

Therefore California, although often overlooked, just could be a great state to work and retire in when measured over many years. when I look at property taxes in other states compared to what I pay it motivates me to stay right where I am.

 

[Caoineag]

Taxes 31.8%
Mortgage 21.7% (includes insurance and taxes)
Savings and IRA 26.5%
Food 11.8%
Utilities 3.3%
Everything Else 4.9%

Hopefully taxes will go down next year thanks to getting a mortgage in oh 2 weeks and we just recently upped the pre-tax savings so hopefully that will cut it down as well. What's sad though is we tend to owe a little less than $1k every year on top of that...

 

[TromboneAl]

My numbers as % of gross income:
Taxes ERROR DIVISION BY ZERO
Mortgage ERROR DIVISION BY ZERO
Savings & IRA ERROR DIVISION BY ZERO
Food ERROR DIVISION BY ZERO
Utilities ERROR DIVISION BY ZERO
Everything else ERROR DIVISION BY ZERO

 

[WB52]

Taxes 20%
Mortgage 14%
Savings 10%
Food 15%
Utilities 8%
All Else 33%

 

[plex]

My numbers as % of gross income:
Taxes 15%
Mortgage 0% (I rent, takes up about 12%)
Savings & IRA 10%
Food 2%
Utilities 1%
Everything else 72% (12% rent, 59% tuition , 1% other)

I essentially save 69% percent of my income, but mostly as short term savings. Kinda hard sticking to the format as a student worker.

 

[OAG]

Mine % of Gross Income:
Taxes 13.8%
Mortgage (HELOC) 3.4%
Condo Fee 3.4%
All other Expenses less than 1% each (total 12.4%)
Savings (Income - Expenses): 67%

 

[DAYDREAMER]

taxes 32%
mortgage 0
food 2%
utilities 2%
frivilous spending 10%
401k's 20%
savings/investing (after tax) 35%

 

[aenlighten]

Also in SoCal, relative to expenses

Taxes 26%
Mortgage 0%
Savings 0%
Food 14%
Util 7%
Else 46%

 

[kumquat]

What year's income?

2007, income was 7 digits due to cap gains on ESOP (I've framed that tax return). Now RE'd and income from interest & dividends ~50K. This doesn't include the capital losses of 7 digits.

How do I calculate?

 

[Dreamweaver]

Here's a summary of the results:

For those on the way to FIRE:

Avg Med High Low
Taxes 23% 24% 37% 5%
Mortgage 10% 8% 22% 0%
Savings & IRA 38% 38% 73% 10%
Food 6% 5% 15% 1%
Utilities 3% 3% 8% 1%
Everything Else 20% 14% 60% 5%

More successful savers tended to get savings predominantly by having lower mortgages (perhaps not surprisingly). To their credit, they also tended to shave off expenses across the board, meaning that as the mortgage became cheaper relative to income, they didn't tend to bloat expenses in other areas. This data really demonstrates the concept of setting your lifestyle at a particular level and then, as income grows, sock that extra away towards savings rather than upgrading the lifestyle.

One person managed to pay incredibly low taxes (only 5%?). This may demonstrate the rewards of an incredible tax accountant, or really giving that TurboTax manual a good read.

Less successful savers tended to go big on the "everthing else" category and also tended to bump up their expenses on food.

For those who already are FIRE:

Avg Med High Low
Taxes 20% 21% 26% 12%
Mortgage 5% 0% 16% 0%
Savings & IRA 0% 0% 0% 0%
Food 10% 9% 14% 7%
Utilities 6% 6% 7% 5%
Everything Else 59% 53% 75% 50%

A note on the analysis for those of you who notice these things: percentages are rounded to the nearest whole number. If someone submitted percentages that did not add up to 100%, the "everything else" category was adjusted accordingly.

 

[Dreamweaver]

What year's income?

2007, income was 7 digits due to cap gains on ESOP (I've framed that tax return). Now RE'd and income from interest & dividends ~50K. This doesn't include the capital losses of 7 digits.

How do I calculate?

I don't think it'd be fair to pick and choose the year of income, as much as 7 digits is incredibly impressive in 2007 (congratulations!). To stick to the idea of level playing field, I (hope) everyone is using current year income. For those like you who have already reached FIRE, I'd list as % of current expenses.

 

[FANOFJESUS]

One person managed to pay incredibly low taxes (only 5%?). This may demonstrate the rewards of an incredible tax accountant, or really giving that TurboTax manual a good read.

Well we have a low income spread between two people, so two deductions and two exemptions eats up the most of it.

 

[Ronnieboy]

I suck, I don't keep that close of tabs on expenses. What does everyone use? Excel? Some budgeting program?

 

[Gone4Good]

My numbers as % of gross income:
Taxes ERROR DIVISION BY ZERO
. . .

Yup, that's the problem with high income / high cost of living areas for a retiree. You still have to pay those prices even when your income goes to zero.

 

[Lagniappe]

Wow, do I ever pay a lot in taxes. Saving for FIRE:

Taxes 42.9%
Housing 8.8
Food 1.2
Utilities 1.0
Other 8.0
Savings 38.1

 

[Caoineag]

Here's a summary of the results:

For those on the way to FIRE:

Avg Med High Low
Taxes 23% 24% 37% 5%
Mortgage 10% 8% 22% 0%
Savings & IRA 38% 38% 73% 10%
Food 6% 5% 15% 1%
Utilities 3% 3% 8% 1%
Everything Else 20% 14% 60% 5%

More successful savers tended to get savings predominantly by having lower mortgages (perhaps not surprisingly). To their credit, they also tended to shave off expenses across the board, meaning that as the mortgage became cheaper relative to income, they didn't tend to bloat expenses in other areas. This data really demonstrates the concept of setting your lifestyle at a particular level and then, as income grows, sock that extra away towards savings rather than upgrading the lifestyle...

Hmmm probably should have noted also that my mortgage is a 15 year not a 30 year. I was the one on the high end for the mortgage which might be partially explained by that tidbit. That and we are in our mid-20's so not at our peak earning capacity

 

[Zoocat]

Taxes -- 12%
Mortgage & HOA fee --28% (includes taxes)
Savings & IRA -- 12%
Food 8%
Utilities 2%
Medical insurance & HSA deductible -- 11%
Everything Else -- 28%

I'm surprised at the low % for housing expenses for the people on their way to ER. I guess they didn't buy at the height of the bubble.