Underestimating Living Expenses

[Moemg]

You mentioned you were a big meat eater .Why not cut down on the amount of meat per serving ? It will save you some money and be healthier . Another easy cut is when you dine out split a meal .

 

[mountainsoft]

You mentioned you were a big meat eater .Why not cut down on the amount of meat per serving ? It will save you some money and be healthier . Another easy cut is when you dine out split a meal .

I try to do that with things like stir-fry's where there are more vegetables than meat anyway. It's harder to do that with salmon fillet's, colossal scallops, ribeye steaks, etc. where the meat IS the main course. I do aim for smaller portions of meat when possible though.

 

[tb001]

I try to do that with things like stir-fry's where there are more vegetables than meat anyway. It's harder to do that with salmon fillet's, colossal scallops, ribeye steaks, etc. where the meat IS the main course. I do aim for smaller portions of meat when possible though.

We're trying to get our grocery bill down too, but still want to eat well. One easy way we've found is to swap in pork for some of the more expensive meats. For eg, we do a pork tenderloin, which is easy and tastes amazing. One lasts us for two meals and it's about $16/4pk at costco. Or splitting a ribeye and adding in lots of veggies instead. Or tilapia instead of salmon

In general, I'm trying to pay more attention to good lower priced alternatives that may just be out of vogue right now.

 

[GenXguy]

Hi Terry. Hey I respect your decision to buy Hondas and Toyotas. I like them too, though quality has slipped. Having said that, no repairs in 19 years of owning them seems a stretch. In that amount of time virtually every vehicle will have a few, no?

The quality slipped a long time ago for me. I have an 07 Toyota Camry. I have only 50K miles, and it burns oil. There was a TSB on it to replace pistons and rings to fix, but they only did the repairs under the TSB if it burned a quart in 1200 miles (they used tamper proof method to test over time). Anyway, since mine had such low miles, it hadn't gotten to a point that it was burning oil quickly enough to satisfy the TSB, but it is still burning oil and at a faster rate, and it's now past the deadline for the TSB, so I'm left with a lemon engine from Toyota with a known problem acknowledged by Toyota that they won't fix for free. Other complaints - they could never get the alignment correct despite multiple trips to the dealer. I gave up and always have to compensate so that it doesn't drift over the center line. It ends up, there was a TSB later issued on that, so I might give it another shot. Wheel bearing failed very early on. Squeaky brakes - there was a TSB for that also. Even little things like the digital temperature reading jumps 2 degrees at a time - apparently by design, something I wouldn't expect even from a $10 thermometer. Generally, I've been very unimpressed with the car.

 

[Montecfo]

The quality slipped a long time ago for me. I have an 07 Toyota Camry. I have only 50K miles, and it burns oil. There was a TSB on it to replace pistons and rings to fix, but they only did the repairs under the TSB if it burned a quart in 1200 miles (they used tamper proof method to test over time). Anyway, since mine had such low miles, it hadn't gotten to a point that it was burning oil quickly enough to satisfy the TSB, but it is still burning oil and at a faster rate, and it's now past the deadline for the TSB, so I'm left with a lemon engine from Toyota with a known problem acknowledged by Toyota that they won't fix for free. Other complaints - they could never get the alignment correct despite multiple trips to the dealer. I gave up and always have to compensate so that it doesn't drift over the center line. It ends up, there was a TSB later issued on that, so I might give it another shot. Wheel bearing failed very early on. Squeaky brakes - there was a TSB for that also. Even little things like the digital temperature reading jumps 2 degrees at a time - apparently by design, something I wouldn't expect even from a $10 thermometer. Generally, I've been very unimpressed with the car.

Yeah. Also an 07 that burns a bunch of oil. More.mileage but it is annoying. Statistically, Toyota and Honda have both slipped.

 

[brett]

We have been fortunate. The '97 Camry never burned oil through 275K miles. The 2007 Solara (Camry) does not burn oil. Neither does the 2006 Accord. Both are 6's. Both are keepers for the present time. Extremely happy with both.

 

[GenXguy]

We have been fortunate. The '97 Camry never burned oil through 275K miles. The 2007 Solara (Camry) does not burn oil. Neither does the 2006 Accord. Both are 6's. Both are keepers for the present time. Extremely happy with both.

The oil burning issue that the TSB addressed was for a common model of a 4 cylinder engine in various Toyota vehicles over a period of years. So no surprise about a 6 cylinder not experiencing the issue.

 

[meekie]

I tracked my spending very closely for a lot of years, then started getting lazy. I started tracking again closely and got a bit of a rude awakening, spending about 30% more than we were when I stopped tracking. We were kinda hoping for a 100k yearly spend in retirement, but I realized we're much closer to 120k right now, plus healthcare, so our FIRE number has gone up quite a bit in the last few months.

 

[ncbill]

The oil burning issue that the TSB addressed was for a common model of a 4 cylinder engine in various Toyota vehicles over a period of years. So no surprise about a 6 cylinder not experiencing the issue.

Sorry to hear about yours.

After it sat for the better part of a year, I jump-started a recently-deceased relative's 1996 Camry (last of the 3rd generation, made-in-Japan) got the battery replaced under warranty, changed oil/air/fuel filters, replaced the stuck thermostat with OEM ($20) & it now runs like a top.

 

[mckittri2000]

Cash

A year before my retirement (at 56), I went to an almost cash only budget. I still used the CC for gas and some monthly bills but almost everything else was cash. I would go to the bank at the beginning of the month and get out what I had budgeted for the month and kept it in a small fire proof safe at the house. I found that I never ran out of the cash before the month was over. The only word of advise I would give you is to over budget for medical because it's the only thing, so far, that has thrown our budget out of wack for a small time. I know I don't get the rewards but it is the easiest way for me.

 

[mountainsoft]

The only word of advise I would give you is to over budget for medical because it's the only thing, so far, that has thrown our budget out of wack for a small time.

Yeah, we currently spend less than $2500 per year for insurance, copays, etc. I'm estimating $7000 per year after retirement. I ran a bunch of estimates using the Obamacare exchange and should spend half that, but I wanted to have a good buffer just in case medical issues arise.

 

[WWDog]

I started tracking expenses by category each month several years before I retired. When the input was a good percent above the expenses each year, then I felt I was able to retire. There are fluctuations in expenses vs expenditures through the year but they average out as the year progresses. I always add a percentage for inflation of expenses each year for those expenses subject to inflation. I adjust my projections each year for variances of the previous year and/or the trend. Always have a pad on your expenses as you will forget something and the alternative is not good. Hopefully the expenses increase less than the input. If not, the fix is to spend less or get a job. Both of those alternatives are less probable as one gets older. Hence the need to get this right grows as one gets older. Track your expenses faithfully to insure comparability with your plan. Do not fudge as you are only fudging on your future.

 

[mickeyd]

Unfortunately, our recreation and miscellaneous spending were twice what I had been estimating.

The best way to estimate future expenses is to do just what you are doing. In this case, you can either adjust your estimates for recreation/miscellaneous or begin to cut back.


10+ years after retiring we still track expenses every 3 months, just for the heck of it. Old (good) habits die hard.

 

[mountainsoft]

The best way to estimate future expenses is to do just what you are doing. In this case, you can either adjust your estimates for recreation/miscellaneous or begin to cut back.

We still have several months to go, but so far this year our spending seems to be considerably less than the previous two years. It's still slightly higher than I initially thought, but closer to my original 40K annual estimate.

I have a better system in place now to track income and spending, and a few years to monitor fluctuations before we retire. So I should have a fairly accurate estimate by then. I think we'll still come out OK, but if not we may have to work another year to make the numbers work better.

On the upside, we're saving a lot more than I thought we were.

 

[mickeyd]

I think we'll still come out OK, but if not we may have to work another year to make the numbers work better.

Having options is great, isn't it?

 

[scrabbler1]

In the year leading up to my ER in late 2008, I was doing an analysis of my expenses to figure out what they would be after I retired. I saw I would eliminate FICA taxes and commutation expenses but increase my health insurance expenses. These two items would roughly offset each other, while my remaining expenses would b pretty much unchanged. I budgeted a 10% annual increase into
my plan.


And that's what happened...…….until my HI premiums rose 20% in 2010 and 25% more in 2011, putting a small strain on my budget, and making me wonder if HI would swallow up my budget in a few more years should these whopping increases continue year after year.


The ACA had, thankfully, been passed in 2010, so I knew I just had to hang in there until the end of 2013 when the exchanges would be created. I was still healthy at the time, so I voluntarily made myself underinsured for half of 2011 and all of 2012 and 2013, reducing my HI premiums a lot.


In 2014, I was able to end my being underinsured while my HI premiums rose, but to an amount lower than what they were in 2009, before the 2 big increases. Good thing I wasn't underinsured any more, because I developed some health issues in 2015 including a 12-day hospital stay.


My HI premiums have been rising quickly again, thankfully not as much as in 2010-2011, but I am now paying nearly as much as I was paying in 2011 before I dropped the policy. And it is now my biggest expense, having just exceeded housing this year. I am on the cusp of getting an ACA subsidy, having gone over the cliff the last 2 years after barely qualifying for a small one before that.

 

[mountainsoft]

One of the perks I thought we would qualify for if we could keep our income under 40K per year was a senior property tax exemption.

"If your income is below $40,000, you may be eligible for the exemption program. Under the exemption program, your residence’s assessed value is frozen. and you will be exempt from excess and special levies resulting in a reduction in your property taxes. The reduction in property taxes from participating in this program do not place a lien against the property."

That would have been a nice reduction in our expenses, so I was disappointed when I realized our actual spending was closer to 45K. Now it seems the income limit has been increased to $50,348. Yahoo! Low income never felt so good.

"The Washington State Legislature has made major changes in the senior citizens/disabled persons/veterans exemption program. These changes will take effect for taxes collected in 2020. The income limits will now be indexed at 65% the median household income in Clark County. The new income limit is $50,348 and below."

I won't qualify till I'm 61 (a bit over five years), but that should help when the time comes.

 

[brett]

It seems to me that if someone cannot figure out their monthly and annual day to day living expenses, not including capital or unexpected expenses, in five or ten minutes flat then something is amiss.

 

[Teacher Terry]

MS, that’s a great benefit. Our property taxes are stupidly low. My friends in Wisconsin pay a lot.

 

[mistermike40]

I tracked expenses for 4 years before retirement. I still track all my expenses 2 years into retirement...

Same here. So far, no surprises.

 

[KarenF]

We use YNAB and are on our retirement budget now. We really like YNAB and it has helped us to prioritize - less eating out and more for travel, for example.

 

[mountainsoft]

Now that 2019 is over I was able to download my transaction data from my banks and analyze our expenses. We spent just over 45K, which is right where I expected it to be.

Over the last six years (2014-2019) we averaged $44,100 per year, or a median value of $44,900. Our expenses were lowest in 2014 at $38K, and highest in 2018 at $52K. 2018 was a crazy year, so no big surprise there.

So with six years of fairly consistent expense records, I feel fairly confident with my 45K estimate. Of course, I will keep monitoring over the next few years until we retire.

It's embarrassing now, but I did make a couple of really dumb mistakes when trying to tally up our expenses.

First, I initially downloaded our credit card transactions, deducting those expenses while also deducting payments to our credit card. Essentially, I was counting credit card transactions twice. It's obvious now, but it took me a while to figure out why our expenses were so high. Now I just ignore the credit card transactions and only count the payments to the card as expenses.

Second, I was counting transfers between accounts as expenses. It didn't occur to me till just recently, that we weren't spending that money, just moving it to another account. Another one of those Doh! head slap moments.

 

[pb4uski]

...Another one of those Doh! head slap moments.

Like this.

 

[W2R]

Now that 2019 is over I was able to download my transaction data from my banks and analyze our expenses. We spent just over 45K, which is right where I expected it to be.

So glad it all worked out!!!

 

[DireWolf]

Now that 2019 is over I was able to download my transaction data from my banks and analyze our expenses. We spent just over 45K, which is right where I expected it to be.

Over the last six years (2014-2019) we averaged $44,100 per year, or a median value of $44,900. Our expenses were lowest in 2014 at $38K, and highest in 2018 at $52K. 2018 was a crazy year, so no big surprise there.

So with six years of fairly consistent expense records, I feel fairly confident with my 45K estimate. Of course, I will keep monitoring over the next few years until we retire

Don’t forget to adjust for inflation if you aren’t already. You can see a pretty big creep over this 5 years from that (the 38k is more like 42k, for example). I’d normalize everything in the past to today’s dollars.