Kronk
Full time employment: Posting here.
However, if you have lived in a house for a reasonably long time, then empirical data (ie, the money that you have spent in the past), will be a pretty good indicator of the money you will spend in the future (adjusted for inflation). The assumption is in the course of a year you have replaced items on a regular basis because your income has come in on a regular basis. That is, you will not buy a new washing machine or TV if the roof is starting to look old. Conversely, if the roof suddenly needs to be replaced, then you will delay the replacement of other items around the house.
Actually, I'm reasonably on board with that. Most people kind of smooth their bigger expenses naturally. And I pretty much figure that my ER needs will be current expenses + monthly slush for emergencies. But I do appreciate a different way of looking at this. It also would make a nice sanity check to make sure that my home improvement / maintenance line item is in the right ballpark.
I am curious. Does your rolling 12-month average changes significantly over time?
Yes and no. The number I normally track doesn't include big ticket items, like a car. If I do a 12-month average of paying cash for a car at $15,000 (which we did last year), I'd have an inflated average expenditure that would suddenly drop to zero. I haven't had major ($5,000+) house expenses in the last couple of years, but maybe I'm getting to the point of having added costs due to deferred maintenance.
Just to emphasis the main point of my post, you can significantly alter your annual costs simply by making some rather modest lifestyle changes. For anyone looking at ER, a lifestyle change can shave 5 years or more off your retirement age. Trying to keep your current lifestyle with all the trappings makes ER unnecessarily difficult. The cost of clothes alone will drop significantly, not to mention all those things you buy on impulse - simply because you have the money to buy them.
Not sure if the original poster has that issue. I think you'll find that most people here are saving pretty aggressively, and don't have a whole lot more slack they can take up by reducing expenses. I'm currently living at the level I enjoy living at, which leaves a few grand extra every month, and I'm not willing to cut it further.
But I guess the gist of your point is that estimating expenses that occur less frequently than annually isn't really a good way to go about it. Personally, the closer I get to retirement (still 10+ years away), the more different ways I'll be looking at it, so I found this discussion useful.