Spending Awareness

[Independent]

If you are spending $63K now you should evaluate which expenses will drop off in ER (education? mortgage?). Will $90K cover taxes, health insurance, and the $63K? Will your assets return sufficient funds to safely spend $90K. If both answers are yes you are good to go.

+1

We track expenses very closely, but it's mostly a curiosity thing. The only use is that some categories might go down after a big change (like kids moving out, or quitting a job, or just plain aging), and more detail may help you think about the relative sizes of those changes.

 

[Walt34]

Recently, when my T-shirts got so worn and needed replacement, my wife went through her storage boxes and pulled out spanking new T-shirts that she had been squirreling away. These are either souvenir T-shirts we bought in our travel, or like the promotional ones that her megacorp handed out. The date on one that commemorated a charity drive: 1994!

I thought I'd get to spend some money on a new suit for my daughter wedding, but so such luck. My wife dug out some suits and had me try it on. Other than needing another inch or two added to the slack waist, they still fit. I guess I won't be getting anything new now.

Perhaps I have too vivid an imagination but this just conjures up an image of a small, neat lady leaning over a huge wooden bin only slightly smaller than a dumpster stored in the basement, arms a-flying, clothes a-flinging until she triumphantly says "Aha! Found it!"

 

[NW-Bound]

It's not a big container of a dumpster size but several boxes of the type to hold bond paper reams (500 sheets/ream, 10 reams/box). And they are not stored in the basement but stacked up in our closet. And the old suits were hanging in the closets of the spare bedrooms.

And last but not least, the little lady doing all this squirreling is mighty cute too.

 

[Tortoise]

I have an accounting and finance degree. The finance degree made me realize I do not need to do the accounting. The category I tracked was the amount I invested every year. How any other money was spent was of little importance but I'm assuming it was to sustain life and have fun.

Awesome.

 

[Independent]

[*]$2400 on clothing and dry cleaning!

The Consumer Expenditure Survey says that the average for households made up of "husband and wife with children" was $2,461 in 2013. So it looks like you are about average. http://www.bls.gov/cex/2013/combined/cucomp.pdf

 

[NW-Bound]

As previously mentioned, my keeping track of expenses with Quicken is mainly to see if I exceed the self-imposed goal of 3.5%WR. But I found it interesting to look back to see the variation in different categories over the years. I knew about the years when we had big unusual expenses like home repair, vehicle purchase, or charity donations, but the most unexpected thing is our grocery expenses. It went down significantly in the last few years. The grocery expenses for 2014 were only 65% of those for 2012.

So, I looked a bit deeper, and the only thing I saw was that we now go to Costco much less often, and shop more at Fresh-n-Easy and Sprouts. Costco sells in big quantities, in contrast with the latter stores who sell in smaller packages. As we rarely throw food away and eat it all, we are really eating a lot less than we used to. Whoa! Maybe drink less too.

 

[Gumby]

I have carefully tracked expenses for the past ten years, and I have gotten to where our year-end spending regularly is within 1% of my starting estimate. We don't do this to impose budget discipline of any sort - we spend as much we want, whenever we want. Rather, it is more to understand precisely how much we'll need to cover in retirement. I also know where to cut should things run tight - primarily fancy overseas vacations, dinners out and wine.

 

[NW-Bound]

I find it impossible to make exact plans for contingency, other than to leave a lot of headroom for the unanticipated.

I started running Quicken only in mid 2010, hence only have accurate data for the four years of 2011 through 2014, but always have a rough idea of what the recurrent charges are. It is always the lumpy "one-time" charges that add up. But then, perhaps it's because of the available headroom that I allow myself to spend.

In the past 4 years that I have accurate data, 2011 was my biggest year: younger son still in school, and us helping daughter with a big down payment on a house. But I still had part-time income, so we did not at all hesitate with our generosity. And our expenses were higher still in earlier years, but I did not have the category breakdown.

My daughter's home has appreciated to 180% of what she paid, so we felt pretty good. If nothing else, I hope we showed her the advantage of having savings, read cash on hand, to buy things on sale, whether it's real estate or stocks.

The next year, 2012, saw my expenses dropping to 73% of 2011, and I started to think that my worry would be too much money I would not know how to spend. Ha!

My expenses then climbed back up, and were 22% higher in 2014 than that low year of 2012. It is still significantly lower than 2011, however. And my stash has grown too, but I cannot count on that every year.

So, my plan in retirement is still the same as when we were working. Leave plenty of headroom relative to what we think we need, because we will always manage to use it up.