What was your 2024 total spending amount?

[Tadpole]

IMO, Spending is all negative deductions from a positive income value, not what it feels like. For example, before I started using EFTPS quarterly withdrawals from my checking account, tax deduction from my income prior to deposit were not, psycologically, a part of my income. Now when I see the big fall in my checking account at EFTPS withdrawal time, I know, as a fact, I spent a lot of money that month. On the other hand, my health insurance premiums are still deducted before my income hits my checking account and I don't feel it until my spreadsheets force me to partition it out as an after-income expense (spending). One of my legacy spreadsheets still leaves the auto-deducted spending out of my cash balance breakdown. After retirement I added a section below the analysis showing the breakdown in deductions taken prior to deposits.

 

[scrabbler1]

IMO, Spending is all negative deductions from a positive income value, not what it feels like. For example, before I started using EFTPS quarterly withdrawals from my checking account, tax deduction from my income prior to deposit were not, psycologically, a part of my income. Now when I see the big fall in my checking account at EFTPS withdrawal time, I know, as a fact, I spent a lot of money that month. On the other hand, my health insurance premiums are still deducted before my income hits my checking account and I don't feel it until my spreadsheets force me to partition it out as an after-income expense (spending). One of my legacy spreadsheets still leaves the auto-deducted spending out of my cash balance breakdown. After retirement I added a section below the analysis showing the breakdown in deductions taken prior to deposits.

I can think of 3 categories of expenses whose total amounts were a combination of (pretax or after-tax) paycheck deductions and actual cash outlays.

(1) Income taxes - Some years, I had to make some estimated tax payments to remain in a safe harbor even though I had those taxes withheld from my paycheck.

(2) Commutation expenses - In the last few years of work, my company enrolled in that TransitChek program where they would withhold some pretax money into an account before we could make a claim for it later, making some of my commutation costs tax-deductible.

(3) Net medical and dental benefits - my company would withhold pretax HI premiums and I would have to pay some copays and deductibles for medical and dental services, something very common for employees. I didn't have an HSA but if I did, it would work like the TransitChek program.

 

[brett]

You certainly spend tax money. It comes out of your income. Isn't that pretty much the definition of spending?

When we all do our retirement planning, we have to include taxes in our spending estimate to determine how much we need saved in order to retire safely. If you only look at your post-tax spending, you're going to come up short in retirement.

Why would anyone count property tax but not income tax? You have to spend money to pay them both.

We view our property tax as spend because it is an expense under our control to the extent that we decide where to live, where to buy. We have the ability to change our property tax simply by moving to a different home.

When we rented for four years property tax was an implicit component of our rent. We had a choice of where to live, how much to spend on rent.

We have no such option on income tax.

 

[kcowan]

Have to agree. It is the ratio of spend to ROI on an annual basis and over time that counts.

Spend in and of itself is somewhat meaningless to me unless it is contrasted with income/ROI/assets etc.

Yes my long range plan has growth of investments at 7% and expense growth at 4%. It has been terribly conservative but 5 years ago, we stepped up spending to acknowledge market returns!

 

[DEC-1982]

All of our pre and post retirement planning has always been done on the basis of after tax income.

I am the same way. Although I understand what other folks are saying.

I was a salaried person. Our paycheck was post-tax. Our spending was post-tax. Our expense budget was post-tax.

For retirement planning, I use Fidelity's Retirement Planner. It also asks for expenses. I do not put my taxes in as part of my expenses. The tool computes taxes before coming to its numbers and conclusions but it's not something I entered as part of my expenses. Other planning tools may do it differently.

 

[brett]

I am the same way. Although I understand what other folks are saying.

I was a salaried person. Our paycheck was post-tax. Our spending was post-tax. Our expense budget was post-tax.

For retirement planning, I use Fidelity's Retirement Planner. It also asks for expenses. I do not put my taxes in as part of my expenses. The tool computes taxes before coming to its numbers and conclusions but it's not something I entered as part of my expenses. Other planning tools may do it differently.

The retirement planner that we used for a time over 10 years or so prior to early retirement did the same. It comprehended income tax. The bottom right hand numbers were always based on after tax dollars available.

I stopped using the tool 5 or 6 years prior to retirement. Our numbers were conservative and solid. I also came to realize that there were only a few key inputs that concerned us and I could easily calculate them on the back of an envelope.

For the past 13 years of retirement our focus has been on after tax spend (actual and f'cst), after tax income, and long term equity growth. 10 year, 15 year,etc. I also review our equity accounts for the ratio of unrealized gains.

I am not implying by any means that this is the right way or that it may work for others. Only that it has worked for me and I have been ablte accomplish the task quickly and accurately without becoming a spreadsheet jockey or a data input clerk.