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    Do we spend too much?

    WHEN I INITIALLY POSTED THIS, I ACCIDENTALLY USED SOME MONTHLY FIGURES AND SOME ANNUAL FIGURES SO IT DIDN'T MAKE SENSE. IT IS CORRECT NOW.




    I posted our monthly spending figure in the "How much $ is enough for retirement?" thread and Jluke said the number surprised him given that we have no mortgage or debt of any kind and college is done and paid for. It got me wondering if maybe we are being too loose with our spending. I know that we've definitely gotten more "spendy" since my income climbed. We're saving more than ever but also spending more than ever.

    For 2019, my gross income from work (I'm not including investment income as it all gets reinvested) was about $255,000.
    13% went to my 401k and when it was maxed at $25,000, I continued to invest 13% of gross into a taxable account at Vanguard.
    My take home pay came to about $157,000.

    We do not do any sort of strict budget but I do a broad tracking of spending. It isn't broken down in great detail, though I just reviewed our year-end credit card summaries and have a pretty decent categorization of our charges.

    My tracker for 2019 shows we averaged $6,656/month in spending.
    There are a few things not included in this number such as anything we paid for with cash or check. I rounded off and said we spent $7,000/month.

    Here is the breakdown:

    688 Property taxes and home insurance
    380 Utilities (gas, electric, water, sewer, home phone)
    228 Synagogue membership
    573 Life and disability insurance
    The rest of the numbers come from the credit card summaries so it's however they categorized everything.
    319 Auto
    853 Bill and utilities
    157 Entertainment
    136 Gasoline
    32 Donations
    735 Restaurants
    450 Groceries
    330 Health and wellness
    162 Home
    154 Personal
    35 Professional services
    870 Shopping
    678 Travel

    That may not all add up exactly to the number I gave above. It doesn't include DW's Discover card and I rounded a bunch of the numbers.

    Bottom line (in big rough numbers)
    I earned $255,000
    I took home $157,000
    We spent $84,000
    We saved and invested the rest

    Again, all of these numbers won't add up exactly because I'm not pulling them all the same way and I'm rounding off a bunch of things.

    So what do you think? Are we spending too much? Clearly we like to travel and eat out (and those two things overlap as when traveling, there's a lot of eating out). And in case you're wondering, the donation figure is rather low because many donations are made by check and some in cash.

    ETA: My cousin pays us $145/month to cover his and my mother's shares of the cell phone bill. DD pays us $200/month "rent". So there is $345 of additional income offsetting all of this.
    Last edited by disneysteve; 01-11-2020, 07:32 PM.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

    #2
    Why is your life and disability so much? Seems really high to me.

    Bottom line DS is that “too much” is personal. You’ve said before you plan to work til 62, you have a retirement number in mind and you’re well on track to meet it, you’re saving a significant percentage of your income... why would you cut back to save more if there wasn’t something you were saving for? Can’t take it with you when you die

    Comment


      #3
      I would say that is pretty high...why do you have utilities on their twice? that is a lot for shopping but that doesnt state what it is..clothes for work/leisure etc....but I guess if it works for you and you are happy with your savings then enjoy life...you can't take it with you

      Comment


        #4
        Sorry. Didn’t know it would turn into a separate thread.

        no doubt you are saving a boat load.

        10k utilities, 9k restaurants and 10k shopping stand out.

        not sure what the auto category covers (big repair bill?) since yours are paid off and gas is separate. I have 3 cars and didn’t even spend 1k (maintenance, registration) on them this year. My car payments were just under 3600 for the year.

        do you still need life insurance?

        travel is your passion so I’m going to ignore that one.

        Comment


          #5
          Originally posted by riverwed070707 View Post
          Why is your life and disability so much? Seems really high to me.
          Good disability insurance is expensive. I have a top notch plan that you can't even get anymore. It covers an inability to do my same job even if I'm still able to work in another capacity.

          The problem the disability insurers started having back in the 90s and 00s is that when medicine started getting so incredibly aggravating, a lot of doctors with premium policies like mine started putting in claims for conditions that weren't really all that serious but they were able to make a legit case for not being able to do their jobs anymore. They retired early and collected disability. After that, the companies cracked down and stopped writing such generous policies, but they maintained the ones that were still out there. So I'm not ditching it until I no longer need it. The good thing is that's an expense that will go away in retirement, which I haven't factored in to my retirement spending calculation.
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

          Comment


            #6
            Originally posted by mumof2 View Post
            why do you have utilities on their twice?
            The first figure is the gas, electric, water, sewer, and land line. I pay each of those individually.

            The second figure is from the credit card spending breakdowns. I know that includes the cable, internet, and cell phone bills. I have to see what else is lumped in there. I think Netflix might be, which really belongs in the entertainment category of course. It also includes the alarm company fee and probably some other stuff.
            Last edited by disneysteve; 01-11-2020, 06:25 PM.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

            Comment


              #7
              Originally posted by Jluke View Post
              Sorry. Didn’t know it would turn into a separate thread.
              Don't apologize. It was a perfectly valid comment and really got me thinking.

              no doubt you are saving a boat load.

              10k utilities, 9k restaurants and 10k shopping stand out.

              not sure what the auto category covers (big repair bill?) since yours are paid off and gas is separate. I have 3 cars and didn’t even spend 1k (maintenance, registration) on them this year. My car payments were just under 3600 for the year.

              do you still need life insurance?

              travel is your passion so I’m going to ignore that one.
              Having 9 and 14-year-old cars we did run into some big expenses last year. Hopefully that won't be an annual amount. I'm probably going to be looking to replace my car (the older one) sometime soon.

              As I said above, "Bills and utilities" includes a number of things, not all of which are utilities. Also, we have 5 people on our cell phone plan - the 3 of us, my mother, and my cousin. My cousin actually pays us $145/month so $1,740/year that should be deducted from that figure. I tend to forget about that.

              My life insurance is $210/month. I'm not interested in cancelling it at this point. I'm happy to pay for it and leave DW and DD a boatload of money if I die.

              I'll have to take a look at "shopping" and see what all got lumped into that. I'm also not sure what "Personal" and "Home" include on the credit card breakdown.
              Steve

              * Despite the high cost of living, it remains very popular.
              * Why should I pay for my daughter's education when she already knows everything?
              * There are no shortcuts to anywhere worth going.

              Comment


                #8
                What is health and wellness? If its just gym memberships, thats through the roof. Unless you're going to equinox fitness. You could get a YMCA membership for much less, and they offer a lot of fitness classes, yoga, cycling, etc etc. If this includes supplements and massages, then it makes more sense.

                Also, how much are you spending on cell phone bills? You said your cousin pays $145/month for a cell phone plan? Thats insane. Even if you include the $30/month to buy the phone, where is the other $115 coming from. Unlimited plans are like $60 per person now.

                I guess the bigger question is...what kind of lifestyle do you want to have in retirement? If you move to FL...some of those expenses will decrease. You'd have to run some calculations on $80k spending a year against your portfolio. At this point in your life, you'll want to start including SS as well, which will help a lot.

                Comment


                  #9
                  Are you no longer paying for your daughter's education expenses or did she graduate already?

                  Comment


                    #10
                    Originally posted by rennigade View Post
                    What is health and wellness?
                    I have to check but I believe that includes pharmacy purchases and medical copays as well as the gym membership. We pay $80/month for the gym for the 2 of us but I get $22 back from my health insurance so net cost is $58/month.
                    Also, how much are you spending on cell phone bills?
                    Our bill is currently $228 for the 5 of us, so about $45/person. Two of our five phones are on payment plans ($42 of the bill). My cousin isn't just paying his share obviously. He's also covering my mother's share and just helping out overall.

                    I guess the bigger question is...what kind of lifestyle do you want to have in retirement? If you move to FL...some of those expenses will decrease. You'd have to run some calculations on $80k spending a year against your portfolio. At this point in your life, you'll want to start including SS as well, which will help a lot.
                    I started another thread the other day asking how people factor in SS to their planning. So far, I've done everything without accounting for SS but I know we will collect it at some point.

                    As for lifestyle, I think we'd be fine with it being relatively similar to what we have now. More travel I'm sure, though if we do move to FL, that will remove some costs of the Florida travel piece that we spend now since we'll already be there. We will likely cook at home more as we'll have the time to do so which could reduce our restaurant tab. But overall, I don't see us spending less except for bill that go away like life and disability insurance and much lower property taxes if we move out of NJ.
                    Steve

                    * Despite the high cost of living, it remains very popular.
                    * Why should I pay for my daughter's education when she already knows everything?
                    * There are no shortcuts to anywhere worth going.

                    Comment


                      #11
                      Originally posted by Singuy View Post
                      Are you no longer paying for your daughter's education expenses or did she graduate already?
                      She graduated in May 2018 and all costs have been paid for. No remaining loans for her or us.
                      Steve

                      * Despite the high cost of living, it remains very popular.
                      * Why should I pay for my daughter's education when she already knows everything?
                      * There are no shortcuts to anywhere worth going.

                      Comment


                        #12
                        The budget breakdown is largely pulled from the credit card annual summaries. They definitely are wonky in how they categorize things. Netflix is in utilities rather than entertainment, for example. And they have no way to know that meals out in Dallas or Orlando really belong under the Travel category.

                        And of course many of the numbers are just estimates because if we went out to dinner and I paid the bill but the other couple gave me cash for their share, that's not reflected. Or if a group of us from work went to an Escape Room and I made the reservation and then everyone paid me their share, that's not accounted for either. I periodically pick up some groceries for my mother then she gives me cash or a check to reimburse me. So ultimately, total expenses are a bit lower than the numbers suggest but it's a pretty solid estimate.
                        Steve

                        * Despite the high cost of living, it remains very popular.
                        * Why should I pay for my daughter's education when she already knows everything?
                        * There are no shortcuts to anywhere worth going.

                        Comment


                          #13
                          So all your obligations are done

                          No mortgage, no college, no loans. You are saving close to 50% of your money. Your kid is self sufficient.

                          Also your retirement balance is over a mil and don't know your taxable account but I'm assuming it's significant too.

                          So yeah spend away. Go on a couple of Adventures by Disney while you're at it

                          I no longer care how much my family spends because it no longer matters. All this worrying stops when the rocket is in orbit. Getting it there is the most stressful part.

                          Comment


                            #14
                            Originally posted by Singuy View Post
                            No mortgage, no college, no loans. You are saving close to 50% of your money. Your kid is self sufficient.

                            Also your retirement balance is over a mil and don't know your taxable account but I'm assuming it's significant too.

                            So yeah spend away. Go on a couple of Adventures by Disney while you're at it

                            I no longer care how much my family spends because it no longer matters. All this worrying stops when the rocket is in orbit. Getting it there is the most stressful part.
                            I agree with you. I've said many times that as long as the saving goals are being met, how the rest of the money gets spent doesn't really matter, which is part of why we don't have a budget. It's only been in the past year or two that I started tracking our spending. I did that more out of curiosity and the early stages of retirement planning to know what our income needs actually are.

                            I do want to clarify a couple of points you made. Our kid isn't yet what I would call self-sufficient. She is still living with us and we cover many of her expenses. She does pay us $200/month which covers her health insurance, auto insurance, and cell phone. She pays for gas and spending money for the most part though if she's doing something special, we will occasionally give her some money. She only works part time currently so isn't earning a ton of money.

                            Our "retirement" balance includes both formal retirement accounts (Roth, 401k, 403b, etc.) and taxable accounts that we just have earmarked for retirement. So when I say we have $1.3 million, I mean everything combined.

                            We would LOVE to do an ABD trip but just haven't pulled the trigger yet. I know from many people that ABD is like crack and once you do one, you want to do more (sort of like cruising) and they aren't cheap. One of these days.
                            Steve

                            * Despite the high cost of living, it remains very popular.
                            * Why should I pay for my daughter's education when she already knows everything?
                            * There are no shortcuts to anywhere worth going.

                            Comment


                              #15
                              I think you are at the point where you can start looking at things from a different point of view. I am close enough to retirement to look at what can I spend vs. how long I work. You could do the same. You know about what your retirement savings will be if you work until 62. Do some simple math and translate that to spending and plot that by month. Then you can decide if you want to keep working or pull the plug.

                              That's what I did. I know what our spending could be if I quit tomorrow ($100k). And any other month for the next 3 years. It's also obvious that if I keep my job, there is no reason to work past 57. That is OBESE FIRE. This helps me manage stress. It also shows we could retire in Mar 22 at our current target spend (FAT FIRE). But I also pilot a couple of other targets. LEAN FIRE is a 20% reduction in discretionary spending and $5k annual travel budget. FIRE is a 10% reduction in discretionary spending and a $15k annual travel budget.

                              Last edited by corn18; 01-12-2020, 09:51 AM.

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