2014 Spending Postmortem


I’m going to burn a post picking through last year’s expenses.

If you read this blog at all, you know that I’m going to retire from formal work in 2015.

In early 2014, it suddenly felt very important to me to track every dollar spent in the year leading up to quitting.  I wanted to be sure that I had a good handle on my expected expenses.  So I did exactly that, and posted the results in monthly spending tallies in this blog.

And for the record, this is something I recommend everyone do the year before they pull the trigger on RE.  I know that most people on the early retirement path already keep meticulous track of their finances, so maybe the lapse in detailed tracking isn’t something that’s happened to you.

But it definitely happened to me.  Put simply, I got lazy on expense reporting over the years on my FIRE journey.  After I’d gotten used to not spending much, I flew on savings-autopilot for several years, where I sort of took it for granted that I wasn’t spending money needlessly.  So I stopped tracking every dollar and neglected to even perform an annual summary.

Still, being that 2014 was my final year before quitting, I took steps to be sure that my real expenses are close to what I thought they would be.  At the beginning of the year, I estimated they’d come out to 28K.

So how’d I do?  Let’s pull a table together and take a look.





793 x 12 = 9516



320 x 12 = 3840











Elect + Oil



74 Phone/ISP/Cable






variable  157


variable  1321


variable 856

Work Gifts

variable 40

Café/Coffee Out






Other Auto



Vitamin A(lcohol)






Home Improvement














Let’s round up a bit and call it 27.1K – very close to my 28K target.



I will now convert that table into a chart.  Note I’ve consolidated a few categories.


A few things:

  • PITI eats up more than half my budget at nearly 14K, meaning I’m really only spending about 13K/yr on myself (27K – 14K = 13K).
  • Grocery bills, auto, and utilities consume another 26%.
  • I’m really at a 13K spend.  That’s a bit over 1K/mo and seems reasonable given my needs.

Anticipated changes to spending after quitting and moving (downsizing my primary residence):

  • PITI will drop to 3K for a savings of about 10.5K.  (Never mind the loss of tax breaks on mortgage interest and all of that – I’m keeping things simple in this analysis)
  • I believe my restaurant expenses will actually drop by 50% ($500) as I will no longer ‘forget to bring lunch to work.’
  • Utilities will drop by 50% to $1400 (smaller house plus a move to gas from oil.)
  • Entertainment will expand from about $500 to about 2K — this bucket includes vacations.
  • ACA will take potentially 2K the first year and perhaps 1K every subsequent year.

These shifts will reduce my spend from 27K to 18K while actually improving my quality of life.  I might go as high as a 20K spend if I’m looking to do something special vacation-wise in any particular year (e.g. international travel.)  That’s the full extent of the lifestyle “inflation” I’m able to imagine.  I’m not someone who has dreams of significantly upsizing my lifestyle — I don’t think spending more money will make me any happier.

I also took a look at imagining changes to my spending and lifestyle as a part of my drawdown posts and the analysis was much the same.  It’s reassuring to see things line up.

Net Worth Increase

Good god, I've been tracking this since 2005?

Good god, I’ve been tracking this since 2005?

  • 765K to 890K, an bump of about 16% (125K)
  • No change in assets, i.e. I have not factored in any expected increase in home prices.
  • The only material asset I include in my net worth is my residence.
  • My wife’s NW is comparable to my own, meaning we’re at approximately 1.8 mil when evaluated together.


Nice work, LAF.  You’re, like, completely financially ready for RE.  What the hell are you waiting for?

Final Note:

I neglected to add expenses in my retirement accounts.  Although expense ratios are comically low with Vanguard (typically between .08 and .2%) they do start add up to something tangible once you have significant holdings.  In my case, I’ve paid Vanguard an average of .1% on assets around 700K, making the total payout for the year very close to $700.


A big fat Happy New Year to all of my readers!  I’m sure 2015 is going to be a great year for our crowd.  Keep on throwing cash on the pile and you’ll get where you want to go, for sure.

Saving:  The only get-rich program that’s guaranteed to work.

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14 Responses to 2014 Spending Postmortem

  1. Frankie's Girl says:

    Wow, you’re spot on (or under) what you’d expected your expenses to be, and very impressive drop when you downsize. That blows me away how efficient you are at both keeping your costs down, and also having a sort of situational awareness of your spending habits even when you weren’t actively tracking to be able to spitball that close.

    I’m hoping to quit/retire in the next month or two (I’m waffling – so silly) so I’ll be combing back over your posts on draw-down strategies while I try to figure all this stuff out. I swear if it was for you and other brighter/more analytical minds, I’d have no idea where to even start. So thank you, and happy new year to you too!

    • livafi says:

      Hi FG – nice to see you on the new site.
      Congrats on being so close to your goals yourself! And it’s not silly to waffle. You’re likely doing something that I think is healthy and necessary when you approach the finish line: Making sure you’re financially and emotionally ready.

      If, during this analysis, you determine you’re not, there’s no shame in that — quite the opposite, in fact, as you should congratulate yourself on figuring it out prior to quitting your job. Heck, you might even find yourself ascending to SWAMI status.

      BTW, I’ve drafted a few posts for the new year already and — so far, at least — they all deal with my own personal fears and reservations re: jumping ship. It’s probably not exactly what you’re going through, because everyone’s own situation is somewhat different, but you still might find them interesting. Re: schedule, I’m going to adhere to my weekly Tues posting commitment for 2015, at least for the foreseeable future.

  2. Scott says:

    Hi livaFI

    Just curious when you plan on retiring in April is that you and your spouse? Have you been able to convince her?

    • livafi says:

      Shortish answer: Yes. It’s been a lengthy process but she’s on-board at this point. She also frankly thinks I’ll get bored in 6 months and will start working again which I suspect is part of the reason she is all right with the current plan to RE. Who knows? She might be right.
      On that subject, though, I highly doubt I’ll be returning to software/IT. It’s possible I’ll pursue PT work in a different field if I think it’s going to be interesting for a while.

  3. David says:

    What? You’re retiring? When the fuck did you tell us???

    Just kidding…. I take the YMOYL position that you track every penny. It’s important to know where you’re at, but it’s far more important to make sure spending lines up with values.

    • livafi says:

      Completely agree on the values thing. That’s why I’m confident that I won’t engage in any significant lifestyle inflation — I don’t believe in it, so to speak. I see you’ve gotten around to reading the YMOYL classic? Seem to remember that at this time last year you hadn’t yet.

      • David says:

        Yeah, I’m currently about 2/3 through it. I would have read it sooner if I knew there had been a reprint in 2008 that fixed a lot of the dated advice, though! For some reason all of the mentions I’ve seen of it neglected that fact. I’m actually getting quite a bit out of it.

  4. LAF,

    It looks like everything is coming together for you nicely. I am still about three years away from FI so I will start making arrangements like you have to further reduce expenses. I probably will be closer to $24k. I used to use the Networth IQ site to track my net worth, but the site has gone to shit over the last couple of years. I have been keeping manual records in addition to my blog posts.


    • livafi says:

      Hey MDP,
      Thanks for the comment. I’m glad you’re taking steps to reduce expenses. Optimizing is an iterative process.
      I’ve also observed Networthiq’s site to be less reliable over the last 3-4 years. Seems like most people are using mint nowadays, since it’s free and they have an automatic net worth aggregator that takes data from your linked accounts. Or personal capital.

  5. ZootsTwin says:

    Having just put together a similar spreadsheet to track my own household’s saving/spending, I’m curious: since you and your wife have separate balance sheets, are the expenses quoted above just for you (i.e., your portion of the food budget, half utilities, and so on), or for the entire household (you and your wife)? DH and I combine all income/expenses so I track on a household-of-two basis, but I’m wondering how you run the numbers in your situation.

    • livafi says:

      The expenses quoted are just for me. To get household expenses for the entire year, you’d double nearly everything.

      There’s one notable exception: Auto and Gas. I pay the entirety of those expenses from insurance to excise tax. We’re a 1-car family and share the vehicle but I do 80% of the driving. I know, this arrangement is a little unorthodox but it works for us.

      Our entire household expenses came out to about 51K.

  6. Your spend numbers are incredible. I’ve been analyzing constantly how to reduce our overhead. It’s going to be a multi-year project. “Washington doesn’t have a revenue problem, it has a spending problem”. Yeah, that’s me. I find “cut coupon” advice useless, which is mostly what many financial planning sites offer. I’m trying to work on what I think is the real problem which is programming that says “oh, I can’t trim that area, it is what it is, life’s expensive”. There must be more structural things that will make a meaningful impact I can work on. Anyway, I’m ranting. And I do see some info on your site on this. I think your list of regrets is awesome. That’s the kind of candor most financial planning sites don’t offer. It would be great if you could share more thoughts on how you structure your life to align with your spending goals. Downsizing housing is a big one I see. That’s the one area I did correctly. Now time to fix the rest.

  7. Runrooster says:

    Hi LAF, I’ve been reading your blog for about 7 hours, mmm for a few weeks, ere for a few months, and read ymoyl 20 years ago at age 25, when it was perfect timing because I was in grad school and saving money on a measly stipend. Anyway, I know this post is old, but one of the things rattling around in my brain about ere crowd is taxes. What sucks is that we spend 10-20 years in a crazy high tax bracket and then drop to the 10-15%. Also, I completely forget about social security. I was stunned to find out that I have a $11k benefit with barely 5 years of real jobs, you and your wife probably double that. But even in grad school I was earning at around the federal/state minimums and all of that counts.

    one thing you don’t mention in this post is the tax savings from retiring. Maybe that seems like a silly thing to mention, but the point is that your wife gets to use your deduction and exemption and can put her back in the 15% bracket. The break point with one income is 37*2+20+IRA/hsa (20)+401k (19)=134, which gives you some leeway for investment income, and income-your 401k for 4 months. No wait thats wrong because the IRA is not deductible at that income range so 123+19=144? Also being unemployed its easier to move to a zero state tax.

    My thought has been trying to figure out a way around the disincentives to have two high incomes, basically is there a way to set up retirement accounts that divert tax free income now to convert into taxable income at future low income rates and also have access at younger ages? For the average person/couple, the current 401k maximums are fine, but for the FI/ere crowd, something else is needed. Its 1 am so I’m not sure my comment makes sense, but I suspect this could be a worthwhile benefit to the community. Or I could find people who already do this sort of thing for lawyers and doctors.

  8. Runrooster says:

    I accidentally left out the numbers, which is that if your (income-401k) goes to zero for the year, then your wife’s tax liability drops by 9k. Though you would lose the aca subsidy.

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