January 2014 Expenses

 

 

One of the primary motivations for creating this blog is for me to have a space to detail my final year of working life.  And in this final year I’m keeping complete track of my expenses.  This is something I haven’t done at this level of detail in a long time, mostly because I generally keep my spending down and simply don’t feel the urge to blow money on anything anymore — so I always have a sense that I’m doing just about as best as I can, given my current circumstances.

Still, I want to be 100% sure that I have a handle on my expenditures prior to leaving my cushy desk job and steady paycheck in favor of the nonstop living-on-the-edge insanity that living off of passive income is sure to provide.

Without further delay…

January 2014 Expenses

Category	Total	Notes
Mortgage	793
Taxes	320
Groceries	175
Restaurants	51	3 meals out
Utilities	318	Oil, Electricity
Cable	75	Phone, ISP, Cable
Cell	27	Went over 100MB on Ting’s Data plan by mistake.  This should be only $17.  That’ll teach me.
Medical	60
Pharmacy	31	Vitamins
Fitness	17	Fitness Center
Gifts and Donations	20	Girlscout cookies
Café/Coffee	21
Entertainment	36
Gas	67
Other Auto	0
Vitamin A(lcohol)	19
Misc, see notes	76	AWS, Towels, Clothes
Total	2106

 

A couple of notes on expense tracking:

• You’ll notice that there is no mention of car insurance here.  I pay auto insurance once a year in may when my premium is set.  There’s a 10% discount for paying 12 months in advance, which is a pretty good return on investment.  It’s been coming out to about $60/mo lately pro-rated.
• Same goes for homeowner’s insurance.  This bill comes due in April and I pay the entirety of it on arrival — no escrow account for me.
• Looking at my expenses, I”m struck by just how much is devoted to housing.   Just mortgage and taxes alone bring me to $1120, which is more than half of my monthly expenses.  This is why I consider it to be such a priority to downsize my house as a part of the plan to RE.   There are a couple of mitigating factors on this cost — such as the fact that $250 or so of each mortgage payment goes into principal, and I probably get $80 of the $300 in taxes back on my refund, making the total expenditure $800 instead of $1120, but still, you get the idea.  This is a huge chunk of money relative to everything else.

 

As a general comment, I’m always struck by how little money I need to live and feel perfectly happy.  I live in one of the most expensive areas of the country — the bedroom towns surrounding Boston — and I’m on pace to spend less than 25K for the year.  This is about right for me, and feels like about what I’ve averaged over the past 5 years or so at my current residence.

One of my friends knows how careful I am about money and is aware that I’m going to leave the workforce soon.  His question is always don’t you feel deprived only spending 2K a month?  And my answer is no, absolutely not.  In fact, it’s the opposite — I feel fairly wasteful and could easily cut further if I wanted to.

During this month, I had several meals out with my wife, got coffee out at super-fancy cafes with a few friends, saw The Hobbit at the theater, and ate fantastic home-cooked meals practically every night.  I watched a few movies on Netflix.  Plus I read six books, all taken out from the library, which cost me nothing gave me about fifty pretty terrific hours of entertainment.  We also have cable, which is something I personally don’t want or need.  I played a lot of guitar, listened to dozens of albums, beat a few old-school video games on my PC emulator, and talked on the phone with family members, all while staying warm in a comfortable house.

Does this really sound like a life of deprivation to you?  For me, it feels like excess.   I think if I wanted to be super-frugal, I could carve away another $300 off of this budget without much pain.  But I feel like it’s easiest and probably best to instead downsize the house to save money.  This single bold move will save me more month-to-month than a multitude of smaller changes.

 

Net Worth Update

Taxable	294K
Retirement 401(k)	268K
Retirement Roth	90K
Home Equity	120K
Total	772K

The above calcuation was done on 2.15.2014.