Author Topic: No Mortgage/Rent No Debt Expenses  (Read 4909 times)

Le0

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No Mortgage/Rent No Debt Expenses
« on: December 07, 2014, 01:55:29 PM »
Its December, and I have paid most of my bills for the month so I decided to take a look at our spending for the year. We use YNAB so this was simple enough to do. I decided I would compare my spending to MMM. He's always saying his annual spending doesn't include a mortgage or rent (And obviously he has no debt). So for the sake of science I removed these categories from my calculation.

The number I found was nothing short of inspiring. I am now super motivated to get out of debt.

For 2014 we only spent $23,000 for the entire year. We rent, and I will have to buy and pay off a home before this can be the actual number, but I easily make over twice that. Just more evidence that you can live on 50% of you income if you don't take on huge debt.

Was is your - No Mortgage/Rent No Debt Expenses Amount for 2014?
I am working hard to move towards Financial Independence.

MB1443

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Re: No Mortgage/Rent No Debt Expenses
« Reply #1 on: December 07, 2014, 04:01:06 PM »
Exactly.  My husband and I were relocated to another city and had our rent covered for a few months.  We buckled down and saved a ton.  We live off of my income and save his. We are able to save approx 6k a month after maxing out retirement.  The key to us was buying a home on one salary.  We pay our mortgage from my salary.  We only have one car.  I do think the little things can add up as well.  People tend to spend a lot on crap like cell phones, electronics, kids activities, dining out, Starbucks and it really adds up.  If you can just get rid of most of those expenses you'll be good to go. 

Heather in Ottawa

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Re: No Mortgage/Rent No Debt Expenses
« Reply #2 on: December 07, 2014, 09:03:56 PM »
Also no debt, no mortgage (many moves and about 8 years of busting ass doing renos and living in a construction site while climbing the property ladder, and downsized into a 'modest' place mortgage-free with our latest move). Mint user to track spending.

Annual spending about 26k, which includes lots of luxuries (2 adults, no kids, 1 car). We could get by bare-bones on about 18k for food, taxes, utilities, house insurance, and maintenance, or even less if we downsized our ridiculously fancy 4 bed 3.5 bath house. So that means there's about $650 a month that just goes to fun and pampering... 3 cats, some bikes, alcohol, the car stuff, annual escape to Florida, not too stingy with the heat, eat whatever we want, a bit of dining and alcohol, a few new clothes, gifts, etc....  Seriously, I am actually pretty astounded that anyone can manage to spend very much more than that... You'd have to spend all your time shopping!

So yes, very possible to live like MMM. Key is to not crave the latest gadgets or luxury crap, and enjoying bikes and a profitable hobby (home reno, in my case) is a definite turbo-charge!

Thegoblinchief

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Re: No Mortgage/Rent No Debt Expenses
« Reply #3 on: December 08, 2014, 10:41:38 AM »
$21K in expenses including all insurance and taxes but no P&I from mortgage. Family of 5.
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EDSMedS

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Re: No Mortgage/Rent No Debt Expenses
« Reply #4 on: December 08, 2014, 11:51:48 AM »
[...]I decided to take a look at our spending for the year. We use YNAB so this was simple enough to do.

Hoorah for YNAB!  They make it all so simple!

$21K in expenses including all insurance and taxes but no P&I from mortgage. Family of 5.

DANG!  I hope I get to chat you up when you are in the DC area!

Including some major car repairs, new professional wardrobe, traveling expenses for work (that were reimbursed), expenses for travel between Iowa and DC (every 3 wks) and doubling up on many expenses due to living/working apart for 6 months, moving costs, some continuing education expenses, and furnishing our apartment, DW and I spent ~$26K (~20% of post-tax income).  We often discuss that we need to restrict more b/c this feels too damn easy...
"The chase is constant; only a man's control of the elements of the chase determines whether he be hare or hound." - Jack London

Thegoblinchief

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Re: No Mortgage/Rent No Debt Expenses
« Reply #5 on: December 08, 2014, 12:28:07 PM »
Including some major car repairs, new professional wardrobe, traveling expenses for work (that were reimbursed), expenses for travel between Iowa and DC (every 3 wks) and doubling up on many expenses due to living/working apart for 6 months, moving costs, some continuing education expenses, and furnishing our apartment, DW and I spent ~$26K (~20% of post-tax income).  We often discuss that we need to restrict more b/c this feels too damn easy...

Honestly, $26K with all of that (especially car repairs, travel so frequently, and moving) is pretty damn impressive.
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Le0

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Re: No Mortgage/Rent No Debt Expenses
« Reply #6 on: December 08, 2014, 02:45:20 PM »
Also no debt, no mortgage (many moves and about 8 years of busting ass doing renos and living in a construction site while climbing the property ladder, and downsized into a 'modest' place mortgage-free with our latest move). Mint user to track spending.

Annual spending about 26k, which includes lots of luxuries (2 adults, no kids, 1 car). We could get by bare-bones on about 18k for food, taxes, utilities, house insurance, and maintenance, or even less if we downsized our ridiculously fancy 4 bed 3.5 bath house. So that means there's about $650 a month that just goes to fun and pampering... 3 cats, some bikes, alcohol, the car stuff, annual escape to Florida, not too stingy with the heat, eat whatever we want, a bit of dining and alcohol, a few new clothes, gifts, etc....  Seriously, I am actually pretty astounded that anyone can manage to spend very much more than that... You'd have to spend all your time shopping!

So yes, very possible to live like MMM. Key is to not crave the latest gadgets or luxury crap, and enjoying bikes and a profitable hobby (home reno, in my case) is a definite turbo-charge!
^This is me also.  I am a debt and mortgage free single person living in a too big house alone (coastal SoCal) and so lower expenses than you have. Generally in the $12K to $20/year range with basics about $7K and the rest for fun stuff like travel, as well as any repairs on the house and car that crop up. I have free medical coverage too so THAT'S a biggie to keeping expenses down.

The one problem I have to comparing spending levels when you remove mortgage or rental costs is that home owners still have a lot of expenses that renters don't - property taxes, insurance, repairs, extra utilities, etc... So it's kind of an apples to oranges comparison unless you remove ALL house owning expenses that renters don't pay. I know some people with paid off houses here may pay as much in  property taxes as some renters pay for their annual rental costs. So maybe a better way to ask this would be - if you eliminate the cost of a rental and ALL house ownership costs, what are your expenses?

This is true. The argument usually goes along the lines of renting costs more but home owners have all the additional expenses.

etc

I would agree that you might have to remove the home ownership expense to compare with me, but include them to compare with MMM.

I would guess that's why mine is so low. Also it is sobering to remember I do have rent to pay, and I do have debt. 
I am working hard to move towards Financial Independence.

Mykl

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Re: No Mortgage/Rent No Debt Expenses
« Reply #7 on: December 08, 2014, 02:57:13 PM »
$33,000 when you include home owners insurance and property taxes.  If you subtract those two things I'm a lot closer to what the rest of you are reporting, which I personally find to be impressive given that we're managing to build a household (very mild changes to a house we just bought; painting, light fixtures, hardware, etc) with some new furniture, and maintaining/fuelling/insuring two cars.  When we're done playing with the house we'll be able to reduce that by a few thousand dollars.

Every last extra penny of what I make beyond that is going towards paying off the mortgage early.

APowers

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Re: No Mortgage/Rent No Debt Expenses
« Reply #8 on: December 09, 2014, 11:28:26 AM »
If we had no mortgage to pay, and no house remodeling to do, we would budget about $13.6K annually. This includes paying property taxes and insurance, etc.

If we were entirely free of all homeowner-related expenses, we'd be budgeting $8.9k annually (assuming we're not paying utilities), or $11.9k (assuming we pay full electric/water/sewer/garbage).

EDSMedS

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Re: No Mortgage/Rent No Debt Expenses
« Reply #9 on: December 09, 2014, 01:09:18 PM »
If we had no mortgage to pay, and no house remodeling to do, we would budget about $13.6K annually. This includes paying property taxes and insurance, etc.

If we were entirely free of all homeowner-related expenses, we'd be budgeting $8.9k annually (assuming we're not paying utilities), or $11.9k (assuming we pay full electric/water/sewer/garbage).

*jaw drop*

How?!  I'd love to see your budget and to hear about your hobbies.  Are you hermits that live off the land? (I say that in jest, but that is our long-term plan)
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APowers

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Re: No Mortgage/Rent No Debt Expenses
« Reply #10 on: December 10, 2014, 09:52:57 PM »
If we had no mortgage to pay, and no house remodeling to do, we would budget about $13.6K annually. This includes paying property taxes and insurance, etc.

If we were entirely free of all homeowner-related expenses, we'd be budgeting $8.9k annually (assuming we're not paying utilities), or $11.9k (assuming we pay full electric/water/sewer/garbage).

*jaw drop*

How?!  I'd love to see your budget and to hear about your hobbies.  Are you hermits that live off the land? (I say that in jest, but that is our long-term plan)

My budget: $1,800/mo. (Actually $1,900/mo, but we're currently not needing to pay for most of our food; this could change, and if it did, we'd be able to feed all four of us on $160/mo. Currently we "spend" an equivalent of about $200/mo for a super-luxurious food budget).

So without the mortgage, we're at $1,100 per month.

We have two cars ('95 Civic 4dr automatic, ~35mpg; '96 Civic hatch manual, ~42mpg), and pretty much drive them like clown-cars. I drive to work in the next town over (grocery store, 18mi each way), and deliver pizzas over the weekends. The other car we use in case we all want to go somewhere. Usually I'll put ~400 miles/week on my commuter/work car, and ~75mi/week on the family car.

We live in town, so we're not hermits. In fact, if I didn't have to work, we could easily be a one-car or no-car family.

We don't eat out, and we don't have vices (no "shopping", no drinking, no smoking). Currently, I'm working (for money) 7 days/week, and working on remodeling the house in any spare time that I have motivation/energy to do anything. So no "hobbies" really (does facebook and MMM count? Probably...), though if I did have hobbies, they'd likely be inexpensive (outdoors stuff, biking, teaching the kiddos about the awesome world we live in) or income-generating (maybe tutoring, or financial coaching/budget writing, or blogging, or flipping stuff on amazon, CC reward churning, etc).

We buy almost all our clothes at the thrift store (budget is $35/mo, and usually doesn't build up too large).

We don't especially have "friends" and certainly not ones that expect us to go out on the town with them in order to be sociable. So that probably helps the frugality meter... Though, honestly, if we were more social and had people come over (and reciprocally visited them), I wouldn't expect too much of a hit on the budget, if at all. Maybe a small increase in the food category (like from $160/mo to $200/mo).

For reference, we live in NW WA.

Runningtuff

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Re: No Mortgage/Rent No Debt Expenses
« Reply #11 on: December 10, 2014, 09:59:48 PM »
15k here, for 2 adults and one child.
It makes it sound better when you take away rent! Although we're still not saving half of that.

Daisy

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Re: No Mortgage/Rent No Debt Expenses
« Reply #12 on: December 11, 2014, 08:57:47 PM »
Well I updated my spreadsheets in November and can somewhat project December costs.

I'm at about $30k for the year for everything, except health insurance premiums which are taken out of my paycheck...but they aren't too much, and charity.

That $30k includes:
$4k property taxes
$6k HOA (includes insurance, water, trash, etc.)
$7k travel

So that leaves me with about $13k for everything else. That includes organic food, some wine and beer home consumption, commuting almost 60 miles every day (although I reduced that by working sometimes from home), travelling at least 50 miles almost every weekend to visit parents (in opposite direction from work). Also, work pays my cell phone.

I'm not sure if that's good or bad...but I just moved and this seems to be my new cost structure.

samburger

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Re: No Mortgage/Rent No Debt Expenses
« Reply #13 on: December 12, 2014, 08:52:34 AM »
Without rent, we're at a whopping $29,000 this year for two people, but the number looks a lot better when you know that $5,000 went toward tuition, and another $5,000 went toward furnishing our first apt from nothing. We had medical bills and unexpected car expenses, but I'm going to assume those are normal-ish expenses.

I can't wait for our first spending year after we're done with start up costs and tuition--I think we'll get down to $16k for the year ($25k including rent), but that won't be until 2016.

Le0

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Re: No Mortgage/Rent No Debt Expenses
« Reply #14 on: December 12, 2014, 09:33:57 AM »
I also consider my debt, when I look at my % savings.

Because we have a debt emergency of (35,000) I don't feel comfortable saving too much. We do put 100 aside each month in a Tax Free Savings (Canada). But other than that everything else goes to our debt. We will be completely debt free in less than 4 years.

These numbers help me to gauge my lifestyle and make sure it stays modest in order to reach our goals.
I am working hard to move towards Financial Independence.

EDSMedS

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Re: No Mortgage/Rent No Debt Expenses
« Reply #15 on: December 13, 2014, 12:48:45 PM »
This forum is why I love this place!  Thank *dog* for MMM!

As I mentioned earlier, DW and I are on autopilot, begging for a bit of a financial challenge. This forum has done just that.  I hope to be back next year, bragging about my <$20K year!
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pipercat

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Re: No Mortgage/Rent No Debt Expenses
« Reply #16 on: December 13, 2014, 02:06:28 PM »
Thanks for the idea!  I never would have thought to do this, but I have been playing around with my reports in YNAB lately.

Total spending for this year was $50,861.  That does not include housing, debt, OR savings (since I don't consider that to be spending).  We are a family of four.

I know our total is still way up there, but it does give me good information about our spending.  Our food expenses were 25% of our spending, so we know we need to lower that number.  Kids' spending was 12% of our total. 
There are two ways to get enough.  One is to accumulate more and more.  The other is to desire less.-  G.K. Chesterton

Le0

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Re: No Mortgage/Rent No Debt Expenses
« Reply #17 on: December 15, 2014, 01:58:35 PM »
Thanks for the idea!  I never would have thought to do this, but I have been playing around with my reports in YNAB lately.

Total spending for this year was $50,861.  That does not include housing, debt, OR savings (since I don't consider that to be spending).  We are a family of four.

I know our total is still way up there, but it does give me good information about our spending.  Our food expenses were 25% of our spending, so we know we need to lower that number.  Kids' spending was 12% of our total.

Nice G.K. Quote - as an aside he is the best author I have ever read, I can put down one of his books and come back to it months later and not only remember the plot and the characters but even the feeling the book was giving me at the time. Great Writing.

To the point, my wife and I have realized recently that Food is not a monthly bill so budgeting monthly for food might be crippling your ability to not over spend in that category.

Think about it, you don't pay for it monthly, it doesn't ever 'get paid' like the rent does. It is an ongoing required expense. Trying to fit it into this month or that month limits your ability to buy only what you need. Food is that rare situation where you have x amount of dollars for it this month, but overspending isn't bad, especially if what your buying is at a good price and keeps for a while.

You have to take a warehouse approach. Stock up when things are cheap, replace the stock when its cheap again. This way you might spend a lot on food in a couple months, but find you only need to buy dairy and fresh veg for the next month. Looking back in December and dividing your total food category by 12 will then give you an accurate picture of your situation.

Full Freezers, Full Cupboards = spending less money.

 
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EDSMedS

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Re: No Mortgage/Rent No Debt Expenses
« Reply #18 on: December 15, 2014, 03:25:00 PM »
Very interesting thought, Le0.  Do you utilize YNAB or a similar budgeting program?  If so, how do you handle planning for groceries?  If not, any recommendations for those that do?
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yandz

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Re: No Mortgage/Rent No Debt Expenses
« Reply #19 on: December 15, 2014, 03:47:52 PM »
Very interesting thought, Le0.  Do you utilize YNAB or a similar budgeting program?  If so, how do you handle planning for groceries?  If not, any recommendations for those that do?

I use YNAB. We budget $300/mo for food/household supplies, but I sort of mentally use $200 for weekly grocery shopping and the other $100 for stocking up on stables during sales etc. Sometimes I use it, sometimes I don't and it rolls into next month. I definitely average 300/mo through the year and that is what is important.

Le0

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Re: No Mortgage/Rent No Debt Expenses
« Reply #20 on: December 15, 2014, 07:26:54 PM »
Very interesting thought, Le0.  Do you utilize YNAB or a similar budgeting program?  If so, how do you handle planning for groceries?  If not, any recommendations for those that do?

Yes we do. It is a little overkill, but it has given us significant insight into our groceries. My wife started a separate budget just for the groceries. Instead of categories, she has food items. Then after a couple months you can see what we have spent on meat vs dairy vs anything.

She symbolically adds money to each month with the amount we should have for the month (Not the amount we actually spend). It might look like $300 dollars on the first of Jan, then $300 on the first of February and so on.

Then you enter the transactions as they actually happen. The YNAB software will automatically steal from the next month showing you how much over your average you are.

The idea is to change the way you look at how much money you have available to purchase food. Let yourself make big purchases when the deal is actually a deal. Do your research, coupon if you have the time.  In six months you will have a full cupboard, a full freezer and the amount you spend monthly on food will start to decrease.

This entire concept assumes you are eating health, not eating out, cooking your own meals, freezing and preserving when you can  cook proper portion sizes and eating all of your left overs.

But so far it has started to work for us. I hope that makes sense.
I am working hard to move towards Financial Independence.