Author Topic: Help with lowering expenses? [awaits flamethrowers, long, srry]  (Read 21793 times)

Joet

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I've used mint for a bit, and came up with the following categories for spending that I seem to incur regularly.
Any advice appreciated.
This is a marriage/dual income scenario, we both make in the same ballpark

1821   Mortgage      [3.375/30-yr]   
756   property tax         
587   Clothing         
748   Groceries         
490   Restaurants         
900   Cash withdrawls         
361   Gasoline [much of this is me and surf trips, I'm 30 miles from the beach]      
728   car payment    [0.9, effectively a zero cost loan]
634   Pet food/supplies/veterinary         
456   Dog walker         
584   Monthly Bills (phone, internet, PGE, directv, etc)   
280 Domestic assistance (maid, gardener)      
2400   Other stuff         
10775            

Obviously the answer is "kill the other stuff, kill the dog walker, cut the cable/internet/bills/home phone line/etc" but my partner likes those things and compromise may be possible but there are some sacred cows. And I think we are meeting most of our savings goals I'd like to do "...a little bit better" though, but my partner thinks we can probably do better as well.

Any pointers? Basically it goes like this. Every month. $1k gets spent as a "1 time" expense here, there everywhere. Gifts to friends/family, impromptu vacations, etc. Many of which I agree with. How do you learn to control spending as a team? We communicate fine and I'm afraid I'm continually moving the goal posts on my partner. As in "hey! you said to max our 401ks and a bajillion other vehicles and you'd shut up! well, we are and you haven't"

In spirit of teamwork, I'm afraid I'm ratcheting up pressure to hit a goal of 9k or less total all-in spending monthly average moving forward [present = 10,500]. But we are already meeting our goals more or less. Life is short right?
This summer I will take an annual bonus and knock out the car payment, so we'll own 3 cars free and clear [his/hers, + his toy from 15 years ago that just sits in the garage and isnt worth much]. Example I try to say "..hey let me wash the dog", but *bam, dropped off at the foofo shop for $50.

Otherwise I cant believe this is 2013 and I still cant convince my partner to cut the landline [emergency, security, likes the simplicity of international phone calls to parents, wont use a cell phone/skype/alternate and this is kind of a dead argument at this point]
Similar with directtv. I know netflix/hulu/amazon/on-demand/streaming gives us a ton of stuff well under our committed $120 burn but it's a sacred cow. Fine. Dog Walker is a sacred cow too (~$400/mo), "our dog deserves it, likes to enjoy a walk outside", I've discussed him just using the dog door, we have a nice fenced in and safe yard, but our cats might escape, etc. This is a sacred cow too.

I'd love to know how to knock down the 2700/month in regular "other" spending but cant seem to figure out how to start. Each item is always a perfectly logical expense. Why yes, of course your mother needs that $150 birthday present. Duh. Why of course we'll give your cousin a $500 check for graduating college/HS/law/business school. After all, we're the ones with money! [duh!]

I am absolutely not blameless and love to spend money too. I guess I dont know what I'm saying. My partner has suggested a convenient tool to check spending levels in order to cut back where needed. I set up mint and gave the login. Hasnt logged in yet. Set up the budget tab, hasnt looked at it. Very busy person at work, I understand. We mostly use 1 credit card for all expenses. Check the balance I say. Too difficult, time consuming, or hard to remember to do. Expenses grow and grow. Maid pressures us to come more often, partner agrees, etc.

Certainly I dont see this as a disaster but my first thought was to simply cut up all credit cards and move to cash everything. It seems to be my only hope. For instance, my partner can withdraw say $3,000 a month, spend it however it wants [staying gender nuetral here], and no questions asked. I take $1,000, spend it however I want, add that to our fixed bills and no problem, we'll spend under $9k/month easily.


Annual savings picture: At our current rate we'll be FI in our mid 40s [~8 years from now]
We save approximately 25% of gross income annually currently. Our investment portfolio is ~600k, and our home equity is ~500-600k conservatively.

The investment portfolio is nice and indexed/low cost/bogleheadish
Current savings vehicles [annually] are:
His/Her 401k+match(where applicable) 41,500
His/Her Roth IRAs [his/her] 11,000 [via backdoor, google that if you havent heard about backdoor Roth]
His 401k post-tax [converted 1x annually to His Roth] 20,000 [below 51k federal limit, just barely for 401k+match+post tax]
His HSA @ work [3k incl emplyer contribs]
Their Ibonds: 5,000 paper I-bonds with federal tax return [by prepaying 5k over what we owe, we like paper]
Their Taxable investing: 5,000 /yr, normally in foreign large cap index funds for tax advantages/foreign tax credit
net of $85k saved/yr, including 401k emp match
« Last Edit: April 25, 2013, 03:51:04 PM by Joet »

Joel

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #1 on: April 25, 2013, 03:41:23 PM »
It sounds like you know where you need to cut back, but are choosing not to for conveniance.

As opposed to using mint, I would recommend YNAB. Mint tells you that you overspent in the past, YNAB lets you focus on planning for the future. Only budgeting what you have, and spending what you have. Spending an extra 1k on something has to come out of something else. Mint just says you spend x too much last month on this category.

Needless to say, $450/month for a dogwalker? Where do you live, and are you hiring?

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #2 on: April 25, 2013, 03:45:35 PM »
Bay Area[san jose]
thanks for the response. I do think the problem remains "I dont know where to cut back", but I think a target of $9k/month all-in spending is 'reasonable' so perhaps since credit cards seem to disguise spending... all cash then? All gone stop spending wait till next month? Sorry your cousin graduated law school this month perhaps we can send a card instead as we're already over $9k?

perhaps if you define 'convenience' as under the vows of commitment to one another a pledge to compromise/defer issues. I apparantly can not gallavantly declare "no dog walker", as I believe it is perfectly in her 'right' to say: 'I make this money, you can't tell me what to do with it'. However, the # of sacred cows I think are over a 'reasonable level of compromise'. Am I wrong about that? There are 3 sides to everything. Truth, His/Hers.

Also recent conversations regarding FI/early retirement are somewhat non-fruitful. "What are you going to do? Sit on the couch all day? Surf?" [actually.... hopefully! , lol]. So I am trying to learn how to better cage that argument.

The other side of this argument will probably say that each and every expense that we incur are all 100% perfectly logical and necessary. Why else indeed would my partner have spent it?
« Last Edit: April 25, 2013, 03:48:57 PM by Joet »

CNM

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #3 on: April 25, 2013, 03:52:26 PM »
I'd say that you should break down where that 900 of cash and that 2400 of "other" expenses go.  Because that's a lot of money to just have melt away unaccounted for!

As for the dog walker and the domestic help, yes those are obvious places to cut.  But I also understand the compromise that comes with relationships.  Perhaps you can cut this expense rather than eliminate it entirely?  Like, have the maid come 2x a month rather than 4x?  Also, if the house was cleaned by someone else or the garden gardened by someone else (i.e. you and you) a better argument could be made that these services aren't needed at all anymore.

And, let me ask, is this a monthly budget?  Another out of whack line item is on pets.  Do you spend that much EVERY MONTH on Fido?  There must be a less expensive option there, too.

Joel

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #4 on: April 25, 2013, 03:57:28 PM »
Bay Area[san jose]
thanks for the response. I do think the problem remains "I dont know where to cut back", but I think a target of $9k/month all-in spending is 'reasonable' so perhaps since credit cards seem to disguise spending... all cash then? All gone stop spending wait till next month? Sorry your cousin graduated law school this month perhaps we can send a card instead as we're already over $9k?

perhaps if you define 'convenience' as under the vows of commitment to one another a pledge to compromise/defer issues. I apparantly can not gallavantly declare "no dog walker", as I believe it is perfectly in her 'right' to say: 'I make this money, you can't tell me what to do with it'. However, the # of sacred cows I think are over a 'reasonable level of compromise'. Am I wrong about that? There are 3 sides to everything. Truth, His/Hers.

Also recent conversations regarding FI/early retirement are somewhat non-fruitful. "What are you going to do? Sit on the couch all day? Surf?" [actually.... hopefully! , lol]. So I am trying to learn how to better cage that argument.

The other side of this argument will probably say that each and every expense that we incur are all 100% perfectly logical and necessary. Why else indeed would my partner have spent it?

It sounds like there is money being spent on things you don't value but perhaps your wife does.

If you value the long-term savings goals, vacations, early retirement, etc. You have to communicate that to your wife and determine if she values that. The money is made by both of you, but you both should work together to determine what you value.

For example, I don't know how often you pay someone to walk your dog. But why not offer to do that yourself, or take that as an opportunity to spend time together and do it together? My thinking is that you shouldn't have a dog if you have to pay someone to spend time with it and take it for a walk.

It's all about doing things together though. I do not think you will have any success if you tell her we need to cut back here. It's going to have to be a mutual thing.

For example, my girlfriend wants to get married. I have every intention of doing that, but she has a student loan that I would like paid off, and then we need to save up for a wedding. Her original thought was to just save for the wedding. I asked if she would want to borrow money to get married? She said, well no. I responded with okay, by not paying off the debt first, we are in fact borrowing that money. I really want everything that you want, but let's do this smart financially. Having the same goals as her, made her opinion feel valued, and allowed her to feel like a team as opposed to me telling her not to buy so god damn much starbucks! (like I would have liked to)

Needless to say, my endorsement of YNAB still stands. Has your wife peaked any interest in Mint at all? It sounds like she hasn't and you are in the police officer type role, which almost always never works, especially with a wife that pulls her weight!

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #5 on: April 25, 2013, 03:59:55 PM »
perhaps thats a bid of an aberration, thanks for your advice as well. Fido [he's fine, thankfully] got nipped in an accident and mint shows that category a bit higher lately. Not really sure of it's algorithm but honestly it's probably smarter than I am about that. Food, trimming/shampoo, vet visits, checkups, etc. Maybe a couple hundred less if there isnt something catastrophic [knock on wood]. But my partner is very committed to our pets [for instance years ago we had a cat on expiremental chemo and I'd rather not go into details but it gets expensive]. This is pretty much another "sacred cow" category. What gets spent is what gets spent because partner has decided it's necessary, has investigated all options, and has made a choice.

Really I'm just wondering if theres a way to weave all these optional spending decisions/categories together thats right in front of my partner, so that we could hit some kind of spending cap and then.... stop spending until the next month. Sounds magical I know.

I guess that's budgeting. So difficult? I've been trying "to fix" this problem for ~15 years. However I think there is a logical argument that there "is no problem", as in set for FI in mid 40s. I dont know. Probably just someone to tell me to stop worrying about it and dont sweat the small stuff. Even if I did manage to find another $10-$20k a year in savings, FI date would only be pulled in a year or so.

mlipps

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #6 on: April 25, 2013, 04:11:02 PM »
The amount of money you're spending on literally every single one of those categories is insane. I don't know where to start though because you seem to have lots of resistance to actually doing anything about it. Instead of saying which categories we CAN'T give you suggestions on, could you specify which ones you can?

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #7 on: April 25, 2013, 04:17:56 PM »
I don't know, I probably sound obstinate. I wish I knew. I'm in a dual-income family and my spouse makes [most] of the elective spending decisions. I look at the monthly statements and am summarily amazed generally. I made the table in the OP out of those findings.

I guess I'm just a lost cause.

Here's some additional info:

thanks again, we both work full time away from home hence dog walker. I walk him in the morning [yawn, leave around 8, partner left for work already], she gets back around 6 and walks him then, we both walk fido again in the evenings/take a jog usually. we do have a dog door and a nice fenced yard that is perfectly safe, however, but "...our dog deserves a good life", or I'm not exactly sure what but the dog-walker is a sacred cow. Sounds very easy to just cut it but the issue is dead/done, not really worth arguing about unfortunately.

I think we are blessed to have good jobs, and have a lot of headroom. I just dont think we can do everything at once each month every month. will check out YANB. But if mint is too difficult to check on a smartphone or in 20 seconds from work once a week or so, is it any easier?

and I think you're right: I am forced into a 'police role' and actually I have managed great success. I literally forced my partner into a 401k from day 1 [big fight], maxed IRAs every year. Then I extended that.... hey we need some Ibonds too. wee. Oh and My HSA I just got... lets max it. boom. haha. Hey my employer offers post-tax investing. Yea lets nail me 51k limit, and send the post-tax over to my IRA, etc. In the game of inches I've scored touchdown after touchdown. I paid off partners new car with last years bonus, and will do the other one this year. But my ability to earn more seems to be not quite as good as partners ability to spend more.

Although honestly I think that isnt fair. when my buddies call up for a week in fiji [surf trip] I go. not cheap. Makes the dog walker a non-argument. Bringing me full circle.

It isnt any one thing. It's everything. How to keep spending to a certain level? How to set [and keep] a budget? There are constant suggestions/impulse buys that come up over and over. I was smart to automatically move funds from salary/bonus to retirement vehicles up front. My main win. But once the accounts get into the 6-figure range in taxable the 'wealth effect' of spending seems to take over and I see it on the credit cards. It's not any 'one thing' certainly.

Ahh so frustrating. I have no idea what to do. "Hey partner, I noticed the credit card balance is $5k this month already, is there any way we can... cool it for a bit until the next billing cycle..."

--> fuming ensumes. "What do you mean OUR spending, you mean MY spending again, dont you? Who gets the food, who does the shopping, etc"
--> Ummm. you do those things because you want to. I go shopping all the time. But partner is right, partner does do most of those things and is a tremendous help around the house, more than carrying [its] weight.

Mostly I think I need to shut up. The "other" category is also a lot of our vacation spending averaged over time. Flights/hotels/weekends/etc, truly the stuff that makes living fun. I also like to "budget" to be able to do such things, hence my artificial spending hold at 9k/month. That way there will be enough of a buffer to take that trip to Paris/Fiji/Melbourne, etc. We only go about 2x a year though, otherwise usually just weekend/local stuff. Still stuff we both agree on.

I'm still thinking the archaic cut-up-the-credit cards deal is the best way to go here? Sure I like our 2% cashback fidelity card and all that but what's 2% when you're spending 3k a month that you otherwise wouldnt if you were forced to withdraw the money for the spending the old fashioned way? Not a rhetorical questions. Isn't this the answer?

AJ

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #8 on: April 25, 2013, 04:26:52 PM »
How do you learn to control spending as a team?

If I am reading your post correctly, this is really the crux of the issue. You have items that you value and are willing to spend on, your partner has things they are willing to spend money on, and those are not the same things so you're spending more than either of you would like.

If you both have smartphones, I think the YNAB software might help you here. You set it up on your computer, then sync to each of your devices. Every time either of you spends any money, enter it into the app. Honestly, I'm willing to bet that just the action of entering every purchase will reduce your spending, maybe even to the level you want. I got my reluctant partner to agree because the app was really simple, and all I was asking him to do was enter his transactions (as opposed to actually reviewing the flow of our funds, which makes his eyes glaze over). You're not asking to cut back (yet) just to record.

The other thing that might help you already suggested yourself: withdraw cash at the beginning of the month and let everyone pay for their own things. If you pay the joint bills (mortgage, electricity, taxes, etc.) out of your checking and can agree on an amount both of you consider "reasonable" for everything else, you should be in the clear. Your partner can pay for the dog walker and landline out of their money, if that is something they value. If you want to go on an "impromptu vacation" to Fiji, it comes out of your cash (which, maybe you have been saving on the side for such things).

For irregular but expected expenses (like joint travel), maybe you could both just agree ahead of time how much money you think is "reasonable" to spend annually in that category and save for it. Maybe you spend $24k on it every year...ok, then put $2000 a month in an account. Want to fly to London, but you just drained the account last week to go on Safari? "Oh well, I guess we have to wait a few months." That's how you keep your spending at a certain level - if it doesn't come naturally to both parties, then it needs to be spent ahead of time on paper (e.g. a budget). If you leave it up to impulse, you'll spend more.

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #9 on: April 25, 2013, 04:30:22 PM »
thanks for the explanation AJ :)

Kazak

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #10 on: April 25, 2013, 04:37:07 PM »
I think we're all missing the point here... You can make $456/month from a side-hustle dog-walking business with A SINGLE CLIENT? I'm in the wrong business...

yolfer

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #11 on: April 25, 2013, 04:39:31 PM »
I want to preface this by saying that although a 25% savings rate is somewhat weak, 8 years till FI is pretty awesome. Even if you didn't change a single thing about your budget I think you're on the right track. It might not be worth rocking the boat with your spouse. Just gotta weigh the pros and cons.

However, someone's gotta do the 'ol fashioned face-punching here, and it hasn't been done yet, so...

You use the phrase "sacred cow" often. Now, I'm Jewish not Hindu so I only know of one sacred cow, and it was made out of gold. When Moses came down off the mountain and smashed up that Golden Cow, you think the Israelites were happy about it? Fuck no! They worked really hard earning that gold or stealing it from Egyptians. They melted it down and made a big-ass idol out of it and had a huge party, and here comes Mr. Holier Than Thou ruining all the fun.

But he had to do it because he had a vision of how people should to behave, and what types of behavior were appropriate and inappropriate. He essentially delivered the world's first and biggest FACE-PUNCHING to an entire nation.

All's I'm saying is that smashing sacred cows isn't fun. It requires bold, goal-oriented leadership. But it pays huge dividends.  Make it happen or go back to dancing around your golden idols.

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #12 on: April 25, 2013, 04:51:04 PM »
thanks for your post. very entertaining. However I'm not sure if "bold leadership" applies to a partnership of equals. Help me understand how that might be applied? Thank you

Paul der Krake

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #13 on: April 25, 2013, 04:53:16 PM »
May I ask how old you two are? Try and remember what it was like living when you were a broke student. Like mlipps said, each and every one of your categories is ridiculously high. If your answers weren't so long I would think we were getting trolled.

It's awesome that your household has such a high income, but that doesn't excuse the amount of waste going on. No mentions of kids, yet your grocery bill is higher than a few regular posters here with 5 mouths to feed. If you add the "unaccounted for" and the "cash withdrawals" categories alone, that's over 3k you spend every single month on... not sure? You do realize there are people who live on a fraction of that amount alone, right?

Get your shit together yo. :)

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #14 on: April 25, 2013, 04:58:54 PM »
37/8, DINKs [no kids]

yea I wish I was trolling. Well perhaps I am as I've been in this situation for 15+ years. In reality, I'm trolling myself I suppose to accurately use the term. I apologize for exposing you all to my problem---which perhaps isnt that much of a problem rather a sub-optimal situation that could be addressed. But hasnt been.

We've had annual/bi-annual go-arounds re-budgeting etc/all and have made fits and starts and everything just fizzes out.
I guess it just requires dedication. Partially I am disappointed as I point out painfully with charts, assumptions, extrapolations/arguments, counter-arguments why I'd like to save/spend a certain amount and it is agreed to vehemently. "Oh that sounds terrific! I love our $$ working for us". Then the credit card bills show up. Then a few months go by. Then I tabulate/categorize/calculate spending and I produce tables like in the OP. Then a fight or three occurs. Then I start getting laid less frequently.

I'm not making any of this up. Hence to summarize, I am trolling myself. But I appreciate any/all advice. Thank you all.

daverobev

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #15 on: April 25, 2013, 05:06:09 PM »
Well the long and the short of it is, you both have to be pulling in the same direction.

If your current situation is really bothering you, you have to sit down and really talk it through. Find some way to shock your partner, make her go.. oh, shit, look at all this money we are just wasting and wasting and wasting and wasting.

IMHO it's the only way. Until she goes... um, no, I'll keep that $200 because it means I'll be free, soon.. I mean, get her a couple of the books. But you have to both sit down and talk it out. Maybe do it away somewhere - rent a cabin in the woods, take a computer with spreadsheets; or if she isn't into that kind of thing, find a way of communicating with her in *her* language.

Spending all your money, in this life, is "normal" and even "understandable" - animal instinct and all that. But it doesn't mean it's clever...

As an aside - I could live for a year, quite happily, on what you spend in a month. I'm anticipating FI this year at less than $1k per month... Now, that won't include trips to Fiji, which is a little sad, but hey!

Joel

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #16 on: April 25, 2013, 05:08:26 PM »
37/8, DINKs [no kids]

yea I wish I was trolling. Well perhaps I am as I've been in this situation for 15+ years. In reality, I'm trolling myself I suppose to accurately use the term. I apologize for exposing you all to my problem---which perhaps isnt that much of a problem rather a sub-optimal situation that could be addressed. But hasnt been.

We've had annual/bi-annual go-arounds re-budgeting etc/all and have made fits and starts and everything just fizzes out.
I guess it just requires dedication. Partially I am disappointed as I point out painfully with charts, assumptions, extrapolations/arguments, counter-arguments why I'd like to save/spend a certain amount and it is agreed to vehemently. "Oh that sounds terrific! I love our $$ working for us". Then the credit card bills show up. Then a few months go by. Then I tabulate/categorize/calculate spending and I produce tables like in the OP. Then a fight or three occurs. Then I start getting laid less frequently.

I'm not making any of this up. Hence to summarize, I am trolling myself. But I appreciate any/all advice. Thank you all.

Talk about future joint goals, not backwards spending. Show that you have X amount available in a given month, spending 500 on the dogwalker means that's 500 less towards a vacation. 500/month is one hell of a vacation every year in itself.

Obviously, I say this because that's the best example you have. Take on the little things first. As AJ mentioned, see if you can just get her to record transactions for awhile. Just the act of being forced to record your transactions (and be accountable) can make one cut down on spending.

I got my parents setup using YNAB about 5 years ago now, and they were in a similar situation with a lot of spending that was unnecessarily made by the woman in the relationship. Granted their finances were on a much smaller scale, but there was always resistance. She would rebel, ignore, hide, and do anything possible to avoid the situation. It took 5 years, but she is finally on board with him. It's mostly because they are beginning to finally have joint goals and realize that if you spend 50 on this, you can't spend it on that.

Mint is very backward looking. It just sends you alerts saying you spent x already! Whereas with YNAB, you make a plan/budget for the month based on what you actually have. You can't spend money if its not available in the category, because you only have so much money available. You may have to pull money from your savings to spend extra money, and often times, most people will balk at having to pull money from savings (or something they value more) in order to do it.

If anything, I recommend you tracking *everything* for a short period, seeing if you can't get her to record as much as possible. It will take time, patience, and working together. It has to be clear that you are not trying to police spending, but rather be able to do something she dreams about in the future!

Another Reader

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #17 on: April 25, 2013, 05:11:43 PM »
I don't see how you are going to reach FI in 8 years.  You are spending $129,300 a year, not including retirement savings.  At FIRE, you will have to create this net income plus the taxes fom your assets.  Your tax rate will probably be at least 30 percent.  Divide $129,300 by 0.7 to gross up the income.  That's $184,714 in gross income.  At a 4 percent SWR, that's a portfolio of $4,617,857.

Your investment portfolio is $600k and the house has equity of $500-$600k.  Even if the investment portfolio does not include the retirement accounts, I don't see a net worth of anywhere near $4.6MM.  Am I missing something or is my math wrong?

You two are poster children for the anti-mustachian wall of shame.

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #18 on: April 25, 2013, 05:13:06 PM »
awesome! thanks for the recommendation. OK, we will try YNAB. :)

you guys are very helpful, thank you for not being judgemental also

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #19 on: April 25, 2013, 05:19:39 PM »
I don't see how you are going to reach FI in 8 years.  You are spending $129,300 a year, not including retirement savings.  At FIRE, you will have to create this net income plus the taxes fom your assets.  Your tax rate will probably be at least 30 percent.  Divide $129,300 by 0.7 to gross up the income.  That's $184,714 in gross income.  At a 4 percent SWR, that's a portfolio of $4,617,857.

Your investment portfolio is $600k and the house has equity of $500-$600k.  Even if the investment portfolio does not include the retirement accounts, I don't see a net worth of anywhere near $4.6MM.  Am I missing something or is my math wrong?

You two are poster children for the anti-mustachian wall of shame.

ah, perhaps I'm using the term differently than is considered appropriate. To me it means the point where I no longer have to work, and can live off my investments [if I choose to]. It is composed of my assets reaching "my number" with a number of assumptions regarding savings rate, market return, income growth, and last but not least-- spending reductions. You are 100% correct that if current spending levels are expected to remain [or even grow], we're not even close.

I've picked an arbitrary net worth of 2m. with an 80k savings rate and zero market and zero housing appreciation we hit it in 8 years. Any combination of additional saving, housing appreciation, salary growth, or investment growth [we're about 70% equities], and it pulls that number in.
1M NW for Him, 1M NW for her. Not elegant. Not COLA. Not sure what it means. Just a number drawn from nowhere that I've decided represents the point where we no longer work because we have to. Rather because we want to.

Pick a SWR of 2, 2.5, 3, even perhaps 4 and we're probably ok at that point. But who knows. Perhaps you understand this topic far better than I and I apologize. 2MM is literally pulled from nowhere, but should be better if the equity/housing markets move at all in the next decade or so.

Hence I've picked a zero guesstimated housing/market growth to hit my numbers. Of course we could have other problems, someone could get sick, who knows, but my crystal ball is cloudy.

KulshanGirl

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #20 on: April 25, 2013, 05:28:20 PM »
Man, this the most firmly attached bedpan I've seen on here so far.  What sort of car has a $700+ car payment?  *popcorn*

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #21 on: April 25, 2013, 05:51:37 PM »
its got 4 wheels and a glovebox!

Jamesqf

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #22 on: April 25, 2013, 06:17:00 PM »
I think we're all missing the point here... You can make $456/month from a side-hustle dog-walking business with A SINGLE CLIENT? I'm in the wrong business...

Yeah.  I mean, I walk my two pretty near every day anyway (and not just tame walks around a (sub)urban neighborhood, but hikes & mountain biking, XC skling in the winter).  Three or four wouldn't be much more hassle than two.

How long a walk does the dog get for that kind of money?

As for the $700+ car payment, I've bought cars for less than that.

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #23 on: April 25, 2013, 06:27:51 PM »
we walk our dogs about an hour and a half every day, both in the morning and in the evening. The only situation where we don't walk the dog every day is when we are both traveling without him. It's just tame suburban walking using your example, can't find too many cliffs to scale in the valley here and whatnot. Perhaps we could chase squirrels together, he pretty much doesn't need any encouragement there. We do not XC ski or take him off any ramps unfortuantely. Thats cool you are a mtbiker, I am too. My main hobby is surfing, 2nd is mtbiking, 3rd is snowboarding. A lot of my 'other' expenses are in this category. For instance tomorrow I am doing Mt Tamalpais with some buddies and taking the day off. Using public transportation to get to the North Bay. Will be a haul.

Using the strava pedometer app, we cover approximately 3 miles a day/avg over the past several years strictly dog walking, weekends closer to 5. The dogwalker comes by during the day when we are both at work. I figured by posting this the discussion would focus on the dog, and here we are. so be it. I completely agree about it as a silly expense so this response probably sounds overly defensive--that's not my intention. If I were doctrinaire about it the expense would go, pooch would use the doggie door, and that would be the end of it. We also jog, and I competitively masters swim for fun. Not really sure of the relevance of hobbies but so be it I also like to play chess.

I guess perhaps its to suggest we are too lazy to walk our own dog. Got it.
« Last Edit: April 25, 2013, 06:35:25 PM by Joet »

madgeylou

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #24 on: April 25, 2013, 06:35:24 PM »
I don't think "lazy" is the word. But maybe, like, so hedonically adapted you can't see straight? I mean, we all are, but you Really Are.

Either way, it doesn't sound like your partner has any desire or incentive to save. So why do you expect it? Especially when you aren't even willing to change your own habits?

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #25 on: April 25, 2013, 06:36:41 PM »
is that accurate tho? our NW is >1M, almost entirely from 'saving',  the rest from some fortuitous real estate purchases, we've been given nothing other than an education and we track 80K+ annual actual savings

open question: what habit am I unwilling to change? example: gardener. That guy is a godsend. 4x a week and I get to play/surf/mtbike/hangout all weekend and not care about my lawncare/yard. $100/mo. Love it.
work/life balance.
« Last Edit: April 25, 2013, 06:39:03 PM by Joet »

madgeylou

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #26 on: April 25, 2013, 06:38:41 PM »
is that accurate tho? our NW is >1M, almost entirely from 'saving', we've been given nothing other than an education and we track 80K+ annual actual savings

*head scratch*

Didn't you start this thread because you want to save more?

Kazak

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #27 on: April 25, 2013, 06:40:03 PM »
I don't think "lazy" is the word. But maybe, like, so hedonically adapted you can't see straight? I mean, we all are, but you Really Are.

Either way, it doesn't sound like your partner has any desire or incentive to save. So why do you expect it? Especially when you aren't even willing to change your own habits?

I agree, you need to lead by example. Show that you are willing to make your own sacrifices first. If you're not, then I don't believe you're really committed to your goal at this point.

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #28 on: April 25, 2013, 06:40:25 PM »
I dont know, I responded to you suggesting that my partner has "any desire or incentive to save"

My spouse plows 17.5K + 5.5K into retirement accounts annually, and helps me plow even more into mine. Certainly that is more than "none" or "any"

Joel

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #29 on: April 25, 2013, 06:41:40 PM »
is that accurate tho? our NW is >1M, almost entirely from 'saving',  the rest from some fortuitous real estate purchases, we've been given nothing other than an education and we track 80K+ annual actual savings

open question: what habit am I unwilling to change? example: gardener. That guy is a godsend. 4x a week and I get to play/surf/mtbike/hangout all weekend and not care about my lawncare/yard. $100/mo. Love it.
work/life balance.

You have an excellent income. But your expenses are high. If that income ever goes away, can you guys actually reduce those expenses? My guess is probably not, but she has no desire to change everything, and you are afraid of the confrontation.

I do not mean this to be attacking you in any way. But most of the users here get by on a whole lot less than you spend on some of these specific categories.

You asked for how to lower expenses, but every suggestion made seems to be met with resistance.

madgeylou

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #30 on: April 25, 2013, 06:46:12 PM »
I dont know, I responded to you suggesting that my partner has "any desire or incentive to save"

My spouse plows 17.5K + 5.5K into retirement accounts annually, and helps me plow even more into mine. Certainly that is more than "none" or "any"

My intention was not to disparate your partner but to respond to the title of your thread about spending less money. I assumed that was because (at least some part of) you want to save more. But it doesn't sound like that is accurate. It sounds like you are actually pretty happy with all your expenditures so mazel tov!
« Last Edit: April 25, 2013, 06:48:39 PM by madgeylou »

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #31 on: April 25, 2013, 06:47:43 PM »
right, I apologize for being overly sensitive with respect to the language chosen. I think it can be assumed that the title of this thread is accurate, and I am not trolling. If you think that isn't the case I apologize again

I dunno my motto is 'dont sweat the small stuff' I'm not as young as I once was but perhaps I'll get to the same place ... if only a little later. I guess perhaps I sound like a total nutbag or whatever but I'm just trying to learn how to follow a budget co-operatively with a spouse.... 15 years later... where the spouse makes virtually all the spending decisions. [80%] YNAB sounds great, am trying it now.

Feel free to filet me I guess but if I can bump spending from 10.5k/mo to like 9k/mo I can pull in the FI date [my definition, meeting "the number"], and exit the "2-income trap" which I'm keenly aware of. I am kind of an idiot so feel free to make fun. This is one of those areas that I've used cognitive dissonance on I think for the better part of 2 decades.
« Last Edit: April 25, 2013, 06:56:04 PM by Joet »

AboutTime

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #32 on: April 25, 2013, 07:00:48 PM »
Massive face punch.  I've got to agree with the comment about this being Anti Mustachian Wall of Shame material.  If you want to get to FI you need to strongly consider what is important to you.  Hiring a gardner, dog walker, back scratcher, butt sniffer, etc. seems to be more of a priority than FI.  There is a ton of stuff that can and should be cut from the budget without batting an eyelash.  Novel idea...one of you could just quit working so you can do the work of all the other people your employing to live your life. 

Don't want to sound too harsh but I support a family of 6 and spend about 40% of what your spending.  That includes private school tuition for 3 of my kids and plowing money into their respective 529s while maxing out retirement accounts.  My wife works about 10 hrs/week.  We have to make sacrifices with our expenses like cutting the cable.  It rots your brain and I got tired of my kids singing commercial jingles (read:brainwashed by consumerism).  I got tired of paying for a home phone because our alarm had to run off of one...so I cancelled both.  We live in a city where there is virtually zero crime but I was forking out about $70/mo for the phone and alarm monitoring.  Statistics show that having the alarm company sign in your yard deters 98% of would be burglars anyway.  I pack my lunch at least 4 days a week and my kids always get packed lunches for school.  There are many a mornings that I would rather just tell them to buy at school because its convenient but I choose not to. Making changes like these becomes habit forming.   

I think you need to read Chapter 1 of Early Retirement Extreme and really think about Plato's Cave.  It sounds like you have a lot of "stuff" and instead of doing things for yourself your hiring/paying other people to do it.  Buck up and come back when your serious about making a change.


matchewed

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #33 on: April 25, 2013, 07:01:54 PM »
You may count your house in your net worth. But do not count your house on your number for FI. You will always need a place to live. You cannot eat your house. You could take a HELOC technically but that would be going into debt. 2008 was not that long ago and people should have realized the lesson of relying on an asset like a house as a source of income. Your house can't make you money unless you sell it or rent it out.

You already laid out what your spending is. You know what it is and you know what is wrong with your spending. YNAB or mint or any other tracking program is not going to magically make you spend less money. You will magically make you spend less money... by spending less money. Stop the sacred cow bullcrap and take some actions. Stop wondering about the random expenses... they're random and they happen to everyone. Worry about the giant bleed out of cash you know exists. Why the hell can't one of you two take the dogs out? Why can't both of you clean or garden?

Do you both have a goal of being FI in 8 years? If so do the math and realize it is impossible for you two at current spending levels.

And seriously? What the hell do you guys eat? Gold plated baby seals?

« Last Edit: April 25, 2013, 07:04:15 PM by matchewed »

shadowmoss

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #34 on: April 25, 2013, 07:03:19 PM »
You mention the dog walker as a possibly unnecessary expense, but you won't mow your own yard and run to Fiji surfing?  No wonder she doesn't plan on changing, you aren't.  And from what you are saying about your hobbies and travel, I question that she does most of the discretionary spending.  Perhaps you need to define discretionary a little more narrow.

MouseStash

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #35 on: April 25, 2013, 07:05:12 PM »
Sit down with your spouse and a compound interest calculator:

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Plug in some of your expenditures to see how much future money you're missing out on by not cutting those expenses. For instance, if you put that $450 a month in your IRA instead of walking the dog with it, you'd have over $80,000 extra in 10 years when you're ready to retire. Or over $250,000 extra in 20 years.

A quarter million dollars in 20 years just from walking the dog yourself. I wish my dog paid that well.

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #36 on: April 25, 2013, 07:16:51 PM »
You may count your house in your net worth. But do not count your house on your number for FI. You will always need a place to live. You cannot eat your house.

Obviously, not explicitely stated so here it is: FI also assume the sale of our current home, and we'd engage in a more nomadic lifestyle at that point with >2.0 -- .2M to our name. If that number is closer to 1.9M I don't consider that catastrophic. Perhaps 2.5 SWR for a couple years.
Should the housing market collapse (and our investments, etc) that 8 year number isn't realistic. I thought I tried to point out my assumptions but here they are in gory detail:
600k portfolio + 150k in taxable, 500k home equity [being conservative, both trulia/zillow and comp sales suggest more, you guys are right perhaps it will collapse again and this is in fact zero and I agree most people say dont include it, that is a fair point]. Savings rate= 80-90k+/yr for the next 8 years and zero increases to saving rate. Assumed return on investment: 0, assumed housing increase: 0. Assumed return on investment of future contributions: 0. Anything less conservative than that [eg 3% market returns would effectively pull this in 2 years or so] and it looks a little more attainable
Assumed activity at FI: sell primary house, rent something somewhere, figure out what to do in the next phase of our lives at approximately the age of 45. If one of us still wants to work, so be it. But expenses will dramatically drop at that point is another assumption.

But what do I know, it's just a rough/hashed out plan that I think is conservative.
« Last Edit: April 25, 2013, 07:19:40 PM by Joet »

matchewed

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #37 on: April 25, 2013, 07:18:59 PM »
Bullcrap. If you can't cut expenses now how the hell are you going to do it eight years from now?

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #38 on: April 25, 2013, 07:20:12 PM »
I could purchase an immediate annuity and wait for the money to show up every month :)

Joel

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #39 on: April 25, 2013, 07:20:49 PM »
I could purchase an immediate annuity and wait for the money to show up every month :)

And watch the credit card bill exceed that annuity every month!

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #40 on: April 25, 2013, 07:21:45 PM »
damnit! lol I think I'll just choke myself out now hehe

matchewed

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #41 on: April 25, 2013, 07:25:48 PM »
You frankly need to lay out a plan on how you get to where you want to be. You can't expect all this to magically fall into place. Part of that plan is knowing what your life will be like in 8 years. You've said some wishy washy things about renting and figuring things out. If that's true fine. But it's a bit vague and you guys seem to need a goal to work towards. So outline the goal. Then lay out the plan to get there.

Expenses don't cut themselves. You need to make lifestyle changes to bring them down.

Joet

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #42 on: April 25, 2013, 07:28:01 PM »

Self-employed-swami

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #43 on: April 25, 2013, 07:47:12 PM »
I think we're all missing the point here... You can make $456/month from a side-hustle dog-walking business with A SINGLE CLIENT? I'm in the wrong business...

How long a walk does the dog get for that kind of money?

As for the $700+ car payment, I've bought cars for less than that.

$575 what I spent last month, to BUY my new car.
And I feel extravigant paying $70/month for the vet-brand cat food for my babies.

I own a small business that likey made just as much money as one of you did. Making that much does not automatically mean you have to spend it. We live an extremely lavish life on about $25,000/ year (obviously not including savings/investments/mortgage paydown).
« Last Edit: April 25, 2013, 07:55:41 PM by Self-employed-swami »

AboutTime

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #44 on: April 25, 2013, 08:00:08 PM »
This has got to be an effin joke.  I have never seen someone put domestic assistance in their budget. I think this guy is just trying to ruffle feathers.

Another Reader

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #45 on: April 25, 2013, 08:22:18 PM »
One of the things you failed to pick up from this forum and the blog is that most people here would consider your lifestyle and consumption to be profligate and wasteful and you irresponsible for your spending choices.  One of the common themes here is reducing your impact on the planet.  Reducing consumption, especially unnecessary consumption, actually can make you happier. 

There's a lot of income sloshing around Silicon Valley these days and a lot of that money is being wasted on stupid stuff.  I see the trappings of your consumerist lifestyle in my neighborhood.  You probably live down the street from me.  Or maybe you live in the gated country club across the hill.  There's an even higher concentration of this behavior there. 

Does your spouse want to hang up "its" career in 8 years?  Does quitting and moving to a rental with a low key lifestyle appeal to the spouse?  Sounds like the spouse is perfectly satisfied to continue running on the hamster wheel indefinitely while you want to cut back a little, so you can reach your inadequate definition of FI a little quicker.  To paraphrase Dave Ramsey, your spouse's ability to spend will outstrip your ability to earn.  You two need to be on the same page and you are not.

The sad thing is, if you cut things that are not really enjoyable or important from your spending, you could reach the necessary level of assets to be truly FI very quickly.  You just haven't bothered to figure out what's really important and what to you is wasteful or unnecessary.  And you're just discovering this 15 years into a marriage where the spouse is not interested in making any changes.


happy

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #46 on: April 25, 2013, 09:13:40 PM »
The more I read this the more I think trolling......
I can't believe you are seriously posting this on this forum.  If you are serious, it just goes to show you don't have to be that smart to earn a mozza.   If you are smart read the blog and do some thinking.

Going back to the math, nice logical unemotional math:

Ignore the home equity .. you need somewhere to live.
600k for 8 years at 6% adding 80k a year results in $1.9 M
Lets make it $2M....at a 4%SWR = 80k a year, and for someone at your age and income, you really should go for 3% SWR = 60k a year.

How in hell are you going to live on that?  If you can't do it now? You are going to have to live on that year in and year out... no room for a "whoopsy, we are over on our credit card this month".

Your original question was how hard to push? How much of "the small stuff" should I sweat? I suspect underneath it all you are feeling pretty pleased with yourself that you have built up 600 equity in the house and 600k in investments and if you just keep going you will have $2M in investments in 8 years.  Yeah, better than the average Joe. 

You are however missing the point. Its not about how much you can accumulate. You will never have enough money if you don't learn some financial self-discipline.  The ONLY thing you need to do is that.  You complain about the neutered spouse..but we see little hints about the non-neutered you that lead me to conclude that you probably spend as profligately as your spouse , just in different ways. Then only credit you get at this point is that you seem to be the driving force behind having  saved 25%.

Get serious. Get some goals. If your spouse doesn't want to retire work out some boundaries and split your finances so that you can. And put your money where your mouth is. You can retire easy-peasy, with just a modest level of money muscle discipline.

So the answer to your question is: push yourself harder in the self discipline department, or you won't even be FI in 8 years.



lizzigee

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #47 on: April 26, 2013, 12:55:15 AM »
"Bullcrap. If you can't cut expenses now how the hell are you going to do it eight years from now?"
+1 Matchewed. 

Surely this couple can't be for real. If so, they have less discipline than my eight year old niece.  Just because you want to buy something, it doesn't mean you are actually FORCED TO!  Spending on a whim is NOT compulsory.

If being financially independent is truly important to you, treat it as such. Prioritize. A gardener FOUR freakin' times a week, a dog walker, THREE GRAND PLUS in magical mystery spending every month!!!  Really!???? You gotta be trolling.

Freda

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #48 on: April 26, 2013, 06:19:16 AM »
You mention the dog walker as a possibly unnecessary expense, but you won't mow your own yard and run to Fiji surfing?  No wonder she doesn't plan on changing, you aren't.  And from what you are saying about your hobbies and travel, I question that she does most of the discretionary spending.  Perhaps you need to define discretionary a little more narrow.

That.

Look in the mirror first, my friend. 

ace1224

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Re: Help with lowering expenses? [awaits flamethrowers, long, srry]
« Reply #49 on: April 26, 2013, 07:51:55 AM »
where do you live?  maybe i'll come walk your dog for half that! lol

i don't know, maybe try not buying clothes for a couple of months.....you can't need 500 dollars of clothes a month!