@Kyle Schuant - you're dropping some knowledge bombs here, brother!
Okay, so I am on the right track.... I am actually tracking our expenses now, with the primary goal at this point being just to have some honesty about what we are spending and where. Like has been said, maybe at the end of this exercise we'll decide not to cut a single thing, but at least it will be a conscious choice instead of mindless consumption.
But, we have found some areas to target for reduction, and are chipping away at them. We have a menu / grocery shopping meeting before we buy groceries now and actually make a list (to combat our $400 per week bill for 4 people). For the last few weeks, we have had a budget meeting before payday to decide where we want our money to go (although we have blown some of our budget categories, I'm still counting it as a (small) win because before I wouldn't even have been tracking it and wouldn't have even known of the impact.) Growing pains in this regard for sure, but progress none the less.
At the risk of straying into case study territory, since you've all been so kind to offer me great feedback, I'll attach our annual income / spending to satisfy some questions. The things crossed out are changes I've made since engaging in this exercise. Feel free to eviscerate !
Gross Salary:Me: $128,000
Wife: $105,000
Pension Contributions:Me: $12,600 / yr Employer Contribution: $12,600 / yr
DW: $10,350 / yr Employer Contribution: $10,350 /yr
Federal Taxes & Social Security Deductions:Me: $32,100
DW: $71,450
Take Home:Me: $83,300 + $16,000 net bonus
DW: $71,450
Total (after taxes & deductions) cash inflow = $170,750PROJECTED ANNUAL EXPENSES FOR THE NEXT YEAR:HousingMortgage Principal $26,500 (And that's the entire balance of our mortgage!)
Mortgage Interest $464
Property Tax $3,480 ($290 / month)
House Insurance
$1,644 $1,500 ($125 / month - reduced by $144/yr by raising deductible etc)
Electricity:
$1440 $720 ($60/month - 50% reduction through tracking and small changes)
Natural Gas: $720 ($60/month)
Utilities: $600 ($50/month)
Internet / home phone:
$1,400 $1,200 (found a better cheaper package, could cancel the phone for another $120 off)
Netflix: $130 ($11/month)
My cell: $900 ($75/month - on contract for 7 more months, then can change plans)
DW cell: $600 ($50/month)
Transportation:Car lease: $5,880 ($490/month - see notes below)
SUV depreciation (approx): $3,000 ($250/month)
Parking:
$1,840 $920 ($76/month - started commuting together with wife)
Gas:
$4,500 $3,900 ($325 / month - same as above, shared commuting saved 144 km / week of driving)
Car insurance: $2,150 ($180/month)
SUV insurance: $2,150 ($180/month)
Recreation:
Family Crossfit: $3,600 ($300/month)
Boxing gym: $1,300 ($108 / month - cancelled post MMM)Kid's circus classes:
$2,820 $2,220 ($185/month - reduced from 2 nights per week to 1)
Kid's BJJ:
$960 $720 (
$80/ $60/month)
Kid's music: $720 ($60/month)
Other:
Housecleaning: $2,400 ($200/ month) - cancelled because I actually like cleaning
Banking Fee: $180 ($15/month) ) - turns out we qualified for free banking if I got a slightly different account
Childcare:
$11,000 $8,250 ($950/month over summer, $500/month in school year, reduced with scheduling juggle)
Life Insurance: $2,800 ($233/month) (mix of work group plan and personal term insurance. We are probably over-insured, but I'm scared to touch it.)
Kid's education fund: $2,400 ($200/month - RESP, so 20% additional contribution from gov't.)
Groceries: $20,800 ($400/week - currently focus of BIG reduction efforts, standby on this front)
Cash spending:
$13,000 $10,400 (we went to a cash system for restaurants, clothing, and personal expenses because we found that we spent way less with cash than on plastic. But, we usually don't spend it, often don't take cash out the week after because we still have a bunch in our wallets, and then use that as an excuse to overspend in other areas)
Stuff I didn't track before so this is an estimate:
Home improvement: $6,000 ($250/biweekly)
Vacations: $10,400 ($400 biweekly - have a big tropical trip this year)
Kid clothes and stuff: $1,200 ($100/ month - this is probably an underestimate)
Gifts: $1,200 ($100/month - I'd say this is for Christmas, birthday parties, etc. I bet if we included Mothers Day and anniversaries it's more than that. Damn, I'm lying to myself again.)
Total Spending: $99,300
Total Forced Savings: $29,700
Into the Black hole:$41,600 (not all of it, we usually double up our mortgage payments most weeks, but beyond a very low mortgage, I don't have anything to show for this.)
ASSETS:Cash: $10,000
House: $960,000 (assessed value. no, I didn't pay anything close to that for it. It's no mansion - 2700 sq ft. HCOL area.)
Kid's education fund: $36,000
My pension: Defined benefit that will pay out approx NET $65,000 / year in 2025 if I work until then.
DW's pension: Defined benefit that will pay out approx NET $40,000 / year in 2021.
Total after-tax pension income = $105,000
LIABILITIES
Mortgage: $26,400 (yay!)
Credit Card: $0
Line of Credit: $0
VEHICLES:2011 Santa Fe w/ 101,000km (value = $10,000)
2017 Audi A3 with 35 months lease remaining (My albatross. This was a present for my wife for going through breast cancer. After we finished treatment we went a little nuts and actually ran up a lot of debt which is odd for us. We had a "now or never" mentality. That has waned thankfully as we put that awful year behind us, and now we regret the car. It's fun as hell to drive, but it's not very practical and is a gas pig.)
Because the Audi will come up as an obvious area of analysis for you eagle eyes, the buyout on it would be $36,000 plus $4,000 tax. The trade-in at a dealership would be $30,000 plus a tax credit on whatever I bought next for $3,600. Or I could sell it privately for maybe $36,000. Either way, the "get rid of it" equation seems to be, can I replace it with something that will save me more than the $6,400ish I would lose in ditching it now. Cashflow wise I don't
need to sell it. My wife wants to sell it now with a brand new electric vehicle. To me, the big move would be to go down to one vehicle. I've thought about maybe posting this as a question.
Anyway, you can see above where I've made progress, where I've stalled out, and where I have blindspots and am not seeing obvious solutions.
Punch away.