We're also way off, our 'happy spending level' is $40k, with wife and two hungry boys. I figure part of that difference is climate, and that I'm in Canada, where everything costs more. Here's our annual budget, with no mortgage;
$9,600 Groceries and household goods (incl paper products, hygiene, cat stuff, etc)
$4,800 Fitness for 4 - jiu jitsu for 3, pilates, swimming, skating, rock climbing, gym, frisbee, hockey
$3,500 Utilities - Gas, Electric, Water, Internet, Phone
$3,300 Property tax (house value $450k, 1700 sq ft)
$3,000 Vacations (cottage rental, camping trips, couple cheap weekend getaways)
$2,400 Vehicle replacement/depreciation
$1,700 Insurance - Home, auto, life
$3,000 Gas (costs way more in Canada)
$2,000 Home repair/renos
$1,200 Meals out
$1,200 Beer and wine (we entertain a lot)
$500 Donations
$500 Annual prof dues
$5,000 Misc - gifts, parties, garden, clothes, vet, misc household
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$41,700 Total
I could definitely cut a few thousand out of this, but I feel it would impact our quality of life too much. When kids are gone, this would drop $6-8k per year, I figure. If we moved to a smaller house, and biked even more than we already do, that would also save more.