Tracking spending: how do you do big projects?

[Maya]

For those that track monthly spending how do you count big projects like renos? Do you count for it in your annual spending because it happened in a particular year/month or do you amortizatize it over a few years?

We're doing our basement finishing and landscaping this year and will likely spend $50 k on both projects. We have the money aside but will likely put some of it on our line of credit because the interest rates are lower than the returns on our investments. I've been tracking our spending in mint and these projects will send us likely into negative net income for the year. I wonder if I should just hide it from the tracker and count it more as a mortgage to mentally feel better about our progress.   

[brian313313]

We just bought a condo that needed renovations. We just considered the costs as part of the purchase price. It really depends on what you're trying to do. If it's a one-time expense tracking is not so important in my opinion. If you're expecting to do this regularly then perhaps budgeting/amortizing might be a good option.

[Guava]

I put all of the expenses in the month they occur. But for a big project, I might have a separate sheet so I know what I can consider one time spending and what may get lumped in with regular maintenance and repairs. While I know the chances of me spending $14k to redo the exterior of my house won't happen again any time soon, I can see that I regularly spend about $3k a year in maintenance on this old house which helps me figure out my FIRE number.

If you need to mentally hide it, then so be it. I like to have the full picture, even if it means I had a negative net income the year I did the big project.

[NoStacheOhio]

I just put it in the month in which we spent the money. I do quarterly and yearly averages, so it all sort of evens out.

[Laura33]

I would recommend tracking it both ways, if you can.  I think the most important thing is to track your normal budget so you can confirm you are saving what you plan and avoid lifestyle creep. 

However, there are a number of big expenses that look like one-offs individually, but if you look over a period of time you can see that *something* happens every couple of years, so you really need to account for that.  E.g., we did a big "back half of the house" remodel @ 10+ years ago and thought, hey, that's it.  Then a few years later we said, you know, we really need to re-do the powder room.  Then we spent a few years replacing all the windows.  And last year we finally built a garage.  Now we are thinking about the upstairs bath, which hasn't been touched since about 1982 (and totally looks it).  And let's not even talk about the replacement vehicle(s) we will probably need within the next couple of years. . . .

I am assuming your situation is likely different (we knowingly bought an old house; the extra spend is the price of admission for a house I adore).  But the larger point is that if I were just looking at my "normal" spend, I'd be thinking we're doing great -- but I'd be missing a very significant chunk of money that we are spending every couple of years, and that is likely to continue to recur in some degree after we FIRE if we stay in this house.  So my prudent FIRE planning involves looking at those "one-off" expenses and finding some sort of anticipated average based on past history -- honestly, I probably don't need to consider the first huge remodel in that analysis (that one caught up about 100 years of technological advancements and will not recur in any way, shape, or form), but I can count on other, smaller-but-significant expenses continuing.  They will be different expenses from the past -- the bathroom won't need re-doing, but we may need a new roof at some point.  But history suggests that things will continue to need repair/replacement, and that I will continue to come up awesome ideas for things that "have" to be done, even though I don't know what they are right now because I haven't thought of them yet.