Author Topic: Reigning in the "Miscellaneous" expenses  (Read 3948 times)

MoonPilgrim

  • 5 O'Clock Shadow
  • *
  • Posts: 78
Reigning in the "Miscellaneous" expenses
« on: August 28, 2012, 09:22:05 AM »
I have what I consider to be a ridiculously comfortable monthly take-home income (around $5500k), and I am super excited about being able to pay off my rental property and build up other investments.  I live fairly conservatively, and when I budget, it seems like I should have at least $3k leftover each month.  But there's always some, unexpected, seemingly unavoidable, OTHER one-off random things that have to get paid for. 

These thousand dollars worth of miscellaneous expenses that pop up each month are making me nuts, because I'm trying really hard to get to semi-retirement (cover 100% of expenses through part-time or seasonal employment).

Next month:  Painting my 150-year old barn that's weathered itself down to bare wood, toilet and sink for bathroom, property management fee
This month:  Fixings to finish shower in my half-finished bathroom; last part of vet bill for unexpected pet surgery; helping Mr. MoonPilgrim with two months on the internet bill (we live together, his income is about 1/3 of mine, and generally covers internet and cell phones)
Last month:  Drywall and carpet in rental property, unexpected pet surgery (9-year-old cat was never spayed/had tumor)
June:  Propane tanks delivered and filled
May:  Running new electrical service to the barn
April:  Labor and materials for turning bedroom into bathroom

I'm not so much looking for help cutting down my current regular expenses, more just to see if anyone else finds that there are these four or five things that pop up and cost between $100 and $200 each and every month.  Is it just me?  What do you do about them?  Inevitable?  Frustrating to anyone else?  Most of it is house-related, now that I'm looking through the list, so do I just put off house repairs?  My situation is liveable, but I have to put in a toilet, get furniture, cover the bare concrete floor, paint the exterior, etc. eventually.

Thanks in advance for any insight and commiseration.


FWIW, my budget is:

Mortgage/Taxes on my house: $1000
Mortgage/Taxes on rental property: $500
Food:  $200
Hedonistic pursuits*: $150
Automotive: $200
Electricity/Water: $200
Pets: $150

*This probably sounds very anti-mustachian, or at least an area I could cut back on, but it is totally worth $5/day to me, and I've made improvements since I found MMM.  I roll my own cigarettes to the tune of a couple dollars per week, I never purchase alcohol at bars or restaurants, I pay cover charges here and there to see live bands because I'm in a band and believe in supporting the live music scene, and am the soup and water girl when I meet friends for dinner out.


AJ

  • Pencil Stache
  • ****
  • Posts: 906
  • Age: 36
  • Location: Oregon
Re: Reigning in the "Miscellaneous" expenses
« Reply #1 on: August 28, 2012, 09:51:25 AM »
For these type of expenses, I keep "sinking funds". You definitely need one for house projects, and for your vet bills. Figure out how much you think is reasonable to spend in a year, divide it by 12, and make it a regular monthly expense. This stuff will crop up in FI as well, so better to build it into your budget now. FWIW, I have sinking funds for: car and life insurance, home repairs, vet bills, Christmas/gifts, and car repairs. Each gets roughly $100 a month, give or take.

Edit to add: you won't necessarily spend the full amount every year. Our vet fund was built knowing that we'll only pay a couple hundred most years, then probably a couple thousand at end of life for our dog. Same probably goes for house projects.
« Last Edit: August 28, 2012, 09:53:43 AM by AJ »

apstone

  • 5 O'Clock Shadow
  • *
  • Posts: 10
Re: Reigning in the "Miscellaneous" expenses
« Reply #2 on: August 28, 2012, 09:55:59 AM »
I agree it is hard to predict these expenses.  Seeing some people's yearly spending makes you wonder how lucky they were haha.

I just had to put new tires on my truck.  I had a blowout on one, so I went in to get 2 new ones.  Turns out that they were all old and cracked and all, probably causing the blowout.  $1200 later, I am good for another 80k miles.  However, that is a big crooked number in any yearly spending chart.

caligulala

  • Stubble
  • **
  • Posts: 114
Re: Reigning in the "Miscellaneous" expenses
« Reply #3 on: August 28, 2012, 10:49:02 AM »
Those don't really sound like surprises; they sound like expenses you've failed to plan for properly.

We use YNAB which makes it very easy to track and plan for irregular expenses. Unlike MMM, I definitely do not have the super power of not spending money, so my budget is essential for me to stay on track. Once you figure out which irregular expenses you have, you can divvy them up by 12 and have a much clearer picture of what your actual monthly outgoings will be. Once you have that information, those expenses become much less frustrating.

MoonPilgrim

  • 5 O'Clock Shadow
  • *
  • Posts: 78
Re: Reigning in the "Miscellaneous" expenses
« Reply #4 on: August 28, 2012, 10:56:00 AM »
Thanks--I hadn't heard of YNAB, and am looking into it.  I use Mint currently, and love it.  I'm new enough to actually trying to get a handle on my expenses that it doesn't seem like the past year is an accurate reflection of what the next year will be.  However, denial of expenses (like the needed home repair) isn't doing anything to help my frustration level!

I'm going to make a list of the house things that need doing and the years they need done, build in a little bit of safety for the unplanned parts, and add the "sinking fund" into it.

I'm thinking now that I'm also low on some budget categories (moment of panic about my car's tires), so making some adjustments that roll over into reserves will go along way towards peace of mind.

starbuck

  • Bristles
  • ***
  • Posts: 360
  • Age: 34
  • Location: Small Town Connecticut
Re: Reigning in the "Miscellaneous" expenses
« Reply #5 on: August 28, 2012, 12:33:39 PM »
Yea it sounds like you need another line item in your budget for house repairs. We have a 2nd checking account that's just for home repairs/renovations, so each month we transfer a set amount into the account, and use it as needed. Some months it isn't touched, other months we'll plow through half of it as we work on updating and renovating our house. (Vet expenses also come out of this fund for the sake of simplicity.) I would recommend setting aside a specific amount each month and create a separate account like AJ said.

And if that account reaches a certain balance, just toss the monthly payments towards your investment account/loan repayment instead until you need to use the funds again and deplete the account.

MsSindy

  • Pencil Stache
  • ****
  • Posts: 535
  • Age: 52
  • Location: Philly Burbs
Re: Reigning in the "Miscellaneous" expenses
« Reply #6 on: August 28, 2012, 12:36:47 PM »
I agree with Caligulala, these just sound like normal expenses - they are not really things that you could opt NOT to spend on.  I keep a spreadsheet (and bank account) that tracks all of my yearly or otherwise unexpected expenses (propane refills, vet care, auto maint, home maintenance, timeshare dues (anyone want to buy it??), Insur, etc) and the month that they will most likely get paid - you should know when you're going to need new tires!  This way, they are planned for expenses and not surprises.  For example, I budget about $200/month for home maintenace, that way when my soft water tank goes I have the money to cover it and it doesn't impact my Savings Rate.  I think it is better (psychologically) to plan for a realistic Savings Rate and be able to meet it (or even beat it!), than to not plan properly and get frustrated.

Just re-work your budget to better reflect your actual expenses and you'll be all set!

tooqk4u22

  • Handlebar Stache
  • *****
  • Posts: 2196
Re: Reigning in the "Miscellaneous" expenses
« Reply #7 on: August 28, 2012, 12:40:54 PM »
For these type of expenses, I keep "sinking funds". You definitely need one for house projects, and for your vet bills. Figure out how much you think is reasonable to spend in a year, divide it by 12, and make it a regular monthly expense. This stuff will crop up in FI as well, so better to build it into your budget now. FWIW, I have sinking funds for: car and life insurance, home repairs, vet bills, Christmas/gifts, and car repairs. Each gets roughly $100 a month, give or take.

Edit to add: you won't necessarily spend the full amount every year. Our vet fund was built knowing that we'll only pay a couple hundred most years, then probably a couple thousand at end of life for our dog. Same probably goes for house projects.


This is the key - an example for me is that I don't just budget I actually put $300/month into an account for house needs and $50/mo into an account for auto needs (2 cars) so it is treated as an actual monthly expense and in my FI calculation.  Sounds like a lot but as AJ said it doesn't mean it is spent every month or even in a year but over time those numbers seem to match what I spend on regular maintenance and surprise repair issues. When expenses are incurred I transfer the funds to the general account.

 

apstone

  • 5 O'Clock Shadow
  • *
  • Posts: 10
Re: Reigning in the "Miscellaneous" expenses
« Reply #8 on: August 28, 2012, 03:21:46 PM »
I wouldn't have actually needed the tires for another 15k miles, but one happened to blow out on me, and it wasn't worth driving the extra 15k and have uneven tires for a 4wd vehicle.

But yeah, it is good to have a yearly expense tracker, and also good to have a separate account for household/unxpected needs, as well as a backup cash savings in the event of something catastrophic

$_gone_amok

  • Stubble
  • **
  • Posts: 149
Re: Reigning in the "Miscellaneous" expenses
« Reply #9 on: August 28, 2012, 04:10:07 PM »
I won't worry too much about these kind of expenses since they are often necessary.

You could measure the value of your net worth instead of your expenses. If your net worth has been increase steady and reaching your target of semi-retirement value then you should be OK.  I do this because it gives me a good idea of my savings and ROI rate, even if I have a big expenses a month or two but the net worth is still on track toward my FI goal then it doesn't bother me.