Spent some time this evening with half an eye on college football as I wrapped up our 2018 tracking and budget sheets. Waiting on a few numbers after 31-Dec before we can finalize the 2018 net worth progress update (a step backwards for sure), but did want to document what we learned from this first full year of detailed cost-tracking.
Our target NW was based on an annual budget of $60k. We 'felt' we'd be close, but had never done a deep-dive (tracked every dollar). What did we find?
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Where did our after-tax money go?
SAVE ---> 63%
SPEND -> 25%
GIVE ---> 12%
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Adjusting for our future FIRE location and per ACTUAL 2018 spend, our predicted FIRE budget is $64k ... whoa!
We expect to ELIMINATE the following categories in the future: Savings, Giving (will come from a separate fund), Rent/Mortgage, House Cleaning
We expect to REDUCE spend in the following categories: Transportation (shift from 2 cars to 1 car and no commute)
So what is the projected breakdown of this MASSIVE $64k annual budget (2 adults, no kids, no pets)?:
23%: HOUSING (Property Tax, Insurance, Maintenance Fund, Utilities, Indoor/Outdoor Misc)
21%: HEALTHCARE (Insurance, Dr/Dentist visits, Supplements, Gym)
16%: TRAVEL (1 big trip & 3-4 smaller trips)
15%: FOOD (Eating In, Eating Out)
8%: TRANSPORTATION (Insurance, Gas, Tolls, Service, Repairs)
6%: ENTERTAINMENT (Events, Gifts for others)
4%: PERSONAL CARE (Clothes, Hair, Nails, Toiletries)
4%: COMMUNICATIONS (Phones, Internet, Television)
3%: BUSINESS (Both of our misc business expenses - keeping for now)
While this represents a slight uptick to our previously planned $60k/year, we finally have good data. For the most part, we are happy with how we have dialed in our Expenses over the last few years and want to keep a similar quality of life in FIRE as we have now. This will also position us to have room to cut, should we experience poor market returns during the first 5-10 years. Trimming a few luxury items like Travel, Home Maintenance savings, etc. give us an easy path to get down toward $50k/year without really impinging on our day-to-day lifestyle.
Now that I have a process in place and a template by which to track things, I'll repeat this for 2019 to see how that data compares. #nerdalert