Let’s just get it out there from the get-go: This is NOT a bragging kind of post. Far from it. This past year we spent a lot of money in our household.
We didn’t go off the deep-end and buy matching jet skis, or take five trips to the Bahamas. But if we’re to be mistaken for knowing two sh*ts about money, our spending this past year sure doesn’t help the cause.
This gist of this write-up is partly to recalibrate myself and shed some frivolous spending that started to pop up towards the end of the year. See, as Dana Carvey in his best George H.W. Bush impression might say, “Shopping bad, bad!”
Let’s have a look at how the Cubert Family Robinson spends its dough. And then match that up with the $24,000 “gold standard”. As with other bloggers who reveal their spending, I won’t muddy the waters with any business expenses.
As a side note, the long term rentals and the Airbnb had some hefty outflows this year. The Airbnb alone required well over 10 grand in additional set up costs. On top of that, two of our four rentals needed a new furnace and one required a new concrete pathway. All that was just north of 10 grand as well. How do we make money with real estate again??
There you have it. $77K was “needed” to get this family of four through the past 12 months. Gulp. Even if you strip out some of the big one-off expenses like the new roof and the car work, we’re still over $70K spent. That’s a lot of Taco Bell party packs.
Why Early Retirement Reduces Household Expenses
We indulged a bit on travel, and we make no apologies for our dining out habits. I don’t really expect those categories to change much with early retirement. Date nights are essential!
And travel? Even with some strategic credit card hacking, spending time away costs money.
But if there’s ever a cure for reducing expenses, it’s early retirement. Keep a parent (or both) home to provide child care (for “free”) and BAM! That’s over $17K dollars “saved”. Knock a car out of the garage to reduce about $2K more. Already we’re down to about $58K.
Where the real magic lies is with eliminating debt: Student loans and mortgages. If we stay disciplined with paying down our obligations to zero, another $11K can come off.
Key to any successful cubicle exit? Steady, reliable cash flow
Even with our remaining student loan balance financed at 2% (roughly equating to inflation), part of me is tempted to just be done with these payments. (A small, teeny, weeny part…)
Early Retirement With Flair
Man. Even with $11K shed, that’s still $47K, or roughly double the “gold standard” of $24K, made famous by Mastah Pete.
Keep in mind too, that the $24K target includes a substantial new expense: Healthcare Insurance. Dang nabbit.
And if we assume on a good day, that a nominally healthy family of four can get adequate coverage for $800 with a small subsidy, shoot. That’s what, almost $10K per year. R*TS! Now we’re back at $57K.
One other random bit of trivia: Our little ranch house carries some mighty big property taxes; about $4K per year. We do love the quality public schools graciously located within a short walking distance. But d**n.
I guess we should re-add that property tax expense, since my pre-payment last year doesn’t paint an accurate picture. Now our annual tab is risen to $61K. We’re going in the wrong direction.
Or are we? One of the semi-FIRE tactics we plan to employ is running our two businesses for the foreseeable future, at least until sitting on our asses all day becomes more appealing. (Guessing that’ll be when the kids graduate from grade school, in a mere 12 years…)
I checked our retirement tab in the sacred FIRE spreadsheet workbook just to be sure we weren’t heading off a cliff. And voila, turns out we had planned for roughly $64K in semi-FIRE annual expenses, post-cubicle.
Conclusion
By no means should we settle on annual spending that borders on the ridiculous. But we are not a typical upper-middle class family either. We cram two kids in one bedroom and drive paid-off cars. The Mrs. and I enjoy a date night every week or so, and unapologetically. All while consistently hitting the mortgage pay-down HARD.
We won’t have to replace the roof every year. Thank God. And with the kids now in public school full-time, the childcare expenses will finally come down big in 2019.
Life is a long string of “money cycles”. You start out with low pay and a mountain of debt, but with some focus, the pay rises and debt diminishes. (And that’s even after you go into greater debt for your MBA because you want to make a higher salary.)
I’m beginning to finally see where time and persistence pays off with respect to achieving what we have in our mid-life money cycle. There are “more levers to pull”, financially.
As for the Quixotic quest to find clarity on what’s important in life (relationships, struggle, no regrets, and shopping)? 2019 here we come….
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Mr. r2e says
December 17, 2018 at 8:21 amCubert – How is the RCA Antenna working out? I am thinking of doing the same thing. Cable tv/internet bill is insanely high!
Cubert says
December 17, 2018 at 8:44 amReally great! We had been using a MoHu device but it was too weak. We live in a stucco house!
The one thing that I had to do after the RCA was mounted, was to remove as much slack as possible in the cable run. The longer the run, the more signal loss. Oh, and I put in a signal amp / splitter where the cables are distributed to the three viewing areas of the house. A bit of a project, but we got there.
Young FIRE Knight says
December 17, 2018 at 10:27 amWow that is a huge amount on child care! I bet you can’t wait to be rid of that.
I just paid off my 1.9% car loan, even though the math doesn’t make sense so I totally hear how you want to just be done with that!
Cubert says
December 17, 2018 at 3:42 pmSoooo looking forward to it, man! We still have an after-school program to pay for the next few years, but at least that’s less than a third of what we had been spending.
Nice work on slaying the car loan! Cash flow does not suck.
Tread Lightly, Retire Early says
December 17, 2018 at 1:10 pmChildcare alone was 23% of your spending. Gulp. Ours isn’t nearly that bad, but it’s still bad enough. One kid plus part time family childcare makes a huuuuge difference.
Cubert says
December 17, 2018 at 3:43 pmIt’s too much. Basically the money we got from the rentals paid for our childcare these past five years. Not complaining, but it is so flippin expensive for households with two working parents.
Pete says
December 17, 2018 at 2:10 pmAntenna! We also have a stucco house and this year we slapped one up on the fascia out back. When we first saw that the “eye sore” was still visible from the alley, I liked it as it was a visible monument of frugality. That cut out Playstation Vue for us and we’ve had literally one reception glitch for a split second over 3 months.
Cubert says
December 17, 2018 at 3:45 pmHey – at least it’s the alley! We’ll often pass by homes in our hood with those MoHu’s slapped right up on the front window.
Monument to frugality? Love it!
Life Before Budget says
December 18, 2018 at 8:15 pmI remember when we had $450 per week in childcare expenses. Yikes! With 3 kids under the age of 5, one of us was basically working just to send our kids to daycare.
Cubert says
December 19, 2018 at 5:53 amYep – That pretty much how it worked for us too. Five and a half years of slogging through childcare expenses. It makes you want to live next door to Grandma. Sometimes… 😉
Team CF says
December 19, 2018 at 4:08 amCrap dude, that’s a s**t load of money for one year! But you already indicated what you need to do, and that one time expenses do have their impact. Those daycare/nanny costs are brutal though!
Cubert says
December 19, 2018 at 5:54 amI know, right??? Multiply that by five and a half years and you can really feel my pain, brotha.
Dylan | Trail to FI says
December 19, 2018 at 9:18 amI’ve been putting off doing our end of year finances since I’ve been so busy lately (bought two houses, renovating both, pregnant wife…) and I’m really not looking forward to what I’m going to find. This year feels like a major setback financially. We have been throwing money into these physical “investments” and have gotten little to no returns. I hope that some long term focus will start to pay off eventually, like you said.
Also, you’ve got me scared with that pre-school number!
Cubert says
December 20, 2018 at 5:34 amDylan! I had to rub my eyes to make sure it was real — are you back in action?? I hope so!
Though, with two houses, renovation, and expecting a child, I’m a little doubtful there’s any time to blog! Don’t worry man. You’ll be fine. Having kids is a healthy amount of work, but it also keep you focused on what’s important. Gone are lazy weekend days of falling asleep on the couch in the middle of the day wondering “what to do??”. Stick with it on those houses. Sometimes it takes a bit for the pay off.
Glad to “see” you!
Dylan | Trail to FI says
December 27, 2018 at 7:15 amLong time no see! It’s been a while since I’ve wandered around the FIRE blogosphere, but thought it was about time to pay you a visit. I probably won’t be writing anything new anytime soon. I might just stick to the comment section on your blog 😉
JoeHx says
December 21, 2018 at 11:31 amI didn’t realize that the antenna would work if you put it in the attic – I thought there’d be too much material blocking it and you’d have to put it on the roof. Sort of reminds me of the huge antenna we had on the roof growing up that came with a motor to spin it so you could get different channels depending on which way it pointed.
Cubert says
December 22, 2018 at 2:37 pmCrazy, huh?? I guess it works better the higher up it’s placed. And the material is pretty light – wood slats with no insulation. Compared with our stucco walls and sidewall insulation, the roof is much easier to pass waves through.
Those old fangled antennas were actually designed quite well and would work amazingly well for modern digital HD signals. Still, a bit of an eyesore, so the attic works great!
freddy smidlap says
December 22, 2018 at 10:27 amwe just bought a roof and paint job on our gigantic house in the past 14 months. they cost 43 THOUSAND DOLLARS combined. we should be good on that for about 20 years and we have zero debt, which eases the pain. we’re also getting a huge 20% tax credit from ny state for that work so 8.5k is coming back this spring at tax time.
we don’t have any kids, but when is somebody gonna chisel the childcare scam/industry like uber did to taxis and aribnb did to hotels? we spend your dining out bill on wine at home so it’s a wash i guess. happy holidays.
Cubert says
December 22, 2018 at 2:39 pmHoly BUCKETS!! Freddy!
Having zero debt makes a big difference when you invest dollars in things like that. And heck, that tax credit eases much of the pain too.
An Uber or Lyft like solution for childcare would absolutely take off. Just need that old fashioned trust factor. Only a matter of time my friend. Happy Holidays to you as well!