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 with respect to our household spending.
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 of household spending 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 Spending
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 damn.
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.
Our Household Spending: 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….