Blog news: I am switching the dates of publications to Wednesdays (The Hump Day post where I share a little history along with great posts from the web) and Saturdays (original content) going forward. Mondays will have the occasional guest post or if I have something I really want to get out. If you want to know when new posts come out, sign up for my email list here.
The final countdown!
So another week has gone by in our low spending month. This is the final week and what I have learned is food is our biggest expense.
Between groceries ($1,443 for the entire month) and restaurants ($1,129 for the month) we spent over $2,500. That is kind of crazy considering some families spend under $400 on food a month. We did have a lot of people over to our house, and community is key to life. So I guess that is okay. Still, we will need to improve this next month.
Groceries – $493 up from $359 last week. This included preparing for Memorial Day weekend. We had my in-laws in town which includes 4 more adults and 2 children.
Restaurants– $354 up from $92 last week. We went out to a nice meal with my in-laws on Saturday night. We also had a picnic at a winery which ended up not being too cheap.
Home– $373 I managed to spend $223 on a heating lamp and propane tank and another $100 on a outdoor umbrella. I suppose if you have the nice view you might as well make the space enjoyable. These are one off expenses and I hope the home spending decreases over the next few months.
Gifts – $256 up from $75 last week. We spent money for 3 different birthdays as there was a sale on the gift items we wanted to buy. This will save us money over the next 3 months.
Shopping– $111 down from $253 last week.
Donations – $3
Other – $19. This included mainly parking.
Total spent was $1,636 which is still down from $1,820 the week before. In total we spent $6,360 not including utilities or our mortgage. Not great, but if you factor in $400 in utilities, we could theoretically live off of $84,000 ($7,000 a month x 12 months) if we were debt free.
If we need 20 years of savings that is $1.68 million. Using a retirement calculator, I need $2,000,000 compounded 12 x per year at 4% to earn $81,000. This does not account for taxes that will need to be paid which would be at 25% federally at the highest bracket. Presumably I would try and move to a state with no or low state income taxes.
If we also decreased our eating habits by $1,500 then we could live off of $66,000. This would be $1.32 million if we saved 20 years worth of expenses. Using a retirement calculator, I need $1,600,000 compounded 12 x per year at 4% to earn approximately $65,000. Again this does not account for taxes but is reassuring. That is a decrease in $400,000 K if we just improve our dietary spending.
The main reason I go through these steps is to figure out my spending habits. If I was debt free (no student loan or mortgage) then what is my very comfortable life costing me. It also let’s me know at what savings number I can retire.
Per the above calculations which again are much more then I would likely spend in retirement (particularly if my son is out of the house) then we need between $1.32 to $2 Million. The truth is somewhere in the middle at likely $1.5 million. That is not terrible, but also means I need to work on getting rid of my mortgage.
Thoughts? How are you doing on your spending? How much do you need to retire?