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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?
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