Low spending month- Week 4
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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.
If you want to see what we spent on the other months click on these links to see how week 1, week 2, and week 3 went. Now onto this weeks spending.
Week 4
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?
Food is a killer and tracking is key. One thing that has helped us out was breaking down our average spending cost per day on the foods we eat all the time. Once you write down everything that you eat on a typical M-F you will see things that jump out. For instance I switched from a protein bar to two hard boiled eggs saving $1.35 per day. Little swaps like that are helping us.
Interesting plan. I think I might try that next month. I am sure there are things (for instance Kettle brand salt and vinegar chips) that is breaking the bank.
I had not thought much about taxes in early retirement, other than “I will pay them.” But recently I did some projections and was pleasantly surprised.
I plan to use taxable investments to fund an early retirement, which means I will mostly be paying capital gains. So if I needed $81,000, that would be in the 15% capital gains bracket, and I only pay taxes on the gains, which might be a small part of that $81k.
It’s a bit complicated, but explained nicely in an article from Kitces here. He gives one example of a family that had $100k income in retirement but only paid $4400 in taxes!
That’s great. You are absolutely correct, I miscalculated. I should not be using income tax brackets, but the capital gains taxes. These are typically much lower then income. Looking at the article, and it is a good one, I doubt I would be able to get it down to the 0% tax bracket, but who knows. In 15 years my spending habits may be completely different.
Ouch! We used to spend a lot on food too, but now our groceries are around $350/mo. Out of curiosity, what kinds of meals are you preparing at home? Are you using boxed/canned/frozen ingredients? That might be what’s driving the price up. Even with six extra mouths to feed, the bill shouldn’t have to be so much higher than usual.
You definitely have more people to feed then we do (family of 3 here). We only prepare fresh items and buy a lot of things that are organic (that may be the culprit). I think another kicker is when we have guests we get some fancy cheeses (we paid $15 for one circle…but that is not bad considering my sister-in-law said it was $30 where she lives! Ouch). There is also wine. We buy $10 to 15 dollar bottles but like to have a few lying around in case friends come by. Then as Physician on Fire will appreciate, there was beer from Russian River Brewing Company. This is delicious local beer, but not cheap.
So the bump was not the usual stuff. It was the booze and cheese to provide for our guests…hmm…maybe we should be less gracious hosts next time!
Knowledge is power! Now that you know what you’re spending in food, you can keep enjoying the food and community, or dial it back a bit. The nice thing is you know what to do for each choice (save more, work longer or spend less, need less to retire). Thanks for sharing all the details of your family’s spending! It’s always great to see and compare. Sounds like you guys had a lovely Memorial Day weekend. Hope it’s a great week, too!
Thanks Laurie. You are absolutely right. Work longer or find a way to spend less. Right now I am enjoying my job, but if we ever are in a bind for me to retire, it is good to know I could downsize and put the brakes on the spending. Hope your weekend was great too!
Awesome to see another tracking nut like me out there – thanks for sharing the details! When we started tracking, I was surprised by how much we spent. About 2 years in now and I can say that the tracking has helped us not just understand how much we spend but also has helped us to really drop our spending in some areas so we can focus on what’s important to us.
Chris, dropping spending is the key, but man a lot of the one off expenses get us. These are mainly home items or fixes. Then there is the food…I love food and so am going to have to work hard to decrease that spending.