2017 was a great year financially for the Heartland on FIRE household.
- We paid off my wife’s student loan to the tune of $40,000.
- Each received raises at work.
- I received a small, but larger than expected, bonus at work.
- I started tracking our net worth in October and watched it grow by $28,000 (10%) during this time!
- We significantly reduced our grocery bills and fast food spending…
But how did our spending shake out?
I’m glad you asked. Other the past few years I have run the numbers on our spending in general terms. But this year… this year I got into the weeds with it. This was no easy task, since we had been using 3 credit cards, partially to take advantage of some cash back incentives and partially due to leaving some recurring expenses on older cards. And then there was our checking account. The end result was a lot of exporting and line by line sorting and categorizing.
My eyes are shot and my brain is numb. In hindsight, I should have dumped everything into Personal Capital, Mint, or something similar. Hey, there’s a 2018 resolution!
…But anyways, on to the spending! The table below will serve as our baseline data for future years comparison.
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Wow… that’s a lot of numbers. But, I got to say, it feels good to get that out there.
There are definitely a few categories we need to look more closely, but I think this is a good starting point. I’m hoping that trading in my fuel-inefficient truck for a high MPG car will help with the auto costs and I am hoping to re-quote all the insurance policies. There were some larger non-recurring expenses (kid’s clubhouse) and ear tube surgery, and we had higher than normal rental costs since we tried to sell it.
If we look at these expenses more closely we can get a picture of what our spending would be when we are financially independent. Subtracting out expenses that we would not have when we “retire”, such as the loan payment (which is now gone), daycare, kiddo activities, and rental house costs (these are covered by the rent check) then our spending is:
- $66,926 annually or $5,577 per month
- $46,892 annually or $3,907 per month if the house is paid off
Not too shabby. However, I would expect healthcare costs to rise as well as vacations in “retirement”. I previously based our FI number of annual expenses of $78,000 (in 2018 dollars). For the time being I am comfortable staying with that assumption. It will be interesting to see how the spending fluctuates year after year and whether any adjustments will be needed.
Emergency Fund, Anyone?
One of our first goals for the year is to restore our emergency fund. This got ransacked pretty hard during the final push to pay of the last student loans. A general consensus is that an emergency fund should cover 3 to 6 months of expenses. I gotta think we would really cut down our costs in a true emergency so here’s my thinking:
- Sorry, no vacations
- The rental costs are covered with the rent check so it stays in.
- Cut waaay back on TV, if not eliminate it.
- Retail gets cut in half.
- I’m leaving in daycare, since an emergency could result in one or both of us unable to care for the kids.
- Tough break kids, no extra activities for you.
- Bye bye booze.
- No gifts, memberships, or family photos.
Cutting this out leave us with ….drum roll please….
- $5,900 per month
- Resulting in an emergency fund ranging from $17,700 to $35,400. Queue the Mr/Mrs. HOF debate…
Personally, I am comfortable at the lower end of this range, but that’s just me and I represent half, or significantly less if you ask Mrs. HOF, of the decision making clout in this house……I can feel her death stare from across the room.
Anyways, have you looked at your spending habits in depth? Have you found any surprising expenditures? How do they compare with ours? Are we totally out of line somewhere? Any great cost busting tips are welcome.
Congratulations on paying of your wife’s loan! That is a major accomplishment by itself.
Combine that with both of you recieving raises at work, and I can’t wait to see how 2018 goes for your family!
Much appreciated! Its a huge weight off our shoulders. Now on to bigger and better things!