Well, I might as well come clean on our spending for last year.  It either went up, or way up, depending on how you want to account for things.

Every year, this annual report seems to come out a little bit later – mostly because I’m no longer all that interested in how much money we spend. And Mrs. Money Mustache, my faithful assistant in creating these reports in past years, has disappeared completely from the blog – justifiably more interested in her Etsy Shop than family finances. Such is the nature of retirement.

If you are early on in your journey to financial freedom, you should not do what we are doing. Until you have your finances on auto-pilot so that you are saving 50-75% of your income, you should absolutely be reviewing every piece of spending and adding up all the categories.

(Related Article: How Rich are You? How to find your Net Worth and Savings Rate)

But we’re all done saving for retirement. Our cash outflows feel both luxurious and reasonable, and they are well below the retirement income budget, so it seems less and less necessary to measure them.

After all, if you are happy with your body composition, do you still need to keep measuring every calorie you eat? If your breathing is clear and uninterrupted, do you track your annual number of breaths?

But our Supposedly Low Spending has kind of become my brand. And because of that, there are even conspiracy theories that form around this spending:

So I thought I could do things a little differently this year. I can share the normal family expenditures as well what our businesses spent, and everything in between.

The Basic Expenses

Here’s the familiar chart, updated for 2016, complete with last year’s numbers for comparison.

Category	2015	2016	Comments
Mortgage Interest	0	0	If we had a $400,000 loan at 4%, we would have paid $16,000 in interest (!)
Property Taxes	1411	1895	Massive house price increases in my neighborhood come at a cost (prices have doubled in 4 years).
Food and Dining	7,400	6,807
Groceries	6,232	5,980	A warehouse store opened up in town, within biking distance of home. This reduced grocery costs a little as I shifted more purchases there. See article: Killing your $1000 Grocery Bill
Wine/Beer	627	321	Fewer large parties this year (boo), plus we cut down our glass-of-wine-or-beer-with-dinner habit (yay!). But many people have been giving me free boxes of beer in exchange for helping them with stuff, which probably makes this cost artificially low.
Restaurants, Coffee Shop	541	506	Mrs. and Little MM started ordering fancy pizza deliveries every time I'm out on a trip.
Medical	3,733	10,868	Here's where the costs went way up this year.
Doctor Visits	0	3807	My poor little lad broke his arm on December 30th (fell from a play structure while playing with me!)
Health Insurance	3,000	6720	A new Kaiser health insurance plan. (A downside of the ACA for those with higher incomes)
Dentist	256	256
Pharmacy	42	0	Aspirins, bandages, toothbrushes, and such included under "groceries". Thankfully no prescriptions for any of us this year.
Physical Therapy	435	0
Auto and Transport	945	490
Gasoline	332	105	1 snowboarding trip, plus assorted errands in the van.
Insurance	357	449	Cost increased in September due to newer car (Nissan Leaf). Still fantastically cheap thanks to Geico
Registration & Testing	169	75
Express Tolls and Uber/Lyft	0	70	Still taking Uber/Lyft to the airport instead of driving. Much cheaper than driving/parking, especially if you have some referral credits.
Service & Parts	88	0	Both vehicles in top shape this year, no scheduled maintenance intervals reached. I'll definitely be buying some windshield wiper blades in 2017 though.
Public Transportation	0	0	Nothing against the bus, Bikes are just faster
Utilities	1652	1,575	Electricity, Gas (heating, cooking), trash/recycling, city park fees, etc.
Cell Phone	539	600	2 smartphones with data on Google Fi and Republic Wireless
Internet Access	692	540	I negotiated a lower rate for part of the year, then ditched Comcast for Longmont's amazing Gigabit Fiber service ($50/month for 1000 Mbit/S access! - Nerdvana!)
Home	<120>	1696
Home Renovations	120	1696	Finish materials for my house and the homes of some friends/family. Does not include the $30k detached Studio I built.
Home Insurance	0	0	Still self-insured for the primary house. Please don't complain about this in the comments section ;-)
Gifts/Donations	1,747	2000	Does not include donations made by the business.
Crossfit/Yoga	230	150
School Tuition	0	0	Little MMM was back to 100% public school this year, due to increased confidence/toughness in getting over anxiety. Go little man! But we also do a shitload of learning at home, because it's fun.
Misc	3095	2,564
Shoes & Clothing	754	622	Lots more fancy stuff for the gang from Gap, Old Navy, etc. (my clothes are mostly free stuff, thrift shop or included in grocery receipts from Costco)
Sporting Goods	0	98	Sweet Compound Bow and arrows!
Shopping Misc	1,274	1000	Mostly at Amazon - household/kitchen goods and computer parts
Books, games, gifts	488	383
Other	580	422	Stuff I am too lazy to sort out. If something is not listed, assume it is here.
Travel	2,376	2,335	Flights to Florida in January, Canada in July and December,
TOTAL	$23,941	$30,193	Adding in our artificially high medical costs is what did this budget in.
Subtracting Tuition, Donations	22,194	28,196
Subtracting travel, crossfit	19,588	25,861
Subtracting organic/luxury food	17,531	23,614	Assuming a 33% increase on groceries due to organic + meat.
Subtracting home renovation expense	17,411	About $22,000	This is what our "no frills" living cost would be (although you could subtract another $6,000 if we had a lower income and qualified for the health insurance subsidy)

So What is Mr. Money Mustache Hiding From Us?

In a word: Nothing – this is my best guess at what our true expenses would be, if we lived a normal, retired life.

But here are the exceptions and special situations, which you can account for however you like:

• Higher Income is forcing me to pay full-price for health insurance. Health insurance pricing comes on a sliding scale from “nearly free” below $25,000 in family income, up to full price for incomes over $80,000 (see subsidy calculator)
• But then again, our family business (of which we are employees) pays these premiums on our behalf, so they are pretty painless
• I built this nifty studio, spending about $30,000 in the process. Is it spending, or investment? Since it increases the value of the house by much more than that amount, and I will be selling this house and moving somewhere else eventually, I chose to treat it as investment. On the other hand, spending money on repairs, changing paint colors, gardens, or swimming pools would count as spending to me, since these items are more likely to be recurring and/or not recouped at the time of sale.
• I bought a Nissan Leaf for roughly $14,000 after all costs. This was $9,000 more than I got for selling the old Scion xA. Is this spending? Well, I definitely would not have bought it if it weren’t for the blog (it served as a strong form of advocacy) and I think it may have actually made a noticeable difference in US Leaf sales numbers – which was my main purpose. Sure is a nice car, but we barely use cars for personal purposes (I had to become an Uber driver in order to even get enough drive time to properly test the car!)
• In late 2016, I gave away $100,000 of this blog’s income to various charities, with much more to come. Having a business that makes and gives away money probably reduces the need to give away my real retirement savings.
• Travel as Mr. Money Mustache (trips to Ecuador, Los Angeles, Portland, Seattle, and a couple of other places) added up to about $4,000 between flights, hotels and food. None of this is stuff I would have done for personal fun, but it may have burned me out enough that I skipped or missed other personal trips (camping, etc) that would have increased my travel spending.
• Mrs. Money Mustache’s Etsy shop spent more than $20,000 on materials, shipping, tools, etc. Most of this went right back out the door and earned a profit, but you could argue that both of our business expense accounts satisfied our “spending desire”, displacing personal spending in some way. In fact, writing for you consumes so much of my limited free time, that it may prevent me from expanding into other, more expensive hobbies (like upgrading my mountain bike or snowboard gear).

Overall, it looks like another fairly reasonable year. The biggest lesson that I try to emphasize is that spending does not have to scale with income. We spent less than 10% of our taxable income this year, and still cannot see any reason to inflate the lifestyle any further than it is already.

It’s a beautiful life!

 

Unrelated but Special Thanks to a Reader: Over the last few months, a lot of technical stuff has gone on behind the scenes here. If it weren’t for some serious help from skilled tech people,  this blog’s heavily used forum would no longer be functioning.

 I wanted to thank Kevin Clack – aka Clack Consulting for stepping in to upgrade the forum and continuing to help me with necessary fixes to this day. And if you have a well-established business with technical and web presence needs, you may even be able to become one of his clients as well.

from Mr. Money Mustache


via Finance Xpress