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July 7, 2017

Our Updated Budget and 2017 First-Half Spending

Remember when I said I would have more time to blog after quitting my job? That has proven to be false. It turns out I'm much busier now than I have ever been at any of my real jobs, so finding time to blog has been a challenge. I am trying to post, but continuing to get settled into our new house has occupied an inordinate amount of my time. Our 17 month old child is another big distraction, but one I wouldn't give up for the world. Anyway, I've finally found the time to put together a post, and it is pretty interesting (at least to me), detailing our updated budget and spending for the first half of this year.

I shared our theoretical retirement budget a while back and it seemed reasonable at the time, but after moving and getting settled into our new life, I realized the original budget was a little unrealistic, so I've updated it to be a little more achievable. Here's what that looks like:
As you can see, our budget has increased by almost $6,500 per year. That is a significant amount, but it still leaves us at a very reasonable $35,000 per year, which is very sustainable in the long term. The largest increase was to property tax, which is unfortunate, but also unavoidable. I also increased the car budget because just insurance and registration on our vehicles was more than the $1,000 I previously budgeted, and I'm not ready to part with any of our cars just yet. To me, they more than justify their expense with the value they provide. The final big increase was an extra $1,000 for travel. Other than that, I mostly just rounded off the previous numbers.

Having a budget is all well and good, but it doesn't really matter unless you stick to it, and that's what the rest of this post is about. Since we are now halfway through 2017, I thought it would be fun to see how our spending aligns with our new budget. I will warn you it's not pretty, but I'm not too concerned. I'll tell you why below the numbers:
I highlighted the areas we are well above or below budget, and unfortunately, there are many more over than below.

The one bright spot is our cash withdrawals. It makes sense because we pay for almost everything with credit cards (and pay them off every month) to earn rewards, and the main thing I was using cash for was eating lunch out at work. The only other thing we tend to use cash for is Craigslist purchases. We also got some spending cash that offset potential withdrawals when we sold several things on Craigslist prior to our move.

Now for the bad news, which isn't really that bad. I'll explain below:
  • Home Improvement - We are definitely way over budget, but I view this as basically a moving expense. You are always going to have a few things you want to do on a new house. We tackled a whole bunch of projects, like painting the entire interior and adding a couple ceiling fans (which will actually reduce/eliminate AC use and save us money), but we won't have to pay for them again any time soon. In the future, I think we will be able to stick to this budget.
  • Travel - This item is another one-time thing. We had two things happen this year that hit this budget item hard but will probably not be repeated any time soon. We bought a (used and very affordable) truck camper and everyone we know got married, which is requiring a lot of travel for the ceremonies and a couple spectacular bachelor parties. Long-term, the camper will save us money by providing very affordable accommodations when we travel (it already saved us several hundred dollars at one of the weddings we attended) and we are unlikely to ever have so many weddings we want to attend in a single year, therefore, I'm not worried about this budget item in the future.
  • Bills/Utilities - This is one of two categories that has me a little worried. It is slightly inflated because we were paying for utilities on two houses for a few months, but it is going to be pretty tight because water is very expensive at our new house. The one thing we are strongly considering to help is removing our front lawn and installing drought tolerant landscaping.
  • Household - This is another category that is inflated by our move and getting our new house set up. It should be much lower in the years to come.
  • Groceries - This is the second category that has me a little worried. We aren't over by all that much, but the additional mouth to feed and being home at lunchtime are definitely making a difference. We will continue to shop frugally and see where we end up at the end of the year.
  • Healthcare - This item had another unusual event inflate it this year--Chrissy and I both got braces. It isn't just a cosmetic thing either. Straight teeth leave fewer spots for plaque to hide (according to my dentist), so it will hopefully improve our oral health long-term, which could end up saving us money. We were able to save a lot of money by doing this after we moved and not paying crazy Los Angeles prices for the work, and I also used my flex spending account to save quite a bit as well.
Hopefully now you understand why I'm saying it's not as bad as it seems. Being $10,000 over budget for the first half of the year is definitely serious, but I anticipate we will do better as the year progresses and we will definitely be much closer to our target in future years.

The final reason I'm not too worried about our excess spending is because we got quite a bit more than expected for our house in Torrance, which more than covers the budget overage we are seeing right now.

Let me know if you have any questions and how your budget looks for the first half of 2017 in the comments.


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3 comments:

  1. I recently completed a 1st half year outlook on my budget. And while it exceeded greatly than intended, it was great to see it was now beyond my means. Same as yours. There is money to cover the expenses. And that's a great thing. :)

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  2. Hi Andy (and Chrissy)

    I just came across your blog - it's great!

    One question - you publish your budget numbers - but how big is your underlying "Stash" as MMM would call it. Are you using a 4 percent safe withdrawal rate, or something higher? I just met with Justin from Root of Good in Raleigh last week and quizzed him extensively on safe withdrawal rates. Sounds like your Stash came from a sale of real estate - good for you - is it invested in Vanguard like JL Collins?

    Regards,
    Peter

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    Replies
    1. I'm happy to publish information on our spending, but I'm more reluctant to make our income and net worth public. We like to keep a little privacy. Suffice it to say, we have around what the four-percent rule would dictate. On top of that, I always planned to generate some income in "retirement," and I have already started doing that with various activities.

      Much of our stash came from being frugal and saving our whole lives, but a big chunk came from the sale of our first home in southern California. That chunk put us over the amount that made us feel relatively comfortable "retiring."

      As for our investments, you can check out this post to see what we're invested in: http://www.fiscallyfree.com/2016/06/our-perfect-portfolio.html
      Our portfolio has changed a little since then, but the underlying idea has not. I'll do an update on that soon.

      Delete