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Any relatively low spenders out there?

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  •  FIREshrink 
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    DocRambo, I’d really like to know more about your life living and working overseas .

    #189444 Reply
    ENT Doc ENT Doc 
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    If someone has massive loan and car debt their spend will be high (not zero) and they will have little to no assets on the back end. Compare that to a mortgage where an increasing share goes to equity and where the underlying asset actually appreciates. So I don’t regard the two as remotely similar. Debt spending is an important category to include IMO.

    As for anyone asking about low spending I would suggest a more nuanced inquiry. For example, for those who spend low amounts how do you specifically achieve this? Spending should then ideally be framed in terms of net income after taxes to show how well one is living within their means. Taxes are only relevant to mention to the degree they reflect active decision making.

    I think you’ll find spending broadly dependent on the size of the family and location. What you really want to know about is who are the outliers with respect to those trend lines and how do they achieve it.

    #189445 Reply
     bobedwards 
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    A lot of good points have been brought up so far.  There are nuances in how we define spending.  For some clarification, we don’t include taxes as spending since they were taken out before we receive our take home pay (and its not discretionary spending).  If I did include it, our totals would be way greater than $70k.  I guess principal payments in a mortgage could be taken out as spending, since its going towards building net worth in the long run (2008 crash an exception?).  We don’t own a home, so I just figure rent as spending. It is an important point to remember that a lot of folks posting own their home already, so a large monthly living expense is already taken out.

    As for health insurance, right now we don’t consider it an expense (our portion taken out of paycheck before we choose what to do with the rest of the money). However, we WOULD consider it an expense if we had to pay premiums on the individual market.  If we can get health insurance by working part time, it definitely keeps our “spending” numbers low even if we have only one income. I think its a smart move.

    If we choose to buy a house and no longer rent with a single part time salary, I’m not sure if we just buy the house outright with cash or take a mortgage with the currently increasing interest rates.  I see the arguments to both, again whatever lets us sleep better.

    A common theme I still notice is that many folks consider 25-30X spend to be the minimum they feel comfortable with. Padding the stash now is easier than later and working part time while letting savings grow is sounding like the best option.

     

    #189479 Reply
    Vagabond MD Vagabond MD 
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    Yeah, we spend $70k. Every four months, unfortunately.

    Click to expand…

    Thank goodness I am not alone!

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #189485 Reply
    Zaphod Zaphod 
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    As usual, it seems the definition really matters and has everyone confused. I dont know what I would consider spending. Certainly not taxes, thats really only reflective of how much you make and you have little say over it.

    Paying down debts and stuff, sure it makes sense, but its not discretionary really and not something you can/should “cut back” on to make your spending better.

    By this kind of measure I have pretty low discretionary spending, but in reality (including all the rest) I spend a ton. Luckily some of that gets fixed with time. Most people usually think about discretionary when we talk about spending but as mentioned this can hide some bad behavior as well.

    Most important is likely where you live and your family size. I remember the grocery thread someone was preachy about their grocery spending and where they lived basics were 1/3rd of the price we pay for things at the cheap stores. Then someone on this thread has four teenagers, those guys are going to have a major grocery bill. Also, it would be crazy for that to be what brought you down, an avocado habit. Get the big stuff right then do whatever you want.

    #189488 Reply
    Lithium Lithium 
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    ‘I don’t count principal paydown of loans or taxes as spending’

    Case-in-point of some of the mental gymnastics some go through to be ‘low spenders’. By the above logic, I could take out loans for a Bugatti and a Bentley, have $1M in student loans from living it up, and 500k personal loan..and my annual ‘spending’ on those is essentially zero, or only the interest cost.

    If you take out health care, various insurances, and the ever growing list of taxes on everything, I guess we could all come up with some blue sky, lowball numbers with regards to our ‘spending’.

    Click to expand…

    Good points.  I was thinking more about the “good” kinds of debt, like for med school and mortgage.  FWIW I have zero debt at this point in my life.

    #189493 Reply
    abds abds 
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    ‘I don’t count principal paydown of loans or taxes as spending’

    Case-in-point of some of the mental gymnastics some go through to be ‘low spenders’. By the above logic, I could take out loans for a Bugatti and a Bentley, have $1M in student loans from living it up, and 500k personal loan..and my annual ‘spending’ on those is essentially zero, or only the interest cost.

    If you take out health care, various insurances, and the ever growing list of taxes on everything, I guess we could all come up with some blue sky, lowball numbers with regards to our ‘spending’.

    Click to expand…

    Sure there are some mental gymnastics for some low spenders, but I can’t imagine anyone actually counts income tax as an expense, which is a lot different than property and some other taxes.

    And maybe Lithium has been screwing with us all for years and he alternates between his Bugatti and Bentley for his daily commute.

    #189498 Reply
     FIREshrink 
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    Yeah, we spend $70k. Every four months, unfortunately.

    Click to expand…

    Thank goodness I am not alone!

    Click to expand…

    And that excludes taxes. And charity. And our solar panels. Oh boy, this is worse than I thought.

    But it was an unusual year. I really hope it was an unusual year. It was so unusual that as of Jan 1 we are tracking our spending in Mint just to see W T F is going on…

    #189511 Reply
    Liked by Zaphod
    hatton1 hatton1 
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    I spent around $45k last year.  I just spent $585K last week.  So I moved from low spender to high spender.  I decided I have more than enough so it was time to change a few items.  I bought what I think is my last house prior to LTC.  I paid cash.  It was very quick.  I am moving most of my stuff myself and really getting rid of lots of stuff.  Anyway sometimes spending is in boluses.

     wa2106 
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    Splash Refinancing Bonus

    With all due respect, principal paydown is an expenditure.  The mortgage isn’t going away if you retire tomorrow.  Try not spending that money and see what happens.

    If you want to include principal paydown in your savings rate that’s fine but for purposes of yearly expenditures as it is applied to 4% rule, it’s included.

    #189527 Reply
    Vagabond MD Vagabond MD 
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    As usual, it seems the definition really matters and has everyone confused. I dont know what I would consider spending. Certainly not taxes, thats really only reflective of how much you make and you have little say over it.

    Paying down debts and stuff, sure it makes sense, but its not discretionary really and not something you can/should “cut back” on to make your spending better.

    By this kind of measure I have pretty low discretionary spending, but in reality (including all the rest) I spend a ton. Luckily some of that gets fixed with time. Most people usually think about discretionary when we talk about spending but as mentioned this can hide some bad behavior as well.

    Most important is likely where you live and your family size. I remember the grocery thread someone was preachy about their grocery spending and where they lived basics were 1/3rd of the price we pay for things at the cheap stores. Then someone on this thread has four teenagers, those guys are going to have a major grocery bill. Also, it would be crazy for that to be what brought you down, an avocado habit. Get the big stuff right then do whatever you want.

    Click to expand…

    I am only truly competitive in running and now my new spinning class. I do not care to earn the most, have the most, spend the least, retire the earliest, drive the fastest or most fuel efficient car, hike the furthest, climb the highest peak, score the highest on the test, or whatever is the competition du jour. Freeing yourself from comparisons allows you to live the life that you want to live. Or, as Teddy Roosevelt is attributed to having said: “Comparison is the thief of joy.”

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

     BCBiker 
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    As usual, it seems the definition really matters and has everyone confused. I dont know what I would consider spending. Certainly not taxes, thats really only reflective of how much you make and you have little say over it.

    Paying down debts and stuff, sure it makes sense, but its not discretionary really and not something you can/should “cut back” on to make your spending better.

    By this kind of measure I have pretty low discretionary spending, but in reality (including all the rest) I spend a ton. Luckily some of that gets fixed with time. Most people usually think about discretionary when we talk about spending but as mentioned this can hide some bad behavior as well.

    Most important is likely where you live and your family size. I remember the grocery thread someone was preachy about their grocery spending and where they lived basics were 1/3rd of the price we pay for things at the cheap stores. Then someone on this thread has four teenagers, those guys are going to have a major grocery bill. Also, it would be crazy for that to be what brought you down, an avocado habit. Get the big stuff right then do whatever you want.

    Click to expand…

    As an example of different grocery costs:

    I work in NYC, avocado cost ($1.50-$5, depending on size and organicness). Many times the cheapest avocado is $3.

    I also spend a lot of time in Denver since spouse mostly lives there, avocado cost (33cents-$1.50 depending on size and organicness) You can almost always get a small avocado for $1.

    People that live in “moderate” COL generally don’t understand the premium paid by people in HCOL places. It is no joke. I’m cheap as hell and push the frugal buttons (in certain areas).

    We have a lot going against us (2 residences, student loans, taste for fancy vacations), so our yearly spending excluding taxes, mortgage principle, and health insurance cost covered by employer is approximately $105K.

    If we lived exclusively in Denver, we could push our spending to $70K but would probably buy a more expensive house and splurge a bit more. For us, our goals are more about what we are saving rather than what we are spending. If we can max all tax protected + Roth + $40-60K taxable at our current income, I’m satisfied. We are on track for a healthy retirement before 60, probably before 50 if so desired.

    #189533 Reply
    Liked by Tim, Zaphod
    CM CM 
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    As for anyone asking about low spending I would suggest a more nuanced inquiry. For example, for those who spend low amounts how do you specifically achieve this? Spending should then ideally be framed in terms of net income after taxes to show how well one is living within their means. Taxes are only relevant to mention to the degree they reflect active decision making. I think you’ll find spending broadly dependent on the size of the family and location. What you really want to know about is who are the outliers with respect to those trend lines and how do they achieve it.

    Click to expand…

    In our case, we have no debt, no kids, no life or disability insurance, and we own a home in a LCOL area.

    We don’t include income taxes in our spending total, but we do include property taxes, and we’d include the mortgage or rent if we had it. You can choose to live in a shack or a mansion, in HCOL or LCOL. Anything beyond a tent in the woods is a consumption choice.

    We do count the health insurance premiums deducted from my paycheck. That is definitely spending, and at a bargain price relative to what we might pay on the individual market.

    Gifts are more than 10% of our annual spending and home maintenance/repairs have been 10-20% in recent years.

    We don’t spend much on restaurants, and the American Ballet Theatre doesn’t include our town in its travel schedule. I like to read and work out, play with our dogs and spend time with my wife. We visit family but don’t take expensive trips.

    Given our advantages, I’d like to know how we manage to spend as much or more than so many others, including some of those with kids and debt payments.

    Unfortunately, my wife isn’t interested in tracking our spending in any greater detail. 🙂

    Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried bags for Cyd Charisse (gracious). Hosted epic company parties after Friday night rehearsals.

    #189552 Reply
    White.Beard.Doc White.Beard.Doc 
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    I am FI but working.  We own our vehicles, our home, and investment property debt free.  Having no debt means we spend only a small percentage of our income; we are doing quite well financially.

    It is nice to have plenty of extra money to invest after paying living expenses and taxes.  And I feel more secure having a rising net worth as opposed to a falling net worth as we might experience in the future in retirement, or maybe not.  The one thing that is somewhat irksome is earning the extra unneeded income leading to paying lots of income taxes.

    I continue to work because I like to work, but the big income tax bill feels kind of strange and irritating since the income that leads to it isn’t really necessary.  I think having achieved financial independence has somewhat messed with my head.

    #189570 Reply
    Drop it into MD Drop it into MD 
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    Jeez. Where are all the parents. Daycare is by far my largest expense. About 3-3.5k a month depending on schedule. Then mortgage 2.5k. That is a 15 year note. Then everything else on the CC about 3-4 k. Property taxes are another 15k a year. I also count the 1500 a month I put in the 529. It is saving to spend so spending. All comes out to lowish 6 figures.
    Once I get daycare and the mortgage out of the way half of my spending goes with.

    #190050 Reply

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