Our 2017 Household Spending: Reaching FIRE Without Feeling Deprived

Welcome to our annual household spending report! We’ve been publishing our expenses since we launched this blog.

Now that 2017 is so last year, we are able to get this post out. Spending reports usually do well with our readers, so we’ll keep publishing them on an annual basis. We’ve been tracking our household spending for many years, and this is a great way to analyze it and see how it’s trending.

Tracking expenses feels very different from budgeting. There are no constraints, per se, when you’re just keeping tracks of where your money goes. You see where the chips fall and analyze how things played out.

In budgeting, you’re trying to stick to a number, which I recommend wholeheartedly if you’re beginning this journey and need to make it work on a tight budget.

What surprises me is that we don’t really look at our “budget” and think: are we okay making this purchase?

We continue to spend based on our needs and value provided by what we spend our money on.

That has become the norm for us.

We don’t have to put ourselves on shopping bans because shopping is not an obsession that might kill our financial progress. In the end, we tend to stick to our overall projected spending, even if we are over or under in some categories.

Maybe after we retire we’ll be more mindful of a budget, so that we don’t overspend. We’ll need to get used to not having bi-weekly paychecks.

How we categorize our expenses

We divide our expenses into three buckets: Essential, Discretionary and Gift/Donations.

Essential expenses are core expenses that we mostly can’t avoid.

Could we reduce them in bad times?

Maybe by a little, for example, we could avoid luxury grocery items in a bad recession, but most of the expenses are fixed.

Discretionary expenses can be slashed in half or even close to $0 in bad times. Entertainment, restaurants, and travel are things easy to cut out of our budget if we need to. These are expenses that we’ll be able to lower during recessionary times in early retirement.

Essential Expenses

We spent $16,674 on essential expenses.

Groceries

We spent 16.5% more on groceries last year. An explanation off the top of my head is that since we are drinking less alcohol, we started consuming other products, such as coconut water and tea, more often. We also added Udi’s gluten-free bread as a staple item and that bread is not cheap! Add a few delicious ready-to-bake crab cakes from Wegmans and there’s our increase.

We save money by buying the ZICO coconut water at Costco in bulk, but they haven’t been carrying it lately. Coconut water is an awesome natural drink as is and we prefer this brand because it doesn’t have added sugar.

We try to go for high-quality food at the best prices because we understand that without health nothing else matters. You have to make a long-term investment in your health if you want to enjoy your golden years without a suitcase full of pills.

Net Rent

We usually apply our rental property income to this line item and that’s why it shows so little. Our rent is $1,150 a month. We had to make more repairs than usual last year on the rental, so we had less income than the previous year as a result.

Discretionary Expenses

We spent $18,038 on discretionary expenses.

Entertainment

Concerts are one activity that we truly enjoy. While in early retirement, we plan to continue booking concerts of our favorite artists when they’re on tour. We said it was going a year of concerts and it was indeed. We saw many Latin artists in concert and really enjoyed them.

The events culminated with Marc Anthony, in Reading, PA. This concert was different from his previous ones because he performed only his Spanish hits. That Salsa concert was phenomenal!

Alcohol & Bars

Last year we decided to challenge ourselves on being alcohol-free for the year and we failed!

We spent a good four months dry at the beginning, which was a great start. By May, the Latin concerts began with Ricky Martin, one of our favorites, and it was all downhill from there. Enjoying beers by the porch and the hot days by the beach, in good company and great music, made this challenge unbearable.

We failed this challenge. We failed big time. While not an excuse, other circumstances also led us to be a little loose on this challenge.

However, a few good things came out of it. We became very aware of how much social gatherings, no matter how big or small promote alcohol consumption. It’s like you can’t escape alcohol. In most U.S bars, you either have a choice of carbonated drinks or fake juice. If you ask for a non-alcoholic version of a drink, you almost pay the same for a sub-par version.

We have, though, become more mindful about our health and drinking habits. We already lowered our alcohol spending by 33% in one year. There’s definitely room for improvement and we hope to report even lower spending next year.

The path that we set to no drinking for a full year wasn’t realistic after a few months into it, but we’ll continue on the path to keep our drinking to a minimum.

Celebrating 5 Years of Debt Freedom

2018 is when I celebrate five years of being debt-free. Wow, the time has flown by since I paid off my last debt. What a difference it makes when you no longer have to send a payment to a creditor and can instead send it to your brokerage account and grow your investments. Paying off everything I owed was the best move I ever made.

Cinco años sin deudas! Five years without debt owed deserves to be celebrated.

We enjoy being on the receiving end, where corporations and the government pay us to borrow and employ our money. 🙂

Having $0 in the Fees, Interest and Bank Charges category is what allows us to spend more on fun categories and still come out way ahead. There are no car payments, no mortgage interest payments, no credit card interest payments, nothing that requires us to pay interest to someone else.

Let’s say you pay $3,000 – $8,000 in credit card or personal loans interest annually. Imagine what you can do with that money if you didn’t have to pay off your past purchases?

Shopping

My iPhone 6 died before the year ended. I was so disappointed with Apple that I ended up switching and getting an Android phone. I opted for the Samsung S8 and I’m really happy with my decision. The iPhone X has nothing on this phone and this one came to almost half the price, with my old phone trade-in and rebates.

Update: 2.5 years later and I’m still enjoying my Samsung phone. I used a cover since I bought it and still looks and feels like new. I get the Samsung updates but it doesn’t slow down the phone’s performance.

Zone of Tech did an awesome in-depth comparison covering the design, display, specs, camera, storage, features, and price of both phones. Check out the video if you’ll be shopping around for a top-of-the-line smartphone.

$2,230 worth in Travel Hacking

We took a few trips last year. We didn’t leave the continent but still managed to have fun traveling to the Dominican Republic and other states.

I think we got a lot out of our $4,431 travel spending, but that wouldn’t have been possible without the smart work from Tatiana to save us money on traveling. Her travel hacking efforts brought us about $2,230 in discounts. It’s a great way to save money on travel if you’re disciplined enough to handle credit cards. We used points for many hotels stays.

Here are highlights of our trips.

Virginia

In late March we went to Virginia for 9 days. We visited Luray, Charlottesville, Williamsburg, and Chincoteague Island. We booked most of the nights with credit card points.

Dominican Republic

In late May we took a 19-day vacation to Santiago and Punta Cana. That’s right, 19 days – not a typo. 🙂

Sightseeing in Philadelphia

In July, our niece from Florida came to visit and we showed her what the city has to offer.

Labor Day break in Rhode Island

We also went to Rhode Island for 9 days around Labor Day.

Florida

Visiting Florida’s Gulf Coast was a great way to end our travel because we’re strongly considering Sarasota as our early retirement home and really enjoyed our “exploration”. We spent 18 days total in North Port, Sarasota, Saint Petersburg, and Clearwater Beach and booked a total of six nights outside of North Port with points. We have family in North Port who we stayed with, and then we saved around $1,200 in hotel costs by using credit card points.

Thanks to Tatiana’s diligence with travel hacking, we were able to vacation for less on points.

Back to our expenses, the original topic of discussion, if you add essential and discretionary expenses, our living expenses were $34,712 in 2017.

The chart above shows how our expenses have been trending since we started reporting it on the blog. Our total spending stayed very close to the previous years, so no surprises there.

Having all these years of tracked spending is helpful because we were able to draft a detailed analysis of our future spending in early retirement based on that data.

Gifts and Donations

Most of this money goes to help our parents, some get donated and some get spent on thoughtful gifts to friends and family. $6,672 or 16% percent of our total expenses went to this bucket.

Three Christmases ago, we got everyone to unsubscribe from excessive gift exchanges for birthdays and holidays, and instead, we spend time together with our loved ones. The holidays are not stressful for us, at all, and are kind to all of our wallets.

A recap of how we spent

So there you have it. 40% of our spending money went to necessities, 44% was spent on “fun stuff” and 16% went to help others.

Expenses for this year should be about the same. Some categories will be lower while others will be higher and some new categories will be created. It’s amazing how consistent our spending stays throughout the years after I paid off my debt and started spending mindfully. $40,000 was just about half of what I used to spend on my own back in 2010 when I had a big house with a mortgage and thought I’ll be working for corporate until 65. That seems like such a distant life now.

We had a great year, financially, and it’s so awesome that even though we don’t spend over $50,000 a year, we are not deprived of anything. We probably splurge more than households that spend over $100,000 a year because we put our money into buckets that bring us pure happiness, instead of spending to keep up with others and follow trends.

Need to catch up on previous years of spending? Here are the reports from the previous three years: 2014 Spending, 2015 Spending, 2016 Spending. Cheers to a great 2018. FIRE is coming!

How did you spend in 2017? Did you spend more or less than what you budgeted for? Where did you spend less or more and why?