Monthly Expenses in line or too much

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joyanni
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Monthly Expenses in line or too much

Postby joyanni » Tue Dec 27, 2016 8:10 pm

I try to keep track of my expenses and see that my expenses are around 4700 per month, not including mortgage. It does include pretty much everything else . Kids are in good public schools ( thankfully ) so no private school expenses . We drive older cars so do have a few hundred dollars yearly in car maintenance expenses but hopefully are saving more in new car depreciation. We eat out in medium level restaurants 2-3 times a month and pizza once or twice otherwise eat at home and brown bag our lunches. We splurge on cable ( $160 pm ) and a few thousand $ in vacations per year, but do generally watch our expenses. My mortgage is just a few hundred pm as I have paid up most of it and refinanced recently.

Are these numbers in line with a medium cost of living area ? Would like to hear from folks especially with young to teenage kids . Please share any savings tips that you might have.

Dottie57
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Re: Monthly Expenses in line or too much

Postby Dottie57 » Tue Dec 27, 2016 8:44 pm

joyanni wrote:I try to keep track of my expenses and see that my expenses are around 4700 per month, not including mortgage. It does include pretty much everything else . Kids are in good public schools ( thankfully ) so no private school expenses . We drive older cars so do have a few hundred dollars yearly in car maintenance expenses but hopefully are saving more in new car depreciation. We eat out in medium level restaurants 2-3 times a month and pizza once or twice otherwise eat at home and brown bag our lunches. We splurge on cable ( $160 pm ) and a few thousand $ in vacations per year, but do generally watch our expenses. My mortgage is just a few hundred pm as I have paid up most of it and refinanced recently.

Are these numbers in line with a medium cost of living area ? Would like to hear from folks especially with young to teenage kids . Please share any savings tips that you might have.



What are you spending money on? Small mortgage. Is saving in the $ amount. Food, car expenses, utilities? What is income?

Not enough info.

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Pajamas
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Re: Monthly Expenses in line or too much

Postby Pajamas » Tue Dec 27, 2016 8:51 pm

I agree that is not enough information. It sounds like a lot to me since it does not include a mortgage. Does that include taxes? Car payments? Dancing lessons?

Whether or not it is too much is subjective. If your income is significantly higher than your expenses and you are investing the difference, and the amount you are earning and investing will be enough to cover your future expenses, from your next vehicle to children's college through retirement and burial, then it is not too much.

joyanni
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Re: Monthly Expenses in line or too much

Postby joyanni » Tue Dec 27, 2016 10:09 pm

I purposely did not include my income information as I wanted to get an idea from folks just about the expenses as it pertains to middle or upper middle class lifestyle. As an FYI, I am able to save around 22 K per year currently, but we don't believe in increasing expenses with income and our living expenses have stayed relatively constant trending inflation and other reasonable increases as kids grow up.
I have some side income that can go up or down ,but any increases go straight to savings. This 4700 figure includes ALL family living expenses ( insurance as well) except taxes and mortgage ( around $300 monthly ) I pay extra principal on my mortgage whenever I can, that's why did not include that as it fluctuates. Any amount paid into mortgage is not included in the savings number ( some people think of principal payments as a form of savings but I choose to exclude any equity in the primary home from savings or net worth )

So, basically the question is if $4700 monthly is too much for a family of 4 with one teenager and a pre teen kid in a medium COL area for a middle to upper middle lifestyle . It should not matter if my kids go to dance class or participate in expensive sports or even how much I make. I believe one of the boglehead principles is that Baseline living expenses should not increase with income

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Mlm
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Re: Monthly Expenses in line or too much

Postby Mlm » Tue Dec 27, 2016 10:42 pm

Your expenses sound high for a middle class lifestyle.
Your expenses sound low for an upper middle class lifestyle.
Reality has a way of catching up with you

greatwhite24
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Re: Monthly Expenses in line or too much

Postby greatwhite24 » Tue Dec 27, 2016 10:47 pm

Your expenses sound just about what I pay in a high COL with a family of 4 without counting my mortgage and taxes.

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Re: Monthly Expenses in line or too much

Postby Grt2bOutdoors » Tue Dec 27, 2016 10:51 pm

Sounds like a good quality of life in a MCOL area. In my HCOL area, the same figure would require no going out to restaurants 3x a month or spending thousands on a vacation each year, you'd have to give up some of the things you are doing now, to keep spending at that level. If you can afford it, then spend at your level.
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AlohaJoe
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Re: Monthly Expenses in line or too much

Postby AlohaJoe » Tue Dec 27, 2016 11:48 pm

joyanni wrote:Are these numbers in line with a medium cost of living area ? Would like to hear from folks especially with young to teenage kids


My brother lives in a medium cost of living area. His total pre-tax salary is less than your expenses; that means his expenses are quite a bit lower. So I'd consider your expenses high, since it doesn't even include housing.

traveltoomuch
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Re: Monthly Expenses in line or too much

Postby traveltoomuch » Wed Dec 28, 2016 1:24 am

It sounds high to me, but we can't see where it's going. Since you've excluded housing costs, medium v. high cost of living area seems like it wouldn't matter too much - I don't think many of my own expenses (other than housing) vary much by geography.

Here are some thoughts and speculations on individual pieces:

What are you spending on your cell phones?

Eating out is an interesting beast: "medium level" restaurants could easily mean a tab for two of $30 or $100 depending on your definition of "medium level" and your ordering habits. Extra courses and alcohol add up fast. If your idea of "medium level" is an Applebees and you order off of the "2 for $20" menu, you'll be at the low end of that. If it's a BJ's Brewhouse with some $22 mains and $10 appetizers, you could blow through the high end, too.

I couldn't stand to pay a $160 cable bill. Teaming up with neighbors to share net, at the very least, might help. If you're very clever, you'll share the cable too, with one of you ordering the most basic package you can (so a wire is maintained to the house) and the other adding a receiver box to their plan for a modest upcharge. The fact that the receiver is plugged in next door is of no technical consequence.

And "a few thousand ... in vacations per year" is a huge range. $5500/year is $458/mo., or about 10% of your overall spending. Not to say you need to cut the vacations, but be wary of dismissing a few thousand here and a few thousand there. Pretty soon you'll be talking real money.

biturbo
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Re: Monthly Expenses in line or too much

Postby biturbo » Wed Dec 28, 2016 1:49 am

I've been meaning to start a discussion like this for a while, since I think my household expenses are a little out of control and wanted to get some perspective. If it helps - for a household of 4 (me, wife, 4 year old stepson, 6 month old daughter) in a relatively low cost of living area, it looks something like this:

Net income: $9,800/month

Expenses:
Mortgage: $2,400/month
Car Payments: $1,440/month (this is mostly my fault - cars are my weakness)
Groceries: $800/month
Utilities: $300/month
Eating out together: $300/month
Clothes: $250/month
Gas: $200/month
Entertainment: $200/month
Car insurance/registration: $150/month
My work lunches: $150/month
Cell Phones: $110/month
Cable/Internet: $100/month
Misc: $700/month
=======
Total: $7,100/month

This feels really high, and I've been trying to work with my wife about toning it down a little, but it is tough to motivate her when we already save > $2,500 per month, in addition to having a fully funded 401k and HSA. I'm all for letting our lifestyle scale a little bit with income, but it feels like a more appropriate monthly expense should be around $5,000 - $6,000 for us.

The "misc" category is the one that bugs me the most. It is a lot of $40 - $130 trips to Target, Costco, baby stores, and the like. I'd like to track our spending more closely to figure out where all of the money is going, but she feels like that is too controlling, and I've had a hard time finding a good middle ground. My car is too expensive, and I'm going to get a cheaper one when my current lease is up.

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Pajamas
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Re: Monthly Expenses in line or too much

Postby Pajamas » Wed Dec 28, 2016 3:10 am

Your expenses of $4,700 a month are more than the median household income, which is something like $52-53,000 a year.

From what you have said, it sounds like you are careful with your money, at least at a high level, and live within if not below your means. It's difficult to give you specific savings tips as you asked if you don't give more information about your spending. The examples you gave seem reasonable, neither frugal nor excessive, except for the splurging on cable. If you spend $5,000 a year on vacations, that is a significant portion of your expenditures, and taking a less expensive vacation or even a staycation can make a difference.

There has been a lot of advice out there about not wasting money on the small things like eating lunch out or having a couple of $5 coffees every day. There has also been advice in reaction saying those small amounts are not as important as increasing your income or being conservative about housing costs. Both could be true. $10 a day for coffee is not unusual and it definitely adds up to a couple of thousand dollars a year.

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Re: Monthly Expenses in line or too much

Postby AlohaJoe » Wed Dec 28, 2016 3:47 am

biturbo wrote:Groceries: $800/month


This seems on the high side, but not outrageously so, for a family without teenagers living in a low cost of living area. I think the average weekly food cost for a family of four is between $150-$300 or so.

$300 for utilities also sounds pretty high, since it looks like that just includes electricity & water? I guess if you live in an area where air conditioning/heating is necessary all day and your wife is at home all day, maybe it adds up to that?

biturbo wrote:I'm all for letting our lifestyle scale a little bit with income, but it feels like a more appropriate monthly expense should be around $5,000 - $6,000 for us.


You are above your "ideal" of $5,000-$6,000 almost entirely due to your expensive cars, though, not the other stuff.

biturbo
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Re: Monthly Expenses in line or too much

Postby biturbo » Wed Dec 28, 2016 5:04 am

AlohaJoe wrote:
biturbo wrote:Groceries: $800/month


This seems on the high side, but not outrageously so, for a family without teenagers living in a low cost of living area. I think the average weekly food cost for a family of four is between $150-$300 or so.


A little, yeah, especially when combined with our dining out expenses.

$300 for utilities also sounds pretty high, since it looks like that just includes electricity & water? I guess if you live in an area where air conditioning/heating is necessary all day and your wife is at home all day, maybe it adds up to that?


And gas, sewer, and garbage. We live in an area that gets really hot in the summer and really cold in the winter, so the electricity and gas bills end up being fairly high.

I miscalculated, though - I counted a semi-annual bill as monthly on accident. We actually spend $250 in this category.

AlohaJoe wrote:You are above your "ideal" of $5,000-$6,000 almost entirely due to your expensive cars, though, not the other stuff.


Yeah, I guess I'm kind of asking for it by admitting to such high car payments on this site. Cars have always been something I've gotten a lot of enjoyment out of, worked hard for, and sacrificed in other areas for. I lived on around $1k/month in non-house/non-car expenses (and around $900 car payment) before I got married, and I wonder if that has warped how I view other expenses.

AlohaJoe
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Re: Monthly Expenses in line or too much

Postby AlohaJoe » Wed Dec 28, 2016 5:17 am

biturbo wrote:Yeah, I guess I'm kind of asking for it by admitting to such high car payments on this site. Cars have always been something I've gotten a lot of enjoyment out of, worked hard for, and sacrificed in other areas for.


I have nothing against spending on things, cars or otherwise. The average car lasts around 8 years. $1,440 a month on cars is equivalent to a $140,000 car. ($1440/month x 12 months a year x 8 years). At some point either the car payments end -- and your monthly expenses go down substantially -- or you make peace with the fact that you are buying a $70,000 car every 4 years.

Of course, $700 a month into a blackhole probably doesn't help either :)

Lindrobe
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Re: Monthly Expenses in line or too much

Postby Lindrobe » Wed Dec 28, 2016 6:27 am

This seems high to me. We bring home about $9,000k per month after we max out 401ks. Our monthly non-mortgage expenses are as follows:

Groceries, toiletries, cleaning supplies $500
Eating at restaurant once per week $200
Car insurance $42
Utilities (water, electricity, trash pickup included) $100
Natural gas $50
Internet $80
DirectTV Now $35
Total $1,007

Our mortgage is about $600/biweekly and includes escrowed insurance and property taxes, so we plow most of our extra money into mortgage after we max out backdoor Roth. We have no children, so that is part of the difference.Also, we live in LCOL area.

Dopey
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Re: Monthly Expenses in line or too much

Postby Dopey » Wed Dec 28, 2016 7:26 am

I don't even bring home that much per month. Married with a wife in school full time and a 2 year old. Also save 15℅ into 401k, max my IRA, and max our HSA every month. Only debt we have is some recent student loans to finish out my wife's degree. We've got a nice enough home and 2 paid off cars built in this decade.

I'd say we live in a medium to low cost of living area, but still, without including a mortgage in your expect number, that would seem to be mostly negated.

Your expenses seem very high relative to myself, but not other worldly.

saladdin
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Re: Monthly Expenses in line or too much

Postby saladdin » Wed Dec 28, 2016 7:45 am

My guess is that in about 5 years you'll look back and go "where did all my money go".
It's bat sh$t crazy high to me for a lcola area.

No way should anyone have a budget item of Misc in the multiple hundreds every month. No way.

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dsmil
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Re: Monthly Expenses in line or too much

Postby dsmil » Wed Dec 28, 2016 8:00 am

We are just a family of 3 (with a toddler) in a medium-high cost of living area but we spend about $3k per month on average other than our mortgage payment.

saladdin wrote: No way should anyone have a budget item of Misc in the multiple hundreds every month. No way.


I'm in the same boat here, $500 per month in "misc". This is our spot for car and house repairs, vacations, random things at target, etc.

dbr
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Re: Monthly Expenses in line or too much

Postby dbr » Wed Dec 28, 2016 10:18 am

You are spending more than the median household income in the United States. So, definition that is "high" but it is not higher than lots of other people spend. Probably more to the point is how much are you saving?

bigred77
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Re: Monthly Expenses in line or too much

Postby bigred77 » Wed Dec 28, 2016 10:27 am

People are just going to subconsciously compare their total spending to the number you posted and reply accordingly.

If they spend more, they'll tell you it seems right in line.
If they spend less, they'll tell you it's too much and you can/should cut the fat.

I say pick a reasonable savings rate target, hit that, then spend the rest as you wish.

dbr
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Re: Monthly Expenses in line or too much

Postby dbr » Wed Dec 28, 2016 10:30 am

bigred77 wrote:People are just going to subconsciously compare their total spending to the number you posted and reply accordingly.

If they spend more, they'll tell you it seems right in line.
If they spend less, they'll tell you it's too much and you can/should cut the fat.

I say pick a reasonable savings rate target, hit that, then spend the rest as you wish.


That is a good recommendation. As to spending, I did throw out the median income data point as a reference. It is probably possible to find a distribution of household spending for the US to locate the OPs spending level without basis in a personal reflection.

joyanni
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Re: Monthly Expenses in line or too much

Postby joyanni » Wed Dec 28, 2016 10:41 am

Thinking more about this, we can cut back some on cable and vacation which could save me about $2000 or so. Eating out is usually in mid level restaurants with total bill close to $50, so not much opportunity there, unless I substitute that with fast food. I do have a personal LTD policy which costs around 3K per year which most folks might not have, but which I think is a worthwhile expense. Other than that utilities are around 3600 and property tax is around 3400. We are big on wholesale clubs so am reasonably sure we are not overpaying on most items, although that might be getting washed out somewhat with some unplanned impulse purchases there.
All in all, we watch what we spend and can maybe cut back around 4-5K yearly which would bring it to 4300 monthly but find it difficult to match the 2.5 to 3K monthly expense number that some have suggested

KlangFool
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Re: Monthly Expenses in line or too much

Postby KlangFool » Wed Dec 28, 2016 10:43 am

joyanni wrote:I purposely did not include my income information as I wanted to get an idea from folks just about the expenses as it pertains to middle or upper middle class lifestyle. As an FYI, I am able to save around 22 K per year currently, but we don't believe in increasing expenses with income and our living expenses have stayed relatively constant trending inflation and other reasonable increases as kids grow up.

So, basically the question is if $4700 monthly is too much for a family of 4 with one teenager and a pre teen kid in a medium COL area for a middle to upper middle lifestyle . It should not matter if my kids go to dance class or participate in expensive sports or even how much I make. I believe one of the boglehead principles is that Baseline living expenses should not increase with income


joyanni,

The only person that matters is you.

1) You save 22K per year.

2) Your annual expense = $4,700 X 12 = $56,400 per year.

3) You are saving 39% of your annual expense.

If you are saving enough to ensure your financial independent and/or retirement, then, your expense is in line. Or else, it is too much.

KlangFool

KlangFool
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Re: Monthly Expenses in line or too much

Postby KlangFool » Wed Dec 28, 2016 10:47 am

joyanni wrote:Thinking more about this, we can cut back some on cable and vacation which could save me about $2000 or so. Eating out is usually in mid level restaurants with total bill close to $50, so not much opportunity there, unless I substitute that with fast food. I do have a personal LTD policy which costs around 3K per year which most folks might not have, but which I think is a worthwhile expense.


joyanni,

Why? As far as I can tell, your income is not high enough to justify this level of personal LTD policy. I assume that you have some amount of LTD policy from the employer too.

KlangFool

dbr
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Re: Monthly Expenses in line or too much

Postby dbr » Wed Dec 28, 2016 10:52 am

According to this article you are spending more than is defined for middle class: http://money.cnn.com/infographic/econom ... ss-anyway/

This article may be interesting: http://www.nytimes.com/books/first/s/sc ... spent.html

I am a bit puzzled how one arrives at a financial plan that based on existing in some arbitrarily defined class structure. I think the above post by klangfool for savings vs spending tells more about where you are.

joyanni
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Re: Monthly Expenses in line or too much

Postby joyanni » Wed Dec 28, 2016 10:56 am

KlangFool wrote:
joyanni wrote:I purposely did not include my income information as I wanted to get an idea from folks just about the expenses as it pertains to middle or upper middle class lifestyle. As an FYI, I am able to save around 22 K per year currently, but we don't believe in increasing expenses with income and our living expenses have stayed relatively constant trending inflation and other reasonable increases as kids grow up.

So, basically the question is if $4700 monthly is too much for a family of 4 with one teenager and a pre teen kid in a medium COL area for a middle to upper middle lifestyle . It should not matter if my kids go to dance class or participate in expensive sports or even how much I make. I believe one of the boglehead principles is that Baseline living expenses should not increase with income


joyanni,

The only person that matters is you.

1) You save 22K per year.

2) Your annual expense = $4,700 X 12 = $56,400 per year.

3) You are saving 39% of your annual expense.

If you are saving enough to ensure your financial independent and/or retirement, then, your expense is in line. Or else, it is too much.

KlangFool




Klangfool, I agree that one cannot directly compare as everybody's situation is different, but when you see somebody like Lindrobe saying that their expenses are around 1K per month , it raises questions in one's mind as to if they have a secret sauce that others don't :-) .... Having kids increases expenses but the difference shouldn't be 4-5x .... the point of this discussion is to share any strategies or secrets that might help others

MathWizard
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Re: Monthly Expenses in line or too much

Postby MathWizard » Wed Dec 28, 2016 11:00 am

We spend about $52K per year.

I'm
not counting mortgage, vacation, or college expenses for my son, but
am counting property and sales taxes, house, auto, and life insurance, medical copays, car replacement fund.

We live in a MCOL area.

In retirement, we should be able to get rid of term life, and work expenses. This should save a few thousand.
We will also gift one of the three vehicles we own to my son when he graduates, as we did for his older brother.
We will then no longer be paying extra expenses on the third car. That will probably save about $1K per year.

We are currently maxing out work retirement and IRAs.

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Pajamas
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Re: Monthly Expenses in line or too much

Postby Pajamas » Wed Dec 28, 2016 11:04 am

joyanni wrote:Thinking more about this, we can cut back some on cable and vacation which could save me about $2000 or so. Eating out is usually in mid level restaurants with total bill close to $50, so not much opportunity there, unless I substitute that with fast food. I do have a personal LTD policy which costs around 3K per year which most folks might not have, but which I think is a worthwhile expense. Other than that utilities are around 3600 and property tax is around 3400. We are big on wholesale clubs so am reasonably sure we are not overpaying on most items, although that might be getting washed out somewhat with some unplanned impulse purchases there.
All in all, we watch what we spend and can maybe cut back around 4-5K yearly which would bring it to 4300 monthly but find it difficult to match the 2.5 to 3K monthly expense number that some have suggested


A meal for four for $50 sounds inexpensive for a sit-down restaurant to me, not mid-level. Not sure where you could do that for much less.

You could probably squeeze out some savings but it would take some time and effort. For instance, you might save some on utilities if you have not already looked at that, by lowering the water heater temperature, ensuring that you don't have air leaks, getting a smart thermostat, replacing any older appliances, and switching to LEDs. If you buy most of your groceries at wholesale clubs, you might be able to do better on some items like toilet paper and sodas by looking for sales at grocery stores. If you have not shopped around for insurance, that could save you some money. Not only could you cut back on your cable package, but sometimes just calling the cable company and threatening to do so will result in a reduced bill. You could also look at the cost of cellular service and maybe find a less expensive family plan. In other words, you could go through each of your expenditures and try to eliminate or reduce them.

It is difficult to compare your $4,700 in expenses with others' expenses of $2500 to $3,000 because just a few items can account for the entire difference.

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JDCarpenter
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Re: Monthly Expenses in line or too much

Postby JDCarpenter » Wed Dec 28, 2016 11:06 am

joyanni wrote:...

Are these numbers in line with a medium cost of living area ? Would like to hear from folks especially with young to teenage kids . Please share any savings tips that you might have.


Here you go, from August: https://www.bls.gov/news.release/cesan.nr0.htm Link indicates: "Average expenditures per [household] for 2015 were $55,978, a 4.6 percent increase from 2014 levels, the U.S. Bureau of Labor Statistics reported today."

The link has a table with average expenditures, and the changes over recent time periods. You can look at the averages in expenditure categories to see where you might be high/low.

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biturbo
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Re: Monthly Expenses in line or too much

Postby biturbo » Wed Dec 28, 2016 11:09 am

joyanni wrote:Thinking more about this, we can cut back some on cable and vacation which could save me about $2000 or so. Eating out is usually in mid level restaurants with total bill close to $50, so not much opportunity there, unless I substitute that with fast food. I do have a personal LTD policy which costs around 3K per year which most folks might not have, but which I think is a worthwhile expense. Other than that utilities are around 3600 and property tax is around 3400. We are big on wholesale clubs so am reasonably sure we are not overpaying on most items, although that might be getting washed out somewhat with some unplanned impulse purchases there.
All in all, we watch what we spend and can maybe cut back around 4-5K yearly which would bring it to 4300 monthly but find it difficult to match the 2.5 to 3K monthly expense number that some have suggested


A pretty painless way to cut your cable bill is to do some research on competing offers in your area, then call and threaten to cancel. At one point, our bill for cable/internet had crept up to nearly $200 per month for a few months (a promo ran out), and I called and politely asked to cancel my service because it was too expensive. Less than half an hour on the phone ended up cutting our bill in half, saving around $1200/year.

yellowgirl
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Re: Monthly Expenses in line or too much

Postby yellowgirl » Wed Dec 28, 2016 11:16 am

Still 2 days left for 2016 and according to YNAB app we spent:

Electricity and gas average $1440 annually
Water and garbage $720
Internet and cable $840
Cell phones $660
Car insurance $1860
Life insurance and disability insurance $1930
Food $6600
Gasoline 921
Restaurants $2980
Entertainment $532
Miscellaneous expenses $1800

Total spent this year $20,885

These expenses not including property tax, home insurance and travel. This is young family with 2 preschoolers.

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Mlm
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Re: Monthly Expenses in line or too much

Postby Mlm » Wed Dec 28, 2016 11:32 am

, but when you see somebody like Lindrobe saying that their expenses are around 1K per month , it raises questions in one's mind as to if they have a secret sauce that others don't :-) .


I doubt that you are comparing apples to apples. I don't see any expenses for clothing, auto gas, auto maintenance, medical.

Groceries, toiletries, cleaning supplies $500
Eating at restaurant once per week $200
Car insurance $42
Utilities (water, electricity, trash pickup included) $100
Natural gas $50
Internet $80
DirectTV Now $35
Total $1,007
Reality has a way of catching up with you

sandramjet
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Re: Monthly Expenses in line or too much

Postby sandramjet » Wed Dec 28, 2016 11:48 am

KlangFool wrote:The only person that matters is you.

+10

BTW, and not to derail anything here, but what exactly defines a "HCOL", "LCOL" or "MCOL" area?

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pondering
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Re: Monthly Expenses in line or too much

Postby pondering » Wed Dec 28, 2016 11:52 am

Great topic

I appreciate the more specific replies

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JDCarpenter
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Re: Monthly Expenses in line or too much

Postby JDCarpenter » Wed Dec 28, 2016 11:54 am

sandramjet wrote:
KlangFool wrote:The only person that matters is you.

+10

BTW, and not to derail anything here, but what exactly defines a "HCOL", "LCOL" or "MCOL" area?


High/Medium/Low Cost of Living (Sometimes you'll see VHCOL for San Fran/NYC....)
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dgm
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Re: Monthly Expenses in line or too much

Postby dgm » Wed Dec 28, 2016 11:54 am

A few observations that may help:

The utility bill sounds high. Depends on how big your house is and where you live but I bet you could cut that a lot by seeing what efficient homes in your area do. We live in milder weather but our bill is a fraction of what you guys have.

As a general rule I would re-examine all your expenses with a fresh eye to see if they are really "worth it" or "needed". I find that once I really step back and re-evaluate, some things aren't as necessary as I thought (or things change and they are no longer as critical) and can be cut.

Some examples from my own life: do you really need cable? do you need a landline? your current cell phone carrier? lower/raise the thermostat settings, any and all recurring expenses are great candidates for examination since they will lower your base burn rate.

KlangFool
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Re: Monthly Expenses in line or too much

Postby KlangFool » Wed Dec 28, 2016 11:56 am

joyanni wrote:
Klangfool, I agree that one cannot directly compare as everybody's situation is different, but when you see somebody like Lindrobe saying that their expenses are around 1K per month , it raises questions in one's mind as to if they have a secret sauce that others don't :-) .... Having kids increases expenses but the difference shouldn't be 4-5x .... the point of this discussion is to share any strategies or secrets that might help others


joyanni,

To each it's own. I save 100% of my annual expense every year. I spend the rest. I do not care how others choose to spend their money and how much they spend. I save enough. And, that is that.

http://www.investopedia.com/terms/p/pay ... ffirst.asp

There is no secret here. I do "Pay Yourself First" saving method. I auto-deduct my savings from my paycheck every month. Then, I spend the rest. If my checking account's number is getting low, I spend less. Or else, I spend more.

KlangFool

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pondering
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Re: Monthly Expenses in line or too much

Postby pondering » Wed Dec 28, 2016 11:59 am

Joyanni,

You know where the money is going, but aren't telling us.

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HomerJ
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Re: Monthly Expenses in line or too much

Postby HomerJ » Wed Dec 28, 2016 12:03 pm

KlangFool wrote:
joyanni wrote:I purposely did not include my income information as I wanted to get an idea from folks just about the expenses as it pertains to middle or upper middle class lifestyle. As an FYI, I am able to save around 22 K per year currently, but we don't believe in increasing expenses with income and our living expenses have stayed relatively constant trending inflation and other reasonable increases as kids grow up.

So, basically the question is if $4700 monthly is too much for a family of 4 with one teenager and a pre teen kid in a medium COL area for a middle to upper middle lifestyle . It should not matter if my kids go to dance class or participate in expensive sports or even how much I make. I believe one of the boglehead principles is that Baseline living expenses should not increase with income


joyanni,

The only person that matters is you.

1) You save 22K per year.

2) Your annual expense = $4,700 X 12 = $56,400 per year.

3) You are saving 39% of your annual expense.

If you are saving enough to ensure your financial independent and/or retirement, then, your expense is in line. Or else, it is too much.

KlangFool


I agree with this. I think you are doing great...

You don't need to cut back... Just don't increase your spending too much in the future...

My wife and I got the point where we felt we had a good life in a MCOL area (about the same as you, although we spend about $6000 a month), and we realized we had "enough", and didn't need to increase our lifestyle anymore...

So all raises from then on went into savings (okay, we take an extra nice vacation now and then with some of the extra money)

alshayed
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Re: Monthly Expenses in line or too much

Postby alshayed » Wed Dec 28, 2016 12:16 pm

Re groceries - I have found the USDA cost of food reports to be somewhat helpful in gauging how my expenses look. See https://www.cnpp.usda.gov/USDAFoodPlansCostofFood. My family generally spends in the area of the low cost plan but includes several things like paper products (towels, TP, etc), cleaning supplies, pet food, etc. We buy most of our food at Costco. I would like to bump up to the moderate plan cost range to have more flexibility with having fish and other things more often.

Car expenses - I put aside ~0.45 per mile into a savings account specifically for cars. We drive a lot so this works well for us, but if you only drive a little per year it might not get you enough to cover all car expenses.

Sorry I don't have time for a longer reply, need to run errands.

Lindrobe
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Re: Monthly Expenses in line or too much

Postby Lindrobe » Wed Dec 28, 2016 12:23 pm

Mlm wrote:
, but when you see somebody like Lindrobe saying that their expenses are around 1K per month , it raises questions in one's mind as to if they have a secret sauce that others don't :-) .


I forgot cell phone ($35). We get one oil change per year cause I only drive about 2,000 miles per year. So, that is about $50/year for auto maintenance. Also, I probably spend about $40/month on gas. Husband has a company vehicle, so we do not pay for gas or maintenance on it.

Medical is deducted from paycheck and the income I sited above is after taxes and deductions. We are both young and healthy, so we rarely have any medical beyond just the premiums. We pay $20/month for life insurance.

I estimate that in 2016, I spent about $100 on clothes. Husband probably spent about $1,000. So on a monthly basis, this would be about $100/month.

The gas, cell phone, auto maintenance, life insurance, and clothing would raise our monthly expenses to about $1,220 month. If we include medical insurance, it would be about $1,350 total expenses per month.

Travel is not included in my monthly expenses, but we usually use points/miles to cover airfare and hotel.

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KlingKlang
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Re: Monthly Expenses in line or too much

Postby KlingKlang » Wed Dec 28, 2016 1:31 pm

biturbo wrote:
The "misc" category is the one that bugs me the most. It is a lot of $40 - $130 trips to Target, Costco, baby stores, and the like. I'd like to track our spending more closely to figure out where all of the money is going, but she feels like that is too controlling, and I've had a hard time finding a good middle ground.


Would your wife be willing to simply put all of her receipts in a file folder so that you can look at them and track expenses? Note: Do not come storming out of your office yelling 'What did you spend $250 at the toy store on?', at least until you have the spending information that you need for your analysis.

Food expenses can vary considerably between similar sized families. Some people feel that it's worth it to get everything organic from Whole Foods, others do all of their shopping at Aldi. If you do purchase food at Costco make sure that you're not throwing half of it away because it expired before you could finish it.

I would be willing to bet that a considerable amount of the Misc category is impulse purchases of toys and clothing for the kids.

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pondering
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Re: Monthly Expenses in line or too much

Postby pondering » Wed Dec 28, 2016 3:52 pm

I'm compiling the posted numbers here:

https://sterbalssundrystudies.miraheze. ... r_too_much

Ron Ronnerson
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Location: Bay Area

Re: Monthly Expenses in line or too much

Postby Ron Ronnerson » Wed Dec 28, 2016 6:28 pm

Pondering: Here is another set of numbers for you. We are a family of three in a VHCOL area (SF Bay).

Monthly Net Income: $9700

Monthly Expenses:
Mortgage: $1810 (3.25%, 30 year fixed)
Property Taxes: $800
HOA: $290
House Cleaning: $270
Home Improvements/Repairs: $50
TV/Internet/Phone: $200
Electricity: $140
Cell Phones: $70
Water: $30
Garbage: $20
Health Insurance: $200
Auto/Home/Umbrella Insurance: $200
Life Insurance: $143
Gas for Cars: $150
Car Maintenance/Repairs/Registration/Tires/AAA Dues: $75
Groceries/Household Items: $1000
Restaurants/Coffee Shops: $400
Vacations: $100
Miscellaneous (Furniture, Gifts, Donations): $150
Office Supplies/Technology (computers, phones, etc.): $100
Clothing/Shoes/Hair/Nails: $80
Pets: $80
Medical/Vision/Dental: $50
Entertainment: $30
Childcare: $270
TOTAL: $6700

OP: If you're trying to cut down on costs, it really would be helpful to see exactly where you're spending your money so that you can target the areas that stick out. However, lacking that, here are some general things we've done to increase our savings rate since you asked for ideas:

-refinance mortgage
-have a friend who is handy help with repairs around the home
-speak to the retention department annually to get discounted rate on cable, Internet, phone
-don't use a cell phone provider with a big name
-get in good shape before applying for life insurance
-buy inexpensive cars and drive them for a long time and keep to the maintenance schedule
-use coupons (download your grocery store's app and add coupons via your phone while waiting in line to check out)
-stock up on items you use regularly when there are sales
-keep technology until it is obsolete (becomes frustrating to use)
-don't shop for new clothes until the old stuff falls apart
-buy winter clothes in May and summer clothes in October
-use the library rather than buy books
-watch movies at home rather than go to the theater
-eat out at restaurants where you are not served
-don't order drinks, appetizers, or dessert when eating out (main course only)
-take a lunch to work each day
-don't show brand loyalty
-use FSA accounts
-shop around for insurance from time to time
-minimize taxes by understanding brackets

Increase income:
-shop using online portals
-maximize cash back by using at least a few different cards
-transfer brokerage balances annually to collect a bonus
-open checking and savings accounts for bonuses if they are lucrative enough
-open credit card accounts for bonuses in order to travel for free or at greatly discounted rates
-put emergency fund someplace that gives a decent rate such as a credit union
-sell things on Craigslist, Amazon, or Ebay
-participate in focus groups
The above added $9k to our income in 2016

In short, go through all your expenses with a fine-tooth comb. You could get assistance on that front if you're willing to provide more details.

joyanni
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Re: Monthly Expenses in line or too much

Postby joyanni » Wed Dec 28, 2016 7:04 pm

Thank you all for the detailed postings and tips. I guess I will have to do a deeper analysis of the expenses and find areas for savings. Based on the previous poster's ( Ron ) and other responses , just by eyeballing the numbers I think we are in line or lesser on quite a few of the categories but more on some others. I Will look further as time permits and post my findings. Hopefully this thread has provided others some valuable insight as well.

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HomerJ
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Re: Monthly Expenses in line or too much

Postby HomerJ » Wed Dec 28, 2016 7:34 pm

joyanni wrote:Thank you all for the detailed postings and tips. I guess I will have to do a deeper analysis of the expenses and find areas for savings.



Why?

You're doing great... Spending $56,000 a year and saving $22,000.... I mean, REALLY great.

You will have no problems retiring once the house is paid off. Especially since Social Security will cover a good chunk of your current expenses.

So no need to cut back anything.

hudson
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Re: Monthly Expenses in line or too much

Postby hudson » Wed Dec 28, 2016 7:49 pm

Below US Average Cost of Living Area...family of 3

Mortgage 0
Car Payments 0
Utilities 250
Car Insurance/Home Owners Insur. Etc 135
Property Taxes Home and Vehicles 167
Cable/Phone/Internet 167
School 300
2 Cell Phones 93
Everything Else 1827
Total.........2939

I left out what my wife purchases.
Last edited by hudson on Wed Dec 28, 2016 8:12 pm, edited 1 time in total.

bluejello
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Re: Monthly Expenses in line or too much

Postby bluejello » Wed Dec 28, 2016 7:54 pm

Here's another data point for you, this is what costs look like for a family of 3 living in a very high cost of living area:

Fixed Expenses
  • Mortgage, Condo Fee, Property Taxes: $4300
  • Utilities (electricity, gas, water): $120
  • Mobile Phones & Internet: $90
  • Nanny: $760

Regular Monthly Expenses
  • Groceries: $900
  • Public transport: $100
  • Restaurants, taxis, movies, etc: $800

Sporadic Expenses
Travel, house improvements and repairs, medical costs, vet bills, buying new clothes, etc: $1,400

TOTAL: $8470

Our mortgage costs are very high, but 70% of the mortgage goes to principal so I don't worry too much about that. We live in the middle of the city and don't have a car, so no car-related expenses. There's been a lot of medical costs in the past year, and we also just did a house renovation, so the "sporadic expenses" category has been really high. I expect that to come down substantially next year. Obviously the biggest area for us to cut down if we wanted to would be the "restaurants, taxis, entertainment" category.

sandramjet
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Re: Monthly Expenses in line or too much

Postby sandramjet » Wed Dec 28, 2016 8:28 pm

JDCarpenter wrote:
sandramjet wrote:
KlangFool wrote:The only person that matters is you.

+10

BTW, and not to derail anything here, but what exactly defines a "HCOL", "LCOL" or "MCOL" area?


High/Medium/Low Cost of Living (Sometimes you'll see VHCOL for San Fran/NYC....)


I guess I wasn't clear... I understand what the acronym means. What I don't know is how does one define, for a given area, which category does it go in. In other words, other than subjective views, is there an objective measure of what constitutes HCOL vs LCOL, etc.

Bacchus01
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Re: Monthly Expenses in line or too much

Postby Bacchus01 » Wed Dec 28, 2016 9:43 pm

Excluding car, mortgage and property tax expenses, for a family of 5 with one a teenager, we spend right at $4,800/month

Adding property costs on three properties and loans on two cars, we are at about ~$10K per month.


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