Critique My 2019 Spending

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d0gerz
Posts: 228
Joined: Thu Apr 10, 2014 9:45 pm

Critique My 2019 Spending

Post by d0gerz » Sun Jan 12, 2020 3:51 pm

Would appreciate any comments, feedback on our spending for 2019. Trying to use this information to update planning for this year.

All figures are annual. Tax filing status is MFJ. We live in the Boston metro area. Household is 2 adults + toddler. We were renting for most of the year up until October when we finally bought a house.

Gross Income..................... 194,300
Tax Refund......................... 3,500
=========================
Total Income....................... 197,800
=========================

Federal Tax........................ 20,600
401k Contribution.................. 19,000
FICA............................... 8,200
State Tax (MA)..................... 7,700
HSA Contribution................... 6,000
Health Insurance................... 5,700
Medicare Tax....................... 2,700
Life Insurance..................... 500
Dental Insurance................... 400
Disability Insurance............... 200
=========================
Take Home.......................... 126,800
=========================

Taxable Investment............. 28,600
Charitable Giving.................. 20,500
Rent/Mortgage.................... 17,600
IRA Contribution................... 12,000
Travel............................. 4,900
Groceries.......................... 4,400
Closing Costs...................... 4,300
Household.......................... 3,600
Family Support..................... 2,300
Auto (Ins, Maint, etc.)............ 2,200
Utilities.......................... 2,200
529................................ 2,000
Eating Out......................... 1,900
Gifts/Misc......................... 1,600
Medical............................ 1,600
Gas................................ 1,200
Baby (Diapers etc.)............. 1,200
Entertainment...................... 800
Internet........................... 700
Cell Phone......................... 600
Clothes............................ 500
Gym................................ 200
Haircut............................ 200
Movies............................. 200
=========================
Net.................................. +11,500
=========================

manatee2005
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Re: Critique My 2019 Spending

Post by manatee2005 » Sun Jan 12, 2020 4:10 pm

What does 20k in charitable giving include?

Perkunas
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Re: Critique My 2019 Spending

Post by Perkunas » Sun Jan 12, 2020 4:11 pm

Excellent. Not sure what there is to critique; it appears you saved $80k towards "retirement" (including HSA, taxable, 529, and then your net surplus) and gave $20k to charity on < $200k gross all while living in a HCOL.

Very cool to see 10% charitable giving. Based on my limited knowledge, that level of charitable giving is abnormally large, especially compared to the younger generation.

brad.clarkston
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Location: Kansas City, MO

Re: Critique My 2019 Spending

Post by brad.clarkston » Sun Jan 12, 2020 4:18 pm

$200 on haircuts? You Spendthrift!!!! Go bald that's how true bogleheads save money! ;)
$500 on clothes? Cad!!! Dumpster dive like a true boglehead ! :annoyed
Entertainment .... ? Torturing pets and the baby should be enough you sod! :twisted:


But really that looks good, better than me. I suck at budgets.

Lalamimi
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Re: Critique My 2019 Spending

Post by Lalamimi » Sun Jan 12, 2020 4:18 pm

deleted
Last edited by Lalamimi on Wed Jan 15, 2020 7:48 pm, edited 1 time in total.

Hug401k
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Re: Critique My 2019 Spending

Post by Hug401k » Sun Jan 12, 2020 6:12 pm

Does your mortgage rate include property taxes? Do you have excise tax? Other than that I'd say your numbers are amazing.

Pacman
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Re: Critique My 2019 Spending

Post by Pacman » Sun Jan 12, 2020 6:29 pm

Three questions if you don't mind:
- Are you using credit card reward sign on bonuses for travel?
- Did you use HSA funds to pay for the medical expense itemized?
- How much coverage is the life insurance providing per person?

Contrary to the person above, I think your food budget is reasonable. Groceries come out to $366/month. Eating out budget comes out to $35 a week so its not like you are going to high end steakhouses each week.

Nice job.

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ReformedSpender
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Re: Critique My 2019 Spending

Post by ReformedSpender » Sun Jan 12, 2020 6:35 pm

Lalamimi wrote:
Sun Jan 12, 2020 4:18 pm
Groceries $4400 Eating out $1900 Seems to be a lot. Maybe not. We are retired, and try to do low carb/Keto-ish, so not lots of snacks, but we do not buy organic, prepared meals either. We try for lunch specials rather than out to dinner. Do you both take lunches to work? Impressed you can go to the movies! My daughter has an 11 mo old and a 3 yr old. No clue when they went out last.
Comes out to a $85 weekly grocery bill and night out once a week for roughly $35. Hardly splurging for a family of 3

OP, I think you are doing great
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

livesoft
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Re: Critique My 2019 Spending

Post by livesoft » Sun Jan 12, 2020 6:42 pm

With your state tax and the charitable contributions I see that you are able to itemize, but you are not making the most of that because the standard deduction is so high. I think you should try to do some bunching of charitable contributions if you can. That is, donate to your charities the $20.5K per usual, but also donate $20.5K to your donor-advised fund this year. You would then get a $49K itemized deduction or more because you get the $7.7K in state taxes itemized. Then next year, ask your DAF to send $20.5 to your charities and take the standard deduction. Go back and forth like that.

A way to think about it: If you take the standard deduction two years in a row, then you deduct $24.4K x 2 = $48.8K. If you do what you are doing 2 years in a row, then you get ($20.5K + $7.7K) x 2 = $56.4K. But if you do what I am suggesting you get $24.4K + $49K = $73.4K deduction over 2 years.

That should save you a few thousand dollars in taxes over 2 years. If this is not clear, then ask questions until it is.

Furthermore, try to donate shares from your taxable account to your DAF instead of cash. You need though to donate only shares held long term with unrealized capital gains and not shares held short-term nor those with unrealized losses.

Be sure to adjust your withholding each year to reduce the chances of refunds. There is some interplay of state income tax refunds and Schedule A itemized deductions I think, but I don't know much about that since I don't pay state income taxes.

{OTOH, maybe you are already bunching charitable contributions and this was your big donation year?}
Last edited by livesoft on Sun Jan 12, 2020 7:01 pm, edited 1 time in total.
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Olemiss540
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Re: Critique My 2019 Spending

Post by Olemiss540 » Sun Jan 12, 2020 6:57 pm

Looks extremely good to me, and definitely would label you as "frugal" compared to peers. What's your nest egg and expected retirement timeline? That's really all that's important to make sure you are going to hit your goal and shouldn't loosen the purse strings.....
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

chw
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Re: Critique My 2019 Spending

Post by chw » Sun Jan 12, 2020 7:08 pm

Looks excellent. You have built in wiggle room should an unexpected expense arise.

Congrats!

fundseeker
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Re: Critique My 2019 Spending

Post by fundseeker » Sun Jan 12, 2020 7:20 pm

Well done, especially with the charitable giving. But, as recommended above, you should consider bunching your giving every other year and take the standard deduction in between. DAFs are fairly simple once you set one up.

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Iowa David
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Re: Critique My 2019 Spending

Post by Iowa David » Sun Jan 12, 2020 8:11 pm

I like your expense break down - did you use a specific application to generate this or was this done manually?
"Just a 1 percent difference in expenses makes an 18 percent difference in returns when compounded over 20 years." The Boglehead's Guide to Investing

Ron Ronnerson
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Re: Critique My 2019 Spending

Post by Ron Ronnerson » Sun Jan 12, 2020 8:49 pm

I think bunching charitable contributions if you're not doing so already is a great suggestion. For the upcoming year, I would also consider reducing the taxable investments and directing some of that money toward maxing out your HSA and IRA accounts. That should help with taxes further.

As far as other suggestions, it is hard to make those without knowing information such as your ages, assets, liabilities, and approximate age you wish to retire. Depending on those answers, you may be ahead of where you need to be to reach your goals or could be right on track or behind (possibly considerably so). If you’re way ahead, perhaps relax a bit and eat out more often and increase the travel budget. If you’re way behind, things like charitable contributions, family support, 529, and other optional items may need to be reconsidered. It’s hard to say without knowing the whole picture.

That being said, if you just want feedback on the snapshot of last year (without really looking at the complete picture), it seems good to me.

Edit: Sorry, I missed that you're already contributing to an IRA. Disregard that part.

H-Town
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Re: Critique My 2019 Spending

Post by H-Town » Sun Jan 12, 2020 9:26 pm

Well... I'll take that invitation.

1) Tax refund is not income. It's just a cash-flow item. You overpaid withholding tax to the IRS and now the IRS gives you back the overpaid tax. The IRS thank you for your interest-free loan.

2) Gotta separate savings & investments from spending. Items like HSA, taxable investment, (Roth?) IRA contributions, 529 are savings.

3) Is it one-income household? Just curious why you only contribute 19k instead of 38k.

4) Is there any employer match, profit sharing, ESPP, etc? It should count towards your income as well as savings.

5) Budget wise, it should come to zero. So the net $11.5k should count towards your savings.

6) You should max out HSA. You left $1k on the table.

7) You should put some money in limited FSA for dental and vision, if your plan allows it.

8) You're pretty frugal considering you live in Boston. Even with the measurement stick used around here, you've done well. Yet, you save only 25% of your gross income. Just be aware of your saving rate and be prepared to work a little longer to be able to achieve your financial goal. It is what it is if you are already doing your best.

Ron Ronnerson
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Re: Critique My 2019 Spending

Post by Ron Ronnerson » Sun Jan 12, 2020 9:56 pm

H-Town wrote:
Sun Jan 12, 2020 9:26 pm
Gotta separate savings & investments from spending. Items like HSA, taxable investment, (Roth?) IRA contributions, 529 are savings...

Yet, you save only 25% of your gross income. Just be aware of your saving rate and be prepared to work a little longer to be able to achieve your financial goal. It is what it is if you are already doing your best.
I agree that the information should be organized differently so saving and expenses aren’t all mixed in together. It’s why I missed the IRA contributions at first.

The OP is saving more than 25%, though. The savings are:
401k: $19,000
HSA: $6,000
Taxable Investment: $28,600
IRAs: $12,000
Extra cash left over: $11,500
Total Savings: $77,100
Gross Income is $194k – 197k (depending on whether or not the tax refund is counted)
That comes to a rate near 40%

I would also include the principal portion of the mortgage payment as savings so the savings rate is even higher. 2019 numbers look good. However, we have a snapshot and not a complete picture of how they are doing overall due to important pieces such as ages, assets, and liabilities not being provided.

H-Town
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Re: Critique My 2019 Spending

Post by H-Town » Sun Jan 12, 2020 10:06 pm

Ron Ronnerson wrote:
Sun Jan 12, 2020 9:56 pm
H-Town wrote:
Sun Jan 12, 2020 9:26 pm
Gotta separate savings & investments from spending. Items like HSA, taxable investment, (Roth?) IRA contributions, 529 are savings...

Yet, you save only 25% of your gross income. Just be aware of your saving rate and be prepared to work a little longer to be able to achieve your financial goal. It is what it is if you are already doing your best.
I agree that the information should be organized differently so saving and expenses aren’t all mixed in together. It’s why I missed the IRA contributions at first.

The OP is saving more than 25%, though. The savings are:
401k: $19,000
HSA: $6,000
Taxable Investment: $28,600
IRAs: $12,000
Extra cash left over: $11,500
Total Savings: $77,100
Gross Income is $194k – 197k (depending on whether or not the tax refund is counted)
That comes to a rate near 40%

I would also include the principal portion of the mortgage payment as savings so the savings rate is even higher. 2019 numbers look good. However, we have a snapshot and not a complete picture of how they are doing overall due to important pieces such as ages, assets, and liabilities not being provided.
I left out the taxable investment for some reasons... 40% saving rate isn't bad at all for new parents with a toddler living in HCOL area.

OP: in my budget, I break out total income into 3 buckets: saving/investing, taxes, and spending. It's easier to track saving vs. spending that way. According to my math (don't trust it), you save $1.16 for every $1 you spent. It's decent. 25-30 years of keeping up with this saving rate, you'll be financial independent.

LAFiddler
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Re: Critique My 2019 Spending

Post by LAFiddler » Mon Jan 13, 2020 8:33 am

I’d love to know how you pull off such a low grocery bill for 3!

HomeStretch
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Re: Critique My 2019 Spending

Post by HomeStretch » Mon Jan 13, 2020 8:54 am

Your 2019 spending recap is reasonable IMO.

As another poster pointed out, the bottom line should be zero as everything should be accounted for as either income, savings or expenses. The net of +$11,500 that you show - did this end up increasing your cash/savings? Or do you have $11,500 of unaccounted expenses?

Agree with suggestion to separate savings from expenses for presentation purposes.

cshell2
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Re: Critique My 2019 Spending

Post by cshell2 » Mon Jan 13, 2020 9:20 am

LAFiddler wrote:
Mon Jan 13, 2020 8:33 am
I’d love to know how you pull off such a low grocery bill for 3!
The toddler probably doesn't eat much.

michaeljc70
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Re: Critique My 2019 Spending

Post by michaeljc70 » Mon Jan 13, 2020 11:00 am

ReformedSpender wrote:
Sun Jan 12, 2020 6:35 pm
Lalamimi wrote:
Sun Jan 12, 2020 4:18 pm
Groceries $4400 Eating out $1900 Seems to be a lot. Maybe not. We are retired, and try to do low carb/Keto-ish, so not lots of snacks, but we do not buy organic, prepared meals either. We try for lunch specials rather than out to dinner. Do you both take lunches to work? Impressed you can go to the movies! My daughter has an 11 mo old and a 3 yr old. No clue when they went out last.
Comes out to a $85 weekly grocery bill and night out once a week for roughly $35. Hardly splurging for a family of 3

OP, I think you are doing great
+1

stoptothink
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Re: Critique My 2019 Spending

Post by stoptothink » Mon Jan 13, 2020 11:06 am

LAFiddler wrote:
Mon Jan 13, 2020 8:33 am
I’d love to know how you pull off such a low grocery bill for 3!
Family of 4 and we spent <$4k in '19 on food (including eating out). Kids are 7 and 4. There are quite a few threads on this board about this topic (minimizing food costs) specifically.

dukeblue219
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Re: Critique My 2019 Spending

Post by dukeblue219 » Mon Jan 13, 2020 11:09 am

Lalamimi wrote:
Sun Jan 12, 2020 4:18 pm
Groceries $4400 Eating out $1900 Seems to be a lot. Maybe not.
Not for a family with kids! We've got 2 toddlers and spend $900/mo on groceries. I'll fully admit we arent frugal with our food budget and eat a lot of meat and fish, but I'm also certain that $366/mo with 1 kid is amazing. Good work!

roadnottaken
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Re: Critique My 2019 Spending

Post by roadnottaken » Mon Jan 13, 2020 11:35 am

dukeblue219 wrote:
Mon Jan 13, 2020 11:09 am
Lalamimi wrote:
Sun Jan 12, 2020 4:18 pm
Groceries $4400 Eating out $1900 Seems to be a lot. Maybe not.
Not for a family with kids! We've got 2 toddlers and spend $900/mo on groceries. I'll fully admit we arent frugal with our food budget and eat a lot of meat and fish, but I'm also certain that $366/mo with 1 kid is amazing. Good work!
Family of 6 (4 young kids). We spend ~$12k/yr on groceries and another $8k eating-out ($1000/mo on groceries and $600/mo eating-out). We're obviously not super frugal, but also cook regularly and pack lunches and try to be reasonable. This thread is making me feel less reasonable than I thought we were...

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Harry Livermore
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Re: Critique My 2019 Spending

Post by Harry Livermore » Mon Jan 13, 2020 2:08 pm

roadnottaken wrote:
Mon Jan 13, 2020 11:35 am
dukeblue219 wrote:
Mon Jan 13, 2020 11:09 am
Lalamimi wrote:
Sun Jan 12, 2020 4:18 pm
Groceries $4400 Eating out $1900 Seems to be a lot. Maybe not.
Not for a family with kids! We've got 2 toddlers and spend $900/mo on groceries. I'll fully admit we arent frugal with our food budget and eat a lot of meat and fish, but I'm also certain that $366/mo with 1 kid is amazing. Good work!
Family of 6 (4 young kids). We spend ~$12k/yr on groceries and another $8k eating-out ($1000/mo on groceries and $600/mo eating-out). We're obviously not super frugal, but also cook regularly and pack lunches and try to be reasonable. This thread is making me feel less reasonable than I thought we were...
Put me in the camp of overspending on groceries. Family of 5, but one is away at school, so for 8-ish months or so we are only 4. We also spend +/- $10K on groceries. But "only" about $3K additional on eating out/ take out (I split those into 3 separate categories) Similar to roadnottaken and dukeblue though. I have not compiled 2019's data yet. The meal that I look at with the most critical eye is dinner. We tend to buy fresh food on the same day we make dinner, and I try to keep it under $20. Not always successful. I know lots of families that shop and plan dinners in a more efficient way and really admire that. Not our style though, and I'm OK with that.
I think d0gerz is doing really well. Good rate of savings and the car and utility expenses are remarkably low. Keep it up!
Cheers

dziuniek
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Re: Critique My 2019 Spending

Post by dziuniek » Mon Jan 13, 2020 3:39 pm

d0gerz wrote:
Sun Jan 12, 2020 3:51 pm
Would appreciate any comments, feedback on our spending for 2019. Trying to use this information to update planning for this year.

All figures are annual. Tax filing status is MFJ. We live in the Boston metro area. Household is 2 adults + toddler. We were renting for most of the year up until October when we finally bought a house.

Gross Income..................... 194,300
Tax Refund......................... 3,500
=========================
Total Income....................... 197,800
=========================

Federal Tax........................ 20,600
401k Contribution.................. 19,000
FICA............................... 8,200
State Tax (MA)..................... 7,700
HSA Contribution................... 6,000
Health Insurance................... 5,700
Medicare Tax....................... 2,700
Life Insurance..................... 500
Dental Insurance................... 400
Disability Insurance............... 200
=========================
Take Home.......................... 126,800
=========================

Taxable Investment............. 28,600
Charitable Giving.................. 20,500
Rent/Mortgage.................... 17,600
IRA Contribution................... 12,000
Travel............................. 4,900
Groceries.......................... 4,400
Closing Costs...................... 4,300
Household.......................... 3,600
Family Support..................... 2,300
Auto (Ins, Maint, etc.)............ 2,200
Utilities.......................... 2,200
529................................ 2,000
Eating Out......................... 1,900
Gifts/Misc......................... 1,600
Medical............................ 1,600
Gas................................ 1,200
Baby (Diapers etc.)............. 1,200
Entertainment...................... 800
Internet........................... 700
Cell Phone......................... 600
Clothes............................ 500
Gym................................ 200
Haircut............................ 200
Movies............................. 200
=========================
Net.................................. +11,500
=========================
You got money left. That does not balance. Now go and take your significant other out to dinner! (should that apply)

SQRT
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Re: Critique My 2019 Spending

Post by SQRT » Mon Jan 13, 2020 7:50 pm

You know that spending is pretty personal, right? What kind of critique are you looking for? Spend on what matters to you and save the rest. It’s pretty simple as long as you are saving enough for retirement.

rbaldini
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Re: Critique My 2019 Spending

Post by rbaldini » Mon Jan 13, 2020 7:57 pm

Saving $80k on $194k salary is great.

Now listen closely: if you meet your savings goals, it doesn’t matter what you spend your money on. Disregard anyone telling you to spend more/less on x. It is irrelevant.

nguy44
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Re: Critique My 2019 Spending

Post by nguy44 » Mon Jan 13, 2020 8:11 pm

rbaldini wrote:
Mon Jan 13, 2020 7:57 pm
Saving $80k on $194k salary is great.

Now listen closely: if you meet your savings goals, it doesn’t matter what you spend your money on. Disregard anyone telling you to spend more/less on x. It is irrelevant.
Completely agree with this.

During my working years there were times our income went over $200K and our savings rate was 30% or higher. You are hitting all the savings vehicles so worrying about specific categories at this savings rate is a very minor issue.

Also, kudos on the charitable contributions. Just before to save your receipts, it is an audit exposure - we were hit with one but had all the receipts so no big deal.

jsapiandante
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Re: Critique My 2019 Spending

Post by jsapiandante » Tue Jan 14, 2020 3:20 am

LAFiddler wrote:
Mon Jan 13, 2020 8:33 am
I’d love to know how you pull off such a low grocery bill for 3!
Totally doable with some planning. Our family of 3 spends about $250 per month. Granted, we cook almost all our meals from scratch so it makes it cheaper that way. We could probably spend less but we like steaks and wine occasionally. My wife plans out our breakfast, lunch, and dinner for the week. We cook 3 meals in batches on Sundays that we rotate for lunch and dinner during the week. Breakfast we rotate between oatmeal, eggs and toast, cereal, and pancakes. This way has helped reduced our grocery budget as well as eliminated throwing away leftovers.

Topic Author
d0gerz
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Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 12:09 am

manatee2005 wrote:
Sun Jan 12, 2020 4:10 pm
What does 20k in charitable giving include?
So last year I didn't actually give away this amount but nevertheless it has been set aside to be given away. I will take the standard deduction for 2019 and will try and bunch 2019-20 contributions together.

Also come to think of it, instead of charitable giving, I think 'tithe' might be a more appropriate label.

Topic Author
d0gerz
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Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 12:11 am

brad.clarkston wrote:
Sun Jan 12, 2020 4:18 pm
$200 on haircuts? You Spendthrift!!!! Go bald that's how true bogleheads save money! ;)
$500 on clothes? Cad!!! Dumpster dive like a true boglehead ! :annoyed
Entertainment .... ? Torturing pets and the baby should be enough you sod! :twisted:


But really that looks good, better than me. I suck at budgets.
Tried giving myself a haircut once. Better left in the hand of pros!

Topic Author
d0gerz
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Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 12:18 am

Hug401k wrote:
Sun Jan 12, 2020 6:12 pm
Does your mortgage rate include property taxes? Do you have excise tax? Other than that I'd say your numbers are amazing.
Yeah my monthly payment is PITI. Though it's only since October that I've had a mortgage, was renting before. If all else remains the same this year, I will not have as much of a net surplus, because my rent was super low. My PITI now is close to what my rent should have been

Though I don't know what you mean by excise tax. The only excise tax I had to pay last year was on the two cars and that was like $50 apiece.

Topic Author
d0gerz
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Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 12:27 am

Pacman wrote:
Sun Jan 12, 2020 6:29 pm
Three questions if you don't mind:
- Are you using credit card reward sign on bonuses for travel?
- Did you use HSA funds to pay for the medical expense itemized?
- How much coverage is the life insurance providing per person?

Contrary to the person above, I think your food budget is reasonable. Groceries come out to $366/month. Eating out budget comes out to $35 a week so its not like you are going to high end steakhouses each week.

Nice job.
Thank you.

1. Because we were involved in homebuying this year, I tried keeping our credit a bit clean. But towards the end of last year/early this year we qualified for the Southwest companion pass through sign on bonuses. That helps as the three of us can travel for the price of two. Also at least 25% if not more of the travel spend was in cash so not eligible for spending for bonuses.
2. No I paid out of pocket, figured I'd let the HSA grow.
3. The coverage is ~700k for myself, 150k (that's the max) for my wife, term life. It's not ideal because it's through my employer and I only have subsidized rates so long as I have this job.

Topic Author
d0gerz
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Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 12:38 am

livesoft wrote:
Sun Jan 12, 2020 6:42 pm
With your state tax and the charitable contributions I see that you are able to itemize, but you are not making the most of that because the standard deduction is so high. I think you should try to do some bunching of charitable contributions if you can. That is, donate to your charities the $20.5K per usual, but also donate $20.5K to your donor-advised fund this year. You would then get a $49K itemized deduction or more because you get the $7.7K in state taxes itemized. Then next year, ask your DAF to send $20.5 to your charities and take the standard deduction. Go back and forth like that.

A way to think about it: If you take the standard deduction two years in a row, then you deduct $24.4K x 2 = $48.8K. If you do what you are doing 2 years in a row, then you get ($20.5K + $7.7K) x 2 = $56.4K. But if you do what I am suggesting you get $24.4K + $49K = $73.4K deduction over 2 years.

That should save you a few thousand dollars in taxes over 2 years. If this is not clear, then ask questions until it is.

Furthermore, try to donate shares from your taxable account to your DAF instead of cash. You need though to donate only shares held long term with unrealized capital gains and not shares held short-term nor those with unrealized losses.

Be sure to adjust your withholding each year to reduce the chances of refunds. There is some interplay of state income tax refunds and Schedule A itemized deductions I think, but I don't know much about that since I don't pay state income taxes.

{OTOH, maybe you are already bunching charitable contributions and this was your big donation year?}
My goal for this year is to look into a donor advised fund (have heard good things about Fidelity). Will take the standard deduction for 2019 and try and bunch contributions this year. And yeah I'm looking to donate appreciated shares.

As for withholding, yes the big refund last year caught me off guard, but even still I haven't done anything to address it since. How should I figure out how much to withhold?

Financologist
Posts: 86
Joined: Wed Jan 01, 2020 11:16 pm

Re: Critique My 2019 Spending

Post by Financologist » Wed Jan 15, 2020 12:52 am

Have you considered shifting assets from taxable accounts (e.g., cash or unappreciated stock) to the 529 to max the time it can grow untaxed? Then if you otherwise planned to make periodic contributions to the 529, you could redirect those future contributions to replenish the raided account(s).

Topic Author
d0gerz
Posts: 228
Joined: Thu Apr 10, 2014 9:45 pm

Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 1:18 am

Olemiss540 wrote:
Sun Jan 12, 2020 6:57 pm
Looks extremely good to me, and definitely would label you as "frugal" compared to peers. What's your nest egg and expected retirement timeline? That's really all that's important to make sure you are going to hit your goal and shouldn't loosen the purse strings.....
Ron Ronnerson wrote:
Sun Jan 12, 2020 8:49 pm
As far as other suggestions, it is hard to make those without knowing information such as your ages, assets, liabilities, and approximate age you wish to retire. Depending on those answers, you may be ahead of where you need to be to reach your goals or could be right on track or behind (possibly considerably so). If you’re way ahead, perhaps relax a bit and eat out more often and increase the travel budget. If you’re way behind, things like charitable contributions, family support, 529, and other optional items may need to be reconsidered. It’s hard to say without knowing the whole picture.
I'll be honest, I don't have a good sense as to when I'd like to retire. Whenever I try to think about it my head starts to spin because there seem to be so many variables involved. So I don't have a goal or number that I'm trying to hit. Because of this I try in the short term to have as high a savings rate as I can. And I play mental tricks like counting active saving as 'spending' and still try and 'spend' less than I earn, if that makes sense.

I currently have ~700k saved, roughly split 400/300 between retirement/taxable. We're 37 (me) and 32. Wife's SAHM. We recently got a 350k 30-year mortgage, that's really the only liability, though it's certainly a big one. I guess I can't really contemplate retiring before paying off the mortgage, however long that will take.

Topic Author
d0gerz
Posts: 228
Joined: Thu Apr 10, 2014 9:45 pm

Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 1:30 am

H-Town wrote:
Sun Jan 12, 2020 9:26 pm
Well... I'll take that invitation.

1) Tax refund is not income. It's just a cash-flow item. You overpaid withholding tax to the IRS and now the IRS gives you back the overpaid tax. The IRS thank you for your interest-free loan.

2) Gotta separate savings & investments from spending. Items like HSA, taxable investment, (Roth?) IRA contributions, 529 are savings.

3) Is it one-income household? Just curious why you only contribute 19k instead of 38k.

4) Is there any employer match, profit sharing, ESPP, etc? It should count towards your income as well as savings.

5) Budget wise, it should come to zero. So the net $11.5k should count towards your savings.

6) You should max out HSA. You left $1k on the table.

7) You should put some money in limited FSA for dental and vision, if your plan allows it.
1. True and I need to work on not having this large a refund.
2. I'm counting savings as spending to see if I can still save even more.
3. Yeah single income.
4. There is employer match for the 401k and HSA but I'm not counting that or for that matter dividend/interest income etc.
5. It will go towards savings, but it's just that it isn't planned savings as in I wasn't aiming to save this specific number at the start of the year. It's just what I ended up with.
6. The 6k is my contribution and my employer also puts in 1k so that maxes out.
7. Does FSA rollover year over year? If not, what's the advantage of doing this?

manatee2005
Posts: 249
Joined: Wed Dec 18, 2019 9:17 pm

Re: Critique My 2019 Spending

Post by manatee2005 » Wed Jan 15, 2020 1:34 am

d0gerz wrote:
Wed Jan 15, 2020 12:09 am
manatee2005 wrote:
Sun Jan 12, 2020 4:10 pm
What does 20k in charitable giving include?
So last year I didn't actually give away this amount but nevertheless it has been set aside to be given away. I will take the standard deduction for 2019 and will try and bunch 2019-20 contributions together.

Also come to think of it, instead of charitable giving, I think 'tithe' might be a more appropriate label.
If it's tithe, isn't it 10% of your net, not 10% of your gross?

Topic Author
d0gerz
Posts: 228
Joined: Thu Apr 10, 2014 9:45 pm

Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 1:39 am

jsapiandante wrote:
Tue Jan 14, 2020 3:20 am
LAFiddler wrote:
Mon Jan 13, 2020 8:33 am
I’d love to know how you pull off such a low grocery bill for 3!
Totally doable with some planning. Our family of 3 spends about $250 per month. Granted, we cook almost all our meals from scratch so it makes it cheaper that way. We could probably spend less but we like steaks and wine occasionally. My wife plans out our breakfast, lunch, and dinner for the week. We cook 3 meals in batches on Sundays that we rotate for lunch and dinner during the week. Breakfast we rotate between oatmeal, eggs and toast, cereal, and pancakes. This way has helped reduced our grocery budget as well as eliminated throwing away leftovers.
That is fantastic and my dream scenario (especially the meal planning part). But sadly not my wife's. She finds it a bit stifling and wants more spontaneity day-to-day.

Cashews from Costco are probably my biggest grocery splurge. I probably eat my body weight in them each year.

jharkin
Posts: 2409
Joined: Mon Mar 28, 2016 7:14 am
Location: Boston suburbs

Re: Critique My 2019 Spending

Post by jharkin » Wed Jan 15, 2020 8:40 am

I live in Boston metro and have 2 kids. Income a little bit higher than you, but we both work. If this is single income you are doing quite well.


Others have asked all the savings and investment questions so I'll add thoughts on the expense side living in the same area:

1 - Its a nitpick but you are including tax refund as income... you know its not really ;)

2- LIfe insurance $500 for the year? How much coverage do you have? With income that level and a child you probably want close to $1M term policies for each of you (over and above any employer life), we have that and its costs us about $1500/yr

3 - $20k in charatable giving on that income in Boston metro is impressive. Well done. But be prepared for the fact that this may have to give when house and kids expenses add up (and they will)

4 - How is your mortgage only $1400/mo in Boston metro (I dont see prop tax and home ins split out ?) We where paying 2k/m PITI for our 1300sq 3BR/1BA starter house 10 years ago and we are almost on 495....

5 - Groceries.. not sure how you are doing that, its $80 a week. Get ready for that to double or more as the kids grow. And I'm talking Market Basket here, not Whole Foods and Roche Bros.

6 - Utilities at ~ $180 a month all in is ridiculously low for MA. We pay 1/3 that number just in the water bill. Mass has lots of old housing stock, very high electric rates and many towns dont even have natural gas. If you have a brand new super efficient home with heat pump and solar or 98% gas heating.. maybe. But be prepared for more.

7 - Baby. Are you sure you added up everything? Accounting for pediatrician visits, baby food/formula, all toys, strollers, cribs, baby furniture, etc you had to buy? Our experience was much higher than that. And if you have to pay for preschool or daycare in future it goes up exponentially.

8 - Where is home maintenance in the budget? Things will break and wear out. Be prepared for it and/or start setting aside a fund for the day the roof springs a leak orthe heat fails on a cold winter night.

jsapiandante
Posts: 108
Joined: Thu Jul 30, 2015 5:58 pm

Re: Critique My 2019 Spending

Post by jsapiandante » Wed Jan 15, 2020 3:32 pm

d0gerz wrote:
Wed Jan 15, 2020 1:39 am
jsapiandante wrote:
Tue Jan 14, 2020 3:20 am
LAFiddler wrote:
Mon Jan 13, 2020 8:33 am
I’d love to know how you pull off such a low grocery bill for 3!
Totally doable with some planning. Our family of 3 spends about $250 per month. Granted, we cook almost all our meals from scratch so it makes it cheaper that way. We could probably spend less but we like steaks and wine occasionally. My wife plans out our breakfast, lunch, and dinner for the week. We cook 3 meals in batches on Sundays that we rotate for lunch and dinner during the week. Breakfast we rotate between oatmeal, eggs and toast, cereal, and pancakes. This way has helped reduced our grocery budget as well as eliminated throwing away leftovers.
That is fantastic and my dream scenario (especially the meal planning part). But sadly not my wife's. She finds it a bit stifling and wants more spontaneity day-to-day.

Cashews from Costco are probably my biggest grocery splurge. I probably eat my body weight in them each year.
That's too bad. My wife used to be like yours until we had our first child. We tried the first few months to cook regularly but it took out a lot of family bonding time. This way, we do majority of the cooking and grocery shopping in one day to have more time with each other during weeknights and Saturdays to ourselves. We wish we would have done this sooner. Maybe your wife will get around to it eventually. To each their own.

WhiteMaxima
Posts: 2087
Joined: Thu May 19, 2016 5:04 pm

Re: Critique My 2019 Spending

Post by WhiteMaxima » Wed Jan 15, 2020 3:38 pm

Not bad.

BrownEyedGirl_27
Posts: 64
Joined: Tue Dec 17, 2019 6:37 pm

Re: Critique My 2019 Spending

Post by BrownEyedGirl_27 » Wed Jan 15, 2020 3:41 pm

I’m really impressed with your low spend on clothing. For two adults and a toddler 500 is amazing. What type of job do you have that doesn’t require a big spend on clothes? I enjoy clothes but I’m learning to be more conscious about what I’m buying and how it affects the planet. I am going to start thrifting and wearing my clothes longer. My hubby spent $300 on clothes in 2019 and I spent way too much! :oops: Awesome job on your budget in general; you’re doing great.
"Your mind has a mind of its own. At the very moment when you are most convinced of your own rationality, you may be feeling rather than thinking your way toward a decision.” | Jason Zweig

azurik
Posts: 40
Joined: Wed May 22, 2013 11:19 am
Location: Boston, MA

Re: Critique My 2019 Spending

Post by azurik » Wed Jan 15, 2020 3:52 pm

Lalamimi wrote:
Sun Jan 12, 2020 4:18 pm
Groceries $4400 Eating out $1900 Seems to be a lot. Maybe not. We are retired, and try to do low carb/Keto-ish, so not lots of snacks, but we do not buy organic, prepared meals either. We try for lunch specials rather than out to dinner. Do you both take lunches to work? Impressed you can go to the movies! My daughter has an 11 mo old and a 3 yr old. No clue when they went out last.
LOL, what? Tell me this isn't a troll post.

Eating out @ $1,900 a year is $36.53 a week. That is extremely reasonable (and almost impossible if that was dinner for two) in Boston. Your typical restaurant in Boston can easily run $100 to $200 a couple.

$84.61 a week for groceries is on the cheaper side too. This isn't about low carb/Keto diets. Location plays a part too. The average couple spends over $144.23 a week.

Come back to earth, buddy :)

Loik098
Posts: 656
Joined: Mon May 30, 2016 9:29 pm

Re: Critique My 2019 Spending

Post by Loik098 » Wed Jan 15, 2020 4:08 pm

Two thoughts:

1) Disability insurance: yours is very cheap. I don't know your occupation, but if it's one that requires a very specific skill set, I hope that you aren't relying solely on an employer-provided disability plan....one in which they can "just-make-you-be-a-janitor-and-not-have-to-pay-you" sort of plan. We chose to get "own-occupation" disability, and our insurance rates are therefore much higher than yours. Something like 1 in 4 adults will have a disability in their lifetime, so in my opinion, disability insurance is more important to "get right" than life insurance is.

2) 529: we have three kids. Looking back, I wish I would have pumped more of my excess money into the first kid's 529 plan while I still had it, and it was just him. I realize that you can make the same argument about any area of your savings, but for us, saving for college is now becoming a bigger priority every year. If you have more children, you might wish the same.

Topic Author
d0gerz
Posts: 228
Joined: Thu Apr 10, 2014 9:45 pm

Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 8:45 pm

Financologist wrote:
Wed Jan 15, 2020 12:52 am
Have you considered shifting assets from taxable accounts (e.g., cash or unappreciated stock) to the 529 to max the time it can grow untaxed? Then if you otherwise planned to make periodic contributions to the 529, you could redirect those future contributions to replenish the raided account(s).
Thanks for this perspective. No, this hadn't crossed my mind at all. Right now I contribute just enough to get the state tax savings in MA and stop there. I will look into this more.

Topic Author
d0gerz
Posts: 228
Joined: Thu Apr 10, 2014 9:45 pm

Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 9:15 pm

jharkin wrote:
Wed Jan 15, 2020 8:40 am
I live in Boston metro and have 2 kids. Income a little bit higher than you, but we both work. If this is single income you are doing quite well.


Others have asked all the savings and investment questions so I'll add thoughts on the expense side living in the same area:

1 - Its a nitpick but you are including tax refund as income... you know its not really ;)

2- LIfe insurance $500 for the year? How much coverage do you have? With income that level and a child you probably want close to $1M term policies for each of you (over and above any employer life), we have that and its costs us about $1500/yr

3 - $20k in charatable giving on that income in Boston metro is impressive. Well done. But be prepared for the fact that this may have to give when house and kids expenses add up (and they will)

4 - How is your mortgage only $1400/mo in Boston metro (I dont see prop tax and home ins split out ?) We where paying 2k/m PITI for our 1300sq 3BR/1BA starter house 10 years ago and we are almost on 495....

5 - Groceries.. not sure how you are doing that, its $80 a week. Get ready for that to double or more as the kids grow. And I'm talking Market Basket here, not Whole Foods and Roche Bros.

6 - Utilities at ~ $180 a month all in is ridiculously low for MA. We pay 1/3 that number just in the water bill. Mass has lots of old housing stock, very high electric rates and many towns dont even have natural gas. If you have a brand new super efficient home with heat pump and solar or 98% gas heating.. maybe. But be prepared for more.

7 - Baby. Are you sure you added up everything? Accounting for pediatrician visits, baby food/formula, all toys, strollers, cribs, baby furniture, etc you had to buy? Our experience was much higher than that. And if you have to pay for preschool or daycare in future it goes up exponentially.

8 - Where is home maintenance in the budget? Things will break and wear out. Be prepared for it and/or start setting aside a fund for the day the roof springs a leak orthe heat fails on a cold winter night.
Nice to get a local perspective, thank you.
2. Have ~700k for myself and 150k for my wife, both through the employer. How did you decide how much coverage to get? With this level if something were to happen to me, my family would have enough for a paid off house and then some, plus whatever's in the nest egg.

4. My PITI is actually $2400 a month. The total amount in the rent/mortgage category for last year seems low because I was renting for most of the year + had last month's rent already paid and accounted for when I first moved in a few years ago. My rent in general was super cheap for what it was. $1600 a month for a 3 BR/1.5 bath close to the T, so I rode that as long as I could. Housing payment now is close to market value for that rental. But yeah anyway this year's housing costs will go up 50%.

5. It could be just the way I'm categorizing it? Groceries are strictly things to eat or drink. E.g. if we buy toilet paper or toothpaste, that goes in the 'household' category.

6. Utilities are electric and natural gas. Between the rental and new house (and by new I of course mean very old new house!) there hasn't been that much of a difference in consumption. The winter so far has also been very mild so that has helped too. Water will start to be included, I didn't have to pay for it while renting. Per previous occupants, will be around $200 per quarter.

7. Again it might be because of different ways of categorizing. Pediatrician visits etc get bundled into 'medical'. Also a lot of the baby stuff you mentioned we already bought prior to last year. So definitely spent money on it, just not last year.

8. Yeah home maintenance will have to be a new category this year. Most likely what I had under 'Closing costs' will go towards that.

Topic Author
d0gerz
Posts: 228
Joined: Thu Apr 10, 2014 9:45 pm

Re: Critique My 2019 Spending

Post by d0gerz » Wed Jan 15, 2020 9:17 pm

manatee2005 wrote:
Wed Jan 15, 2020 1:34 am
d0gerz wrote:
Wed Jan 15, 2020 12:09 am
manatee2005 wrote:
Sun Jan 12, 2020 4:10 pm
What does 20k in charitable giving include?
So last year I didn't actually give away this amount but nevertheless it has been set aside to be given away. I will take the standard deduction for 2019 and will try and bunch 2019-20 contributions together.

Also come to think of it, instead of charitable giving, I think 'tithe' might be a more appropriate label.
If it's tithe, isn't it 10% of your net, not 10% of your gross?
I meant more in terms of the spirit of what it is rather than strictly what %age of income I allocate

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