Let’s be clear up front: this isn’t a bragging post. Far from it. Last year we spent a lot on our 2018 household budget.
We didn’t buy matching jet skis or take five trips to the Bahamas, but if anyone thought we were financial wizards, our spending last year wouldn’t help that impression.
The point of this write-up is to reset and cut some of the frivolous purchases that crept in late in the year. As Dana Carvey’s George H.W. Bush might put it: “Shopping bad, bad!”
Here’s how the Cubert Family Robinson spent its money, and how that lines up with the $24,000 “gold standard” many in the FIRE community aim for. I’ve left out any business expenses to keep things clear.
A quick note on rentals: our long-term rentals and Airbnb needed big outlays this year. The Airbnb alone cost well over $10,000 in furnishings and setup. Two of our four rentals needed a new furnace, and one required a new concrete path — that was also just north of $10,000. How do we make money with real estate again?
Bottom line: $77K in household spending to support our family of four this past year. Gulp. Even if you remove big one-offs like the roof and car repairs, we’re still above $70K. That’s a lot of Taco Bell party packs.
We splurged on travel and we eat out a fair amount — and I’m not apologizing for either. I don’t expect those categories to change much in early retirement. Travel costs money even when you’re good at credit-card points.
If there’s a reliable way to cut costs, it’s early retirement. Keep a parent home to provide childcare and—bam—you can save over $17K. Pull one car out of the garage and shave off about $2K more. That drops us to roughly $58K.
Where the real savings come in is eliminating debt: student loans and mortgages. If we stay disciplined and pay those off, another $11K disappears. That would put us around $47K.
Even though our remaining student loan is at about 2% (almost the same as inflation), part of me wants to be done with the payments. A tiny part.
Still, $47K is about double the $24K gold standard the thriftiest in FIRE shoot for. And that $24K target includes healthcare. Yeah, healthcare. If a reasonably healthy family of four gets coverage for about $800 a month after a small subsidy, that’s nearly $10K a year — boom, back to $57K.
Another piece: our little ranch carries hefty property taxes — roughly $4K a year. We love the great public schools within walking distance, but ouch. Adding that back brings us to about $61K. We seem to be headed the wrong way.
Or maybe not. One SemiFIRE plan is to keep running our two businesses for the foreseeable future — at least until sitting around all day sounds more appealing. I’m guessing that moment will be when the kids finish grade school, in about 12 years.
I checked our retirement numbers in the trusty FIRE spreadsheet and we actually planned for roughly $64K per year in semi-FIRE expenses after leaving the cubicle. So we’re not as far off as the raw numbers implied.
We shouldn’t accept ridiculous spending, but we’re not your average upper-middle-class family either. We cram two kids into one bedroom and drive paid-off cars. My wife and I enjoy a date night every few weeks and we’re unapologetic about that. At the same time, we’re aggressively paying down the mortgage.
We won’t be replacing a roof every year (thankfully). And with the kids now in public school full-time, childcare costs should drop significantly in 2019.
Money comes in cycles: low pay and big debt early on, then higher pay and less debt later — even if you take on more debt for an MBA to get a better salary. I’m finally seeing how time and persistence pay off in this mid-life money cycle. There are more financial levers to pull, and we have a money map to guide us.
As for the ongoing search for what matters — relationships, challenge, no regrets, and yes, the right amount of shopping — 2019, we’re coming for you.
Any surprises or lessons from your 2018 household spending?