Living a $100,000 lifestyle on $40,000 per year – 2016 Expenses in Review

“Oh you live on $40,000 per year? Guess you like camping in the van underneath the highway bridge huh?  Still enjoying those rice and beans?  Three kids cost $40,000 per year right off the bat so it’s clearly impossible!”.  That complainer clearly doesn’t know how we spend money.

Living well on $40,000 per year is possible and I’m here to explain exactly how by going over all of our expenses during 2016.  Later in the article I’ll explain why our spending affords us a lifestyle that costs most other people $100,000 per year.  And I don’t think many would argue that a $100,000 per year lifestyle is a tough way to live.

2016 was the first time that Mrs. Root of Good and I didn’t have a full time job all year (other than that one month of full time employment in January 2016 for Mrs. RoG).  Now we have essentially a full year of early retired living expenses recorded.  At a high level I can summarize our 2016 spending by saying “We nailed it!”.  Our 2016 budget totaled $40,000 while our expenses came in just a few bucks under $39,000.  On that low budget we managed to take several international vacations and purchase a 2009 minivan for cash.


Where did the money go?

At the beginning of 2016 I laid out our $40,000 spending plan for the year.  We increased the 2016 budget to $40,000 after acknowledging that we could be spending a lot more than the $32,000 or $32,400 that we budgeted for 2014 and 2015, respectively.

Our spending tracked closely to our budgeted amounts in almost all categories with the only really notable deviation coming from the $8,300 we spent on the new (used) minivan.  That expense plus other regular auto-related expenses reached 369% of our budgeted amount for autos.

Education and taxes were between 100% and 120% of budgeted amounts.  All other expense categories were 100% or less than the budgeted amounts.




$8,200 budgeted vs. $6,031 actual spending

First off allow me to celebrate our complete lack of a mortgage payment.  We paid off the last small chunk of mortgage in 2015.  No more mortgage!

Our housing expenses are fairly predictable year to year.  The repairs and maintenance budget of $2,500 covers big ticket items plus smaller repairs.  It also covers lawn maintenance supplies and equipment like gas for the lawnmower, fire ant bait, and paint for the house.  We spent $866 in this category which is only 35% of the $2,500 budgeted.  I intentionally budgeted plenty for this category because I wanted the flexibility to call a repairman for tasks I don’t want to do (like plumbing).

During the year we had a few plumbing issues, some preventative like replacing all the toilet shut off vales, and some repairs (I broke a sink drain P-trap while trying to clean it; the shower faucet sprung a leak and had to be replaced).  I also did a small amount of DIY plumbing repair and saved a few hundred bucks that way.  I needed to replace the pressure regulator valve.  It was an “unscrew the old one, screw back on the new one” repair fortunately.  That is about the limit of my plumbing expertise.

Had to get a little dirty in the crawl space to replace this beauty.
Had to get a little dirty in the crawl space to replace this beauty.

For house insurance and taxes we spent $2,203 against a budget of $2,200.  If only I could get all our expense categories within $3 of budgeted amounts!

Utilities are also fairly predictable since the rates are regulated for the most part.  We spent $2,809 out of the $3,000 budget.  The almost $200 cost savings versus the budget was due to savings on the water bill thanks to that pressure regulator valve replacement and the fact that we are on vacation five to ten weeks during any given year.

Our Home Furnishings / Furniture budget of $500 was way more than enough to cover our $153 actual spending.  We’ve owned our house for over 13 years so we don’t really need to replace a lot of household items.  We picked up a new couch from the thrift shop and a few other odds and ends.  I probably make enough from random craigslist sales to cover our actual spending on furniture but I don’t keep track of craigslist sales that closely.



$2,900 budgeted vs. $9,428 actual spending

This is the one area where we blew up the budget with our new (used) minivan purchase.  But it’s okay because we intentionally budget for these “one time” expenses by allocating $1,000 per year to our car replacement fund to account for the depreciation over time.

Here’s an excerpt from my “$50 car payment for life” car replacement strategy:

Here’s the math behind my $50 car payment.  Buy a gently used six to eight year old car with low to moderate mileage for around $8,000-10,000.  Run the car almost into the ground and then sell it after nine or ten years when it’s 15-16 years old for $3,000.  The net depreciation (cost of new(er) car minus sale proceeds from older car) for those nine to ten years is $5,000 to $7,000 or about $50 per month ($6000 divided by 120 months = $50/month).

$50 per month is less than $1,000 per year but I wanted to keep plenty in the budget in case we need to replace the vehicle more often (and odds are we’ll be in an accident or sustain damage to the van at some point).  We are our own insurance company since we carry no comprehensive or collision coverage on our minivan.  We’re saving hundreds per year and can easily afford a sudden $8,000 to $10,000 loss.

Great for hauling lots of people and loads of stuff. And 2000+ mile road trips.
Great for hauling lots of people and loads of stuff. And 2000+ mile road trips.

I’ll probably put out a full article on it later, but so far we are eight months into owning just one car.  And there have been exactly two situations where it would have been nice to have two cars (but we managed to get by just fine with one).  No uber or public transit required so far (though I did take the bus downtown once for a day of museums with our four year old).

It’s worth mentioning that we didn’t come close to spending our $400 gas budget.  We only spent $191 during 2016.  I planned the gas budget assuming 4,000 miles of driving around town at 30 miles per gallon while paying $3 per gallon for gas.  It turns out all three assumptions were wrong.

We drove much less than 4,000 miles during the year (I count road trip related expenditures such as gas in the “Vacations/Travel” category).  We replaced the 30 mpg Honda sedans we owned at the beginning of 2016 with the minivan that probably gets 19-20 mpg in the city.  And gas prices were closer to $2 than $3 throughout 2016.



$8,000 budgeted vs. $6,330 actual spending

We budgeted $7,000 for groceries and $1,000 for dining out.  By year end, we spent a total of $5,753 on groceries (82% of budget) and $577 on dining out (58% of budget).

We manage to save on groceries without Extreme Couponing (hint: Aldi and grocery store loss leaders are your friends).  We eat pretty well with a variety of fresh fruits and vegetables (and meat of course) plus purchase a ton of Asian and Latino ingredients throughout the year to make some tasty ethnic dishes (here’s what a month of grocery shopping looked like for us a couple of years ago).  We love cooking and enjoy the challenge of making awesome meals out of whatever random stuff is in our fridge.

Pho, from scratch. Maybe a buck per bowl.


(Mostly) fresh fruits and veggies mostly from Aldi. And all of that was probably under $40 (about what you would spend for a small basket of produce at a fancy pants grocery store).


When dining out, we tend to frequent the same few restaurants.  For those restaurants that take them, we buy discounted gift cards from (and you can get $5 off your first gift card purchase at Raise by clicking here).  But we really don’t go out to eat very often.


Other Core Living Expenses

$6,300 budgeted vs. $5,378 actual spending

We spent about $1,000 less than budgeted in this catch all category that includes phone, internet, medical and dental, clothing, education, and taxes.

For phone, cell phone, and internet, we go the extremely cheap route.  The $422 per year that we pay for phone, cell, and internet is less than some households pay in one month!

Our phone is hooked up through a $50 Obihai VOIP adapter using Google Voice for free monthly service.  My smartphone service is free through Freedompop.  Each month I get 200 voice minutes, 500 texts and around a gigabyte of 3G/4G data for free.  I never come close to any of those limits.

Our internet is 50 mbit/5 mbit service through Time Warner Cable at $35 per month (and we bought our own cable modem for $30 to avoid the $10 per month cable modem rental fee).  The regular rate for internet is $40/month but I call or go online each year and snag an extra $5-10 discount by asking politely.

We have a prepaid T-mobile dumb phone on a legacy plan that costs $10 per year. We rarely use it, but keep it activated for convenience and for emergencies.  It has saved us several times while overseas since it works worldwide (for higher per-minute rates).

Our medical and dental expenses were $2,162 for the year which is 72% of the $3,000 budgeted.  Our health insurance premiums (with heavy subsidies from the Affordable Care Act) were about what we expected at $125 per month.  We planned on $440 in healthcare expenses and didn’t spend all of that.  Dental expenses were budgeted for $1,000 since Mrs. Root of Good and I don’t have dental insurance.  We were lucky and didn’t have any expensive dental procedures in 2016 (just routine cleaning and exams).

What will you do when the Affordable Care Act / Obamacare goes away?” someone will ask.  Check out my discussion and the comments in my December 2016 Financial Update post to learn more about my thoughts and our plans.

Clothing purchases totaled $452 for the year.  How do we do it with a family of five? Some hand me downs, some thrift shopping, and some retail store purchases.  Since the adults in the house are no longer working, our wardrobes are pretty basic.  Swimming attire and shoes are probably the largest clothing subcategories these days.

Marathon thrift shopping
Marathon thrift shopping

Education expenses of $267 were 107% of the $250 budgeted for 2016.  Now that our oldest child is in middle school, the field trips are getting more expensive. As are the required graphing calculators.

We paid a total of $2,075 in taxes during 2016 versus a budgeted $1,750.  This primarily comes from rounding up when paying quarterly estimated state taxes to spend in even $100 increments.  North Carolina charges $2 per $100 when paying with a credit card so I try to get as many points or miles as possible.  Paying taxes with a credit card is a great way to meet minimum spending requirements from new credit card bonus offers.  And who doesn’t love free travel?  (Check out Jeremy at Go Curry Cracker – he graciously allowed Uncle Sam to buy him a free family trip to Hawaii!).

For those curious about our tax liability in 2016, we’ll owe a couple of thousand dollars in federal tax due to the self employment tax I pay on blog income (partially offset by $3000 in child tax credits).  We are in the strange situation of paying higher taxes during early retirement than we were when working full time and earning $150,000 per year while paying only $150 in taxes.  I still think our overall 2016 tax burden is very reasonable considering I took some capital gains and converted $4,000+ from a traditional IRA to a Roth to start my Roth IRA Conversion Ladder.


Purely Discretionary Expenses

$14,600 budgeted vs. $11,812 actual spending

This is where the fun is.  Vacations, entertainment expenses, and electronics primarily.

I bumped our entertainment and toys budget up to $2,500 from the $1,000 in 2015 and previous years.  At $522 total entertainment spending for the year we still didn’t spend the $1,000 let alone the $2,500 “new and improved” budget.  What can I say? So many free or cheap entertainment options mean we don’t spend a lot in this category.  Most of the $522 is outdoors/sports related expenses like bike tires/tubes, rollerskating admission, and city swimming pool passes.  Liquor ($176) is included in this category.  There’s a miscellany of computer/video games, supplies to build crazy things, and half of a netflix subscription.

Boat rental - not free but worth every penny of the $4. Also cheaper and more fun than a gym membership. And we saw a bald eagle.
Boat rental – not free but worth every penny of the $4. Also cheaper and more fun than a gym membership. And we saw a bald eagle.


Vacations represent the bulk of our discretionary spending.  We somehow managed to come in just $43 under our $10,000 budget with $9,957 total vacation spending in 2016.

In 2016 we did some serious traveling:

We stretch a buck till it hurts.  Travel hacking helps a lot. Check out credit card sign up bonuses and get you some free travel too.  The European lodging is all through Airbnb (save $35 on your first trip!).  For cruises we usually book through Expedia but click through Ebates to get a 10% cash rebate (and you get an extra $10 when you sign up for Ebates through this link).

View of both falls from the Canadian side.
We took a quick 2 night pit stop in Niagara Falls on our drive home this past summer.


Our electronics budget of $1,000 was big enough to accommodate our $885 in tech gadget purchases.  The majority of the electronics spending was a pair of brand new HP ProBook 430 g3 ultralight computers for $350 each (Black Friday special pricing).  They have similar specs to macbook pros that cost 3-4 times as much (except ours came with no Apple logos).  We mainly bought them for our 9 week summer trip since we’ll be carrying nothing more than regular size bookbags for our trek across Europe.  These new toys are faster, smaller, and almost half the weight of our old 15″ laptops.

Our $1,000 gift budget went mostly unused.  We spent just $381 throughout the year on various gifts for Christmas and birthdays.  Our families aren’t huge gift givers fortunately so we get by without much financial outlay.  We’re also opportunistic gift acquirers, so if we see a nice deal on a gift for someone then we’ll purchase it months ahead of time.

A "free" gift. An art kit pulled together from random unused school supplies. Our kids love these and use them all the time.
A “free” Christmas gift. Random unused school supplies found around our house repurposed into an art kit. Our kids both loved receiving these for Christmas gifts and use them all the time.

I’m going to get some nasty comments for this, but here it goes.  We gave almost nothing away to charity in 2016 and I’m totally okay with it.  We only spent $67 out of our already scrooge-like $100 budget.  Maybe we’ll give hundreds, thousands, or millions to charity some day.  We still have three young kids to take care of and several other financial unknowns.  Health care costs in the future are uncertain.  In the meantime we are active in the community and volunteer our time in various ways.

2016 was a huge year in the Personal Finance blogging community. It was pretty awesome when Mr. Money Mustache gave away $100,000 of his loot to charity.  Then Physician on Fire did the same thing.  I believe all of them received some decent tax breaks from making these sizable donations (in some cases to their own donor advised funds), and I hope to one day turbocharge the value of my giving by finding some tax breaks too.  That time is not today.

I’m a big fan of letting each person choose how they spend their money and not shaming others into giving it away.  I know at least one other major FIRE blogger feels the same way but I’ll never tell who!

A quick note on discretionary expenses: over one third of our annual budget falls in the discretionary category.  And that’s a great situation to be in since we can very easily slash discretionary spending if we enter a prolonged period of poor stock market returns.  Cheap vacations or skipping them altogether combined with deferred toy purchases would lower our total annual expenses to roughly $30,000.


Living well on less than $40,000 per year

So that’s the story of our $40,000 per year budget and how it played out in practice over the past year.  Sometimes I’ll hear from high spending folks that there is no way anyone could live on $40,000 per year, and certainly not with three kids.

However if we gross up our $40,000 per year budget to account for things we don’t pay for, it’s easy to see how we’re living a $100,000 per year lifestyle only minor sacrifices:

  • +$20,000 mortgage payment
  • +$5,000 new car payments
  • +$10,000 extra tax bill
  • +$5,000 dumb financial moves (credit card interest, extended warranties, investment management fees)
  • +$10,000 rough annual value of travel hacking free hotel rooms and free flights
  • +$10,000 work related costs (lunches out; fancier wardrobe)

So if you’re like me and spend around $40,000 per year, realize that you might be living a luxurious six figure lifestyle without even knowing it!  And welcome to the club.


How to track spending like a pro

When I was working I kept track of spending but never budgeted. We always had a surplus of funds and spent like we wanted to.  I used a simple spreadsheet to keep track of our expenses.

Total 2016 Spending (courtesy of Personal Capital)
Total 2016 Spending (screen cap from Personal Capital)


Then a few years ago I switched to Personal Capital to track all of our expenses (full review).  Personal Capital also tracks all our income (including dividends and interest), and summarizes a couple dozen investment accounts into one screen.  It is completely free to use Personal Capital whether you have $10,000 or $1,000,000 or more.  If you don’t already track expenses, try Personal Capital, since it only takes 10 minutes to sign up and link all your accounts.



How was your 2016 spending?  Who’s going to win the biggest spender award?  And the tiniest spender award?  Impress me with your numbers!



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  1. Thanks for the details Justin. Always helpful to have you keep proving that it can be done. The way you framed it as “$100,000 lifestyle on $40,000 a year” is perfect, since the reality for the vast majority of people is that they’ll be spending a lot less in “retirement” than when working.

    Here’s to a great 2017!

  2. We more than doubled that number (just shy of $90K), but $33K of that is because we paid off one of our rental mortgages. We still have 1 remaining plus our home mortgage, and we’re working on chiseling those down. Having Jon able to do as much of the repairs and maintenance as he does easily saved us $4-5K, especially once you throw rental repairs in there.

  3. Living the dream! We spent right around $40K this year if we exclude our Van purchase of a similar size as yours. You guys are doing awesome! (Our house isn’t paid off yet, but in about 4 years that will cut us down roughly $7K per year). I think we easily live a 75-80K lifestyle based on time off, tax optimization, and good planning. A dollar stretches a lot further than many people think!

    I’m with you on the charity deal. Mrs. C. and I made around $80K last year and gave $0 to Charity. We spent around $800 on helping family/friends with issues, but still a small percentage of total income. You shouldn’t feel guilty, nor should others try to make you feel guilty for how you spend your money. The fact that you are sharing your income and expenditures with the world so openly is a major help to thousands of people. What many of those people who judge you on the charity issue aren’t seeing is the extreme value to society you are making by being present in your kids lives. This is huge and something most parents, and especially most dads, don’t do, largely thanks to those “job things”.

    1. I’ve never tallied how much we help family/friends with stuff (monetary and advice/time) but that’s the way I look at it too. I go out of my way to help people out when I have the skills or knowledge (and free schedule) to do so. And how do I value my gift to society for making my kids more awesome? 🙂

  4. Wow, this is amazing!! I enjoyed reading the breakdown of how you and your family were able to spend so little last year. We too frequent Aldi for groceries, thrift/consignment stores for clothing, and use discounted gift cards when we eat out. We’ve saved a ton of money by doing so as well! Thanks for the great read, and congrats again on the impressively low spending!

    1. So I’m not the only one doing some clever lifestyle hacking? We just stopped by Aldi’s today and spent $50. Half that was for smoked salmon and two huge racks of ribs. Save in some areas to splurge in others, right? 🙂

  5. Great breakdown, Justin!

    Since your minivan was only a one-time purchase, that leaves an additional $8k for you to play around with or just leave it in the market!

    Awesome job on sticking to your budget and keeping your expenses low!

    1. We’ll be dropping several thousand on a new roof this year so that will consume a big part of that $8k. Or all of it if I have to replace all the roof decking material.

  6. Nicely done, Justin! I think $40,000 is completely doable and I would like to fancy myself as part of your club. Although in 2016 we spent just shy of $60,000 with just one kid. However, about $20,000 of that is mortgage P&I and another $10,000 is daycare. Those expenses will eventually go away though.

    We also used travel hacking for some big savings this year as two of my brothers got married back home. That required airfare for 3 (kiddo was just over the 2 yr mark!) along with some travel expenses for the bachelor parties…

    Also, love how gas prices are so low! Those are some good savings to the auto budget right there!

    Thanks for the overview!

    1. It’s tough to compare pre-FIRE budgets to post-FIRE because of things like childcare and mortgage. Those can easily consume half of a frugal person’s budget especially if you’re in a high COL area (to earn the big bucks of course!).

  7. For our family of 7 we came in at about 33,000 for the year, minus giving. Not having a mortgage is a big part of that! Although we did build out our master bathroom, and spend 8 weeks traveling.

      1. Great work Justin. To the above poster, we are a family of 7 also. Came in at around $75K, but property tax is roughly $12K, medical costs (insurance @ $9K + misc) = $15K, so I think we are doing “okay”.

        Some areas of fat, but comfortable where we are at.

  8. Very thorough break down and thanks for sharing. I’m not surprised by your end number. Mortgage is a large part of most people’s expenditures. Remove that from the equation and 40k should go a long way. That is after all nearly as much as the median us income (52k) and you don’t have a mortgage. It just goes to show that if you set your mind to it anyone can do it.

    1. That median income figure is key. Factor in what we would pay on a mortgage ($600? $800?) and some taxes and we would easily be over $52k in spending. So we’re living better than half the population just from that quick metric.

  9. Pretty impressive! We spend a similar amount with zero kids ???? Without that minivan purchase you would’ve absolutely destroyed that budget.

    Totally agree that what you give to charity is your choice and your business. We give zero and it will stay that way until we reach freedom. Anyone who disagrees is free to make an extra donation to make up for us not giving, and as a bonus, they get extra virtue signalling points!

  10. Killing it! With travel as your largest expense, you guys are living well indeed. I’m jealous of your tax an insurance rates!

    Our budget also came in at 38k, but we’re only a family of two. Living in CT isn’t cheap and we still have a mortgage. At just over $7k travel was also one of our largest expenses. With only minor travel hacking we managed to go to Colorado, New Mexico, Nova Scotia, Maine, and to Costa Rica twice 🙂

    I can relate on the 100k lifestyle, I feel like we are living like kings even though we aren’t spending like it 🙂

  11. Nice! I’m not going to win the biggest or smallest spender award–I think we spent just about the same as you, but for 2 people in the DC area.

    It feels like we live a really luxurious lifestyle, because we live in a beautiful apartment, have a well stocked liquor cabinet, and pursue lots of hobbies, but just yesterday a friend was amazed that we haven’t ordered takeout in almost a year and said she would be so miserable to live a barebones existence like we do. So, I guess luxuriousness is in the eye of the beholder!

    1. That reminds me, I haven’t had Chinese takeout in several months. Might have to drop $10 or $15 soon. 🙂

      Funny what people consider luxuries or “bare bones”. Go show pics of your lifestyle to folks living in the ‘hood in inner city Baltimore or DC and I bet they would trade your bare bones for their bare bones existence 🙂

  12. Congrats on another great year of financial independence! It was a thrill joining you in 2016!

    Oh, and nice job spending so little Justin! Truly an inspiration to us all!

    While my family didn’t quite manage such a small budget in 2016, if we subtracted off our mortgage we’d be in the same ball park!

  13. Wowza, it sounds like you guys killed it! Thanks for showing you can have kiddos and still make frugality really work. 🙂 I want to get more into travel hacking, but since we’re paying off our student loans over the next 12 months or so, every penny goes towards debt. But after that I expect to take a nice vacation. 🙂

    We spent about $40,000, so I know we could do better. In all fairness, we did renovate our new house, and that got quite expensive. Hopefully we can get that number nice ‘n’ low during 2016 as we pay off debt.

    1. Only so much savings you can do when you’re paying off debt and moving to a new house (and renovating!). Hopefully 2017 lets you catch up on the savings.

  14. I love the detail of these breakdowns. It’s helpful. My goal is to start building up points to travel hack, though we don’t travel much.

    I am having trouble not being a little nitpicky, so I’ll throw all restraint aside. I think most people’s $100,000 budget allows for more luxuries. For example, the new cars that you mention at the end. There’s a big difference between my Forrester and my wife’s Acura MDX. Many other people might prefer to eat out more or have cable television. Those are the things that I’d think you’d see with a true 100K budget.

    Also, the mortgage payoff is huge. I guess we could similarly say that we paid off a vacation timeshare years ago (not the best use of money), so when we go to Aruba every year it is like a $4000 vacation for very little. Or in a few years when our solar panels are paid off and our utilities drop to almost nothing. It feels like prepaying is just an accounting trick to make the future look great.

    In the end, it really matters what the value is to you. I love that you’ve been able to combine some things that you love like cooking your own exotic dinners with frugal food finds.

    1. I guess I don’t really view the Acura MDX as a big improvement over my Toyota Sienna. 🙂 Of course I’m a weirdo because I HATE leather seats and consider cloth to be the far superior upholstery choice in terms of comfort. However my BMW-loving friend pointed out that my opinion would change if I had heating and cooling in my leather seats (and farts get “stuck” in cloth seats he claims but I think that’s BS personally).

      But yes, if you are spending $100k or $200k AND getting a lot of value out of those purchases it will be a higher lifestyle than what I have on $40k. The sad truth is I’ve seen a lot of people doing the $100k+ lifestyle and still struggle. Maybe their car is really nice but other parts of lifestyle are hurting (travel, food, housing, stability, free time, etc).

  15. Don’t worry about the naysayers, Justin (I know you don’t). They will always be there. Great job on the spending front. Love when you prove the people wrong who cannot/will not put in the effort you and your family do to stretch a buck.

    We are a little different on the charitable side since we as Christians are directed to give, whether we think we can/should or not. But that is between you and the Big Guy, so I will never criticize. I have enough in my life that you could do the the reverse if you chose.

    1. So far I’m pretty happy with the tone of the comments here. 🙂 I think we all have different takes on philanthropy and timing and how to best approach it and it’s silly to criticize others for not living up to our own expectations of what should be given away.

  16. Great breakdown of everything. $40,000 per year can get you a lot of good living and probably in most areas of the country too. I bet it could even be stretched farther if you started living outside the country in places like Thailand, but you guys are proof that you don’t even need to!

    We’re hoping one day to save up a large enough budget where we can consistently under-spend as well to stay sane. Our only what if is medical, but we’re still young and healthy so haven’t given a ton of thought to it yet. We’re going to have to learn how to start making Pho, because we order that out at the moment.

    1. So far we haven’t really focused on cutting costs to the core. I would say we are loose in our spending way more now compared to our working years when we were saving and investing (and racing to FIRE!).

      I’m in the same situation with medical. It’s dirt cheap today but we’re basically healthy. Insurance is a huge unknown due to the political environment we are in, as is our future health situation in the next few decades. Who knows what the future holds? In the meantime we’re enjoying some good cheap but fancy living and not worrying about unquantifiables.

  17. Thanks for the shout out, Justin!

    it’s my opinion that we should not shame others about their charitable giving (or really any of their financial decisions at all, provided that said decisions aren’t causing extreme harm.) It was disappointing, to say the least, to see some folks use their personal financial platforms in an attempt to shame people into giving to specific organizations over the weekend. I mean, I’m all for expressing whatever you wish, but I just don’t like when others are shamed – whether it’s for purchasing a vehicle or for giving or not giving to charity.

    I funded a DAF for a myriad of reasons, all of which made sense for me in that moment. What anyone else does is their own business. I certainly would not have made the decision that I made with the combination of multiple kids to support and my current net worth…

    1. Agreed. I wrote out a comment early this morning before leaving for work, but it doesn’t appear to have gone through.

      I made a big donation to the donor advised fund not as a method of shaming anyone, but rather to inspire others with generous salaries and excessive disposable income (i.e. my target audience of physicians) to follow my lead. At least three people repeated my giving by donating a six figure sum to DAFs. In essence, it’s a tax efficient way to front-load decades worth of charitable giving while receiving an immediate tax deduction. I expect to receive between $40,000 and $45,000 back as a result, which I will donate again this year, and see close to $20,000 back from that.

      The following years, I expect to be retired from medicine, in much lower tax brackets, and will have a DAF worth about 10% of my nest egg to give from indefinitely. To me, it’s a smart move that helps me feel more comfortable walking away from a good job.

      Loved the post, by the way. We spent a lot less than most physician families, but we “cheat” by having previously paid off our mortgage, student loans, and are self insured (by virtue of being FI) so no life or disability insurance. Our $62,000 for a family of four was a Champagne lifestyle on a Barefoot budget.


      1. Yeah, I wasn’t calling you and TJ and MMM out at all! I love that you guys are giving big and hope we can find a way to maximize giving and get that kind of tax benefit to turbocharge the gift like you describe. I’m coming up mostly empty right now (other than donating appreciated shares but CG rates are so low and I pay zero individual income tax already that it doesn’t really make sense).

        I love your spending level too. I imagine if we ramped up the spending to $60-70k we could probably live a $150k+ lifestyle!

        Oh yeah, and sorry if my blog deleted your first comment. I checked the spam folder and didn’t see anything from you (but I think Mr Crazy Kicks got stuck in there!).

        1. It’s all good!

          It appears you’re in a position financially to ramp up that spending a bit, but I also think you’ve found the sweet spot where additional spending gives you rapidly diminishing returns. I think most people are unaware that a bend point exists, and for those of us who are wise to it, it exists at a different spot based on many individual factors. I think we’ve found ours, but I can also imagine it increasing as our boys are older, hungrier, and generally more expensive (currently 6 & 8 and don’t know downhill skiing exists).

          It never hurts to give appreciated shares (as long as you can afford to give). It’s sort of an alternative way to “tax gain harvest” by jettisoning the most appreciated parts of your taxable portfolio, decreasing the difference between your cost basis and current asset value. If the 0% capital gains bracket disappears (and it could), it will have been a good move (as compared to giving cash).


          p.s. my original comment was waiting on the screen when I came home from work. I probably forgot to click the Spam box.

    2. I’m with you – charity should be something you do when you feel it’s right.

      I guess I’m at that point where analytically I know I’ll need much less $ when I’m 60 than I do at age 36. By 60 I won’t have 5-6 decades of life to pay for, nor 3 kids (college, getting transitioned into adulthood, unknown health issues between now and then, etc), nor the uncertainty of stock market returns for the next 20-25 years (by that I mean I’ll know whether I have $1 million or $10 million at age 60). So at some age and net worth level I’ll know “hey I have enough” and loosen the purse strings.

  18. This is why I always use your story whenever anyone complains they can’t live on less than 100K with 3 kids.

    That is some seriously awesome life hacking to get the budget down to 40K.

    I’m curious about something though. Do you never feel pressured to spent more on your kids from other parents? This is the concern I hear a lot about from other parents. I get that we FIRE people generally don’t give influenced easily by the herd/normies, but if one of the kiddos want to go on an expensive field trip or buy the latest gadget/thing that’s not in the budget, do they need to work to pay for it themselves? Or do you just say no? Or do you kids not care about those things?

    1. We are “fortunate” to live in a slightly below median price neighborhood so we ARE the Joneses with which others must keep up in some regards (like our travel habit). Our neighborhood elementary school that the kids attend(ed) was one of the worst schools in the district with the 2nd highest poverty rate (80-90% of kids in poverty several years ago) so other than fancy Nike shoes, there wasn’t a lot of conspicuous wealth on display (and they think the $200 sneakers are ridiculous especially when some of those kids struggle to get 3 meals per day and buy school supplies).

      Now our oldest kiddo is in possibly the best middle school in the district and surrounded by much more wealth, but it draws from all over the county so there’s still a diverse mix of rich and poor. So she sees a lot more conspicuous spending and we hear fun stories. 🙂 Our days of spending $25 for the whole year’s worth of field trips is now over, and in a month she’s about to head out on a 2 day overnight field trip that set us back $150. So that kind of spending is already baked into our 2016 spending numbers.

      We turned down some ridiculous “field trip” offers that I think are nothing more than a cover for teachers to get a free trip to NYC, DC, or Europe. Like $2000-3000 for several days to a week in one of these places (and that doesn’t always include 3 meals per day!! WTF!!). $3000 is what we spend for a month for the five of us in many places in the world and our kids have no problem understanding we would prefer to take a 1-2 month trip somewhere instead of send them on an expensive field trip for 3-7 days.

      As for gadgets and spending $, they have plenty of money and can spend it on what they want (within reason). Tech gadgets are handled that way or we give them as birthday or Christmas gifts. So far all of the kids have <$70 tablets but none have smartphones. We might give the oldest a hand me down phone soon.

  19. Hi Justin- Great job! We are doing well, but I will tell you that three kids turn into three teenagers. Ours are 19,17 and 16. We pay more in two months for auto insurance than you pay all year. It doesn’t help that Florida has the highest auto insurance rates in the country, but we aren’t moving anytime soon. I work part-time for excellent benefits including a very nice BCBS health plan that my company pays 75% of the premium. We still had $10k+ out of pocket, in addition to premiums paid, in 2016. Healthcare costs are outrageous! We won’t even talk about dental costs. All three teens are in community college pursuing A.A. degrees and will start transferring to University in the fall. Cha-ching! We can just do the best that we can, remain counter-cultural and try to learn from each other. Btw, I know this is a personal finance blog but you keep posting pictures of delicious looking food. You are going to have to cough up the recipes at some point!!

  20. What a great post ! I would love a post about the cost of kids – not their food and clothing (that’s easy!), but their activities. Looks like your kids are relatively young. Mine are teens and they play sports, sports , sports! Organized sports. Soccer in spring and fall, basketball in winter, spring and summer, baseball in spring and summer. Each of these costs money – some not so much (town soccer is 100 a season, so 200 each for the year, two kids for a total of $400 a year). Other sports are more – and even in high school (just outside of Boston) kids have to pay extra to be on teams (soccer $250, basketball $300, track $200, baseball $300). AAU basketball – a common thing for basketball kids to do in high school – is $650-900 a season, depending on the team (thank goodness my kids don’t play hockey which can be 2,000 a season!). Another category in here is instruments or dance (though mine don’t do either). I am thrifty and always have been, and am comfortable with over a million in retirement and another 500K in savings, and I am still working, so I am able to afford these things for my kids. Wondering if your kids do any activities now and if not, whether you will begin to budget these in as they grow older or will you discourage them form this type of thing?

    1. Yes! I’d love to hear your take on this (activities), too, Justin. So far we only have our kids in swimming because it’s a major cause of preventable childhood death. But the siren’s call of gymnastics and soccer and lacrosse and and and…is LOUD!

      Also, do your kids go to birthday parties? We have three kids and seem to have 1-2 birthday parties a weekend with the resultant expectation of the a gift. I try to keep it reasonable ($10-20 range) but they do add up.

      I have some friends who are Catholic (just had kid #8!) and on a single teaching salary. They made a family rule a long time ago. No birthday parties. No throwing them and no going to them for any of their kids. Because of the costs involved. This makes me a little sad to think about…but maybe I’m too much of a consumer?

      anyways would love to hear Justin’s, or other parents out there, thoughts on this. Thanks for sharing so much, Justin!

      1. I guess we are lucky our kids have just a few close friends that invite them to birthday parties (with the occasional random friend that’s not as close that invites the whole class to the b-day party). Maybe that’s our low income school working to our advantage? 🙂 Outside of a few family b-day parties, we seem to have just one birthday party every month or two, and occasionally it’s a “no gift is required” kind of event. Our two oldest kids also have a ton of friend overlap since they are both girls and only 1 grade level apart. So that probably cuts the b-day # in half.

        As for sports/activities, we don’t hear that siren’s call. We drop a good bit of money on pool admission fees and some on rollerskating but nothing on organized sports.

    2. I mentioned some of what we spend on activities like swimming under “entertainment”. We have paid for some city classes in the past (ballet comes to mind, but it was many many years ago and only $50 or so for a month or two of class I think). Otherwise most of their activities are free. The middle school student has a heavy academic load this year (2.5 years of math in one year) and we didn’t want to make her transition any harder with lots of after school extra curriculars. The 5th grader, still in elementary school, participates in some clubs and activities like STEM team (before school 3x/wk) and Robotics team (1.5 hour, 1x/wk plus some weekend meets I think) and they are all free so far. We aren’t huge on organized sports. We’ll go hit some balls on our neighborhood tennis courts with family and friends and they like to ride their bikes. We go walking/hiking. And the swimming.

      I’ve never been into organized sports and my kids don’t seem interested. We’ll mention it occasionally and haven’t had any takers for the local parks and rec teams or classes (other than summer camp – but we’re usually gone most of the summer!). Speaking of activities, our busy summer travel schedule means they can’t participate in a lot of activities that meet over the summer, so we don’t really have a choice there unless we forego or curtail travel. I find our weekday evenings are busy enough and we never seem to get bored on the weekends, so there isn’t anything “missing” in our lives if that makes sense.

      If I were going to search for some sports for the kids, I’d obviously go for the parks and rec/city leagues first. They are pretty cheap here (about what yours are – $50-100/season/kid). And maybe the school sports (I think ours are more like $100-200/yr for most sports but I’m kind of clueless there since the oldest isn’t eligible till 7th grade next year anyway). I’d skip the $2000 hockey unless it was the only thing that would pry the video game controller from my kids’ fingers.

      I also cringe when I see some families get sucked into the “sports industrial complex” and add in other extracurriculars like band or dance. It’s go time 7 days per week from sun up to sun down. When do their kids have time to do nothing, relax, and navel gaze? Or go outside and play? Or read or sketch or stroll around? I feel like the “sports industrial complex” is unhealthy unfulfilling lifestyle and I wouldn’t want to be the chauffeur for all that activity (even if I am retired!!). But to each their own – I assume it works for all those families that are in the thick of it.

      1. My son (now 21) was never really into organized sports. We did get into Boy Scouts so there were some costs there for summer camps, etc… Fundraising for those activities did help a lot though.

        We do go skiiing a lot which could be really expensive. We buy used or on sale equipment and rely on a season pass ($320) to keep the cost down. Sack lunches are always the order of the day – can’t really justify those $16 hamburgers on the mountain. (We are in Colorado and some kind of winter sport is a necessity to get you out of the house in the winter!)

        Hiking and swimming cost pretty much nothing and are great for keeping us in good shape and getting outdoors 3/4 of the year…..

        I hear what you say about kids being scheduled to do to much and not having time to just do their own thing. Boredom can lead to discovering ones own interest. My son loves to draw is becoming quite the talented artist in his “free time”.

        1. We just spent most of the middle of the day hiking at a city nature preserve with our four year old. $1 for the gas there and back and we packed picnic lunches. Ate on some rocks in the middle of the creek and had a blast. No time to do costly activities 🙂

          My kids love drawing, painting and crafting too. They (like us adults in the family) are kind of introverted so their little projects are fun for them. Being on 5 different teams throughout the year and constantly on the go doesn’t seem to appeal to them at all.

      2. Hi – circling back to the replies – believe me, when my kids were younger, I was very focused on keeping our evenings and weekends free for family, homework and low cost or no cost activities on the weekends (museums, hiking etc). HOWEVER, as my kids got older(middle and high school) and found their “groups” at school, they clearly gravitated towards sports. They are both very talented and excel in their chosen sports (and continue to get good grades). The oldest may get some financial help with college if he chooses (schools are already contacting him as a junior as a result of sports, so actually this is may be a financial advantage in the end!) . Fortunately for me both kids focus on basketball and soccer, which both keep them in fantastic shape as both of these sports they require non stop running so they don’t have announce of fat on them – which is amazing given how much they EAT! I place value on keeping healthy and giving my kids the tools to stay healthy throughout life, so have supported their sporting adventures, despite the costs. Also, as they get older, fitting into their group of friends becomes important and allows them to build their independent personalities!

        1. That’s good and very important. My oldest (just started middle school this year) and I had a good discussion about extracurricular activities today. She wants to join the art club 🙂 She likes sports and enjoys PE (wants to take tennis and archery next year!) but hasn’t expressed any interest in joining a team. The only “team sports” her and her immediate friends enjoy together are multiplayer video games.

  21. That is a pretty neat budget Justin. I think that you are pretty well prepared for retirement, as your dividend income alone can cover pretty much everything. Plus, I think your accidental side ventures are probably covering a large portion of expenses also. ( i mean the blog)

    Other than the Van purchase, you are pretty much in line with previous years. And the accountant in me thinks that under accrual accounting, you should amortize this expense over its useful life ( say 10 years), rather than allocate everything over one year.

    I can’t wait to hear what adventures you have in store for 2017.


    1. Yeah, I’m not too worried about the cash flow situation and could probably spend $70-80k/yr and be just fine in terms of portfolio survivability. Just struggling to see where we need to ramp up spending to gain more value in life.

      As for the accrual accounting, that’s how I budget. But I try to stick with cash based for monitoring current expenses. It averages out over the years (there seems to be a large, lumpy $4000-10000 expense most years). And we have a fat cash cushion (over $40,000 I think) so $50k spending this year and $30k next year isn’t a problem.

    1. How do you manage to dine out with 2 young kids? That was often a nightmare for us and probably led to us cooking at home more often. But maybe your kids more easygoing than mine 🙂

    1. No clue! That picture was from my grocery post 2-3 years ago. Probably salads, stir fry, curry, spaghetti sauce, or some other dish. Mrs. RoG LOVES colored peppers plain sliced up as a snack. They also keep well in the fridge so we probably worked our way through these over the course of 2 weeks.

  22. 47k for us including 17k mortgage. We are family of 4, skiers, hikers and campers. We did not travel a lot last year. A few trips around Colorado, Utah and two trips to New Orleans. I feel like we spend a lot on food, we go out to eat using groupons. We do rent out the basement in our house using Airbnb which brings in about 20k – wash off the mortgage. We are on a 5-7 year plan to financial independence and we constantly looking for ways to reduce spending. Thank you for the motivation.

  23. Awesome! Your property tax is really low too. That’s the problem with living on the west coast. The cost of living is more expensive here. You guys are living really well on $40,000. We’ll have to visit someday. 🙂

  24. Paying your mortgage off in 2015 made a huge difference in your bottom line. Great job on your expenses as well!

    I agree with Retire by 40, your taxes do seem really low. We pay near $5000 for ours!

  25. Do y’all skip termite insurance? If so, which is my assumption, what is your plan for dealing with it. Is the damage usually caught before it’s too severe?

    1. Haven’t given it much thought but presumably it’s not covered by our homeowners insurance?? I can’t recall hearing about many local cases of houses ruined by termites but I guess it happens. I’m in and around our house and crawlspace fairly routinely so might be able to observe some types of termites and fix the problem before it gets too severe. Otherwise I’d pay the $5-20k to tear out and replace a wall and/or floor I guess.

  26. The benefits of not having a mortgage (or rent) are hard to overstate. My 15 yr mortgage, insurance, and property tax totals $23k/yr. Compare that to your $2k/yr. That’s massive! But the benefits don’t stop there. In order to pay those additional housing costs I have to generate income, which I pay income tax on. And that additional income is one reason that my family doesn’t qualify for ACA subsidies. I’m self employed so I pay for my family’s health costs. Everybody was healthy in 2016 so we *only* paid $17k. The prior 2 years included some medical procedures so we paid over $22k/yr. Compare that to your $2k/yr. So just between the housing and medical costs my family is spending $36k/yr more that yours. That’s HUGE money!

    I think you’re selling yourself short on the $100k lifestyle because you didn’t include the medical and dental (and other?) subsidies that your family qualifies for due your modest MAGI. Those subsidies are probably worth at least another $10-15k. You’re truly livin’ the life!

    1. That’s true – some families are paying $10,000+ per year for insurance that might not be as good as mine PLUS extra for actual medical services consumed. So I might be living the $120,000 lifestyle and not even know about it? 🙂

  27. I’m incredibly jealous of all your traveling! And for so cheap!

    While I’m not married, I do live with my boyfriend and we keep our finances separate. I keep track of my expenses and for 2016 I spent close to $16,000. I was pretty happy with that, but I think I need to start shopping at Aldi’s. The picture of your grocery haul is impressive!

    1. If you have an Aldi’s definitely check it out. Produce isn’t always as pretty as the grocery store but it’s pretty awesome 90% of the time. And they have a 100% money back guarantee no questions asked if something you buy is rotten. 200% if you save the receipt (replace the item and 100% cash refund). I did this using a cell phone picture of a dozen rotten avocados and got another dozen for free (tossed the receipt away). Takes most of the risk out of shopping there.

  28. Great breakdown! Looks like you had a fantastic year. Under $40k with 3 kids is very impressive!! I’m a big believer in not telling others how they should spend their money (is that weird coming from a personal finance blogger?). If giving is a priority for you, then great. If not, that’s great too. Like you said, you may decide to donate a large chunk of money in the future.

    Keep up the good work!

    1. It’s like there’s a slim minority of “charity nazis” out there that want to scalp you if you don’t donate 5-10-15% of everything you have to charity. I just don’t get it. I’ll be charitable with my attitude toward the charity nazis and forgive them.

  29. Really enjoyed this blog. Healthcare costs are now higher than my mortgage expense. I can fix the mortgage by paying extra until it is paid off but healthcare costs continue to be a budget buster.

    1. We might be joining you in the “health insurance budget buster” camp in another year or three depending on what happens to the ACA. Sad because we use healthcare so sparsely. At least with a mortgage you get to live in your house all the time and enjoy the comfort and safety.

  30. Your lack of charity is very sad. Perhaps my favorite thing about Dave Ramsey is his emphasis on generosity at ALL phases of life – even while getting out of debt, and on the holistic benefits of learning to be generous. Your generosity muscles are weak. You’re wealthy – there’s no justification for delaying giving. And your kids are currently soaking up their life philosophies from watching what you do. Give regularly and generously, and involve your children in this so they learn to be generous too.

    1. I had a paragraph in the article on 2017 plans but deleted it since it didn’t flow well.

      Basically $40000 again, plus a 2% inflation adjustment if we need it. So $40,800?? I’ll probably track against a $40,000 budget for simplicity. Most of 2017’s travel is already paid, and that was going to be our biggest expense for 2017. I have to replace our roof but I think it’ll be modest – in the $4000 to $8000 range.

  31. It’s fair enough to criticize the ACA for allowing people with high net worth/low income to receive subsidies. But RoG didn’t write the law. He just follows it. RoG is no more of a mooch than anyone else that that takes the deductions and credits that the tax rules provide.

    1. “expects society to pick up the tab for his families healthcare”
      I’ve given you the wrong impression if that’s what you think. I will accept any subsidies like ACA tax credits offered to me but I do not lobby to give millionaires like me ten thousand dollar subsidies. I’d prefer a sensible health care system with actual reforms to make it easier and cheaper to get basic healthcare for everyone with a funding mechanism that ensures those least able to pay still have access to health care. ACA works in many cases for access to healthcare but does little to control costs. I’m still waiting on a repeal/replacement proposal that addresses high costs in the health care industry (why is our healthcare 2-3x that of other developed nations??).

      “He is taking advantage of the system just like a welfare queen, but don’t worry, the party is about to end for Justin”
      Oooohhhh you’re gonna piss off some people by mentioning welfare queens around here! And I don’t think my party is going to end simply because I have to pay for health insurance. The party is just beginning! I’m not tied to a state or country that has horribly expensive health care (have passport, million bucks, and a passport; can speak foreign language(s); might travel). Or maybe I pay cash for my HI policies and make it work in the budget somehow. Or maybe the crazy expensive healthcare system continues as it always has and Trumpcare offers me a similarly nice subsidy. Or maybe our dysfunctional legislative and executive branches can’t/won’t get a repeal and replacement bill passed and ACA remains substantially intact.

      But maybe it all falls apart and I have to go back to full time work just to gain access to healthcare for my family (if I choose to stay in North Carolina and the USA). Wouldn’t be the end of the world I suppose.

      1. IMHO….I think you’re fine for a while anyway. Let’s face it the “genie is out of the bottle”…cutting a bunch of folks healthcare off…not wise politically. Who knows…the replacement for the ACA may be better yet!

        1. I tend to agree, and I’m not overly concerned yet since it’s impossible to predict the outcome. Having a better deal/subsidy with Trumpcare wouldn’t surprise me entirely. And if they eliminate the ACA’s subsidy being tied to income, I can accelerate some Roth conversions and save even more on taxes long term.

      2. John Smith, could please provide the link to the ACA replacement plan that will cause Justin and his family to burn through their million dollar plus portfolio. I have an ACA policy, so I am interested in seeing the details of the new plan that you keep referring to.

        According to our new president, there will be an ACA replacement plan that will have insurance for “everyone” with lower costs and lower deductibles. Don’t you believe him?

        It is easy to campaign against something and say what a “disaster” it is. But it is very difficult to actually develop a new system that will deliver on all of the promises that you made.

      3. First up I worked as a civil engineer my whole career and only did free pro bono work as an attorney. And as you know we’re about to spend $20+ billion to build The Wall so you can imagine how many hundreds of millions will go to civil engineering design fees and construction management/administration fees. 🙂 And he kind of sort of promised to spend half a trillion dollars on infrastructure improvements (civil engineers and other design professionals will probably receive $50 billion of that). This whole Trump election is probably the best thing that could have happened to my career prospects! The market is red hot right now.

        As for health care overseas, I could pay cash or buy private insurance in many places. A million dollars would go a loooooong way. It doesn’t cost $100,000 for a week in the hospital and a surgery anywhere in the world other than the USA.

        “If you voted for Hillary and I’m pretty sure you did you’re just as guilty at taking advantage of a broken system.” I’m doing a great job keeping my true political thoughts a secret. 🙂

  32. I apologize in advance for the dark tone of this comment, but it is a serious question nonetheless.

    Re: self insurance. I’m curious to hear how you mitigate financial liability risk for a catastrophic car accident? For example, North Carolina experiences a surprise ice storm. You are out driving and can’t stop at a stop sign, and run someone over killing them. Their estate comes at you for several million dollars in a civil wrongful death suit. Do you assume that this possibility is so remote that if it were to play out and you found yourself bankrupt, you’d just do it all again? (work, save, retire)

    I have a similar question relating to long term care insurance. (spouse ends up in a nursing home for several years and exhausts all household assets leaving the survivor penniless) Everyone in the FIRE community is so young overall that topics like these generally aren’t covered. 🙂 Or at least I’m not finding any.

    1. We don’t self insure the liability component of insurance (and in fact our state requires us to have mandatory insurance). In fact we carry huge amounts ($500k auto plus $1 million umbrella) for liability. We DO self insure for comprehensive/collision on the van. If our van is stolen or messed up in an accident we have to pay out of pocket for a new one. As a result we’re pretty careful about where we park our van, we keep it locked, drive mostly at the speed limit or a few miles over, and don’t drive a ton in general (reduced exposure to accidents). So far so good but eventually we’ll have a loss I imagine.

      For long term care insurance, I suppose we would pay out of pocket to the extent possible. I haven’t heard much good about current LTC policies and don’t carry one for our household. I might look into this in another couple of decades but by then I imagine we might have plenty of money from portfolio growth to cover nursing home costs. On the “upside” from a financial aspect, once the spouse in LTC dies, the surviving spouse would have lower long term costs so wouldn’t need as large a portfolio to fund the remainder of retirement (kind of dark to view it this way, but necessary from a numerical perspective).

      To summarize, we insure in those cases where insurance is reasonably likely to save us from ruin at a low cost, and self insure in other situations.

  33. Well done on your budgeting for 2016 Justin! Nice one there.. Must say while I tracked individual months I’m not 100% sure on how much exactly I spend however I probably spent around the same amount you guys did as a single guy..

    Not proud of that amount of spending however wages down under are significantly higher here + plus I’ve done some reasonably fancy pants travelling 😉

    Looking forward to seeing your goals for 2017 and what the budget will look like for that, will it increase or decrease? 🙂

  34. Justin – great post. I enjoyed reading about your adventures, as always. I like the top photo of your family by the Detroit River with Canada (to the south) behind you. Today is a similarly sunny day here in Detroit, although much colder and snowier.

    I am hoping this is the year I can take some time to analyze 2016 spending and set some actual budgets for 2017. We have decreased spending and increased saving over the past few years but haven’t ever formalized a budget.

    1. I feel for you guys up there with the winter. No way I could deal with that much cold and snow for so long! It was 70F here in Raleigh and sunny and we were out hiking for a few hours. Even dipped my toes in the creek when we stopped for lunch (yes, the water was still cold!).

  35. Any thoughts on travel insurance? Many European countries charge foreigners rather robustly for care. And a medevac back to the US can cost 100k easily.

    1. We’re going to developed nations so I don’t think I would need to pay for a medevac. Do they charge ridiculous amounts for foreigners or just the full cost of care? I’ve always heard it’s about half of what we pay here (or our negotiated rate anyway) so I figured I would let our primary insurance cover emergencies and pay out of pocket for non-emergencies).

      1. Okay, not to be morbid, but what happens when someone gets hit by a car and breaks enough parts they can’t fly commercial? And your Schengen three months is nearly up? Or gets a serious TBI? Unless you have a right of abode in those countries, you are getting a medevac.

        Many countries in Europe require full cost of care up front for anything beyond an emergency. Example: they diagnosed you with a heart attack in the emergency department, but care for said heart attack requires cash up front. Not 100k, perhaps, but 25 or 50k. And yes, some countries do charge foreigners double or triple.

        Not all insurance covers overseas. Medicare does not and Medicaid rarely does.

        These are unlikely instances, but bills of 200k for care and transport, while rare, are not unheard of. I personally would insure with that possibility, but to each his own.

        1. I guess we should wear helmets. Helmets with really really good padding?

          No, seriously I’m not sure what we will do. I’ve considered medical insurance but not sure it’s something we need or if it’s worth the cost/hassle.

          Where are you hearing about all of these $25k-50k costs for something like a heart attack? I’ve googled around a bit and it seems like $5-10k for various major procedures including several days to a week in hospital in expensive places (Paris, London, Switzerland) and much less in cheaper places, or same price for longer stays in a moderate COL place like Prague. $5-10k is a freaking joke compared to US medical costs (less than the deductible or out of pocket max on many people’s insurance!!). $25-50k wouldn’t be the end of the world I suppose.

          Using up 90 days of Schengen visa and being forced to incur $100k medevac? How would that even work? They put handcuffs on the hospitalized patient and stick em on a plane? Maybe I overstay the visa and/or hire a local immigration attorney to see if I can get an extension to recuperate. I’d figure it out if necessary (or let someone else figure it out if I were incapacitated).

          We’re staying in Portugal, Spain, Italy, Slovenia, Germany, and Czech for all but 5 nights (2 nights in Austria; 3 nights in Amsterdam). So not too many really expensive COL countries. Not sure how the various health care systems work in all those countries in terms of payment but we’ll have $25-50k worth of credit on our credit cards and access to more $ with some notice.

          I guess this is one of those black swan events that one can analyze and quantify but the odds of incurring a massive expense are incredibly low. In fact it might even be cheaper to have a medical issue arise overseas depending on what one’s insurance is like at home!

          1. They charge higher rates in the UK for foreigners than for residents. Not sure about the others.

            The chance of needing a Medevac is about 1 in 10000 trips. So, fairly low. Average Medevac cost from Western Europe is 25-50k. From Russia 100-200k. No idea about Slovenia or Czech Republic.

            The main issue with overstaying in the Schengen area is that you might not be allowed back and there’s a ton of not great energy right now about immigration issues. Obviously, some countries are more sympathetic and lax than others.

            Be aware that unlike the the US, you are often expected to pay BEFORE you receive any service. In some countries on that list (like Germany) credit cards are simply not as common as here and cash may be expected.

            I agree with you that the chance of incurring a major expense is low, and if you can be treated in-country you are likely to be out 50k or less. Although (depending on your insurance) further care in the US is sometimes not covered by your primary plan, which could be an issue if you need ongoing care. What crushes people is an unexpected Medevac. There are a number of reasons you can’t fly on a commercial plane, or that you need special accommodation and a medical attendant on a flight. Those are the (rare) expenses that start to get into the six figures.

            Everyone has his or her own comfort level with expenses!

            1. I’d gladly be banned for life from the euro area in exchange for avoiding a $25-50,000 medevac 🙂 Although I say that as someone who’s never visited the continent (gonna fix that this summer!).

              I think I’m going to wing it and hope for the best. We aren’t doing any “high adventure” stuff on this trip (worst will be <5 mile hiking trips on easy to easy-moderate trails). No skiing, skydiving, whitewater rafting (though it's tempting - google Soca Valley in Slovenia), rock climbing, running with the bulls, etc. Walking in urban areas and driving/riding in a car are probably our riskiest planned activities.

          2. A lady from our church told us her brother had to be Medevac here in the US. Not very far and the cost was $69,000 dollars which his insurance will not cover.

            “they put handcuffs on a patient and stick them on a plane”

            Yes that happens here in the United states. No handcuffs but it is cheaper to fly them back to their home country than to keep them in the hospital for an indefinite period. Patient was comatose. Happened at the hospital where I worked. Also had U.S. citizens charged with trespassing to remove them from the hospital. Part of my job required me to speak with patients who refused to leave when they were discharged. Their insurance would no longer pay and I had to explain the additional costs and ask for the money up front. Most Americans are not aware that this happens in US hospitals. Before I worked there I had no knowledge that this kind of thing went on. I imagine foreign governments would act similarly.

            1. I googled around a bit (not authoritative, I know 🙂 ) and it seemed like social healthcare in many European nations extended to some extent to non-citizens. Maybe not formally but in practice. Probably because they don’t have profit centers to manage and run a hospital or clinic like it’s free/charity (not all countries; I know some aren’t technically socialized medicine – Germany for example). Very different model and mindset than in the US where it’s pay to play other than emergencies.

              I guess we’ll cross that bridge when we get there. Fortunately we have access to a good bit of cash so we can pay up for care (and hopefully avoid forced trespass or deportation 🙂 ). I get the feeling that a major medical procedure in most of Europe is measured in thousands (maybe tens of thousands) and not hundreds of thousands of dollars.

  36. Well done Justin…I am always amazed at your “travel hacks”. What I am most impressed by is your cell phone …$10..a YEAR…. and the landline for free. Perhaps you could share a bit. I have a legacy plan for my cell as well but it requires $20 every 3 months which way cheaper than my neighbors’ $100-200 bills per month. In addition, the landline phone alternatives are very confusing to me, perhaps you could educate the “communication challenged consumers”. Thanks for a great post!

    1. The freedompop is free each month. Kind of tricky technologically speaking but I like to tinker. And it’s free. 🙂

      The cell plan is with Tmobile. Added a $100 card many many years ago and that got me into Gold Premium club or something like that. Minutes stay active for 1 year as long as you add a $10 card before the year runs out. We rarely use it.

      For cheap/free landline, google “obihai google voice” and maybe add “VOIP” to the search. Basically brings home phone over your internet and you can hook it to your home phone using the obihai adapter. One time purchase of $40-50 for equipment. Maybe 1-2 hours to configure and get it working if you aren’t hugely tech savvy.

      1. HAHAHA! You using the words “tech savy” and “tricky technologically speaking” just scares the heck out of me….That is pretty cool about the T-mobil plan….Pretty sure that “ship has sailed”… My pay as you go carrier is pretty clear that if we let our service lapse the $20 every 3 months plan is out the window.

        1. Ok, then you might not want to try the Obihai/Google Voice hack. 🙂 I wouldn’t recommend it for my Grandma, for example, unless someone else was configuring it for her.

          Our T-mobile plan is definitely grandfathered and no longer available. But I found out last summer when I forgot to add airtime that I could call them up and add time a day or two later and they still kept all the 1000 minutes I had stored on there and reinstated the old plan that had lapsed (might work for you too if you if you ever forget to add more time every 3 months).

  37. I used to be more amazed by your spending. Once we dropped childcare, I realized we’re about the same 🙂

    Still, I owe a debt of gratitude to you. When we made the switch to Time Warner this year, I dropped your name to get the $35 price locked in for more than a year.

    1. I’ve been getting $35 internet with Time Warner for years too! I got my parents that deal too but now that Spectrum has bought them out, apparently those deals are gone. My parents are paying $44 now and they wouldn’t reduce it even when I threatened to cancel (maybe I need to drop your name too =) I think they’ll be raising the rates soon…argh! And a little off topic, but when my parent’s internet wasn’t working, they kept blaming the cable modem and said we should rent theirs for like $10 a month (when it costs like $60 to buy!) Of course, eventually they realized that one of the lines was down.

  38. Thanks for this
    Having read this post, I decided it was time to do my budget. I know I spend well within my income and save sensibly, but I wasn’t looking ahead and planning for big purchases, with the result that I had money sitting in low interest savings accounts, getting no return when I could invest it and let it grow until i needed it. I don’t expect to do any major house repairs this year or replace my car.
    Need to learn from your travel hacks though. I am budgeting £10k for travel this year, for two of us….
    My budget is £35k which works out at $44k, but that is only for 2 of us, not 5!

  39. I love the idea of the $100,000 lifestyle on a $40,000 budget. That is exactly what we are trying to achieve going forward.
    This last year we spent a slightly painful $98,000. That seems high, but it’s almost $10,000 less than our average for the previous three years. Having a baby might mean more spending for some, but it actually helped us save money by not going out as much.
    If you want more details, you can check out our post on the subject here:

  40. Justin, I have to say, your blog is one of my favorite FIRE blogs. I’ve been reading since you had a handful of entries. I totally appreciate the details. It helps so much on my own journey. I usually comment on your family’s holiday spreads (still waiting for those recipes, heheh). But I keep reading for the real life experience. And while we don’t have kids, we do live in the city (Seattle). Higher cost of living for sure, but same ideas apply. Other blogs are definitely inspirational, but they often entail constant travel (not interested right now), or living in an RV (sounds fun for a little while) or moving to the country and starting a homestead (I’m too lazy). We just want a great life where we’re at. It really helps to see that you can do it.

    1. I’ve found my niche reader! 🙂

      We don’t permatravel, don’t want to full time in an RV, nor move to the country for the homesteading experience. I cringe when I think of all the work and manual labor and the remoteness from other people and distance from conveniences I take for granted like walking to the grocery store for some fresh fruits and vegetables and being back home in 20-25 minutes. I can see the allure but the trade offs aren’t worth it to me.

  41. Nice work Justin. I’m surprised there aren’t more people trying to shame you on the charity thing. Maybe you are filtering them out or they just gave up on you and left the blog. Haha!

    I completely agree with you. At the end of the day we need to do what makes us happy and what is best for our personal situation. Living a life in balance with our personal moral beliefs is what we should strive for. Some arbitrary percent of whatever metric is meaningless. If I was retiring in my 30’s there is no way I would give anything to charity until I was convinced there was no way I could ever run out of money. After the kids were through college I would probably start giving much more generously.

    1. I definitely need several more million before I am “convinced there was no way I could ever run out of money” as you say. Too many unknowns and too many liabilities with family for the next 20 years (and our own healthcare and LTC several decades out). My hope is we hit those $2 million and $3 million NW milestones without incurring huge kid costs and then we’ll probably be more generous (and maybe spend more??).

      As for the charity-shamers, maybe they are feeling particularly charitable 😉 I haven’t deleted any charity shamer comments. In fact I only delete maybe one comment every few months if it’s particularly vitriolic and adds absolutely nothing to the discussion beyond name-calling. I imagine those type of comments come from people who found this site from google and aren’t long term readers (though there’s one guy that seems to be sticking around the blog and waiting for the ACA to collapse so he can laugh in my face when our healthcare costs a million dollars – not everyone has fruitful uses of their time apparently).

  42. Hi. Do you mind sharing how you spend $90 or so a month on electricity?

    We pay $.08 a kWh. Our house is ten years old — newer than yours, so I’m assuming it’s more energy efficient. We have LED bulbs. We have an Ecobee thermostat (rival of the Nest). And we keep it at 78 during the hot Houston summers. We were gone a month over the summer like y’all were and we still averaged $120 a month for 2016.

    Do you do anything special like make sure all electronics are off when not in use (not in sleep mode), etc.? That’s the only thing I think we’re not doing. How much is your kWh? Do you mind sharing how you set the thermostat, etc.?

    Thanks for all your details! It makes getting to where you are that much easier. It is greatly appreciated!

    1. We spend around $50 during the winter, spring, and fall when not using AC. That’s what I consider the “baseline” – electronics, fridge, elec dryer, etc. Then it cranks up to $100-150 when we’re using the AC mostly in June, July, and August (probably <$100 in May and September, and not much AC use in April and October). We keep it on 76-77 in summer (cooling to 73-74 at night I think). I think our summertime rate is $.105 per kWh plus a small ($8-10) monthly admin fee (no transmission fees added here - the $.105 includes all variable per kWh charges). Winter time is natural gas for heat (it was 106 CCF at $.94 per CCF, plus $10/month admin fee plus 7% sales tax). That natural gas also includes hot water heater (probably 15-20 CCF during winter given the 40-50 degree incoming water from the city system). So not much electric usage in winter other than what's required to run the furnace fan (max $10 I assume). As for energy consumption, we don't do anything special like turn off the power strips for unused electronics. That's a fool's game in my opinion since most modern electronics consume under a watt in standby (so 20 devices plugged in but turned off might suck 10-20 watts, or about $10-20/yr). We have pretty decent insulation in our house but it's 45 years old and I know we could improve how airtight our house is (based on electric company's free audit). All bulbs are CFL or LED other than a couple incandescents in rarely used areas. Our thermostat is a very very old unit (probably from the 1980's or 1990's) and has time of day settings for weekday and weekend. We set it up so it cools down at night because our upstairs where we sleep tends to run a couple degrees hotter than downstairs. We're also at a disadvantage during summer since we have no shade trees sheltering our house, so direct sunlight from 8-9 am until 7 pm during the middle of summer (need to get some solar panels I guess 🙂 ).

      1. Do you do things like line dry your clothes? My husband always says it’s not worth the hastle, but our electricity bill has creeped upwards into the $150 land, and I’m doing everything I can think of to lower it!

        1. No, we don’t hang our clothes on the line to dry. I know the dryer uses a lot of electricity but it’s probably not more than $5-10 per month for the 15 or so loads of drying we do. It’s also humid here for part of the year.

  43. I just started paying any attention to my finances at the very end of 2015. So 2016 was our first year of budgeting and trying to keep costs low. We spent $78,500 in 2016. But this includes almost $13,000 in childcare for my 3 kids and $14,500 in mortgage costs. After those expenses we were at about $51,500, which seems pretty good to me. Most importantly, our overall spending for 2016 was $15,000 less than it was in 2015 when we were not trying to control anything. I really hope we can keep it up and reduce 2017 even more.

    I am most amazed at your grocery bill for a family of 5. My kids are slightly younger than yours at 6, 3, and 1 currently but they all have birthdays in the next 3 months. We do not have an Aldi in central Arkansas where I live. We try to buy things on sale and buy in bulk but I cannot manage to keep our grocery bill below about $700/month. It’s often more than $800/month and it worries me that my kids are going to keep getting bigger and hungrier.

    1. Amazing that you could cut out $15000 just like that! I think tracking spending helps control spending just as much as intentionally trying to reduce expenses. Knowing, for example, that you spend X hundred dollars on something that you didn’t realize cost much at all can be a big eye opener.

      As for groceries, I honestly attribute a significant bit of savings to Aldi. We used to shop at the Super Walmart for everything many years ago, and as soon as we switched to Aldi for our routine shopping (rounded out by shopping grocery store sales and still relying on walmart for some things that are cheaper there), we saw a $100-150 decline in monthly spending (even as the kids get older and after inflation). In other words, we spend less now than we did 5-6 years ago and probably buy more high end stuff now (though with kids being in and out of diapers and on formula for a while it’s hard to nail down exactly how much lower our spending is today).

      Lower prices at a discount grocery like Aldi not only saves you money directly, but it forces competing grocers to keep their prices competitive too. Similar to the effect that walmart has on groceries and general merchandise prices when they first came to town.

      And now we’re getting at least one Lidl within almost walking distance (in same shopping center as our Walmart and our favorite Asian grocer!). Lidl is another German discount grocer that most directly competes with Aldi. That means even more price competition (and more variety I assume). One of the advantages of living “in the city” I guess 🙂

  44. Nice job on the spending last year, that’s pretty imressive. And I loved the John Smith comments, man, some people just seem angry about the life they’ve built for themselves. We weren’t angry about the crazy lifestyle we created for ourselves, but we definitely did something about it other than troll PF blogs, lol. We’re looking at being FIRE in about another 2 years, maybe sooner, but either way, we’ve seriously downshifted our lifestyle in the meantime to create a happier one and one with more free time to spend with the kids.

    With us also having 2 kids it’s hard knowing what they will want to do or won’t want to do this far out. They’re 3 and 5 now, but we do have built in price jumps for clothing when they get to middle school. Also, budget increases in case they want to do sports, music, clubs, etc… We’re also cautious about overscheduling because some of our colleagues have kids in 4-5 activities and they are go, go, go 7 days a week. Currently it’s not an issue as they don’t do any sports, but who knows what the future will hold.

    As far as the take on charity – to each their own. I donate some of my allowance budget to charities I like and it ends up being maybe a month’s worth of allowance per year, and we give to our church, but nowhere near the 10% like some folks and we chose to not have a DAF either. More power to people that want to go that route, but it’s nice not having that “we’re all successful, we should ALL give to charity” tone coming from your blog too. Thanks!

    Sounds like you’ve got a great handle on the budget and a great plan going forward. Here’s to a great 2017!

    1. Your approach to charity seems very sensible. I stick a nominal amount in the budget for small random stuff that crops up during the year but have no current intention to give large sums away. I almost dropped a thousand bucks at year end on something because we were so far under budget but ended up spending money on other stuff in the last bit of 2016 (which might mean we significantly underspend in 2017 since I was in effect pulling 2017 expenses into 2016).

      Hope you have a great 2017 and continue to make significant progress toward FIRE!

    1. I haven’t seen any for sale lately at the usual gift card sites I check. I’d suggest for best bets on gift card purchases generally since they offer a 1 year money back guarantee if there is a problem with your gift card at a later point.

  45. I budget a set amount for charity donations per month, which let’s me put my foot down to random calls or off requests, with flexibility to support causes, or people when it aligns with my values. That’s how I roll. Everyone should do what works for them. 🙂

  46. Sometimes I think charity overrated – as good as it sounds (and I do it too) is an option, not an obligation. In my opinion, as long as one don’t go around being greedy at others cost or pain, that is enough. The rest is not others to judge.

    And I love how you see yourself as living a 100k life with min commitments. I have friends who come to me and say they like to save money but once I suggest the min phone bill they all have ideas of why they need to 100s package.

    1. Gotta love the people making tons of money but unable to save anything 🙂 They will keep the economy growing and expanding through their consumerism as we sit back and enjoy the stock market gains.

  47. My budget is essentially $21,000 for the year for myself. I pay rent and utilities and contribute $100 monthly towards the expenses on my families cottage. I live with my partner and we each pitch in $300 per month for food, utilities and eating out. I have a pretty bare bone budget but I don’t stress about money. I cook great meals and go out for dinner occasionally. My car is paid off and I have $7500 set aside for a new (used one) when the time comes. I am 100% debt free! I buy most clothes at thrift stores. I bought a used cell phone 3 years ago and it works great. I pay health insurance thru the ACA. I don’t spend money on cable, technology, or fancy things. My big vacation this year will be to drive to Florida and spend time with Mom. When you focus on what is important, the need to spend on anything else is reduced. My favorite things to do are essentially free! Paddling in, biking on the rail trails, having game nights with family and friends! Life is good…

  48. I’m rather disgusted when adding up how much we spend. We’re around 5k monthly. $1550 is rent, $400 truck payment, overpriced phone plans at $165, gas is astronomical at $500 because of husband’s job. If we had a paid off house, no truck payment and husband didn’t have to drive do much we’d be spending around $35000 yearly, and that includes a couple thousand on homeschooling expenses and tithing. I can see how working takes a lot year, at least for us because we have to spend so much on transportation.

    1. Haven’t done a review but I’ve used freedompop successfully for several years now. Can’t beat the price obviously. The only real downside is the limited data and voice you get (200 minutes and ~600-900 MB on the various free plans with some minimal hacking to add referral bonus from friends). Other downside is potentially poor voice call quality since they do voice through VOIP (sending voice over data). Poor connectivity (like a weak 3G signal) might mean your call quality is crap. But if you’re on wifi or decent 3G/4G signal it’s been pretty good the past couple years (wasn’t great the first few months I used it back in 2014).

      The barrier to entry is very low. If you have an unlocked phone that takes a SIM chip, you can get a US based sim for $1.99 right now. Doesn’t work – toss it in the trash and cancel service. Or you could buy a $29.99 phone through them (it’s CDMA so stuck on their network or any Sprint carrier or subcarrier). I just got one of their $29.99 phones for my 12 year old’s birthday gift. Great for kids – if they lose it or break it it’s no big deal. And free monthly service is nice too 🙂

        1. Yes, they have monthly plans you can subscribe to that are still very competitively priced versus the big brands like Verizon, ATT, etc. Not sure if you can go to a per minute voice plan for overages, but I believe their data overages allow you to top up to add MBs.

  49. Our spending was around $72k for the year (just two of us). We’re frugal in some areas but tend to splurge in others, fortunately our incomes can accommodate such transgressions. We spent over $16k on paying off the mortgage, and on top of that replaced the roof and a water heater to the tune of around $6k. Our food spending is pretty high at over $12k, we’re working at chiseling that down, but it includes eating out on vacations so maybe I’ll recategorize that in the future. We’ve also been putting money away in a 529 for several years for five nephews and that cost (~$3k) diminishes as they have started heading off to college. Aside from all that we’re paying on a new Subaru Outback from 2015 which combined with Michigan’s high insurance is another big chunk. We let our high earner status get ahold of us for a couple years but with a FIRE goal of 5 years we’re focused now and are budgeting $55k for 2017.
    Two months in and we’re well under budget thanks to heavy business travel. Personal Capital has made it SO easy to track!
    And I see the “JS” troll was back again. Based on the latest news, Trumpcare won’t drastically change the outlook. (Though I’m very concerned there has been no talk of repealing the Death Panels! ????)
    In a way I’m glad we weren’t ready to FIRE around this time because I think I’d have a serious case of One More Year syndrome until it all shakes out.
    Looking forward to hearing more about your 2017 and EU trip.

    1. Business travel – gotta love the savings that come with that. Helps offset all the other costs of working 🙂

      As for the Affordable Care Act – I think it still has at least one more Act before the curtain call (<-- see what I did there 🙂 ). It's tough to take away affordable insurance from 10-20 million people without losing your next election. Oddly enough politicians have to actually listen to their constituents and react to what they are saying. Lots of flip flopping and wiffle waffling going on in Washington. For FIREees I bet we'll see something workable (but possibly more expensive than original ACA). Good thing you aren't at the finish line or One More Year would be very tempting.

  50. Spot on and Awesome article as always Man!

    We spent about $118K for 2016 which broke down to roughly –

    $15K taxes
    $25K Mortgage
    $32K Consumer debt (I wish that was a typo)
    $46K everything else

    We are family of 4 in HCOL area (DC). At least $6K of that everything else is work related like commuting, daycare expenses. ~34 more months to erase that insane $32K line item and we’ll be stacking benjamins for FIRE!!!

  51. I have a question about savings rate.
    My stats are as follows:
    My salary is $69K year
    Contributions to 401k $18K
    Contribution Roth $5.5k
    After tax income $36k
    Yearly expenses $27k

    What is my savings rate %, based on salary?
    I am new to this journey and trying to learn as much as I can.


      1. I have to pay taxes back (federal and state) comes April, so I am add those tax payment into my yearly expenses.
        Looking at your formula, should i be deducting the April tax payments from the gross income ?

        1. Great!! I never realized I paid soon much in taxes.
          I just added all the taxes from last year w-2 + tax a paid back in april and is a whopping 15180 🙁
          By reading your blogs and have woken up…like The Matrix
          Thank you for sharing your knowledge.


        2. I always figured it makes sense to remove income taxes while working since you generally have no control over that ‘expense’.

          1. Yes and no. Deductible IRA contributions, trad 401k instead of Roth, maxing out all the various other accounts like HSA, 457. Choosing a job with access to those other savings plans.

            To be it doesn’t really matter since it’s just a number.

    1. If you aren’t saving anything after taxes, then I would say (18+5.5)/69 = 34%. That’s how I’ve always calculated it. Some will report after tax savings rate or subtract taxes from the numerator and denominator.

  52. Great thank you both for your prompt replies.
    I would love to increase my savings rate, but I have cut back as much as possible.

  53. I just found your blog and it’s very inspiring and has some really great info. Something I wondered about though, are your kids in any activities? Sports? Music lessons? I didn’t remember seeing those mentioned in the budget.

    1. They take PE at school (“variety games” that included basketball and dodgeball, archery and tennis in the fall I think). One kid is in art club and robotics club (both are free as far as I recall – we might have sent in some minimal supplies – like $5-10 worth). The 6th grader is pretty busy with her advanced math class this year so we skipped extra curriculars and not sure what the fall will hold assuming her academic workload drops (maybe coding camp which would probably be a free online course/group). Total cost $0, maybe $10 if we count the supplies that we might have sent in 🙂

  54. Love what I have read so far.

    Let me tell you our story from a perspective of a couple of 56 year olds.

    We spend about 40K per year and live very well ( according to my standards) for a married couple with no kids. We traveled to Spain last September and just got back from France last week. Our friends that are struggling look at us funny when we tell them we shop at Aldi. I personally love Aldi. We started going there because our fresh veggie and fruit bill was sky high. Shopping there cut at least 50% from our grocery bill for two. It’s really all about choices.

    I drive a 2003 Toyota Camry that has been paid off for 10 years. My wife drives a 2013 Toyota Corolla that we pay $300 per month on and will be paid off in less that a year. This will be the last of our debt. After a string of bad used cars we decided to buy new and then drive them into the ground. After lots of research we decided to choose Toyotas. What a godsend these vehicles have been. Very limited repair bills for years and years. Yes you have to change oil on a regular basis but that is a minimal cost and a small price to pay for years of reliable autos.

    From the start we agreed to not purchase a home or take on debt that one income couldn’t support (in case one of us lost a job). Our choice of neighborhoods has been very targeted to make sure we live in areas that are walkable and with little crime and access to good schools (even though we don’t have children). This strategy has worked well for us in Dallas, Madison, WI and our current home of Minneapolis.

    We have what I would say are average jobs that anyone without College degrees could obtain (even though we both have degrees). Instead of jumping around looking for the next great job we stuck with our jobs and created a nice lifestyle off of regular pay increases and watching what we spend.

    I do worry about affordability of health care the we decide to retire around 60 with no pensions but feel that we are at a point that if something happened with our jobs we would be fin throughout retirement.

    It’s all about choices. Don’t let friends and family an society in general decide how to live your life.

    1. Sounds like you’re driving what we drive (Toyotas) and shopping where we shop (Aldi). Can’t say this is much of a sacrifice! 🙂 Very reliable car and even our 8 year old model has tons of features. And Aldi is great. So easy to buy cheap, fresh fruits and veggies. And in general the quality is pretty good. I love how small the stores are too. Some might look at our lifestyle and think it’s not for them, but it works for us!

    1. Freedompop runs on a few different carriers. They lease the airtime/bandwidth from other providers. Some of our freedompop phones run on Sprint (which seems to have the spottiest service and the least comprehensive nationwide network – particularly lacking in rural areas). Others with SIM chips run on AT&T and/or T-Mobile networks and have generally great service. However we were out in a very rural area yesterday and had nearly zero connection with the ATT/T-Mobile Freedompop but someone else with me also had near-zero service on Verizon (and I actually had better service on the drive down with Freedompop!).

      The only catch is Freedompop voice calls run on VOIP which means a bad data connection leads to horrible voice call quality. Otherwise it’s pretty good with 3-4+ bars of service.

  55. I have noticed there has been little to no comments about college education for kids. Maybe kids are not going to attend college, go the assoc degree route or fend for themselves. It appears to be a common thread on other sites – DINKS (dual income, no kids) and the ability to hit FIRE earlier than most (makes sense). Different strokes for different folks. We desire to enjoy life now, put kids through college w/o debt and be FI by 59/60. I think we are on track — Healthcare is a ?? though.

    1. Our kids might end up with a little debt but probably not a lot. We have 2-3 years worth of tuition saved up for them already, and they might get merit based scholarships, or even need-based (as strange as that sounds for the children of millionaires!). Check out my article on my plans for college for my kids.

      So we’re enjoying life right now, planning on helping out the kids significantly with college, and managed to do it all while retiring in our 30s!

      As for healthcare, the Affordable Care Act helps us out a lot. We’ve paid between $16 and $125 per month since signing up for ACA insurance.

  56. Your House-Utilities figure is off by $600.00; $700.00 + $1100.00 + $1800.00 = $3600.00. It is amazing what you and your family are accomplishing. Thank you for sharing.

    1. Thanks for catching that. Looks like an error in the notes in the spreadsheet from the 2016 budget, and I simply copy/pasted into a new spreadsheet for this post. Fixed it now in both places (but it might take a while to propagate) 🙂

  57. I see what happened. Found ($1200.00 is correct figure for water/sewer/trash) in your detailed breakdown posted: Subject 2016 Budget, Jan. 2016. Sorry for the bother.

    1. Yes, it’s $1,200 per year for water/sewer/trash. Guess I messed up in the notes on the table 🙂 Though our city water/sewer/trash bill is creeping up and may grow to $1800/yr before long. 🙁

  58. Thank you for sharing this, Justin! I am amazed that you were able to pull spending only $40,000 for one year considering that you have three kids. This is definitely worth sharing. Creating a budget strategy and sticking to it is the key to having a successful right now. We featured your article on our monthly roundup, which focuses on the different retirement expenses people should plan for. Hope you can drop by and share more of your thoughts! We need more people to learn about this!

  59. It’s just me that find $40,000 actually a lot of money? I have only 1 kid and I try to live below $30k a year even earning six figures pre-tax

    1. Yes, it is a lot of money! We spend a lot less in many years, as in $25,000 or so. 2017 is shaping up to be one of those years with under $20k spending and only 3 months left (without any major planned expenses).

  60. Holy cow… taxes… are you talking property taxes? Vehicle taxes? Income taxes? If property, where do you live that taxes are only $2000+ a year??

    1. Our property taxes are around $1500-1600/yr. It’s a 1% tax rate (roughly) on a $150,000 value house. Pretty average house for Raleigh actually. And pretty average for the southeastern US.

  61. Great work Justin. You did way better than me at a younger age so congradualations. I’m 52 and have close to $1.1m saved and I am holding out until I turn 55 so I can call it quits and tap my 403b penalty free via the 55 rule. 95% of my assest are in taxable vehicles. Is your $40k budget pre tax?

    Thanks again for the detailed analasys. It really helps to see it work in the real world.


    1. Yes, the $40k is pre-tax but we pay almost no tax. Federal is pretty close to zero (unless I earn a ton from my blog, because the income gets hit with self employment tax). State tax is actually larger many years – currently about $1300/yr.

  62. This makes me feel like a tool for…

    a. going to college out of state, racking up absurd amounts of student loan debt and trying to make it as a writer
    b. renting cruddy apartments in NYC for 10 years for 1000-1400 a month when I could have lived with my parents, taken an office job, and saved up for a house.

    I will never finish paying off my loans. I will never own a house without a mortgage. I came here hoping I could learn ways to save money and instead I’m walking away with the realization that I’ve already screwed up my life to the point that there is no hope for me. But, at the very least, I’ll always have art in my soul and a life full of pain and struggle to draw from. –written from the mean streets of New Orleans.

    1. Could be. I’ve encountered tons of people that assumed living in a high cost of living area translated into higher income. Then they realize that they could make almost as much in a ton of low to moderate cost of living areas elsewhere in the country.

    1. I’m sure quality varies. I tried Aldi probably 10 years ago and it wasn’t very good quality so I didn’t shop there for a long time. Then about 5-6 years ago I checked them out again and I was impressed with the quality and very impressed with the price!

  63. I realize this is a year later, but I was curious if you still budget $10k per year benefit from “travel hacking”? $10,000 the first year or maybe two is easy, but with all of the new restriction tightening, new sign-ups with better than $5-600 in first year value are a lot harder to come by. Do you get a lot of income from credit card affiliate sign-ups and count that in your “travel hacking” category, or more of “I got a hotel room for 12,000 points when the going rate was $400/night”?

    1. The $10,000 is still flowing freely but you are right, the rules are tightening. I get a lot of business cards these days and they come with a different set of rules. Still plenty of $500 to $1000 sign up bonuses in that space. I added it up and we earned 880,000 points/miles from sign up bonuses in 2018 which are conservatively worth 1 cent/point on average. Plus $500 to $1000 in bank sign up bonuses. Plus the miles we earned on actual spending to meet all the sign bonuses. Easy $10k once again this year! I think I paid <$500 between all the extra annual fees, upcharge to pay with credit card, etc. so still netted $10k+ in value. And depending on how carefully we redeem it might be $15-20k! I know what you mean about the deceptive $400/nt hotel that you get for cheap with points, but that you'd never buy ordinarily. I do look at it that way sometimes, but rarely do we get $400/nt hotels. Though there was that time in Niagara Falls where we did exactly that and paid only 3,000 points per $400-500/nt room. So cheap we got 2 rooms - 1 for us and 1 for the kids! Best value ever, and most redemptions aren't that high value. A good example is a recent redemption of Choice Hotel points in Florida. 8,000 points for a $75 per night hotel. Almost 1 cent per point, which is a decent value for those points. And much of our value comes from great air miles redemptions. Southeast Asia during peak summer season is $1600 round trip to the cities we want to fly into and back out of. We paid 71,000 points plus $80 in taxes for each ticket. So we basically saved about $7500 just on flights alone for our big 2019 summer trip. We have to travel during summer since the kids are in school, so free (or almost free) points/miles are a great way to avoid paying for more expensive tickets. And we got near-perfect connections, whereas a lot of the bargain basement cheap tickets you pay cash for come with ridiculous connections and much longer travel times, so there's a value to avoiding that too.

  64. OK, that’s really impressive! It makes such a difference when you have the mortgage paid off. Plus the food budget is typically huge for everyone, but it’s really impressive you came in under budget again and again. Kudos!

  65. I love your breakdowns. It motivates me to cut back a little more. Like you, I love to cook exotic food. I’m Vietnamese so I cook delicious Pho, basil chicken, Thai soup, spring rolls, Italian dishes, etc.
    Our family of 3, and with a huge dog (eating a lot!), our annual expenses is $44,00 (except mortgage and income taxes). We travel a lot and have hobbies.
    Our house will be paid off in 4 years. We are 46 years old. We can retire in 4 years but my husband very much loves what he does so he will keep working till 55-60. I work part-time for a few more years.

  66. Hello,

    Just found your blog. I have an expensive Verizon postpaid account. 2 flip phones for $65/mo. What service would you recommend as an alternative? What about the VoIP Service? Where do you purchase the equipment for cell and VoIP? Do you pay monthly fees for VoIP?

  67. Just saw this article in January 2021.
    What makes it not especially applicable is that you have no mortgage/rent payment and an unrealistically low health insurance payment.
    My recipe for living on $40k/year, including the need to pay for housing and health insurance, is to relocate outside the US, most probably to Spain.

    1. Houses and health insurance are free in Spain? 😉

      It’s certainly possible to pay off a house and get big subsidies on health insurance in the USA and plenty of people have made both of those happen.

      I do like Spain though.

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