FIRE--Monthly Spending Challenge

from Jeremy

What it costs to live 

In order to FIRE in July 2017 we have to be spending less than $50,000 a year for a family of four. This includes rent, groceries, medical expenses, any insurance, and other costs that arise. If we break that out by month, we have to keep our spending below $4,166. Considering we expect to spend at least $1,800 a month on rent in the US (less than $500 a month while abroad), all other spending has to be below $2,366. One would think that should be easy. Yet, we spend far more than that every month now. 

We don't want to wait until July 2017 to see if we can make these numbers work. Therefore, we're going to do an experiment in July 2016. Can we make these numbers work in the DC area? If we can do it here, we can do it in Chicago, and can definitely do it abroad. If July doesn't work, we'll revisit this in September, October, November etc. I didn't say August, because we'll be doing a different experiment that month, which I'll talk about below and in a future post. 

Monthly Spending Today 

As one month is not a guide, let's look at our total spending so far this year. Six months worth of data is far more useful to see trends, and catch quarterly expenses. Using  Personal Capital, a free accounting and personal finance software program/app, we are able to see a complete breakdown of our expenses from January 1 through June 30: 


Category                            ThisYear Cost               Monthly Expense  

Rent                                    $12,150.00                $2,025.00 

Groceries                           $5,814.00                     $969.00 

Education                          $4,546.00                     $757.67 

Restaurants                       $2,371.00                      $395.17 (Wow!) 

Car Payments                   $1,795.00                  $299.17 (Waste!) 

Insurance                          $2,249.00                    $374.83 

General Merchandise      $1,360.00                     $226.67 (Wow!) 

Automotive                       $849.00                   $141.50 (Waste!) 

Utilities                              $1,065.00                    $177.50 

Business Miscellaneous  $2,379.00                   $396.50 (Investment?) 

Healthcare/Medical         $1,459.00                   $243.17  

Clothing/Shoes                $342.00                     $57.00 

Internet                             $299.00                $49.83 

Gasoline/Fuel                  $436.00                 $72.67 (Waste!) 

Gifts                                  $325.00                    $54.17 

Charitable Giving            $1,380.00                  $230.00  

Entertainment                 $671.00                      $111.83 (inc.Vacations) 

Telephone                       $156.00                 $26.00 

Taxes                               $104.00                 $17.33 

Advisory Fee                  $33.00                       $5.50 

Personal Care                $242.00                 $40.33 

Hobbies                          $58.00                       $9.67 

Home Improvement      $170.00                      $28.33 


Total:                               $40,253.00              $6,708.83 


Monthly Spending Challenge 

As you can see, we have some work to do! We live quite COMFY, but we also spend quite a bit. Some of this spending will not exist in Chicago or abroad (such as the car payment and auto repair, but we will still have transportation costs, not to mention bike repair and decent walking shoes.)  

Let's go through the list, and create a new one that matches what we expect to have to spend in Chi-town and Spain (just to give an example of abroad), shall we: 

Category     This Year Cost     Monthly Expense     Chicago         Spain  

Rent             $12,150.00     $2,025.00          $1,800.00 <$500.00(Free)  

Groceries     $5,814.00      $969.00                 $500.00   < $500.00   

Education    $4,546.00     $757.67               $400.00   < $400.00   

Restaurants $2,371.00       $395.17               $150.00       $150.00   

Car Lease $1,795.00      $299.17                     $  -               $  -     

Insurance     $2,249.00      $374.83              $289.75       $250.00   


Merchandise $1,360.00     $226.67              $286.25       $286.25   

Automotive  $849.00       $141.50                $  -              $  -     

Utilities         $1,065.00     $177.50               $150.00       $100.00   


Miscellaneous$2,379.00   $396.50              $150.00       $150.00   


Medical         $1,459.00     $243.17               $123.00       $75.00   


Shoes           $342.00              $57.00                $75.00        $75.00   

Internet        $299.00        $49.83                $69.00       $69.00   



Transport     $436.00        $72.67                 $50.00      $50.00   

Gifts             $325.00        $54.17                  $50.00      $50.00   

Charitable   $1,380.00      $230.00               $50.00      $50.00   

Entertainment $671.00    $111.83                   $25.00      $25.00   

Telephone    $156.00        $26.00                 $25.00      $25.00   

Taxes            $104.00       $17.33                   $10.00       $10.00   

Advisory Fee $33.00       $5.50                    $20.00      $20.00   

Personal Care $242.00    $40.33                  $15.00       $15.00   

Hobbies         $58.00       $9.67                     $15.00       $15.00   


Improvement $170.00      $28.33                  $5.00         $5.00   

Total:              $40,253.00  $6,708.83             $4,278.00  $2,840.25   

Even with an expected Spartan lifestyle, we don't quite make it in Chicago, do we? What else can we cut? We've already lowered our rent, cut out the car, reduced our groceries, since we're making less income we reduced the price of school and healthcare (Thanks Affordable Care Act!), dining out far less (which in Chicago is a real sacrifice as compared to our area which is a decent restaurant desert!), lowered our utility bills (although that may go up if we have a washer/dryer in our unit after we move to Chi-town), lowered our tax bill (I paid for two tax programs this year to test them against each other). We're close, but we're not there yet, are we! 

So, can we make this work? In the month of July we will set ourselves up to reach our goal of spending under $4,166. I think we can cut out more in restaurants, clothing, and general merchandise. Don't believe me? Let's come back in September and see how we measure up. 

Spending in Spain 

During the month of August we'll be spending at least 3 weeks living in Spain. This will give us a chance to measure our actual spending there against our expectations. This is a good way for us to test the waters of the Mediterranean and our finances at the same time. We'll be seeing if we can live for as little in Spain as we estimate. We'll come back in September with our results for this test too. The whole family is excited to go to Spain. I believe Jan is almost as excited as I am about measuring our cost while there. 

You may be looking at those Spain numbers and thinking "What's the deal here? Why does it say Free for housing?" I'll tell you, we stumbled onto a money saving scheme almost as powerful as compound interest (The most powerful force in the universe according to Albert Einstein). Initially we were looking at the cost of renting an apartment in Spain or Thailand for less than $500 a month. We can easily find great places for those prices in both locations that would fit our family needs of at least 2 Bedrooms and 2 Bathrooms in good locations with equal amenities to what we have now. Yet, that's not where the true power is. We'll be writing a post about this awesome new force we discovered in the near future. You should be as excited as I am about it, as it's TOTALLY AWESOME!   

Do you use Personal Capital to track your spending? If not, may we recommend you do so. It's very handy, and free! Not to mention, you'd be helping us out by signing on. Check it out!