FIRE-July Monthly Spending Challenge Report

Greetings all, 

As we mentioned last month, we need to spend under $4,166 a month in order to qualify for our Financial Independence Early Retirement (FIRE). We offered up our method of tracking our spending through Personal Capital, and our spending actuals for the previous six months through June to give a baseline from which to compare. Now we're ready to give you our actual spending for the month of July. One caveat with this spending: Since we moved in July I took out the actual moving expenses (as those are one-time costs, not average monthly spending). Also, our actual rent payment in July was only $894, but I boosted it up to our new rent amount of $2500. (Yes, our rent went up with the new place, from $2,025 to $2,500: NOT FRUGAL, yet far better for our growing family in terms of home). 

Ok, so the July numbers are below: 

Category                                                      Amount 

Internet                                                        $69.99  

Car Payment                                                  $299.00  

Clothing/Shoes                                            $19.45  

Entertainment                                                $37.70  

Gasoline/Fuel                                                 $108.25  

General Merchandise                                     $87.30  

Groceries                                                      $972.58  

Healthcare/Medical                                        $72.76  

Home Improvement                                     $8.47  

Insurance                                                      $140.00  

Online Services                                            $1.99  

Rent                                                                $2,500.00  

Restaurants                                                  $347.68  

Telephone                                                     $24.65  

Total                                                                $4,691.02  

As you can see, still lots of room for improvement, particularly in Groceries and Restaurants. How does this compare with our overall budget needs? Well, let's revisit our goals we laid out last month, shall we? Here is the exact language cut and paste from last month's 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                                     ThisYearCost                                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  

As you may notice, there is a huge variance between June and July spending. We cut our education (Joshua finished Pre-School and wallet says Yah!), we did not pay extra for Insurance this month, no automotive costs, no utilities (that will come back to haunt us next month), Healthcare went way down, internet went up, gas went up, we did do some giving to non-charities this month so did not include that, no taxes or advisory fees, no personal care or hobbies either. So, all in all, we did quite well this month as compared to last month.  

Unfortunately, we did not hit our goal of $4,166. We missed that by $525.02. Guess what this means, we're doing it again in September. We have to see if we can hit the $4,166 mark. What would be even better is if we can hit it without taking out any one-time charges to build in a cushion.  

There is some good news in this test, however. If we compare our spending this month to what we expect to spend when living abroad, we've done quite well. Simply replace the rent amount with either $500 or $0 and you get a far more reasonable picture for financial independence: 

Category                     Amount 

Internet                       $69.99  

Car Payment                   $299.00  

Clothing/Shoes           $19.45  

Entertainment                 $37.70  

Gasoline/Fuel                  $108.25  

General Merchandise       $87.30  

Groceries                      $972.58  

Healthcare/Medical          $72.76  

Home Improvement     $8.47  

Insurance                      $140.00  

Online Services            $1.99  

Rent                                   $500.00  

Restaurants                  $347.68  

Telephone                     $24.65  

Total                                 $2,691.02  

What this tells me is, we're very close to being able to retire abroad right now if we rent a place in Spain on our current savings and live from the 4% rule. We would need almost 50% less to live abroad (and I can't imagine spending more than $900 a month on groceries in Spain since we're here now and groceries are very cheap!) We could probably get this number down to around $2,000 a month, which would only require $600,000 to make it sustainable. When we add back in healthcare costs we're still wrestling to make this work, but it's much closer than we knew in June. Throw in a little revenue from my writing and consulting, and we'd be in great shape! 

Yes, we have a way to go, but we're on a good track. We may not hit the June 2017 target date with the new rent costs and adoption expenses coming up, but at least we're confident we're moving in the right direction.  

What direction are you moving in? 

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!