Our 2015 Living Expenses: $32,080 – Not Bad!

When I hear that people need to spend more than $100,000 a year to be happy, I wonder where their happiness comes from. The more fulfilling our lives are that require fewer material possessions, the happier we are.

We traveled, ate well, danced, and spent a lot of time with family, friends, and each other last year. We were living, and we were living well!

And how do we get to travel so much?

Priorities and choices we make

It all comes down to priorities and the choices we make. If we succumb to peer pressure and feel the need to impress others, we will struggle regardless of our income.

To give you a better picture of our finances, we’re a working couple with middle-class salaries and no children. We are also very good savers. We can live with much less and still be happy. When we splurge, we usually do so on experiences rather than materialistic possessions.

Our formula for happiness

You may be wondering why we chose to make our expenses public. We want to demonstrate that the majority of Americans can live happy lives on much less. That you can reduce your spending, reduce your stress, and be happier overall.

Financially, 2015 was a fantastic year for us. We always say that our expenses should reflect our values and bring us true happiness, and we have done so yet again.

We are aware of our spending because it represents our life energy. One of the primary goals of conscious spending is to achieve financial independence as soon as possible without sacrificing the present.

Our formula for happiness is to live in the present while keeping an eye on the future. After all, how can you shoot in the right direction if you don’t have a target to aim for? Knowing how your money is spent is one way to accomplish this.

Let’s take a look at how we spent our money last year.

Our expenses were divided into three categories: essential, discretionary, and gifts/donations.

What has changed since the 2014 spending report?

To simplify the report, we combined the costs for fuel and insurance on both cars, and we also added a column with our expenses from the previous year.

What remained constant?

We were too lazy to sell the second car, a 2003 Suzuki Aereo, but we’re determined to do so this year!

People, let’s get some comments going at the end of the post. We’d be delighted to hear from you!

Essential Expenses

In 2015, we spent $13,171. That is 33 percent of our total spending on essential goods and services.

Homeownership vs. Renting

In the personal finance community, the debate over whether to rent or buy is never-ending. Depending on your circumstances, one may be more advantageous than the other. You only need to do the math.

For several reasons, having a rental property rather than owning a home is more advantageous to us right now, mobility being one of them.

Renting is not a waste of money as long as you invest the remainder of the income that could have gone towards a mortgage and the costs of home maintenance.

Paula Pant at Afford Anything has a great article comparing both: Renting is Throwing Money Away… Right?

Discretionary Expenses

Last year, we spent $18,909 on discretionary spending. That equates to 46% of our total spending. Although these expenses were not required, the majority of them added to our happiness.

The return on extra purchases diminishes over time and can cause more stress than anything else. There may be many ‘wants’ in this category that people mistake for ‘needs.’ The important thing to remember here is to avoid spending money you don’t have.

Entertainment

We love Latin music concerts and have seen two this year: Chayanne’s En Todo Estare Tour and Ricky Martin’s One World Tour, which is now making its way to Latin America.

Both concerts were held at Atlantic City’s Boardwalk Hall. In comparison to larger venues such as Madison Square Garden, the venue is medium-sized and very cozy. We only sat down for a slow jam during Ricky’s concert and danced the rest of the time. Wisin opened the show before joining Ricky on stage for Adrenalina (sube la adrenalina!).

Fees, Interest and Bank Charges

There were no interest charges here. We live debt free and intend to stay that way.

In 2015, our total living expenses (essential and discretionary) were $32,080.

Gifts and Donations

This one means a lot to us. Last year, we gave away $8,802 in gifts, or 21% of our total expenses. We’re grateful to be at a point in our lives where we can make a difference by helping others.

Nobody gets anywhere on their own. We got here because others helped us along the way. Our parents made significant sacrifices in order for us to receive an education. A large portion of this money will be used to help them, with the remainder going to charitable causes and a few thoughtful gifts to friends and family.

Thankfully, we were able to convince everyone to forego excessive gift exchanges for birthdays and holidays in favor of spending time with our loved ones.

Drum roll, please… our new projected FI date!

When we released our first annual spending report in March 2015, our projected FI date was March 2019. Our new FI date is November 2018, according to our new projections. Yay! We’re doing better than expected and hoping to get there sooner.

The stock market can delay or advance our FI date, but it cannot delay our early retirement plans because we are not investing in the market the reserves that we will require immediately after early retirement.

How did you perform in 2015? Did you spend more or less than you anticipated? What are your suggestions for saving more money while living a better life?