Welcome to our annual household spending report! As we continue our journey toward Financial Independence and Early Retirement (FIRE), transparency in our financial journey remains a cornerstone of our blog. Let’s dive deep into how we managed our money in 2017.

The Philosophy Behind Our Spending

Before we break down the numbers, it’s important to understand our approach to spending. We don’t follow a traditional budget—instead, we practice mindful spending. This means:

• Focusing on value rather than cost
• Making intentional choices about where our money goes
• Tracking expenses without imposing strict limitations
• Aligning our spending with our long-term FIRE goals

This approach has helped us maintain a high savings rate without feeling deprived. It’s a sustainable way to live below our means while still enjoying life’s pleasures.

Breaking Down Our Expenses

We divide our expenses into three buckets: Essential, Discretionary, and Gifts/Donations. Let’s analyze each category in detail.

Essential Expenses: $16,674

Our essential expenses cover core costs that we mostly can’t avoid. Here’s a breakdown:

Groceries: A Closer Look

We spent 16.5% more on groceries compared to the previous year ($5,346 in 2016). This increase can be attributed to:

1. Our preference for organic produce and wild-caught fish
2. Buying coconut water in bulk
3. Adding other premium items to our regular shopping list

We prioritize high-quality food because we understand that health is a long-term investment. As we say, “Without health, nothing else matters.”

Discretionary Expenses: $18,038

Our discretionary expenses cover areas where we have more flexibility:

Travel Hacking: Maximizing Our Adventures

Thanks to my Tatiana’s expert travel hacking, we saved about $2,230 on our trips this year. We explored Virginia, spent 19 days in the Dominican Republic, enjoyed Labor Day in Rhode Island, and investigated potential early retirement locations in Florida.

Entertainment: The Year of Concerts

2017 was our year of concerts! We indulged in numerous Latin artist performances, culminating with an unforgettable Marc Anthony salsa concert in Reading, PA.

Gifts and Donations: $6,672

We allocated 16% of our total expenses to helping our parents, making donations, and giving thoughtful gifts to friends and family.

Reflecting on Our FIRE Journey

Our total spending for 2017 was $41,384, which is remarkably consistent with previous years. It’s amazing to think that this amount is just about half of what I used to spend on my own back in 2010, when I had a big house with a mortgage and thought I’d be working in corporate until 65.

What’s truly incredible is that we don’t feel deprived at all. We’re probably splurging more than households that spend over $100,000 a year because we focus our money on what brings us pure happiness rather than trying to keep up with trends or impress others.

Financial Milestones and Future Vision

Celebrating Five Years of Debt Freedom

As we approach our five-year anniversary of being debt-free, I can’t help but reflect on how transformative this journey has been. Breaking free from debt has been the cornerstone of our path to financial independence. The impact extends far beyond just numbers on a spreadsheet—it’s fundamentally changed how we view and interact with money.

The most immediate benefit has been the elimination of interest payments, which has supercharged our saving capacity. Every dollar that previously went to creditors now goes straight into our investment accounts. But the benefits go deeper than that. We’ve gained unprecedented financial flexibility, allowing us to make decisions based on what we truly want rather than what we can afford to pay monthly. Perhaps most importantly, the psychological burden of debt has lifted, reducing stress and allowing us to focus on building wealth rather than managing obligations.

This shift from being a debtor to an investor has been revolutionary. Instead of paying interest to others, we now earn interest through our investments. We’ve been able to focus on building our portfolio and watching our money grow through the power of compound interest. It’s incredible to be on the receiving end, where corporations and the government pay us to borrow and employ our money.

Our Spending Evolution

Looking back at our spending patterns from 2014 to 2017, we’ve seen a fascinating evolution in how we manage our money. What started as a strict budgeting exercise has transformed into a more nuanced approach to value-based spending. We’ve learned that sustainable financial independence isn’t about deprivation; it’s about intentional choices that align with our values and long-term goals.

Our lifestyle optimization strategy has focused on maximizing joy while minimizing unnecessary expenses. We’ve discovered that many of life’s greatest pleasures, like our concerts and travel experiences, can be enjoyed more efficiently through strategic planning and creative solutions like travel hacking. This mindset has helped us maintain our quality of life while steadily building our nest egg.

Vision for Our FIRE Future

As we look ahead, our strategy encompasses both immediate and long-term objectives. In the short term, we’re focused on maintaining or reducing our essential expenses while optimizing discretionary spending. We’re actively working to increase our passive income streams through investments and continuing to maximize travel rewards to maintain our adventure-seeking lifestyle without breaking the bank.

Our long-term vision is more comprehensive. We’re planning for a life of location independence, carefully considering different regions like Sarasota for our eventual retirement home. Healthcare planning is a crucial component of our strategy; we understand its importance both for our well-being and our financial security. We’re developing sustainable withdrawal rates that will allow our portfolio to support us throughout retirement while maintaining our desired lifestyle.

Practical Wisdom from Our Journey

The most valuable lessons we’ve learned come from practical experience. Tracking everything has been crucial—not just the numbers, but the patterns and insights they reveal. We use a combination of apps and spreadsheets, reviewing our spending monthly to stay on course.

We’ve learned to focus on optimizing the “Big Three” expenses—housing, transportation, and food—as these typically represent the largest portions of most budgets. Our rental property strategy has helped offset housing costs, while mindful transportation choices and strategic grocery shopping have helped optimize the other two categories.

Value-based spending has become our north star. We’ve identified our priorities—like travel, concerts, and quality food—and cut ruthlessly in areas that don’t bring us joy. This approach has allowed us to invest in experiences that matter while maintaining our savings rate.

Your Path to Financial Independence

If you’re inspired to start your own FIRE journey, here’s a concrete action plan: Begin by tracking your expenses today; you can’t optimize what you don’t measure. Identify your top three spending categories and look for optimization opportunities within them. Set realistic reduction targets that don’t feel like deprivation. Create a value-based spending plan that aligns with your personal goals and lifestyle aspirations.

What aspects of your current spending align with your long-term goals? Where do you see opportunities for optimization without sacrifice?