Wow, it took me a while to write this post. Getting the numbers from Mint was the easy part but getting the rest done has been an ordeal. And what a first quarter we’re living in!
We’re in the midst of a pandemic. People are very scared. They are worried about their health, their jobs… It’s full-on panic.
Some are even financially worried about us.
“How are the FIRE folks handling this situation? Are they looking for jobs already?”
Those are the kind of statements you find out there. It’s like some are just waiting for our FIRE plans to fail.
Well, we are here doing just fine, snowbirding in Florida. Other than the quarantines, which are delaying our return to our home, life goes on as usual for us.
Now, I’m not going to sugarcoat this and say that we don’t worry about things. We do worry about more people dying. We worry about the ones who are having a hard time supporting their families because they can’t work. We’re concerned about others.
However, the last thing on our minds is worrying about finances but this site is about happiness and financial independence, so we need to discuss those topics.
2019 was the last full year of the longest bull market in history. We knew the end was coming but didn’t know when and how it would end.
We were promised a roller coaster ride but no one told us that we’d be riding the drop tower!
30% of our stock funds portfolio was wiped away in days.
Fortunately, we were ready for this moment. We’ve been preparing for it for the past three years by getting more conservative. We went into early retirement with a conservative allocation of 60/40 (stocks/bonds) and a withdrawal rate of 3.25% for 2020. That covers our projected spending for the year.
We are easily able to project our spending because we’ve been doing this for years.
Previous years of spending
We started blogging in 2015 and have reported our spending online since then.
Here are links to previous spending posts:
Wow, that’s six years of expense reporting including 2019.
But, how long have we been tracking our spending?
We began tracking it on our own about a decade ago. Tracking our spending was a major factor in reaching financial independence. It opened our eyes to how we were spending our hard-earned dollars, while not maximizing it for true happiness.
2019 spending by category
To keep this reporting light, we’re concentrating on the major categories and lumping them all together in one table.
When we started tracking the spending, it was critical for us to know what was essential spending from discretionary.
Tracking it gave us an edge. It provided crucial information as to how much money we needed to live on, what could be cut from our spending, etc…
Nowadays, most of our spending is discretionary. We don’t carry any debt (not even mortgage debt) and that gives us more freedom to spend how we want.
Now, let’s see how we spent last year:
|Food & Dining||$12,914||$1,076|
|Gifts & Donations||$4,049||$337|
|Bills & Utilities||$3,175||$265|
|Auto & Transport||$3,066||$256|
|Health & Fitness||$2,698||$225|
We spent more than usual last year.
Instead of investing more on our taxable accounts, we decided to spend on much-needed repairs and remodeling on our property. We planned for this higher spending, so no surprise there.
2019 was a transitional year for us. We rented during the first five months of the year for a total of $4,600. During that time, I drove to the property on weekends to make repairs, while Tatiana stayed home caring for Chica Libre.
In June, a month before we retired, we moved into the property and commuted to work for 45 minutes with a combination of remote/office workdays.
We spent close to $18k on home repairs and improvements. Most of these expenses were upgrades. That was a good call because once we’re ready to sell the house to move south, we won’t have to make any upgrades. And we get to enjoy them while we live there.
It was also good timing because had we put that money into the stock market, it would have evaporated. Now the property is mostly renovated and ready to sell at any point.
When the market is overvalued, is a good time to diversify, pay off a mortgage and make home repairs.
Before and after photos of repairs
Powder room remodeling
The powder room in the basement also got an upgrade.
New roof install
Ceiling and wall repairs
Making of a smarter home
Garage opener replacement
The garage opener replacement broke during the summer. A company wanted $250 to install it so I ended up doing it myself and learned a new skill.
Enjoying our home
It took some work to get us to the point of being able to fully enjoy our home. We still have a few minor projects to finish up when we go back but nothing compared to what we’ve done so far.
Food & Dining
We cook a lot at home but we also buy quality food and it’s not cheap. If you want wild-caught salmon, and not from China, you’re going to pay a lot more. At some point, we were buying salmon from Aldi but stopped as soon as we noticed it was coming from China.
We don’t restrict ourselves when it comes to good food, but since we spend little on other categories, our overall budget evens out.
2019 was the first year that we traveled unrestricted for time. At the beginning of the year, we spent about 3 weeks in Florida. Then we traveled to Europe for almost two months in the summer and then drove to Florida again in late November.
We kept our travel expenses down to $8k because we used reward points for flights and hotels.
We got the child tax credit of $2,000, which we applied directly to our child spending and that brought it down to $3,278. This was high spending because we hired a babysitter while we were working. She was awesome! :*
Auto & Transport
We still drive our ’07 Camry. We had to make some repairs, but it’s still kicking. It droves us to Florida for a second time! $3,000 is what we usually spend per year on auto expenses.
What’s not included in the spending report
- Income tax is not included.
- We also exclude blog expenses even though they’re minor and we don’t break even. This is just a hobby for now.
- We don’t have any debt, so there are no interest payments to show for any balances.
Final thoughts on 2019
There were no major surprises for us in 2019 as far as spending. If you have questions or need more details on how we go about spending, you can comment below.
Could we spend less?
We could spend less on food and dining but we don’t feel that we have to. We also don’t eat out as much, but when we do, we go to restaurants that provide quality food. As a result, we end up spending more per visit.
Our fast-food joint is Chipotle.
We are okay with spending more on this category because being FI is about having choices and spending more where it matters to you. Health and food go hand in hand.
Cut the fat where there’s a lack of happiness and spend more on what really matters.
A look ahead
Since this year we’re not spending on full-time babysitting and major repairs, we’re confident that we can keep our spending for 2020 under $40,000.
We have three months of data to support that level of spending. Therefore, we’re feeling very confident that our first full year of early retirement spending can be kept below a 4% withdrawal rate.