And now for the obligatory “new blogger flailing around”-style monthly summary of income and expense. This time around, it’s April and its various happenings.
We continue as a one-active-income household, with my wife’s paychecks providing the bulk of the influx. My several months as the “stay at home parent” has been much shorter than my wife’s several years. I’m glad I had the chance at it. Still no contract or temporary job, so I expect to start looking maybe June or so. (You can feel the enthusiasm, I can tell. 🙂 )
This is a three-paycheck month for my wife, boosted further by a slight out-of-cycle raise. I’m still nursing the six-month sabbatical fund through its eleventh month. 😀
Hobby time will go to health (gym and meditation) and this blog. I intend that all non-health hobby expenses will channel through my existing LLC. They won’t show up on household monthly reports.
I’ve developed these categories for the household’s expenses over the past several years. These are actual numbers; we keep no budget. Instead of “miscellaneous”, we have some discretionary categories.
We reside in a low-upper cost-of-living suburb in the US, supporting two pre-college children (one in residence, one out) and a second household with my mother-in-law and niece. We own two cars and our primary residence. Our only non-revolving debt is a home-equity line-of-credit, using 20% of most recent property-tax valuation for a slumbering side business.
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Most of these categories are self-explanatory. Several have subcategories under them, which roll up and are not visible here. For instance, “education” has separate subcategories for each child, “durables” subsumes “computers” and “furnishings”, and insurances subcategories appear where you’d expect.
The last three expense lines here are pure discretionary. Older child’s random expenses fall under ‘Second Households’ if not better fit elsewhere, as she is on full scholarship (HALLELUJAH!). My mother-in-law has cared for our niece in another state the past few years, in a rental unit we (my wife really) cover. This of course has drastically slowed our FI/RE progress.
April totals $8104.44, with $4231.92 non-discretionary and $3872.52 discretionary. Average month for 2015 is $7885.58, with $4929.05 non-discretionary and $2956.53 discretionary.
So how’d the household do this month? $7154.91 active income minus $8104.44 expenses means I drew $949.53 from the sinking fund I’d set aside for the sabbatical. As in previous months, the secondary households (barely) force us into the red. The sinking fund is still far from sunk, so Sabbaticalia continues! 😀
Lots of funny bumps in expenses this month. I booked three months’ personal trainer time in one go, so my discretionary will return to its usual near-zero level next month. My wife’s discretionary is unusually low, I think thanks to a missing credit-card statement. The abnormal “clothing” amount is inflated by returns to be recognized in May. “Dining” is high thanks to dinners for my fiftieth birthday and the last of the student lunches for my daughter’s school year. “Fees” is the annual Costco (discount warehouse club) membership renewals.
For purposes of projecting FI/RE dates, I assume certain of our non-discretionary expenses will halve as our children launch and we downsize our primary residence. Totalling our “retirement monthly expenses” (RME) gives $2532.10 as the floor for our required FI income. This in turn sets how much municipal bond income we need, and thus how much in bond face value.
I’ve set two budgets of discretionary expenses given our current discretionary spending. My wife and I will thus each have a “retirement monthly allowance” (RMA), $450 for me, $500 for her. This sets the target of dividends from stock (for me) and of draw-down from a balanced mutual fund (for her).
Our tax-deferred accounts, plus equity released on home sale, buffer us against inflation and minor lifestyle upticks outrunning these two portfolios. We both have (US) Social Security insuring against outliving our money. I spare you the page-long spreadsheet (with decade-old hair) that calculates my FI date as if we were to simply coast in neutral starting now.
And the coast-in-neutral projection is: eight more years to FI!
Hah! Gained a year by recognizing we’d need slightly smaller discretionary amounts each month. Should we decide to raise them again, it’ll be contrary to our observed trends, but perfectly doable.
Eight years remains longer than I’d like. (First world problem, yes?) The household still faces eight person-years of college expenses, and other opportunities for my wife to derail progress. Past experience suggests such goal-keeping will keep me very occupied, grrr …. That, FI’ers, is the price to pay for an apathetic partner!
Random Closing Thoughts
The main satellite household merges back during summer. This should reduce overall expenses slightly, with no change to FI/RE projections. We might take guardianship of my niece, or even adopt her. That would delay the “empty nest” by a year, and add an extra undergraduate education to fund in the coming years.
The incorrigible optimist in me has finally given up. There’s too much spousal interference. Any side-hustle in the LLC must operate from outside the house. Past work-from-home efforts have been shot down hard: I’ve lost two previous attempts at early retirement, at opportunity cost in mid-six-figures when I stopped estimating a decade ago. Thinking about the situation no longer leads to a dark place, which is progress of a sort. (Just not the progress I wanted!)
After twenty years of tracking expenses, I’m pretty clear on expense trends before we transition to FI. At worst, we coast to standard retirement age, when we’ll wind down businesses and tap retirement accounts and government-provided social benefits. (FI success, RE fail — I’m okay with that.)