MBB_Boy's journal

Where are you and where are you going?
mooretrees
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Re: MBB_Boy's journal

Post by mooretrees »

Ha ha, well, it's a great spot to be in to be ready to drop one income. We have a stay at home parent (DH) and it's so much better than both parents working. Good luck!

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

6. Groceries

Background: This is going to be a problem category, and is one of my planned focus areas this year. Last year the two of us spent 7.7K on groceries (641 per month, 4.3% of expenses).

Even before reading here I wasn’t happy with that number – it’s been lower in the past, so I saw no reason why it couldn’t at least go back down to that range. I remember as a Military Officer, I was given around 220 a month in “Basic Allowance for Subsistence”, so that number has always been in my mind as an appropriate number. That number was from years ago, inflation etc etc, but still.

In talking to my wife and thinking back, think a few things have happened that have caused this number to go up:
1. We started eating organic

2. We moved over time, unconsciously, to essentially a Paleo diet. My wife does all the grocery shopping and cooking, and she’s been slowly cutting our carbs. This is a BIG deal. We were high level athletes in college and she was a serious runner for a few years post college, so we ate carbs and grains all the time. Lots of waffles, oatmeal, pasta, and a baguette with every dinner. Substituting that food is expensive – especially if organic vegetables become the replacement

3. We started eating more seafood. I’ve never really cared for fish, but my wife has been slowly introducing it to me so I can tolerate it. Problem is, she only wants to eat things that are wild caught (frozen is ok). And fish of any kind is more expensive than the chicken and pork that would have been eaten in its place.

4. In an effort to “help” last year, I made a rookie, WL5 style mistake. I started shopping the sales ads / weeklies for the first time, and picking out items that were “the best deals”. What I didn’t consider was that while I was getting good value, the nominal $ amount of things that I was buying was still higher than the non-sale items I would gotten. Typically, the best deals have been in fresh fish and red meat – even at 20-30% off, that is more expensive than chicken thighs. Oops. I also discovered the unconscious Paleo thing, because I started pushing for rice based meals like stir fry, and after a while my wife said “stop trying to feed me rice”. That led the discussion and realization that we had slowly dropped carbs and grains without realizing it

Motivation to change and rationale: Medium. This is the largest expense category that I feel is firmly in our control, and eating a cheaper / more flexible diet has resiliency benefits, especially as we start to grow more of our own food. The reason that this isn’t labeled high is that I am firmly aware that even a 50% cut doesn’t move the needle in our overall finances. It’s hard to be motivated by something that will take a lot of work daily / weekly to adjust for no discernible financial benefit. But I KNOW this can be done, because many people here are eating healthy diets for much less food.

Another demotivator is this info from the USDA, which publishes a monthly cost of food report:
https://fns-prod.azureedge.net/sites/de ... ModLib.pdf

The national average for a moderate cost plan is 613 a month – and I’m pretty sure the typical family in the U.S. isn’t eating an organic, essentially Paleo diet (Paleo apparently has a reputation for being expensive). I COULD argue that our grocery budget isn’t out of whack, and that we’re actually doing well compared to the average – much less our peerset. Of course, ERE isn’t about being average so it really depends on who I want to compare ourselves to (if anyone). That’s the central question I need to decide, and is the reason I decided to push past the initial discomfort of reading here and start an account / create a journal. Some mix of introspection, reflection, and community feedback will ultimately inform a decision.

The Good:
• Healthy diet with food we enjoy
• Small % of income
• Not out of whack compared to national average

The Bad:
• Higher than it used to be, indicating creep

The Ugly:
• Our grocery budget alone is 85% of a JAFI

In-bounds things we could have done differently:
• Approached sales differently – tail wagged the dog on that one
• Chose to eat different / altered meals – give me plenty of cheap carbs, wife eats the expensive vegetables and fish. Trade time/work for money savings
• Substituted frozen vegetables for fresh
• Watered the vegetable garden more so it turned out better

Current go forward plan: Goal is to get this down to 500 a month – which is a bigger lift than it initially appears. Not only are we battling inflation, but we’re adding a new human being to our house. My wife has an increased appetite being pregnant, and then we’ll be feeding a kid. Expect she’ll still be eating at an elevated amount post birth as we plan on breast feeding. Frankly, even keeping our grocery budget flat would be a win.

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

7. Pet
Background: We got a dog this year! He’s a big one (less than 1 year, close to 80lbs already). We spent $7.4K (4% of expense base) on him this year, most of which won’t repeat (initial acquisition, equipment setup, emergency vet visit). The largest recurring cost will be food, which we are doing an expensive way. He’s a on the prey model raw diet, with meat and organs procured from Sam’s or our local grocer. He eats…….well.

Motivation to change and rationale: Low. We’ve wanted our dog for a long time (wife grew up with breed), and the additional cost of a prey model diet vs high quality dog food doesn’t make or break our budget. It’s also a very easy thing to undo if things REALLY hit the fan and I had to cut deep to the bone. Switching to kibble is really easy if we felt we had to

The Good:
• Love the dog
• Not a large % of our expenses

The Bad:
• Have chosen an expensive food option

The Ugly:
• None

In-bounds things we could have done differently:
• Fed kibble instead of raw
• Chosen a different breed
• Looked for a rescue (We donate to rescue org for this breed of dog)
• Not paid for insurance

Current go forward plan: This budget category will drop by half with no action taken, 3.7K expected for the year. I’ve dialed in the food recipe better, so will be able to get this down. This cost includes medical, so good chance that we come in under budget. 1.8K of the budget is food, rest is a wedge for medical / boarding etc. I’m also dropping the wellness rider on the insurance at renewal.

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

8. General Merchandise

Background: Along with grocery, this is the other budget category that will receive the “Eye of Sauron” this year for sure. We spent 6.5K (3.5% of expenses) this year, which is on the higher side of our 3-year average of 6K.
The difficulty here is that it’s hard to pinpoint what’s in this category. It’s basically a less lazy version of “other”, but directed at shopping. The problem is that when I review this category in the budgeting software, most of these purchases are from Amazon or Walmart. Otherwise, there’s “bigger” purchases that don’t repeat. Moreover, simply finding a way to split the purchases into other categories doesn’t erase the spend, which is the goal.

Motivation to change and rationale: High. It’s the second highest expense category that I feel I have “control” over, where making changes don’t require something financially suboptimal (like paying down our low interest student loan). It’s already hard to pin down what exactly this is, which feels sloppy. That said, it’s still only 3.6% of our expense base.

The Good:
• Limited % of revenue

The Bad:
• Limited knowledge of where this money is actually going

The Ugly:
• Slowly creeping up over time

In-bounds things we could have done differently:
• Gone used where possible – wasn’t even something I thought about generally
• Gone without. If the purchase wasn’t a replacement of something that broke or wore out, then we could have placed a higher level of scrutiny on why we need it. We’ve obviously not needed it up until that point.

Current go forward plan: Bring this down to 5.8K, which is our 2020 level and a 10% cut. Will take this as a win given 2 years of inflation, higher income, and adding a kid to the house.

One step we took in the past to wrangle this was getting rid of Amazon Prime and writing down things we wanted to buy on our whiteboard and letting them sit a few days until they could be batched. A few times this results in one of us questioning the need and erasing after discussion….but usually not. We can do better.

This year, after writing something down we are going to label whether it’s replacement item or not. If it’s NOT a replacement, we need to give it higher scrutiny.

Otherwise, I’m sort of drawing a blank here on what to do and will just be relying on discipline and case-by-case reviews. I wish I could think of a better system or process to put in place. It really is death by a thousand cuts.

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Slevin
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Re: MBB_Boy's journal

Post by Slevin »

You might need a stronger filter mechanism for purchasing, you really want heuristics based on a web of goals, but you might just be able to use some of these random ones from my head if they apply to you:

* will this good be useful to me 5 years down the road? Or is it likely going to be trash by then?
* can I get this product used, and sell if for the same price when I am done with it?
* can I create an mvp of this product or approximation of this good through something I already own (I.e. use a cardboard box or two as a coffee table mvp, etc) or short term borrowing of this good that a friend has to de-risk the purchase (make sure it is a good I actually want).
* do I need this version of this good explicitly? Is there a less wasteful (monetarily or ecologically) version of this good I can use instead?
* if I’m not going to be using this often, can I rent it instead of buying? Can I share with my neighbors or close friends?
* am I overfitting a solution here? I.e. Where the thing I might need is “flat surface” and I have chosen “luxury marble table with gold inlay” or something like that.
* if a replacement good: can I do without it and be fine? Operate for 2 weeks without the replacement good, see if it is really a necessary purchase.

@mathiverse , you are just finishing up a no buy period, right? Do you have any more ideas on good purchasing filter heuristics?

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mountainFrugal
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Re: MBB_Boy's journal

Post by mountainFrugal »

Some overlap with @slevin's suggestions... but here is my listicle accumulated over years of different scenarios that may be helpful:
viewtopic.php?p=242893&sid=87cff39f17db ... 66#p242893

Add: The key for me was realizing where I heard about an item (e.g. ads from media and/or friends). Being able to recognize this is a crucial step in overcoming mindless consumption and consumption comparison traps.

Western Red Cedar
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Re: MBB_Boy's journal

Post by Western Red Cedar »

MBBboy wrote:
Sat Feb 26, 2022 10:47 am
6. Groceries
In regards to your grocery spending, I'd encourage you to remain flexible on this as your wife is pregnant and it sounds like she was the driving force behind some of the dietary changes. It isn't worth trying to save too much at the moment when you have bigger priorities to focus on. Your current approach is optimized for health, which is great. I've noticed paleo tends to be harder to cut costs, particularly when you are buying all organic meat and vegetables. It sounds like you are already taking this approach, but just wanted to offer an encouraging nudge. Happy wife, happy life :D

One easy way to cut expenses while on paleo is intermittent fasting. It isn't something that works for my DW, but it works well for me. You can check out this thread for details:

viewtopic.php?t=12297&sid=7230d9ad22197 ... e2a0da6d6a

One of the others is to compare a little bit between different grocery stores. Sometimes one can get into a habit of shopping at the same place out of convenience. I'm able to find certain organic items at 25-50% off by shopping at certain discount stores. Buying in season obviously has a big impact too. Eliminating any food waste is also a bit of a no-brainer. I have a few recipes, like stir fry's or curries, which allow me to use up most of the leftover produce at the end of the week before anything goes bad.

Spring is just around the corner, so focusing on the garden sounds like a good opportunity to try to expand what you grow and preserve at home. Even if it doesn't save a ton of money, it is an opportunity to hone an important skill set, cut down on your carbon footprint, improve your diet, and reduce some cortisol with additional time in nature.

Hristo Botev
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Re: MBB_Boy's journal

Post by Hristo Botev »

MBBboy wrote:
Mon Feb 14, 2022 2:00 pm
Two of these categories will go away in the next 2 or so years naturally (student loan and car payments), but it's hard to make significant progress on getting overall expenses down when I can rationalize / justify all the large ones. And this is ignoring the fact that we make and save a lot of money, so none of this is "necessary". Or maybe I'm fooling myself by saying that my lack of motivation isn't tied to our high income / savings rate.
Wait until that kid comes; that's when the spending rationalizations will REALLY start coming!

On the motivation thing, and in light of the fact that you've got a kid coming, what happens if one or both of you lose your job? Seems like there are a lot of debt payments and other expenses that need to get made each month; and that's likely going to increase in the aggregate when the kid comes (and that definitely does NOT change once the kid is out of diapers and in school, even public school).

One metric/concept from this forum that I found really helpful was the Income Robustness Score (see viewtopic.php?p=240187&hilit=robustness#p240187; see also viewtopic.php?t=8215&start=60, which I believe was the genesis, development of the concept/rubric). If you are a high income household, it can be really easy/convenient to overly focus on the savings rate, because the income is so high it screws up the equation. And when that income comes from just one place (or two places, for a double income house), there's an all important single gatekeeper (your employer) that can reek havoc on your life with a phone call. The robustness concept, OTOH, necessarily causes you to focus on getting the expenses down, because even if one salary covers your spending 4x over, it still only counts as a "1" on the income robustness score.

I suspect you've also looked at Jacob's 21 day makeover on the blog; but I found that really helpful as well. But that's more "how" focused; not "why" focused.

Also, CONGRATULATIONS, you posted the 1,000th reply on my journal; I'm sure that entitles you to some sort of prize, I just can't think what that would be.

Hristo Botev
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Re: MBB_Boy's journal

Post by Hristo Botev »

Sorry, something else.

Another possible motivation that might appeal to you; drawn from my own experience. DW and I used to make more money; and we did the savings rate thing for several years and got to a place where felt we sufficiently had enough FU money that I could leave my BigLaw job for a SmallLaw job with about a 50% paycut and about 500 less hours a year. It was at that point that we got a little more serious about the spending side, because we wanted to keep our savings rate about the same, and we did that; and our savings rate ended up higher than it had been despite the big cut in pay. As the kids were a bit older (elementary school) DW wanted to go part time, so she could be more involved with the school, church activities, being the "Team Mom" for sports, and other Soccer Mom type stuff. We were able to do that; and we weren't able to do that because we'd saved up so much money; we were able to do that because we'd cut our spending down so drastically that we could maintain our same savings rate even with her going part time. Now, we're making a move back home and leaving our HCOL area; we went under contract on our house BEFORE I had the talk with my law partners about whether they'd be cool with me going remote across state lines--i.e., we made the decision to move back home without even factoring in whether or not I would have an income (i.e., whether or not I kept my job was not a factor in our decision). Our savings had something to do with that (we're able to buy our new house in cash), but again, this is really much more to do with us getting our spending down even further.

For me, I've gone from being REALLY concerned with the money in the bank and the movement of the index funds, etc. (and checking in regularly for some spreadsheet therapy), to being much more at ease with the knowledge that if push comes to shove, DW and I could meet our family's needs (with no change in how we currently live) waiting tables or delivering pizzas or any number of other things, without ever touching any of the money that's in the bank.

Money in the bank certainly is comforting and gives you leverage; BUT, being able to live exactly the life you want to live without needing any (or much) money is next level leverage.

mathiverse
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Re: MBB_Boy's journal

Post by mathiverse »

I think a lot of the purchase heuristics already listed are good. The chapters about purchasing heuristics in the book "How to Survive Without a Salary" might also be a useful resource.

I would say the things that were most helpful for me were *delaying purchases and acquisitions*, thinking about how I'd get rid of what I purchased and deciding whether that hassle was worth it, and asking myself if there is a way to substitute skill instead of purchasing something.

Another tip/trick is that I will make posts asking if anyone has an item on Freecycle or a Buy Nothing FB group before I even consider purchasing something. Being able to delay the acquisition and reducing the, often psychological only, urgency of a purchase helps allow time and space for waiting for the answer to posts online.

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

Wow, thanks everyone for the replies.

@Slevin - you're definitely right. The "plan" of relying on discipline on a case by case basis is a poor one. Thanks for lending some suggestions - the ones around 5 years from now and sharing with friends / neighbors especially resonated.

@MountainFrugal - thanks for linking to your post. My instincts have led to some of these (e.g., have you wanted this for more than a month), but I'm definitely stealing a few from your list. Where specifically an item will be kept, the 6 month rule, and the one around solving the problem in under an hour are really good. That last one especially is a good way to stretch thinking.

@Western Red Cedar - Definitely staying flexible here! She does the vast majority of the cooking, so she gets most the decision rights on what we eat. Fair's fair, right? I am familiar with intermittent fasting, and it's the primary reason I gave up daily breakfast tacos a few years ago. There's definitely more to explore on that topic. On the topic of different grocery stores, we did find some big price differences in some of the fruits we eat. Now it's just a matter of deciding if the time / energy to add another store to the shopping run is worth the money. And the garden has been adding, not reducing , cortisol so far! That'll change as we build proficiency. We only got one cucumber last year....

@Hristo Botev - I've been making my way through your entire journal, and appreciate what you've shared. I can definitely see the kid rationalizations coming! Took a look at the Income Robustness score, got a 2.34 (Two jobs, portfolio, and a very small side gig). If either one of us lost our job, we would be fine - the casualty would be our savings rate. We wouldn't have to actually change our spending to make it, although I'm certain we would.

The motivation you talked about (ability to change jobs and not worry about money) is definitely a big one for us, and it's the reason why we've always decided to live on the lower of our two incomes. The "problem" is that we both ended up making a ton of money. I wrote much earlier in the journal (or my intro, I forget) that one of my goals was to make sure my wife could choose to be a SAHM if she was ever drawn that way. If that never happens (and she doesn't feel that way), we've also talked about this giving us the flexibility to do something high risk / high reward like starting a business or working for a super small, early stage startup. Neither of those options appeals to us currently, but life changes. We'd like to maintain the flexibility / optionality to choose. Next level leverage indeed - I like how you phrased that. And exciting that you're moving!

Let me know when you figure out what my prize is!

@Mathiverse Another book added to my list. Unfortunately Freecycle isn't big in our area, and the Buy Nothing groups are only on facebook - which neither one of us uses. I dropped it back in 2011, my wife more recently. I can do more to see what's available though, just because those big names aren't active doesn't mean the door is shut

Edits: Grammar

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

As a break from the expense series, wanted to quickly log a few "ERE" victories since I've started the journal. Some of these are a few months back, but I wanted to finish the expense series from top to bottom first. It's taken a bit longer to do so given higher priorities, so want to get these down before I forget them.

1. Saved about $1300 on baby gear by buying used from a person in my network. In the old days, I would have asked all my friends with kids for suggestions, and then bought those things. Now, I asked for suggestions as part of the research.....and then asked the friends who aren't having more kids if I could simply have theirs! Everyone was happy with the negotiated price - hadn't even occurred to them to sell or try to give the stuff away. It was just in storage indefinitely. Sort of crazy if you think about it.

2. Upped my prepping to 2 weeks of various essentials, as well as dedicated bags for vehicles, first aid stuff, and some energy prep (small solar panel, rechargeable batteries). This builds on the other work I'd already done (food storage, generator, 3 days water). Also, my application for my suppressor FINALLY got approved.

3. Did a DIY fix for our nicer office chair (which was bought used from a store a while back). The arrms were giving out, the leather/plastic material was cracked and leaking the cushion. Ended up cutting up some old tshirts for cushion, wrapping it in some fun fabric from hobby lobby, and hot gluing the bottoms under the arms together after cutting notches for the various levers. Sewing it would have been a stronger solution, but I don't know how to sew yet AND not sure that I could sew it tightly from a weird angle under the arm of the chair anyway. Either way, victory in my book. Has held up for a few weeks so far.

4. Fixed our dog bed. He got into the zipper on the removable cover and destroyed the teeth track. Definitely outside of my ability to repair. Old MBB Boy would have simply tossed the thing and bought a new one for $60, while saving the insides somewhere in case the next break was the cushion and not the outer layer. New MBB Boy bought some velcro strips and moved on. $10 and 20 mins later, good to go. Wanted to keep it removable for washing - this could all fail if washing it ruins the velcro somehow. Guess I'll learn at some point

5. Joined the local library. Sort of nuts we hadn't done this - we used to belong to the library in another state, and just never bothered when we moved here a few years ago. Got a number of books already, and will be able to get kids books and activities when our son is born next month.

6. Resisted the urge to buy a pressure washer for our deck. I've cleaned it with a brush / "high pressure" nozzle attachment a few times, but it sort of sucks. Was all set to pay $100 or whatever and buy from a big box, and then the thought hit "wait, all my friends have houses and decks. And we're all manly men with tools, I guarantee someone has a pressure washer I can use". One text later I had offers to borrow 5 of them!

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

9. Wine Club

Background: Yup, we are in a number of wine clubs. On this forum, I suspect most of you would just nuke this entire category and move on. We spent 5K last year (2.8% of expenses), which is higher than last year’s 3.3K, which is higher than 2019’s 2K.
We started on this path after going to Napa/Sonoma during our honeymoon. We joined 3 initially, and over time have added (and dropped) a few, while also joining a few in our local area. We are “collectors” now, have around 80 bottles in our wine fridges.

Motivation to change and rationale: Medium. Our wine fridges are full, and I’m happy to move from “collecting” to “consuming”. It’s a purely discretionary expense – we could simply stop adding to the collection and drink it down, or even stop drinking altogether.

The Good:
• Limited % of revenue
• We like wine
• Shipments remind us of our honeymoon, and we visit occasionally

The Bad:
• Unnecessary expense
• Paying for benefits we don’t use (applies to non-local clubs)

The Ugly:
• I didn’t realize this until now, but this category has been growing FAST
• 5K in a year could be a grocery budget (416 a month!)

In-bounds things we could have done differently:
• Been more aggressive trying new wines. The vineyard owners/workers and people at wine shops are more than happy making recommendations. Would result in less volume being purchased (buy as we drink instead of predetermined shipments) and possibly at lower price points.
• Paused memberships to see if we miss them. One hurdle to quitting outright is that there is sometimes a waitlist to joining. This can be a soft cancel, and then we see if we actually miss them when they stop showing up.
• Bought direct off websites instead of being in club. The per bottle price will be higher (no discount, shipping considerations) but odds are we will be doing less ordering and therefore saving a ton of money. Also get more control of assortment – but lose access to “exclusive” bottles
• Done without completely. This entire category is discretionary

Current go forward plan: Bring this down to 3K, which is a local club and our two favorites from our honeymoon. Reassess after a year, see if we start drinking down the collection.

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

Meta note: "Current go forward plan" is what my wife and I planned on at the beginning of the year. Any changes that I make from reflection and discussion aren't reflected in these

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

10. Vacation
Background: I have us marked as spending 4K (2.2% of expenses) on vacation last year, which severely understates actually spend / value. We also burned a ton of points that supplement this number. Last two years were both 13K as reference points, which still included some points usage. We went bigger on points this year because Marriott is moving to full dynamic award pricing next year and I expect devaluation. I’m also looking at dropping the Chase Sapphire Reserve so wanted to eat through that cache as well.

Motivation to change and rationale: Low. Along with charity, this is one of my “off limits” categories. It’s how I balance living now vs saving for the future. We make a lot of money and I want to make sure we enjoy some it along the way. For us, that means generosity and vacations. Given that I conservatively expect to be FI within 5 years anyway (while in my 30s), I don’t see a lot of harm with this approach. Maybe I’m missing something.

The Good:
• Creating treasured memories
• Heavily supplemented with points and travel gaming
• Limited % of expenses

The Bad:
• I don’t see a bad side to vacations!

The Ugly:
• This isn’t a real number, don’t have a sense of “reality” in what we’ve been spending as a future reference point

In-bounds things we could have done differently:
• Chosen less expensive accommodations
• Gone to places where our friends live
• Done less expensive activities (e.g., scuba diving)

Current go forward plan: I’ve budgeted 5K for vacation this year as I don’t expect to go very far with a newborn. We will still take a few trips somewhere, but we’ll probably substitute activities and locations.

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

11. Travel

Background: I maintain separate budget categories for travel and vacation. The difference is origin story – if we’re going somewhere because of someone else, it’s travel (e.g., weddings, bachelor parties, see family). If we’re going because WE want to, it’s vacation. Last year’s travel spend was 3.8K (2.1% of expenses)

Motivation to change and rationale: Low. I’ve long maintained that I will NEVER miss a wedding I’m invited to. I’m an only child and don’t have cousins or anything, so every wedding I’ve been invited to has actually been a really close friend and I’ve WANTED to go, as opposed to family obligation. We’ve been to over 40 weddings since we’ve been together and they’ve all been a blast. Family travel has typically been to see older family members (went to a 90th birthday last year), and obviously we don’t want to miss those because they are limited. So yeah, these are all things I look forward to so I don’t have much motivation to reduce them.

The Good:
• Creating treasured memories
• Goes down on its own as function of age – not many weddings left!

The Bad:
• Don’t always choose the cheapest way to execute – could drive, choose flights with connections, choose Airbnb over hotels, etc. etc.

The Ugly:
• I don’t see an ugly here

In-bounds things we could have done differently:
• Not stayed at the wedding hotel – choose something cheaper
• Fly in same day to cut a hotel night
• Take cheaper flight with connection

Current go forward plan: Next year’s budget is down to 1.9K – only one wedding unfortunately. Good chance we’ll end up under this number, there’s some slop built in for unexpected trips. That single trip is probably only $700 with two flights and hotel.

MBBboy
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Re: MBB_Boy's journal

Post by MBBboy »

12. Insurance
Background: This includes 2 term life insurance policies and auto insurance on two vehicles - totaled 3.5K last year (1.9% of expenses). Home insurance is lumped into mortgage. I shop auto and home every year, so feel confident that they are as low as they can reasonably be. I am considering getting umbrella insurance.

Motivation to change and rationale: Low. Since I shop it, the only way to get this down is to lower our coverage (undesirable). I chose the limits and coverage a few years ago after a lot of introspection and research, and don’t see why it should be lowered.

The Good:
• Small % of expenses
• Protection benefits

The Bad:
• Waste of money (if you don’t use it!)

The Ugly:
• Don’t see one

In-bounds things we could have done differently:
• Adjusted coverage for lower prices

Current go forward plan: I’ve budgeted 3.6K, so just an inflation bump and moving on

MBBboy
Posts: 212
Joined: Sat Jan 01, 2022 12:11 pm

Re: MBB_Boy's journal

Post by MBBboy »

13. Restaurants
Background: We spent 3.2K at restaurants last year (1.8% of expenses). Restaurants in our case does NOT include things like takeout, which I track under a “Fast Food” category. So this spend is intentional spend, not “we’re hungry and don’t have a plan” spend. There is some slop here because I apply the cashback / points from the dining credit cards as a contra to this category.
This is a LOT less than it used to be. There were a few years in the past where we spent more at restaurants than we did in groceries (2019 was 8.8K for reference). Once identified, we decided to change it and wrestled it down to where it is today. We eat out less frequently than before, but have nicer meals when we do.

Motivation to change and rationale: Low. We’re basically down to having a nice “date night” type meal once a month. I don’t view this as a “no touch” category like charity or vacation, but it doesn’t feel unreasonable that we go out once a month and have a nice time. Given the relatively low amount, it’s hard to muster up the motivation to kill this. Our definition of a “nice time” is what would have to change.

The Good:
• Limited % of expense
• Enjoyable time
• Great progress in the past getting this down

The Bad:
• Still a few thousand in unnecessary spend – we don’t HAVE to eat out

The Ugly:
• Not a “real” number because we’ve applied points against the category

In-bounds things we could have done differently:
• Changed definition of a nice meal, gone somewhere cheaper
• Stop ordering dessert as a general rule, just have it at home
• Drink wine by the glass, not by the bottle. Glass each with the meal, accept the more limited offerings

Current go forward plan: Plan is that this will drop to 2.5K this year. Not out of habit change, but because of the newborn. My wife’s diet and wine intake are limited until birth anyway, and she doesn’t want to “waste a cow” by ordering a well-done steak.

MBBboy
Posts: 212
Joined: Sat Jan 01, 2022 12:11 pm

Re: MBB_Boy's journal

Post by MBBboy »

14. Grab bag:

At this point, we’ve hit things that are below 3K per year, which I don’t believe are as worthy of reflection. From here on out, it starts to become a lot of smaller things, so I'll hit some of the highlights and ignore the rest of the expense base.

Utilities: 2.6K. This includes electricity, water, waste water, trash, and a variety of other required city services that I can’t opt out of or even influence the costs of because they are fixed. We turn off the lights, switched primarily to LED bulbs, and go 74 in summer and 65 in winter. Don’t think there’s much to do here except get used to hotter/colder temps, which we won’t do with a newborn

Entertainment: 2.2K. Almost half of this is renting boats for days out on a local lake. Rest looks like UFC PPVs and wine tasting fees at places where we aren’t members. Could sub with even more game nights / cookouts and only watch the free fights

Hobbies: 2.2K. Almost all of this was weapons related and shouldn’t repeat. Camping stuff goes here too

Everything else is under 2K for the year, not worth listing out for me. Don’t think it’s worth spending time on monthly internet, cell phone, clothes, etc. On the other hand, the 19 categories that fell under 2K individually totaled up to 16K……which is higher than some people’s annual spend.

Just feels like a lot of “work” to go through these and make changes, considering the only way to move the needle is to fully eliminate categories, which I don’t think is realistic. And I would need to crush multiple of these categories completely combine to anything relevant. I think our attention and willpower are better spend on the bigger categories and non-financial things (e.g., newborn, improving the land we bought, prepping)
Of course, this flies against the ERE blog post here: https://earlyretirementextreme.com/how- ... rt-ii.html

Where sweating the small stuff IS important

A quandary

MBBboy
Posts: 212
Joined: Sat Jan 01, 2022 12:11 pm

Re: MBB_Boy's journal

Post by MBBboy »

So now that the giant collection of text called "Expense Series" is complete, the summary is that our original plan going into this year netted out to spending the same as last year.

The cuts roughly balanced out with the projected new expenses (e.g., kid, land stuff) to mean that our projected budget is going to be effectively $180K (I can feel the stones and rejection). About 80K of that is tied to debt (mortgage, car, student loans), leaving 100K in spend that I'd consider "addressable" due to my views on investing vs debt paydown.

So that's the starting point. Using a 6% return assumption and conservative yearly savings (we typically save over double the assumption I use), we'll be FI in about 5 years.

Going forward, more of my written focus will be on lifestyle design and building resiliency. I mentioned a few posts ago that we've upped our basic prep to handle 2 weeks and are slowly working a plan that involves some undeveloped rural land we've purchased. I'll be working on developing useful DIY skills (like basically everyone else), but I'm also pretty sure I want to do some medical training. I've got some knowledge from my time as a lifeguard and in the military, but definitely atrophied and not something I feel comfortable counting on. Any suggestions would be welcomed - I'm leaning toward a book purchase / download and paying to attend one of the courses that REI does in the absence of further research.

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