2015 How We Lived on $42K Living Expenses

Well 2015 was an expensive year, compared to the previous year 2014 where we lived on $34K, and the prior year 2013 where we lived on $32K. I was kind of hoping this year would be the same as the last two years but alas it is time to buckle down and get back to budgeting. My motto is that you can't improve what you don't measure, so even though you don't like the numbers you see they are what they are.

• $8548 The largest expense (20% of spending) we had this year was travel - we went on a couple cruises this year, 5 day and 7 day, a trip to Phoenix, AZ, a trip to Minnesota and our annual timeshare week at Naples, FL. This is probably about normal and we expect to continue to have about five vacations each year, so a budget cut will have to come from another area.
• $6000 The next largest (14%) portion is our allowance. We each get $250/month to spend or save as we like on stuff that is not included in the house. Lunches with coworkers, outings without each other, clothing that is not necessary, electronics, toys, experiences that we don't do together. The house buys if we go out together for dinner, or do a trip or activity together. Sometimes we splurge and each chip in our allowance because the "house" can't afford it right then. This expense is the same every year and we each have sizable individual savings that we occasionally withdraw from to purchase from when we can't justify it coming from the house.
• $3256 The third most expensive (7%) portion is clothing, electronics and misc. This is the culprit for the unknown spending. I did buy a GoPro this year, and some cool Columbia clothing for our BWCA camping trip, but this category needs serious tracking to keep it smaller than it is. This is not a frugal person category.
• $2546 Our cars, motorcycles and home (not counting insurance) maintenance costs were a little high (6%) considering all we fixed on the cars was an alternator this year. I think this is the patio paver project we did in the spring was the bulk of this spending. We also got a new metal roof installed on our home but didn't include that expense ($20K) in our living expenses since it was paid off from savings. Next year we're installing a polyvinyl fence around our yard and expect to pay up to $10K for that. Then our forever home will be solid, well, forever.
• $2207 Home Insurance - we have lived in our home in FL for twenty one years and have always had State Farm insurance. Amazingly, they have never canceled us, but then again we live in a inexpensive home 25 feet above sea level, and we've never filed a claim. So they are glad to take a couple thousand from us. We could probably get cheaper insurance but I don't want to deal with inspections and if we do ever file a claim, the fighting and denials that come with less than reputable insurance company.
• $2117 Food, Household supplies and beverages (not including the keg) - we still coupon, but have started to withdraw $100-200 cash a month for groceries and stuff you get at Publix. We still have large stockpiles and years worth of paper products and shampoo, plus 3 refrigerators and freezers full. Our goal is to move through enough so we don't need to chest freezer. This does not include our monthly keg of beer we purchase with our allowance ($1260).
• $2114 Entertainment, news, gifts - includes concerts, sporting events, season passes to Busch Gardens, newspaper subscriptions (I get 6 sunday papers, plus 1 weekly paper), and gifts mostly for grandchildren, since we don't exchange gifts with each other.
• $1859 Life Insurance - we both have whole life policies that have a sizable cash payout if we don't want to wait til we die to collect. We don't really need the insurance but its a cheap safe investment.
• $1564 Health Insurance, rx, copay, dentist - we are fortunate to only $15/mo each for health insurance through our employer, so the bulk of this was dental, a new crown I got in December.
• $1553 Electricity - this actually is more than 2014, but we have noticed a decrease in monthly costs since our new metal roof was installed. We also installed a new programmable thermostat this year and actually program it to ease off AC during workdays.
• $1550 Cell phones - We have two Galaxy S phones, one unlimited SERO plan on Sprint that I use, and DH uses Ringplus.net on his phone since he doesn't really need or use data. This includes purchase of a new Galaxy S6 phone I got 6 months ago, and the repair cost of $146 from Samsung to fix a cracked glass. I now have an Otterbox case so that won't happen again.
• $1442 Car Insurance - we have a risky state to drive in, so we are fully covered and have high uninsured motorist coverage despite having a 11 year old Camry and 18 year old Explorer. We could cut this back but DH doesn't want to.
• $1413 Dining Out - this doesn't include our weekly dinner out for wings and beer because that is out of allowance. So, I'm pretty sure this category can be cut back.
• $1321 Internet/Cable TV - We could cut expense here and probably will. I have super duper fast internet uploads and downloads and could downsize on that. We don't have a DVR or any extra packages, just HD cable but DH watches live sports every night so there is no way we can get rid of cable. I never watch TV, but I do use the internet so we each have our needs met.
• $1241 Gasoline - for all vehicles. We drove 14000 miles between 2 cars and 2 motorcycles, plus the 1300 miles I rode my bike to work (130 days of the year).
• $1121 Property tax - our home is not really appreciating despite the market conditions, and the property tax is capped due to a "save our homes" law in FL many years ago.
• $1069 Motorcycle Insurance - I know, we spend a lot on insurance. But DH collided with a car 5 years ago and lived to tell about it, we collected our maximum uninsured motorist amount due to injuries received, so now we keep this insurance high.
• $743  Water, Garbage, Recycle pickup - twice a week pickup, not much we can do to decrease this except watch our water usage. We are already frugal in this area so I'm okay with this one.
• $664  Personal care - haircuts. I am growing my hair out so I've only been to my stylist a few times this year, but DH gets a haircut every 3 weeks. I think this should come out of allowance, but alas I do not always get my way. I've tried negotiating this every year, but its not worth drama and resentment.
• $328  Pet - our old lab mix dog is over 15 years old this year. She has vertigo, is totally deaf, has cataracts, and has a huge fatty lump on her body and now her bad hips are very weak and she struggles to stand for more than a minute, but she walks fine. Despite this, she didn't have any medical needs this year other than routine meds. She probably won't make it through the year 2016.

In summary, our expenses are about $12,000 more than last year. Most of our set costs have remained similar, but the misc category and travel can be monitored more closely. We can continue to travel, but we'll be more deal seekers. And we don't need more clothes this year. I would like to have a no clothing spend challenge with DH this year.

Do you have any ideas for us to cut back expenses?

2014: Review of How We Lived On $34,000

Another year has passed us by and it is admittedly getting tougher to live frugally. I especially felt like spending money this Christmas season, and felt jealous of others my age (in their 50's) who have houses worth 3x ours, and fancy vacations, and some even retiring. Granted there are plenty of people out there who are also falling into poverty through no fault of their own from medical issues to just bad luck in their careers. We are thankful to be able able to stay the course and hope the stock market continues its steady climb.

We do not make a lot of money, but we both work. But we have managed to save over half of our income and invest in some dividend stocks, peer to peer lending with Lending Club, and ETFs through Wealthfront. As a result our money made more money than we did this year. We have no debt and our retirement portfolio increased by over twenty percent again this year. And it is because we save more than we spend. We also spend less than we make. Both frugal actions are necessary to plan a successful future.  But it is hard, even though the behavior is ingrained throughout life. There are always new temptations and desires so my defense is to always wait on spending decisions. I have to think it through, alot. I once read that you should take a day to think about every $100 you spend. So, it you want to buy a $500 dollar laptop, you need to think about it for 5 days before you spend to determine if you can really justify the purchase. Thats my trick anyway.

So, this year we spent about $34,000 maintaining our lifestyle and household. We track everything on Mint.com and categorize the expenses. Last year we spent $32K. One big expense ($2,125) this year was our dog. She is over 14 now and has developed a permanent case of vertigo due to chronic ear infections and being under anesthetic surgery this year. Our largest expense category this year is allowance and personal care ($4200). We each get $250 a month in allowance to spend or save as we please. If we both do something together it is considered a household expense, but if only one person wants the expenditure it is allowance. I usually buy computer stuff or victoria secret or clothing, my husband buys experiences like auto racing, or massages. Our next largest category is travel ($3661) and it was lower this year than previous years. The third largest expense category was Clothing, Electronics and Miscellaneous ($3611). This was a surprise to me since it didn't seem like we spend much on clothes but I guess we did. This is an area for opportunity to cut back since probably most of it was discretionary and unnecessary.

We did have a couple categories where we managed to cut expenses, one was cable and also phone. We played the mars movie moments sweepstakes and won hundreds of dollars toward our cable bill this summer. We essentially had free cable and internet for four months. We also changed my husbands smartphone to ringplus where he only pays $11 a month for phone, text and data. I pay $50 a month for the unlimited Sprint plan. We still coupon for our groceries and with the changes in Publix coupon policies it has affected our ability to stockpile.

We expect to see our grocery bill go higher in 2015 but still plan to do what we can with coupons. I still will get six newspapers on Sunday for coupons, but I think printing coupons is probably cheaper and there are many of the same insert coupons that available to print. I also want to investigate a way to decrease the insurance costs of our 17 year old truck. We have max coverage and we only drive it 1500 miles a year making it expensive per mile analysis. We need to separate the vehicles and get a separate policy with just minimum on the truck. There are other areas we could cut back but at this point we don't see the need.

2013 Financial Review of Expenses

It's always interesting to figure where your money goes. Even if you track receipts and sync up all your investments with Mint.com, its still a little blurry and murky to pin point the exact amount of money you take in and put out. Really our finances are one big game of offense and defense, with the goal being to gain in the end. That means if your offense is weak (you don't take in a lot of money), you have to be really good at defense by minimizing spending and getting the most of the money you do spend. If you have strong offense and make a lot of money, its really tempting to spend a lot and then you really aren't any better off than the household that has a weak offense.

In my opinion my DH and I don't have much offense, since we are state employees and of course the State of Florida has not been generous with wages - ever. We get paid in sunshine. So, we have a strong defense and minimize what we spend in most areas, but we get what we want in other areas. We are fortunate to have already paid our dues working in corporate America and made decent wages years ago, where we paid off all our debts - student loans, mortgage, vehicles and credit cards. I'm going to say that even though we are frugal, we are not scrooges. There are certain luxuries, pleasures and conveniences that we "want" and are willing to pay the price for. With that being said, even though there are some discretionary expenses in our budget we try to get them as inexpensive as possible. There are many things we do in our life that are absolutely free - like gather firewood from curbsides when a tree is chopped down, split it with our hydraulic splitter and enjoy backyard fires in the chiminea every weekend.

Our household expenses for 2013 were $32,177. Here is a breakdown:

• Travel (7,037) - this was our largest categorical spending. In the past few years we've had to remodel our home, so we traveled less. This was 21% of our budget and I see this staying the same whether its for a big household project (next year is a new roof) I would like to have about 20% discretionary budget to either travel or make a big purchase.
• Allowance (6,000) - we each get $250/month to do as we want that doesn't come out of household budget. DH buys cigarettes and goes racing. I buy electronics and victoria secret. This is also where beer kegs come out of budget. Allowance also includes dining out at our favorite pub for wings and beer on Fridays and Saturdays. This is one area we could try to cut back since most of my allowance just goes into my allowance account and is more than I need.
• Maintenance (car/mc/home 2,876) - this is kind of large this year because we had our 15 yr old Ford Explorer painted at Maaco, and we also had brakes replaced on both cars, plus motorcycle maintenance is a rip off. Motorcycles are not frugal when you consider the maintenance and insurance costs.
• Home Insurance (1,960) - a necessary evil, but luckily we're not in a flood zone and we're lucky State Farm still finds us worthy of insuring in Florida.
• Life Insurance (1,860) - these whole life insurance policies are not really necessary now in our life, but we keep them because cash value is worth more than we've paid in premiums. Actually, we have pretty risky lifestyles with our daily commuting by bicycle and motorcycle, and if one of us die, it means a loss of future pension and social security income for the household. So maybe we do need these policies.
• Electricity (1,702) - we spend way to much on electricity but with our pool pump, hot tub, chest freezer, 2 refrigerators, kegerator and electronics its to be expected. We try to unplug when we can, empty the hot tub in the summer and I'm trying to get us back to just one refrigerator if we can get rid of all our food.
• Internet/Cable TV (1,539) - This is an expense we should work on lowering. DH will not give up live sports broadcasts, and I like good fast internet and wifi. But we should threaten Verizon FIOS and try to get them to lower our rates or something - maybe they want to sponsor me?
• Cell phones (1,409) - this category was expensive because I upgraded to a new Samsung S4 and my plan increased to $56/month. I passed on my old Samsung Epic to DH and his plan through Ting is only $20/month. So next year we'll spend $500 less in this category.
• Car Insurance (1,212) - our 10 yr old car and 15 yr old truck should be a lot less expensive to insure, but this is Tampa where over 40% of drivers are uninsured. The majority of our policy expense is uninsured motorist coverage which we have at 100/300. Next year we plan to lower this to 50/100 since we don't drive much. It should save us a few hundred dollars.
• Groceries/HH Supplies (1,248) - We purchased $21,529 worth of product using cash and gift cards this year. This involved 355 trips to stores. I save every receipt and log in the spending and saving, which I have done for years. We saved 88%, which averaged out to $104 per month spent. This is significantly less than we have bought in years past because couponing is getting harder to do with stricter usage policies, increased competition for goods and smaller value coupons. I expect to continue to coupon to save, but plan to continue to budget $100 per month for groceries and HH supplies.
• Motorcycle Insurance (1,088) - again we have maximum coverage since the probability of needing it are good since riding is risky and most drivers will hit and run if they can, its best to have your own insurance because many drivers do not, and more than likely an accident will be the fault of the other party. 
• Property Tax (1,088) - we are protected by the save our homes legislation that prevents tax increases in homes that people have lived in for many years.
• Shopping misc (1,064) - This includes gifts, electronics accessories, clothing, and other weird stuff that doesn't fit in any other category. There is probably some room to cut expenses here. 
• Water/garbage (725) - provided by the city so we don't have a choice in vendors. We do have an irrigation line so all outdoor water usage is charged at a tenth of the city water cost. We use less than 3000/gal water per month which is the threshold for the surcharge.
• Newspapers/coupons (441) - this is large because I bought Winn Dixie $5 off $30 coupons, and I also get 8 Sunday papers for coupons. I might cut the newspapers back to 4 per week since I use a lot of printables now.
• Health Insurance (450) - includes visit co pays and rx. Just trying to stay healthy to keep this cost low.
• Pet (435) - includes dog food, meds and vet visits. The 13 yr old dog has been healthy this year except she has gone deaf. We also have a vet surgery scheduled to remove a cyst on her eyelid that will cost a bunch in early 2014.

• Gasoline (291) - this includes cash we have used to buy gas cards at Publix, and the occasional time we have purchased gas while traveling by car.

So that's it for 2013. We want to spend less next year than this year, a simple goal. If we could keep our expenses under 30K that would be good. Looking forward to a prosperous 2014 with hopes of increasing our networth so that retirement is a little bit closer to reality.

Wishing you a healthy, prosperous and stress free life.

Happy New Year to You!