How We Spent in 2016 and a New Challenge for This Year

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Welcome to the annual detailed Enchumbao expense report. We’ve been publishing our expenses since we launched this blog, so this is the third annual report showing how we spent our money. One of our annual traditions for the last five years, on New Year’s Day, is to enjoy coffee while looking through our past year’s expenses, so that we can set a budget for the year. Our budget is more of a guideline to see where our money needs to be allocated. It’s no surprise that we track our expenses. After all, if you want to run your home like a business, you need to track your expenses.

Last year’s spending stayed more or less in line with how we usually trend and we expect it to remain the same until early retirement. The categories will vary, but we don’t expect our living expenses to change much.

Financially speaking, we had another great year, but it was a rollercoaster ride on the emotional side. 2016 was the year that I lost my mom and nothing will ever be the same without her. We’ll always treasure the great memories we have of her. Our motto is never take your loved ones for granted, so we have no regrets because we spent as much time with her as we could. Our loss was also a reminder of why we are pursuing FI–so that we’ll have even more time to spend with our loved ones.

How we categorize our expenses

The money that we spend represents the life energy we gave up to earn it, so we try to be conscious of how we use it. By lowering housing, dining and transportation cost, we get to spend less on things that don’t add value to our lives, and more on the things and experiences that enrich our lives and brings us true happiness.

If you’re new to the blog, our expenses are divided into three buckets: Essential, Discretionary and Gift/Donations.

Essential Expenses

 Category

2016

2015

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Net Rent$2,358 $2,798$13,800 (gross rent) – $11,442 (profit from rental property).
 Internet $348$520We pay $29 a month for high speed internet.
 Electricity$717$634That’s electrifying!
 Trash $112 $206We switched the trash to a la carte. It costs $4 per 32 gallon trash can and free recycling! 🙂
 Groceries $5,346$5,205Higher grocery bill due to buying more organic produce – trying to avoid GMOs. Stop poisoning our food!
 Home Supplies $915 $781What that heck falls under this category? That Charmin Ultra Soft toilet paper that we love so much.
 Mobile Phones$840 $840Cricket plan of $35 a month per phone.
International Calls$30N/ALong distances charges to call relatives abroad.
 Auto Insurance $647$1,039Insurance is for one car now. Yay!
Fuel$975$844Oh crap, oil is going up. Stop cutting production!
Auto Services, Parts, Registration, Other 1,150$304Had some car repairs including alternator replacement. I miss my mechanic brother-in-law.

 Total

 $13,438

$13,171

We spent $13,438 on essential expenses. These are core expenses that we mostly can’t avoid.

Net Rent

What that heck is net rent? We cheated on this one. We apply our rental property income to this line and that’s why it shows so little. Our rent is $1,150 a month. A few years ago, we made the decision of not buying a house and instead invested the money in a rental property. It makes us feel better to know that someone else “pays” our rent so we consider the revenue from the rental property a wash. Besides giving us a psychological boost because we don’t feel as if we’re throwing our money away by renting, this gives us a way to see how much we really spend in housing after making this decision. We do report it properly as income in our taxes.

Discretionary Expenses

 Category

2016

2015

Comments

Health Insurance $1,144$1,066Why don’t we just call this sick insurance? Aetna Insurance provided by employer.
Dental Insurance$208$312
Vision Insurance$164N/AMr. Enchumbao gets it biannually.
Renter’s/Umbrella Insurance $288$196We brought back renter’s insurance because our umbrella insurance requires that we have it.
 Toll Fees $296$275
 Parking$63$49
 Public Transportation $168$157
Dry Cleaners$60$69We must take the same items every year because this one stays pretty consistent. Oh crap, we missed three shirts!
Shipping/Office supplies $6$37
Alcohol & Bars $1,726$1,547Hmmm… Is it time to call the hotline?
Coffee Shops $88$117Limited people-watching available for Mrs. Enchumbao in the suburbs?
Restaurants $3,806$2,920
Lunch at Work$231$530We brought more lunch to work than previous year.
Entertainment$798$914Less concerts attended. 🙁 We need a Latin concert so bad this year. There’s a promising lineup coming up!
Education$0$0Investing in yourself doesn’t need to cost money.
Fees, Interest & Bank Charges$0$0Not a typo.
Health & Fitness $710$935We use the gym at work.
Home Furnishings$0$852
Personal Care$778$689
Pets $101$447 El Asaroso did well. I had a talk with him. The welfare cat either gets his act together or he’s out.
Clothing$1,809$836 We’ve been overdue for some wardrobe replenishment.
Electronics & Software$1,535$308It hurts to see technology become obsolete!
Sporting Goods$1,114$11We’ll be fit now because we got the gear! Right?
Shopping (other)$253$373Oh look, we spent less than $300 on shopping this year. Not bad at all. 😉 Now that’s a Mustachian kind of spending.
Travel $5,734$6,269If we don’t drink, we could travel more. Travel without drinking? What!!!
Miscellaneous$305N/ANew category for insignificant things not worth discussing. Seriously. Let’s not make a discussion out of this.
Auto Sale-$1,497N/AOne of our goals was to sell our second vehicle last year. Mrs. Enchumbao sold it within 24 hours of posting on Craigslist. Mission accomplished!

 Total

$19,888

$18,909

We spent $19,888 on discretionary expenses. These are expenses that we can cut down on if we deem it necessary.

Alcohol & Bars

We intended to spend less last year on alcohol, but ended up spending more (at least on paper). What I mean by on paper is that in previous years drinking at an all-inclusive resort was buried under hotel travel cost. We didn’t go to an all-inclusive last year, so we paid for alcohol out of its own budget.

We also split any alcohol purchases from our restaurants and grocery bills. That way we have a clear picture of how much we’re truly spending on alcohol. A big wake up call was when we had a month of change in August and realized that we were spending almost $5 a day on alcohol. Even if we’re not drinking every day and spend more because we buy mixed drinks that tend to be more expensive, that can’t be healthy.

The good news is that we reduced alcohol consumption after the month of change, as you can see in the chart below.

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The alcohol spending was higher in February because we vacationed in Punta Cana and didn’t stay at an all-inclusive.

We have a new challenge!

After some deliberation in the Enchumbao household, we’ve decided to go alcohol-free this year, so our goal is to have $0 in alcohol expenses. We’re up for the challenge. No alcohol in 2017, nada nada nada.

Fees, Interest and Bank Charges

The $0 in this column is not a mistake. There were no interest charges here. There are no car payments, no credit card interest payments, nothing that requires us to pay interest to someone else. Those days are over, at least for me since Mrs. Enchumbao never had debt.  We live debt free and intend to stay that way. Having large transactions under this category might forbid you from saving and investing, traveling, and taking time off from work when needed.

Shopping

We spent an unusual amount in the shopping category last year. So much that I wanted to break it down, so that we can keep a tab on this in the future. In the clothing department, we needed to replenish a lot since we didn’t do much shopping in the previous years. As far as technology, we replaced my laptop and Mrs. Enchumbao’s iPhone 4. Another huge expense was the gear that we purchased for hiking, boots and sneakers.

Travel

We managed to take a few trips last year

1. In February we visited Punta Cana for a nice 15-day getaway. It was such a great experience exploring Punta Cana without staying at resorts. We recommend it wholeheartedly!

expenses

Macao Beach, Punta Cana

2. In July, Mrs. Enchumbao went to her homeland in Belarus/Lithuania for 19 days after an 18-year absence. She had a long layover in Finland, so she and her mom got to explore downtown Helsinki.

expenses

Helsinki Cathedral, Finland

I also drove to Providence, RI to spend time with my dad and family while she was away.

3. Then in September we flew to Colorado, the home state of MMM, for 12 days.

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Maroon Bells, Colorado

4. And finally, in November, we flew to Tampa, FL. Then, we drove to Gainesville and North Port to visit family for a total of 12 days.

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Tampa, FL

Overall, we really enjoyed our destinations and exploring Colorado’s hikes was really exciting.

Back to our expenses, if you add up essential and discretionary expenses, our living expenses were $33,326 in 2016.

Our living expenses and the Freedom Fund

This is the number that we’re looking to fund with our Freedom Fund when we retire–we’re estimating an annual budget around $30,000 to $35,000, adjusted annually for inflation. We estimate some of our expenses to be lower in early retirement.

expenses

Gifts and Donations

 Category

2016

2015

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 Gifts & Donations

$10,933

 $8,802Amount includes $1,040 from paycheck deductions for charitable work contributions, unaccounted for in the chart below.

A big chunk of this money goes to help our parents. The rest are for donations and a few thoughtful gifts to friends and family. This year we spent a little more than usual due to a few beautiful weddings that we attended and Mrs. Enchumbao’s gifts to friends and family in Belarus/Lithuania. $10,933 or 25% percent of our total expenses went to this bucket.

Two Christmases ago, we got everyone to unsubscribe from excessive gift exchanges for birthdays and holidays, and instead we spend time together with our loved ones. So, no, we didn’t just go overspending on gifts during Christmas and here’s the chart to prove it. 🙂

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2016 Gifts & Donations Expenses. It does not capture charitable donations deducted from paychecks.

How we spent our money

expenses

So there you have it. 30% of our spending money went to necessities, 45% was spent on “fun stuff” and 25% went to help others.

We don’t expect our expenses to increase this year. It will be interesting to see how expenses will change once we’re retired. That retirement date is still to be determined, but it’s not too far. We can smell it!

How did you spend your money in 2016? Did you spend more or less than what you budgeted for? Where did you spend less or more and why?

Featured image by Alexandra

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Mr. Enchumbao

I work for a large investment management company helping people save for traditional retirement. During my spare time, I help others save for financial independence and early retirement by writing for Enchumbao. My journey to FI began in 2012. I was in a lot of debt back then, but I turned things around and became debt free a few years later. My wife and I reached financial independence in 2017 and are preparing to retire by 2020.

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2 Responses

  1. I’m impressed with your decision to cut out alcohol, especially since it was trending the opposite direction. Will be interested to hear if you are able to do it!

    • Hi PFK-
      Yes, it feels kind of crazy to make such a commitment, but I’m up for the challenge and I’ll definitely report on it. Now I’m not saying it will be easy but we’ve been successful so far. I haven’t drank since mid December and the alcohol expenses are at $0 for the year. Now what to do with the newfound money? Keep investing! 🙂 Thanks for stopping by.

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