I’m in a bit of shock right now.
For the first time ever, I’ve completely consolidated our annual household spending on one spreadsheet. My wife and I maintain separate financial accounts, although we each have full access to all of them, and while we talk about our finances fairly often we stay at the big picture level and don’t obsess at a micro level.
This was an eye-opening exercise.
I’m not going to lie, this isn’t a post I’m particularly happy about writing. As much as we like to think we’re fairly frugal and avoid most frivolous spending, there’s just no way around the math.
We spent almost $100,000 in 2017.
That’s without a car payment, student loan payment, or child support payment — all expenses that went away last year when we used part of the proceeds from selling our house to pay off those debts.
Even now, looking at a detailed spreadsheet breaking out those expenses into specific categories, I’m shocked at how much it all adds up to. Let’s examine how in the world we managed to spend so much money in the past year.
The Big Ones
For starters, let me tackle some of the big expenses.
Mortgage & HOA: $24,750 – At 25% of our spending, this is obviously the big daddy of our expenses. Our monthly HOA fee also includes high-speed Internet, so we don’t pay that in the utility line. This figure includes principal, interest and escrow, so it covers property taxes and homeowners insurance, too.
College: $14,250 – My oldest step son finished his junior year and entered his senior. This includes tuition, books, and the money we pay for his housing and food each month. My younger step son just started college, but he’s got enough scholarship money to cover everything. Next year this expense will be wrapping up, but it could still be about half of this year’s outlay.
Groceries: $8,000 – This line is a bit squishy. We do most of our shopping at Wal-Mart and Costco, and I don’t go to the trouble of separating every item we get into merchandise and groceries. So non-grocery items purchased during a trip for groceries are lumped in here. If it was a specific trip for non-grocery items from these stores, then I did categorize that as merchandise.
Kindergarten: $7,800 – My daughter goes to a private kindergarten, the same school she went to the year before, because both my wife and I work and the logistics of putting her in half-day public kindergarten and then getting her to a daycare for the other half of the day were more trouble than keeping her in a full-day kindergarten. Next year she will go into full-day public school and this will go away.
These are the four big line items that are above $5,000 each. They total to just under $55,000. That leaves almost $45,000 of spending yet to be accounted for.
I’m going to say anything between $1,000 and $5,000 for the year is a medium expense. This is really where the sum of many seemingly small expenses adds up, and it’s where I think we’ll need to focus in 2018 to rein things in.
Merchandise: $4,500 – I categorize merchandise as pretty much any “stuff” we bought that wasn’t a grocery item, service, utility, etc. The bigger-ticket items this year were a new iPad ($700 after accessories), and an Ikea kitchen table and chairs ($400). There’s some other fluff in here we could be more diligent about in 2018.
Vacation: $4,500 – We went on a cruise in April, spent couple of weekends in Lava Hot Springs, ID, had a family glamping trip in Moab, UT, and enjoyed a weekend in Midway, UT. Plus my wife went on a book club trip to Colorado. This category includes all the spending we did for those, including meals, lodging, gas, airfare, etc.
House: $4,300 – Basically this is all the new air conditioner and furnace. It’s on a zero-percent interest credit card that I’ll pay off before the accrued interest comes due. I owe about $8,100 on it still. That will all be in next year’s expenses.
Healthcare: $3,700 – There were some healthcare expenses this year that weren’t well covered by our insurance. Ideally, this shouldn’t be this high every year.
Services: $3,600 – Again, this is a catch-all category. It includes things like haircuts, massages, pet care, passport renewals. There’s $520 in credit card annual fees from our new focus on rewards points.
Car insurance: $3,500 – Four cars and four drivers — two of them young adult men, one of them with two speeding tickets and an at-fault accident — adds up. I expect this to go way down when my son gets his own car insurance after college.
Utilities: $2,800 – Gas, electric, water, sewer, trash and recycling. I’m still working to get the water bill down. I made some progress last summer, but there’s still more to go.
I Dream of FIRE: $2,000 – Most of this is my October trip to FinCon. The hotel and airfare added up, but the mohawk was priceless.
Dining: $2,000 – We really cut back in this area this year. This spending doesn’t include gift cards we used, nor does it include spending on restaurant lunches during work. I track that separately.
Gifts: $1,800 – Not just Christmas, but birthdays, holidays and a few “just because” things we gave to other people.
Life insurance: $1,800 – Both my wife and I have term life policies outside of our employers, and I also have a supplemental disability policy. There’s enough there that if either of us died the other would be able to pay off the house and invest the rest to get by on one income.
Car repairs: $1,700 – I include oil changes, registration renewal and taxes, inspections, etc. in here. I also had the little issue with both sons’ cars.
Entertainment: $1,600 – For the first time since our daughter was born, my wife and I started going to concerts almost like we used to. This year we saw The Cure, Rise Against, Incubus/Jimmy Eat World, Avenged Sevenfold, Bob Schneider, New Found Glory and a few more. We also went to a few movies, the state fair, and some other events. While the spending on this category is way higher than it has been in years, it’s one category I’m loathe to try to clamp down too much because dammit music is one of the things we like to experience together and that’s worth it.
Alcohol: $1,600 – I include not only trips to the liquor store, but also the occasions where my wife and I went out to a bar or restaurant specifically for drinks. A note on this item: Utah only allows sales of wine, liquor and beer over 4% ABV in a state liquor store with an 88% markup — the highest in the nation. So factor that in. We also go to a monthly wine club in our community where we each bring a bottle. Still, this is a category where I can rein it in, especially in the expensive beer purchases.
Gas: $1,500 – This one surprised me. I didn’t think it would be this high. My wife works from home and I take the train to work. We don’t put a ton of miles on our cars. About 40 percent of it is my son’s car, though, so that will go down in the future.
Misc. child expenses: $1,100 – Pretty much covers random things you pay for when you have kids.
This section adds up to almost $41,000. Places to cut: Merchandise, (hopefully) healthcare, car insurance, utilities, alcohol and (again, hopefully) car repairs.
Rounding out our spending for the year are these categories where we’re pretty frugal overall.
Charity: $975 – We definitely want to spend more on charity in the coming years. Some of the gift spending could be considered charity, too, and this doesn’t include non-monetary donations, like my son’s car.
Work lunch: $600 – I bring my lunch to work most days, but sometimes it’s not convenient because of my meeting schedule, sometimes I don’t feel like it, or sometimes I like to go out with coworkers. My wife eats at home most days, but sometimes she gets out, too.
TV: $500 – We have Netflix, and I still buy a $60 UFC PPV six or seven times a year. This is way down from our cable days!
Cell phone: $300 — I’m on Republic Wireless for around $25 per month (down from $65 per month when I was with Verizon) and my wife’s phone is covered by her work. If you want to lower your own cell costs, I’ve been really pleased with Republic’s service. You can check out their offerings using my affiliate link, which just means if you happen to sign up with them I get a few bucks for sending you their way.
Only about $2,400 in this category. We will increase charity spending in 2018, but everything else should look pretty similar.
Looking at the year ahead
There’s no doubt I want to rein in the spending. However, I knew the past three years were going to be our most expensive. That’s finally starting to wane.
We’ll have several expenses falling away or being significantly lower, especially college and daycare costs. I’m anticipating some savings in car insurance, as well.
There’s still the remainder of the AC/furnace payment before the zero-percent interest period lapses.
A rough estimate based on what we’ve spent and what I expect to spend shows next year hopefully being more around $80,000 in spending, and ideally that will dip further in 2019.