Gyroscopic Investing

Just had a fight with the wife about our spending 3 young kids, 2 adults, no mortgage and we average 6.5k euro spend per month for the last 2 months. I would say the average is closer to 5k a month as we had some insurances to pay.

Pretty amazing as this is with no treats apart from a weekend in London with free accommodation. How about you guys?

Electric
School
Gas
Water
House insurance
Car insurance
Socials
Wife
Petrol
Gardener
Cleaner
Holidays
rubbish collection +house tax
hobbies

Things that eat it are juicy cars, so insurance and fuel, we had extra annual bills for 2 cars, the house and a big water bill for our garden that we irrigated over the summer.

Maybe it is me but there always seems to be exceptional expenses every month, oh I forgot 2 trips to the dentists for me ended up being another 300 euro.

Two adults, one child. Mint is showing $1,300 a month if I don't include home improvement (living in a fixer-upper, so these expenses are going to go away as things I fix 'er up). including those costs raises the average to about $2,800 a month.

jabba wrote: Just had a fight with the wife about our spending

I chuckled when I saw "wife" included as an expense on your list.

Two adults, no kids.  Not counting the mortgage (which I plan to pay off by the end of the year), we live quite well on about $2k/month.  That also includes high Texas property taxes, so if we moved to a different state like CO or NM we could shave another couple hundred dollars off that pretty easily. 

About US$2,000 in credit cards and I'll have to get back to you on the cash transactions and some utilities that don't let me use a card.
I expect the total will turn out to be about $3K/month.

MangoMan wrote: In the US, the cost of public school is generally paid for from property taxes [at least here in Illinois], so unless one sends their children to private school, that would not be an additional expense. Gas [petrol] is also way cheaper in the US than in Europe. Not sure how taxes, utilities and insurance compare. Maybe the 'wife' expense is reducible?

That is what I thought too but having a daughter in high school gives me a different perspective. Here in CT there are fees for sports. There are also fees for AP classes (if you want to actually take the test and get credit for it). We do not have activities busses so getting an "involved" kid home from school 100 or so days in the course of the year really adds up. And on it goes.

My wife and daughter both derive great pleasure from having nice things. I do not but we are a team so that drives costs up. Our food costs are really high. We are at at least $5000 a month in total expenses but I am a bit afraid to tally it all up.

Pointedstick and Tyler have this stuff figured out. We bow down to their collective awesomeness when it comes to living way below their means and, from all indications, being quite happy as well.

barrett wrote: Pointedstick and Tyler have this stuff figured out. We bow down to their collective awesomeness when it comes to living way below their means and, from all indications, being quite happy as well.

Thanks! I hear you on the school stuff; my kid is only 2 so those kinds of costs haven't kicked in yet. Then again soon we won't have to be paying for diapers anymore...

I honestly don't find it very hard or really feel deprived at all. I don't think being frugal means not having nice things; you just need to pace yourself and make sure not to buy nice things you won't actually enjoy. Get one really nice thing you've had your eye on for a long time every few months and not only will you save a ton of money, but IMHO you'll be happier because you can savor the enjoyment from these things more. I have an Amazon wish list full of stuff I want and I almost always wait months before buying anything. In that time, I kick a lot of things out because I realize I don't actually need or really want them. And every so often, I buy one of the things that's been on the list longest. Don't think I've ever regretted any of those purchases, but I have regretted many of the dumb impulse purchases.

There's also just a lot of simple optimization. Cut out recurring costs for things you don't use. Drive as few vehicles as possible, and replace gas guzzlers with fuel-efficient ones. Buy as small as house as possible and get to a point where you have no recurring payment ASAP. Be willing to pay more upfront for lower recurring costs, but learn how to calculate the point where this becomes cost-ineffective. Learn as many useful skills as possible and do as much domestic work as you're capable of doing yourself; avoid paying people to do things for you. Pay off all of your debt ASAP and plunge the former payments into savings.

Stuff like that.

barrett wrote: My wife and daughter both derive great pleasure from having nice things. I do not but we are a team so that drives costs up. Our food costs are really high. We are at at least $5000 a month in total expenses but I am a bit afraid to tally it all up.

In other words, they're spoiled.  They derive pleasure from things not experiences.  That is something you need to change to reduce expenses and expectations.  But in physical terms, your largest expense is the neighborhood and house you live in because it starts in motion the Hedonistic Envy Treadmill.  I suspect your daughter -- depending on how old she is already -- is going to have very high standards about men (based on you) and likely be unhappy the rest of her life if you don't knock her expectations down a couple of pegs through tough love.

TennPaGa wrote: Here are (most of) the regular expenses for me, the missus, and the 5 y/o:

Groceries    1200
Mortgage      600 (principal + interest)
Insurance      320 (100 autos, 70 life, 50 homeowners, 50 home warranty, 50 PMI)
Utilities      320 (150 electricity, 80 phone + internet, 70 water, 20 cell)
Cars          300 (200 for gas, 100 for other stuff averaged out)
Dog            300 (dog is ill)
Household      300
Dining out    200
Medical        200
Charity        120
Gifts          100 (Christmas, b'day, etc.)
-------------------
TOTAL        3960

I can't resist.

Easy optimizations:
- Shop at Costco rather than Whole foods
- Replace all your showerheads with 1.25 or 1.5 GPM units (these actually work wonderfully)
- Ditch the landline
- Replace all your incandescent bulbs with LEDs
- Replace all your toilets with low-flow units
- Stop using hot water for washing your hands, especially if it takes a while for the water to even get hot
- Stop running your washing machine with hot water
- Re-plumb your dishwasher to draw from the cold tap

Moderate optimizations:
- Replace your refrigerator if it is more than 10 years old (the savings will easily pay for themselves in practically no time)
- Replace any plasma TVs with LED TVs
- Replace your electric water heater with a heat pump model (will also lower your AC bills)
- Replace your coil stove with an induction stove
- Line-dry your laundry in the sun
- Do what it takes to pay off the PMI
- Cancel collision and comprehensive insurance on the cars (if you're posting here, you're probably rich enough to easily afford to pay any such expenses out of pocket from PP cash)
- Add a shitload of cellulose insulation to your attic floor
- Next time you need to replace your roof, tear off all the nasty shingles and put up a light-colored metal roof

Extreme/Controversial optimizations:
- Cancel the life insurance (if you're posting here, you're probably rich enough for it to be a nice-to-have, not a must-have)
- Cancel the home warranty (ripoff central)
- Replace the most-driven car with a hybrid or nothing

Optimizations that reveal me to be a cruel, heartless libertarian bastard:
- Euthanize the dog and get a puppy that can grow up with your kid

TennPaGa wrote: Here are (most of) the regular expenses for me, the missus, and the 5 y/o:

Groceries    1200

Wow, thats very high.  Whats up with that?

Electric 175
School 629
Gas 202
Water 62
House insurance 67
Car insurance 225
Socials 359
Wife 1349
Petrol 337
Gardener 81
Cleaner 107
Holidays 1200
rubbish collection +house tax 33
hobbies  kids 269
fixed phone/mobile 76
car maintenance 90
car tax roads 9
going out 90
house maintenance 179

Per month 5539

I put in USD an average month for us. I did not count in auto depreciation. My kids go to a private nursery, Socials means the tax I pay each month to the government for healthcare etc. My wife's budget is for groceries would be about 800 USD I guess.

As a sanity check use the median household income for your locale, if you're spending more than that (without a mortgage) then by definition you are living high on the hog. If you're FI at that high on the hog level then it's only an issue of personal philosophy.

We (2 adults, 2 children) live a very conventional life, without noticeable limits on around $2.4k a month, about 400 of that is entertainment spend in it's broadest sense. If we needed to get below $1700 I'd really have to apply some thought into stripping it all down and building back up intentionally. I'd rather not go that far because I'm too lazy but it would also likely be pretty disruptive to the children too.

I'm aware that the benefit / poverty level (in the UK) for a family our size is about $900 and many people manage a decent life for their children at that level.

MachineGhost wrote:

barrett wrote: My wife and daughter both derive great pleasure from having nice things. I do not but we are a team so that drives costs up. Our food costs are really high. We are at at least $5000 a month in total expenses but I am a bit afraid to tally it all up.

In other words, they're spoiled.  They derive pleasure from things not experiences.  That is something you need to change to reduce expenses and expectations.  But in physical terms, your largest expense is the neighborhood and house you live in because it starts in motion the Hedonistic Envy Treadmill.  I suspect your daughter -- depending on how old she is already -- is going to have very high standards about men (based on you) and likely be unhappy the rest of her life if you don't knock her expectations down a couple of pegs through tough love.

Well, I wasn't really looking for advice, just contributing to the conversation because my numbers are probably in line with the OP's. I mostly derive pleasure from good experiences and they derive pleasure from both nice things and good experiences. I can't claim to be superior. I am just wired this way. My wife works hard and wants to look like a million bucks while she is still relatively young ("Who cares what I look like when I am 80?"). She grew up poor in China and started working (hard!) when she was seven years old. She buys most of the groceries, pays any bill she can get her hands on before I can, keeps the house immaculately clean, prepares delicious dinners, makes me laugh, picks me up when I am down and is an amazing mom to our daughter. The nice stuff she buys is almost always at a steep discount. Overall I think I got a pretty good deal.

I'll also mention something that I think doesn't get discussed in these budget discussions. While our 17-year-old daughter is just a good kid all around and a very hard worker in school, she also is really well dressed most of the time and that does, in my opinion, give her some advantages here and there that really start to add up over time. If I am honest with myself I have to admit that I am learning something from my wife and daughter about how the world works. I love NOT spending money but sometimes there is more than one path.

jabba, your list looks about right to me for five people. $800 for groceries is certainly not high for three kids and two adults. The 'Wife" category looks high but eliminating her is messy. 

jabba wrote: Socials 359

[...]

Socials means the tax I pay each month to the government for healthcare etc.

Wait, American liberals keep telling me that the UK has free healthcare! I'VE BEEN SO MISLED

barrett wrote:

MachineGhost wrote:

barrett wrote: My wife and daughter both derive great pleasure from having nice things. I do not but we are a team so that drives costs up. Our food costs are really high. We are at at least $5000 a month in total expenses but I am a bit afraid to tally it all up.

In other words, they're spoiled.  They derive pleasure from things not experiences.  That is something you need to change to reduce expenses and expectations.  But in physical terms, your largest expense is the neighborhood and house you live in because it starts in motion the Hedonistic Envy Treadmill.  I suspect your daughter -- depending on how old she is already -- is going to have very high standards about men (based on you) and likely be unhappy the rest of her life if you don't knock her expectations down a couple of pegs through tough love.

Well, I wasn't really looking for advice, just contributing to the conversation because my numbers are probably in line with the OP's. I mostly derive pleasure from good experiences and they derive pleasure from both nice things and good experiences. I can't claim to be superior. I am just wired this way. My wife works hard and wants to look like a million bucks while she is still relatively young ("Who cares what I look like when I am 80?"). She grew up poor in China and started working (hard!) when she was seven years old. She buys most of the groceries, pays any bill she can get her hands on before I can, keeps the house immaculately clean, prepares delicious dinners, makes me laugh, picks me up when I am down and is an amazing mom to our daughter. The nice stuff she buys is almost always at a steep discount. Overall I think I got a pretty good deal.

I'll also mention something that I think doesn't get discussed in these budget discussions. While our 17-year-old daughter is just a good kid all around and a very hard worker in school, she also is really well dressed most of the time and that does, in my opinion, give her some advantages here and there that really start to add up over time. If I am honest with myself I have to admit that I am learning something from my wife and daughter about how the world works. I love NOT spending money but sometimes there is more than one path.

jabba, your list looks about right to me for five people. $800 for groceries is certainly not high for three kids and two adults. The 'Wife" category looks high but eliminating her is messy. 

Sounds like you have an amazing wife and daughter and you recognize it.  Kudos to you all.    Spend whatever you (plural) like, it is your money, your life, your hard work that made it possible, and your decision.  I am truly happy for you and your family.

... Mountaineer

Gardener just stopped by and had a load of end of season discounted trees and stung me for another 160

My brother spends even more, I asked today, about 10k a month but he has huge alimony. Tough life being the bread winner.

If I may be nosy, Barrett, is your food bill high from eating out or just from buying quality or organic produce? My experience has been that the Asian markets are always cheaper. In my household, I'm the one who drives up the food bill. 1) I'm the one who likes to eat out at nice places. 2) I buy quality items at farmers' markets when there are far cheaper alternatives as the grocery store. Plus, I can use Amex at the grocery store for 5% back, but I mostly have to use cash at the outdoor markets.

barrett wrote: jabba, ...The 'Wife" category looks high but eliminating her is messy. 

I've lost one and I keep one (or she keeps me). I'm still not sure which is more expensive (losing or keeping), but honestly, I can't imagine living without one for too long. I'd keep both if I could.

Dualstow, If I post something on here, you can ask about it. The food bill is high for a few reasons. All three of us are physically quite active, so that means a higher caloric intake. We also eat a lot of good-quality animal protein. My wife likes to have a fridge full of fresh fruit (she pronounces it "Fa-ROOOOOOT!") cut up and ready to eat, and some of that is always out of season.

Also, we started to get lazy about really finishing off the leftovers and were wasting a considerable amount of food each month. I asked my wife if it could be as much as 20% and she said yes. So I took two $100 bills out of my wallet and threw them in the garbage. That elicited an excited "What the hell?" response from both her and our daughter. Point made and we now - just in the last couple of weeks - are eating everything! I was damn proud of that move and luckily I had a couple of Benjamins handy.

There are no Asian markets close by but we do stock up at them when they are on the way to or from something.

And thanks, Mountaineer. We have to protect our assets, right?

Pointedstick wrote:

jabba wrote: Socials 359

[...]

Socials means the tax I pay each month to the government for healthcare etc.

Wait, American liberals keep telling me that the UK has free healthcare! I'VE BEEN SO MISLED

Only partly, UK healthcare is free at the point of treatment. jabba is spending euros so he isn't in the UK.

barrett wrote: Also, we started to get lazy about really finishing off the leftovers and were wasting a considerable amount of food each month. I asked my wife if it could be as much as 20% and she said yes. So I took two $100 bills out of my wallet and threw them in the garbage. That elicited an excited "What the hell?" response from both her and our daughter. Point made and we now - just in the last couple of weeks - are eating everything! I was damn proud of that move and luckily I had a couple of Benjamins handy.

Wow - that's an amazingly Alpha move. Impressive.

FWIW, my spending is certainly lower than many of my contemporaries. While the DW and I have never been big spenders, we weren't always this low, either. It took effort and conscious decisions over a few years, including big ones like moving to a new state for more affordable housing. Another example is that our $2k number only includes about $100/month on healthcare because we're able to optimize our reportable income with intelligent investment moves to maximize subsidies. If that perk changes next year with Supreme Court cases, our total expenses will be closer to $2.5k. That's still within our budget, but we could also move yet again to one of the previously mentioned low property tax states to make up the difference.

Along those lines, I've found that many expenses over the years are the cumulative result of false chains people place in their own lives. We can't live in a smaller house. We can't move - it would be too stressful and I'd never find another job or new friends. We can't buy cheaper or simpler foods because the price of a tomato must surely be proportional to its nutritional value.  We need three cars because _________. 

That said, I've learned not to judge the spending habits of others too harshly. Just as I hope they don't judge mine. I spend much less than most friends with my background, and much more than certain early retirement online communities I run in.

The most important step, IMHO, is to not spend blindly. Consciously evaluate every expense, and measure how much happiness is truly derived from each incremental dollar. Experiment with cutting back to see if you truly will be less happy (in my experience, you'll probably get a buzz from feeling no worse off but wealthier from the exercise).  Over time, no matter what ultimate spending level you land at, you'll be maximizing happiness for the dollar. And since dollars are really certificates earned for hours worked, your life will feel well spent.

barrett wrote: Well, I wasn't really looking for advice, just contributing to the conversation because my numbers are probably in line with the OP's. I mostly derive pleasure from good experiences and they derive pleasure from both nice things and good experiences. I can't claim to be superior. I am just wired this way. My wife works hard and wants to look like a million bucks while she is still relatively young ("Who cares what I look like when I am 80?"). She grew up poor in China and started working (hard!) when she was seven years old. She buys most of the groceries, pays any bill she can get her hands on before I can, keeps the house immaculately clean, prepares delicious dinners, makes me laugh, picks me up when I am down and is an amazing mom to our daughter. The nice stuff she buys is almost always at a steep discount. Overall I think I got a pretty good deal.

Whoops, I confused your post with the OPs!  But this sounds like the right kind of psychological situation arising from hard work rather than a "trust fund" situation.  The key difference here is likely that your wife is Asian rather than white.  They know the value of hard work, so I don't think anyone minds them showing off conspicious consumption (except maybe their lazy counterparts).

barrett wrote: Also, we started to get lazy about really finishing off the leftovers and were wasting a considerable amount of food each month. I asked my wife if it could be as much as 20% and she said yes. So I took two $100 bills out of my wallet and threw them in the garbage. That elicited an excited "What the hell?" response from both her and our daughter. Point made and we now - just in the last couple of weeks - are eating everything! I was damn proud of that move and luckily I had a couple of Benjamins handy.

I LOVE that story...good for you!  Nothing like a good straightforward way to get the point across.

Dualstow I like shopping at farmer's markets too because it feels good and the produce really is better than what you find in grocery stores, but the prices around here are beyond ludicrous.  It's actually cheaper to shop at Whole Foods.  Ironic given that the city is promoting the farmers' markets as a way to get good quality food to low-income neighborhoods.

+1 for Costco.  I thought it wouldn't make sense in Manhattan, between the $50/year membership fee and the $13 car service to get your loot home, but the latter is mitigated by going with friends which makes it a fun outing.  And I finally found a purpose in life for that useless cabinet over top of my fridge.  The savings are truly astonishing, and their "house" brand (Kirkland) is quite good.

Also as far as getting monthly expenses under control... the secret for me was one I hit on a long time ago:  monthly charges for this and that are far more deadly than the occasional dinner out or luxury purchase.  I went through and got rid of all the monthly payments for stuff I didn't really need, in the process discovering one or two I wasn't even aware of (!).  Cable TV, magazine subscriptions, identity protection services, etc etc.  Amazing how it adds up.

WiseOne wrote: Also as far as getting monthly expenses under control... the secret for me was one I hit on a long time ago:  monthly charges for this and that are far more deadly than the occasional dinner out or luxury purchase.  I went through and got rid of all the monthly payments for stuff I didn't really need, in the process discovering one or two I wasn't even aware of (!).  Cable TV, magazine subscriptions, identity protection services, etc etc.  Amazing how it adds up.

This is so true! Merchants love it for precisely the same reason: those expenses are easy to forget, and each one is usually not big enough to make you care too much about it. But once you've got a few, they really add up.

We're at about $6,500/mo which includes charitable giving and a mortgage. No other debt besides the mortgage though.

Me + wifey + 3 kids under 6 y/o