The Cost of Living Well – Our 2017 Spending

It’s been over a year and a half since I quit my job. At that time, we calculated that we had enough investments to fund a $40k/year lifestyle indefinitely. Of course a lot has changed since then. For one thing, we travel a lot more. Over the past year, we enjoyed a decadent stay at an all inclusive in Jamaica, road tripped around Catalonia, hiked rural Vermont, swam with sharks in Belize, and just returned from a 3 week surfing trip to Costa Rica. I’ve also continued pursuing my hobbies including mountain biking, surfing in the Northeast, building a greenhouse, and growing a ton of veggies in my garden.

Getting more comfortable with being a bum

When I first quit my job, I still wasn’t completely comfortable with not having an income. Even though Mrs CK found a retirement gig that still covers our expenses and healthcare, there was something unsettling about not having my own salary. Without an income, the only knob I could turn on our finances was to watch what we spent. I wouldn’t say that I was holding back – the majority of our expenses in 2016 were travel related – but it was on my mind a lot.

Now I’m coming up on 2 years without working, and I’m getting more comfortable identifying as a jobless vagabond. The market has been doing better than we expected and I’ve found myself less concerned with money. If anything, the tables seem to have turned, and I have to stop Mrs CK from being too frugal on occasion.

I’ve been more apt to splurge, and less inclined to do anything that feels like work. Even when we do treat ourselves, it’s probably not what most would consider excessive – sharing a sandwich from our favorite deli, or picking up craft beers to enjoy at home.

We had a few Toppers.

Tracking our 2017 cash flow

Travel hacking has revolutionized the way we travel, but opening dozens of cards for sign up bonuses has also complicated our expenses. We used to have one credit card for everything, but now things are getting a bit messy.

At the beginning of 2017, I revived my old Personal Capital account. The software is a lot better than it was even a few years ago. They even provide quick support when I have issues – like with my credit union information not syncing up correctly – a surprising level of service for a free tool. Each time I get a new card, I simply add it to my Personal Capital dashboard and the software tabulates all of our expenses into basic categories.

Here’s what our cash flow looks like for this month in Personal Capital:

I even took the time to add all of our brokerage accounts. Given we have nearly a dozen different retirement and brokerage accounts, it’s made tracking our asset allocation and net worth infinitely easier. We used to spend a day each month adding everything up, but now we can check things with the click of a button. If you decide to try out Personal Capital, it’s completely free (affiliate link).

Our 2017 cost of living

Our total cash flow from 2018 as tracked by Personal Capital was $43k, but this includes principal payments made on our mortgage, including some extra payments we started making. When I update the numbers to reflect our actual costs we get:

Month Year
Housing  $1,118  $13,411
Mortgage Interest  496  5,956
Taxes & Insurance  530  6,355
Renovations & Repairs  92  1,100
Travel  $379  $4,547
Food  $425  $5,099
Groceries  287  3,447
Restaurants  138  1,652
Utilities  $249  $2,984
Electric  126  1,512
Oil  35  418
Water/sewage  47  560
Internet  41  494
Cars $202  $2,423
Insurance  93  1,117
Gas  82  987
Maintenance  27  319
General Merchandise  $220  $2,642
Entertainment  $164  $1,969
Beer  150  1,800
Netflix  6  70
Amazon Prime  8  99
Hobbies  $122  $1,468
Gym  28  333
Brewing  18  210
Greenhouse/Gardening  58  700
Surfing  15  185
Mountain biking  3  40
Student Loan  $100  $1,200
Google FI Cell Phones  $52  $619
Gifts & Donations $50  $600
Clothing & Shoes  $40  $477
Healthcare  $17  $200
Belize Clinic  50
Total  $3,137  $37,639

 

For comparison, we spent just over $38k in 2016. The biggest reduction in our spending came from travel expenses. We spent $4.5k in 2017 compared to $7k in 2016. This is because our trips to Jamaica and Spain were completely free. We pretty much got over $10k in free travel just by signing up for new reward cards every few months.

We had some incredible free trips.

While we had a big reduction in our travel spending, we did spend more in other areas. I spent $650 building a greenhouse, bought some surf gear, and enjoyed a lot more local craft beers.

The key to living well for less

In reality, we have been living a much richer lifestyle than $40k would reflect. That’s because we’re always honing ways to do more with less. If it wasn’t for all the travel hacking, staying in Airbnbs, acquiring free furniture, driving $3k cars, and cooking gourmet meals at home with friends, our lifestyle would cost double what we spend.

We didn’t get to a spending level like this overnight. For years, we’ve been trying new things and testing our limits. It’s never been about deprivation so much as finding optimizations that work for us, and we keep getting better at it.

Wealth to me is no longer about fancy cars and expensive bars, it’s about sleeping in whenever I want, having time for friends and family, being free to surf out the winter in a tropical paradise, and being excited to find a free toy in the trash.

The truth is that we don’t even pay much attention to our spending anymore. Maximizing happiness per dollar has become part of our lifestyle, a lifestyle we’re enjoying immensely.

36 thoughts on “The Cost of Living Well – Our 2017 Spending

  1. What do you do for health care? How do you manage that in $200 per year?
    We will be in your shoes in a few years, and health care is one of the areas I am not sure about. With employer sponsored health care, we will still pay $2000 this year.

    • As mentioned in the post, our health insurance is through the community college Mrs. CK teaches at. It’s actually much better than what I had at my job and we only have to pay a few co-pays a year. If and when Mrs. CK decides not to teach anymore, we will probably move somewhere cheaper to make up for additional healthcare costs.

  2. Mate, well done! Love the beer category under entertainment (might need to start with that too). We are aiming for the about the same amount for the 3 of us (but then living in the Netherlands……). FIRE light if you will, bloody taxes make it difficult to get there.
    Seems like you are able to enjoy life to the fullest while limiting expenses, lots of folks could learn something from that!

  3. You’re killing it CK! Travel hacking in particular – it’s a no-brainer for anyone who’s good with money. You can basically cut 10k a year from your budget just by being smart with the credit card game. If you think about it, you’d need an extra $250,000 saved in order to support your travel otherwise.

  4. Nice job keeping the expenses low and living a nice life Mr. CK!

    Our story is fairly similar, but we have additional costs in the form of kids. 🙂

    I hope your 2018 is just as terrific!

  5. You guys did great in 2017. Congrats!
    I’m a bit jealous, but everyone has to figure out their own early retirement.
    I hope to reduce our housing expense at some point. Traveling is more difficult because our kid is still young. We did pretty well with travel hacking in 2017, but this year will be way slower on that front.

    • I wouldn’t mind a bit higher housing expenses if we had some appreciation like you’ve see on the west coast! But I suppose the silver lining is that we aren’t getting priced out of our home 🙂

  6. Thanks for sharing your costs! It’s interesting to see what a crazy FIRE budget looks like. 🙂 It seems like you’re living a great one with prioritizing travel and experiences. Life’s not perfect during FIRE, but it sure as hell beats jockeying a cubicle.

  7. I’m trying to reason through why the principal payments weren’t considered an expense. Not to nitpick, but that seems to hide about 13% of your total budget for the year. I thought maybe it was a “the principal paid adds to our net worth” but since it’s an expense report and not a net worth report I couldn’t logic it out.

    I do enjoy your blog though.

    • I think you got it with “the principal paid adds to our net worth.” Whether it’s equity in bonds making interest, or equity in the house saving on mortgage interest, it’s all the same to me. I don’t count investing in bonds as an expense, and so I don’t count principal payments either.

  8. I can imagine that I’ll be uncomfortable not earning a salary when I retire, so it’s great to hear that you are now comfortable with it.
    I guess that 18 months in your FIRE plan is tried and tested, so you can relax 🙂 well done!

  9. Nice breakdown of your expenses for the year. I love the fact that you both were able to retire with a mortgage and student loans without any problems, and that it will get easier over time. Quick questions regarding the credit card churning now that you both have over a year of FIRE under your belts. Have you ever been denied a credit card given the amount of credit cards you apply for? Also, have you seen any fluctuation in your credit score because of this? Thanks for sharing, and keep up the great “work”! 🙂

    • I have been denied a card, but it was becuase of the 5/24 rule –
      some credit cards check to see if you have applied for more than 5 cards in the last 2 years. Otherwise, I haven’t had a problem.

      As far as my credit score, I haven’t noticed any big changes. I just checked it the other day and had an 805.

  10. Great job man! I could spend $20k on Heady Topper alone in a year if no one stopped me. That stuff is amazing!

    I’m still settling into my semi-retirement and learning from you guys who are fully out of the game. I’ve yet to do the travel hacking thing yet, but it’s on my radar.

  11. Hi

    I agree that one will gain FIRE as long as he/she keeps his/her expense low. The most important thing is to focus on the things which are important to him/her. There are lot of stuffs which are unnecessary and are costly. He/she will have to see whether these stuff are worthy to be kept.

    Ben

  12. I think it’s great that you consider beer as part of your entertainment expenses. While you may think your year was a tad high, I think you did fantastic when considering the extra expenses. Some people spend $3,200 a month, month to month (or more) while living paycheck to paycheck. Not too shabby.

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