The Cost of Living Well – 2016 Expenses

There were a lot of changes for us in 2016. Half way through the year, I quit my job, drastically cutting our income. At the time, we decided we were financially independent if we could spend less than $40k a year. But then we started to travel a lot more, spending over 2 months on the road exploring Colorado, New Mexico, Nova Scotia, Maine, and Costa Rica. I was also in a wedding and went to Montreal for a bachelor party while Mrs. CK enjoyed a weekend at the spa. We went sailing, fishing, hiking, biking, and ate and drank like kings. Overall, I think we have been living pretty damn well, but what did it cost us?

We did a good bit of traveling in 2016.

When it comes to early retirement, we don’t live in the best location. Connecticut has one of the highest costs of living. Our property taxes alone are over $5k, and we pay nearly $1500 a year just for liability insurance on two used cars. But we do enjoy living in New England, and for now, Mrs. CK enjoys teaching at our local community college. Her job allows plenty of free time to travel, and the pay more than covers our expenses. The health insurance we get through her job alone makes up for the additional taxes.

Living in a more expensive area doesn’t mean we need a six-figure salary to travel and enjoy life. We don’t budget, and didn’t keep the best records of our spending. But I was able to download all the transactions from our bank account and piece together our spending. The total spend is directly from our bank statements, and I did the best I could to break down where all that money went for the year. So for you voyeurs, here it is, the cost of living well for the Crazy Kicks in 2016:

Month Year
Housing $1,145 $13,740
Mortgage Interest      555    6,660
Taxes & Insurance      500    6,000
Renovations & Repairs        90    1,080
Utilities $344 $4,128
Oil     44      528
Electricity   142   1,704
Water & Sewer     61      732
Internet     44      528
Phones     53      636
Travel $590 $7,080
Costa Rica, March   1,900
Colorado & New Mexico   1,400
Nova Scotia & Maine   1,400
Montreal Bachelor Party      900
Hershey Spa Weekend      250
Costa Rica, November   1,230
Cars $245 $2,940
Taxes     28      336
Maintenance     12      144
Gas     82      984
Insurance   123   1,476
Student Loan $100 $1,200
Entertainment $158 $1,899
Gym     50      600
Amazon Prime       8        99
Beer & Brewing   100   1,200
Food $450 $5,400
Groceries   300   3,600
Restaurants   150   1,800
Gifts & Donations $90 $1,080
Miscellaneous $80    $960
Electronics  30     360
Toiletries & Other  50     600
Total Spend 2016 $3,202 $38,427

Coming in at just over $38k, we are safely within our target spend of $40k, and I think we can do even better in 2017. A big chunk – nearly $7k – of our spending was on travel. We did a pretty good job of travel hacking, and managed to get free tickets to Colorado and Costa Rica. But in 2017 we are planning a lot more travel hacking. We recently booked an all-inclusive vacation to Jamaica – including flights – using only travel rewards. I plan to share more on how in a coming post. We also used the travel vouchers we earned on our Colorado trip to book tickets to Barcelona for the summer – a trip we’re still piecing together.

We went on two surfing trips to Costa Rica.

Travel costs went up for us after quitting my job, but other costs went down. While working, I was eating out a lot more. I was also putting a lot more miles on my RSX commuting to work. So although our gas consumption will be a bit higher from road trips, my commuting and lunch expenses should go down. We also expect to burn less oil since we’re home to burn the free firewood I gathered over the summer. Mrs. CK and I also bought into lower plans at the gym, so our gym expenses should go down as well.

I didn’t list them, but we had both Netflix and Pandora subscriptions for a part of 2016. We cancelled them an signed up for Amazon Prime which has free streaming TV, movies, and music. We got a free month subscription to start, and so far it’s been convenient and saved us a bit of cash.

We ate very well

Optimizing our lifestyle to maximize our happiness per dollar has been an ongoing process. We used to spend over $80k a year, and were convinced that we would need at least $60k to live a decent life. Each year we are surprised by how low our spending keeps getting because we never feel like we are sacrificing. Just a few years ago we didn’t think we could live on $40k comfortably. But if you start cutting spending on things that return little happiness, you start to realize you don’t need much money to live a life of luxury.

39 thoughts on “The Cost of Living Well – 2016 Expenses

  1. 40k for two people seems like a terrific amount to spend each year. And that’s with 7k worth of travel in a year! Two people earning a decent amount and saving aggressively can get to your level for sure. Always nice to see these numbers as I aim for my own FI goal one day.

  2. Wowza! It sounds like you fit a whole lotta living into 2016. Not too shabby. 🙂 That’s insane that you were able to travel so cheaply–I love it!

    Being frugal isn’t about clenching money tightly in your hand–it’s about spending money on things that matter. So, we don’t spend money on takeout but we do spend money on good clothes. It’s about placing money in budget categories that will give you the biggest return on your investment. And once you start thinking that way you can’t go back. 🙂

  3. Congrats on a fabulous year of change and adventure. Your story and ones like it help me feel better about my plans to retire and travel. It will happen this year, just finalizing the details. Thank you for sharing and inspiring!

  4. It sounds like you had a heck of a year, especially with the travel. How did your wife find the Hershey Spa? My wife had us do a couples massage there a few years ago. I’m not so much a massage person but it did loosen up some knots.

    I noticed you wrote mortgage interest but not mortgage principle? Are you doing a interest only loan, counting it as savings, or something else?

    • The spa was new to us. Mrs. CK has a friend who knew about it and wanted to meet up there for a weekend. Sounds like they had a really nice time.

      I don’t count mortgage principle since we will pull that equity when we sell. The principle payment on our mortgage is another $340 a month.

  5. Amen to all this, CK! Y’all did outstanding and hardly could’ve lived any better.

    I agree with your general conclusion that it’s surprisingly easy to cut living expenses down (in your case by half) – and way more than might have been anticipated – without sacrificing any life goodness.

    Awesome work on the many travels, and I’m eager to hear more about the upcoming trip to Barcelona! Great job, CK!

    • Cutting expenses also helps you cut the crap that wasn’t making you happy, maybe that’s why it’s been easy to go to lower budgets and never feel the pain.

      I’m looking forward to the Barcelona trip, it will be my first time in España 🙂

  6. Since we quite working, our expenses dropped even more, which I didn’t expect at all. There are way more free and fun things than we could possibly have time to do. And its just so darn easy to live well on less, when you have the time. Plus our days are 50% less crappy, so we spend less trying to compensate for stressful jobs.

  7. That is awesome that you were able to be under your goal of $40k in expenses. That’s so great especially with all the amazing travel that you did and living in such an expensive area. I can’t wait for more people to catch on. I hope to be in your boat in the next couple of years and we’re trying to shed like crazy expenses that might tie us down. So hopefully next year we’ve decreased by 10% from 2016. That’s my goal anyway.

    • I think more people are catching on, or maybe I’m just connecting with more of them since I started blogging 🙂

      I think you’ll be surprised how easy it is to cut expenses without feeling any pain. I think you set a great goal. Good luck crushing it in 2017!

  8. Nicely done, Mr.CK.

    I’ll be preparing my 2016 expenses post shortly. We came in at $1800 in alcohol, but that’s with 2 kids.

    When travel comes in as one of your top spending categories, I would agree you are living well.

    Cheers!
    -PoF

    • 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. For 2016 we probably paid $45 in co-pays. If and when Mrs. CK decides not to teach anymore, we will probably move somewhere cheaper to make up for additional healthcare costs.

  9. Optimizing our lifestyle to maximize our happiness per dollar is an ideal lifestyle. Congratulations for your financial independence! You can make full use of your time to do what you want to do. I am still in the long journey to my financial freedom. I plan to manage my investment well and retire early.
    I use my mobile as the wi-fi hotpot, so I do not need to pay Internet fee ever month.

  10. It is all very true Mr CK. You dont really need to spend that much to be happy. You have to start thinking for yourself and tune out the mass marketing on TV etc. Having some self control helps also. Spread out some things rather than do them every time you are bored etc. Over time, I’ve started questioning everything and why I need something and will I really use it. Its surprising how much you can save just by cutting out all the wasteful things you have been doing. Im not extreme at all and still like to spend money but its much more targeted now. With a little effort, you can get things for a lot less and bring your expenses way down.

    • Targeted spending is the way to go. We don’t have any problem with spending money, we just want to get the best bang for our buck. And a little effort goes a long way with things like travel hacking. Thanks for the insightful comment 🙂

  11. Nice one on the exenses! We are doing our roundup and tally for 2016 next week, but it was well over $40k… Mortgage and daycare accounted for ~$48k of that, yipe! However, taking into account the expenses we’d cut once we quit working, we’re still around our target of $50k/yr and that’s with our allowances added in.

    I’m excited to see that we can most likely cut our COL even more in FIRE when we reach that point.

  12. Hey MCK, just started reading through your blog and very much enjoying the style and content. I love the allocation of your $40k to beer, food & travel! My three favorite personal improvement categories. Congrats on a year!

  13. Spending intentionally – on a amazing life you love! That’s what it’s all about. 🙂 38k is great! I’m truly impressed with your travel expenses (and can’t wait to read about Jamaica).

    I thought our car insurance was high (we have a teen driver) – that is, until I saw yours. Wow!!! That’s atrocious!

    • Yeah, I was pretty shocked when I first moved to CT and changed my insurance over, it was a big jump in price from PA.

      I guess they gotta cover all that expensive property around here that might get smashed 🙂

  14. Nice job! I think $40k/month is a very good budget for 2 people. You can live a comfortable lifestyle without depriving yourself too much. Our budget is a bit higher, mostly due to housing. Someday, we’ll move to a cheaper location…
    Looking forward to reading more about your travels.

  15. wow that’s amazing that you got to do so much traveling and only spent $38,000 for the year. I will be following the blog to learn some tips. Good luck in 2017 and congratulations on financial independence.

  16. Impressive! I like your simplified categories. We are looking at FIRE next year (April 2018) and have a prospective budget of about $60k, but clearly we can do better than that.

    Thanks,
    Ron

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