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Saturday, July 26, 2014

I Spent $58K in Six Months

Posted by Tim Stobbs on November 15, 2012

As some of you might recall I’ve been using Mint Canada to help track my spending and income now for about six months, so I thought a report card would be in order.  So I login into Mint and looked at my spending data and nearly fell over in shock that I’ve spent about $58,0oo in just six months.  At that kind of spending rate I can kiss goodbye my entire retirement plan.

How the hell did that happen? As I dug into the numbers it started to make a lot more sense.  First off, my regular and lump sum mortgage payments accounted for about $22,000 of that total amount.  Then of course I bought the a used car for $18,500.  So that leaves me with $17,500 in spending, which is slightly more reasonable, but still higher than I would guess.

As I dug into the number a bit more a few things became apparent.  Mint had tracked my lump sum payment on our taxes for last year of $3300, which then takes us down to $14,200.  Yet if you double that number to get a yearly spending amount that still clocks in at $28,400, which still seemed high to me.

So where is the issue?  Well like many things in life beware extrapolation of a limited data set.  The particular six month period I have data for includes most of my annual expenses such as auto and house insurance as well a property taxes which in total comes to about $5500.  The issue becomes that those outflows include about 66% of what I normally average out during a year with my savings account.  So if I correct for that my true average spending (less the mortgage, lump sum taxes and the new car) would end being $12,900 for the last six months.  Which if you extrapolate that value turns into $25,800 in spending.

So that value is significantly closer to my target spending level of $24,000/year in my retirement years. Actually if I consider the fact I still spent about  $1700/year just on the kids (for example clothes, activities, school supplies) that gets me almost bang on to my target spending.

In the end a six month sample size is interesting to look for patterns on where you spend your money, but in reality it is a very small sample size.  Time will tell if I really am spending around $24,000 plus inflation on a consistent basis.  My ideal case would be to have about five years worth of data to tell me if I’ve got it right or not.

So do you ever have those high spending periods in life?  How do you try to balance that out over the long term?

Comments

5 Responses to “I Spent $58K in Six Months”
  1. Michael Harris says:

    I’m going to criticize a bit here. Where is the issue? You can’t be serious, can you? Many people that have a higher than average lifestyle and can’t comprehend living on less material items. I stopped reading your article seriously as soon as I saw you spent $18,500 on a “used car”. If you were really serious about retirement and wealth building you could have bought a decent, reliable, name brand NEW car for that much money. How many times have we read stories of millionaires living in shacks, or one bedroom apartments alone only to pass away and leave millions to charity? They didn’t save and make millions spending have of the average U.S. household’s annual income on one car in a six month period. And during the 2008 crisis how many times did we read of formerly wealthy people unemployed wondering how they would pay for private schools, multiple car leases in the thousands, and staff to care for their enormous houses? I don’t think you have to live like a hermit but you can live a great life and build wealth without what most would consider an excess in expenses. But hey, I’m not the one trying to retire at 45. Keep spending like that and I’ll beat you at 55.

  2. Michael Harris says:

    p.s. My spelling sucks only when I’m emotional about an issue. half = half, and so forth…

  3. Jacq says:

    Our spending is really close in total (almost exact!) to yours when I take out the mortgage payment of $18k+/year, some renovations ($5,700 last year – new kitchen cabinets & interior/exterior doors) and a bit of the travel (was $4,500 last year – includes 2 months RV-ing and a cruise).

    I’ve been tracking for 3 years now – first manually and then with my bank software. I’ve only seen inflation come around in the utilities ($3,193/year) and a bit on the groceries ($3,589 avg/year and includes pet food & household items) – which I could easily trim by about 20% but don’t want to. My kid costs are even very close to yours for the little guy (the oldest pays rent so has turned into a revenue stream). ;-)

    I’m totally not understanding the issue with the car. Seemed like a decent buy to me but I’ll still take the $10.5k Mitsubishi I bought last year over yours. ;-)

    At about $1k of fixed cost/year or so extrapolated out, I’m still happy I unlocked the wallet for the SUV. In the big picture, I’m more than willing to spend a little over 0.1% of total net worth on a vehicle that I love driving and will probably still love driving 10 years from now. I’m sure you will be are are happy to have spent it too.

  4. Jacq says:

    Oops – meant “and are happy”
    Also… I’ve lost more in the market this month than my spending sans mortgage last year. I’ve got bigger fish to fry / worry about than a piddly $100/month of spending. On the upside, the annual dividends have reached the crossover point of covering the expenses – as long as they don’t get cut. :-P

  5. Tim Stobbs says:

    @Michael,

    Excess expense for the used car…ya, I know that. But I really did want a hybrid car. That spending choice didn’t have much to do with ‘need’ it was a ‘want’. I really don’t have to defend it to anyone for any reason other than my wife.

    Everyone makes spending choices that are insane to other people, but in the end did you reach your goals. That is what matters. I fairly sure if I looked at your spending I would find things that make no sense to me as well.

    @Jacq – The crossover point? Really?!? WOW, I’m hoping that lasts as well, but given the economy I would be cautiously happy. It’s funny how close our spending it, perhaps the basics for most people end up being similar numbers.

    Tim

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