Tuesday, January 14, 2020

2019 Spending in the Done by Forty House

We haven't done many spending summaries on the calendar year here at the blog. We used to post a series of Budget Porn posts, sharing all the nitty gritty details of the past month's spending and how much we invested, too. For years, we used to share our net worth on a monthly basis, too.

But somewhere along the lines, we stopped. It felt weird after a while: like we were humble bragging. But instead of bragging like a huge jerk just once, we kept doing it over and over again.

Then recently we decided it might be good to be more transparent. We even decided to share the details of all the money we've ever earned, since, you know, the higher than average income was the real reason we can work towards financial independence, not our lukewarm frugality.

So in that vein, I figured why not share our spending from 2019?

The spreadsheet I use to track all that spending is a fever dream of complexity and formulas, but for those who prefer that sort of thing, here you go:

But I figured the top line numbers might be more interesting.

Total 2019 Spending: $47,046*
Spending w/o mortgage: $37,248 (paid off mortgage mid-July 2019)
Spending w/o daycare: $44,526 (Baby AF started daycare mid-October 2019)
Spending w/o mortgage or daycare: $34,728
*Does not include income, Social Security, or Medicare taxes, but does include property tax

Any time I get figures like this, I like to run them through the Mad Fientist's Laboratory to find out how well we're tracking towards our goal of financial independence.

Here's how far off we would be from financial independence if worked under a 3.5% safe withdrawal rate, and our ongoing annual spending was just like it was in 2019: $47,016.

Click for bigness. Assumes a 3.5% SWR.
Okay, so that's not great. It means we'd be nearly three years off from our goal, not nearly done by the last day I'm forty. But thankfully, we hit a milestone in the middle of 2019 when we paid off our mortgage. This lowered our monthly expenses, but for less than half the year and also took a big chunk out of our liquid assets, too (measured by the bright green line on the graph).

How close would we be to financial independence if we removed the P&I portion of our mortgage payments (but kept the property taxes & insurance), now that we no longer have that monthly bill? That is, what if our annual spending was just over $37,000?

Click for bigness.
Okay, I like that a lot more. Only a year and a month away, well within my fortieth year, too.

So we're on track then, right?

Well, kind of. There is another expense that was only present in a tiny portion of the year: daycare. Depending on how we want to design our post-FI life, we might not want to keep Baby AF and the-infant-yet-to-be-named, MC Baby, in daycare. We might just want to hang out with the little fuckers, while still giving each other breaks to leave and get some alone time during the day.

If we took daycare and the mortgage out of the spending, that brings our spending below $35,000. How close are we to financial independence then?

Click for bigness.
Later this year? Before I even turn forty? That's what I'm talking about.

Of course, assuming no child care expenses at all might be overly optimistic, and downright foolish, too. Especially since having Baby AF in daycare while Mrs. Done by Forty works has been such a positive period for us. Besides, even if traditional, five day a week daycare isn't what we need or want, preschool seems like a good idea. And those places aren't free.

Which all goes to say, while we're close to some kind of financial independence, we're probably not close to the kind of FI that we ideally want for ourselves.

And that's the whole point, right? To create the kind of life you really want, and not just the kind of retirement we could get to the quickest?

When we started this journey back in 2012, I didn't know all the things we'd want. Would we want kids? A bigger house? Daycare and preschool and college for those kids?

We also didn't know about the four percent rule and how optimistic it is for retirees in certain years. I didn't realize we might want to save up additional six figure sums to account for that dang half a percent, either.

So maybe we truly will be done by forty. Maybe we'll want to put the kiddos in some sort of daycare, and we'll have to work a bit longer. I suppose it's nice to just know we could be done under the original timeline.

That's still a small victory, right?  As always, thanks for reading.

*Photo is from Ken Ratcliff at Flickr Creative Commons.

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  1. I like numbers, so I really enjoyed this post. I also love that you do fun things and donate some of your money. You're doing it right, I think!

    Also, how exciting that you could reach FI by later this year!

    1. Thanks for the comment, friend, and sorry for the late reply.

      To be honest, we had some hesitancy in sharing all our figures primarily because we only gave as much as we did. I think it's a sore spot, when I look back on the past year. We want to, and plan to give more in 2020.

      But yes! Exciting to think we could be FI, in some manner, later this year. If we use the 4% rule and decide to not use any daycare, we probably are FI already. Yay!

  2. I had to laugh because (and I use the word VERY LIGHTLY here) while I don't suffer envy from people's high incomes and savings, I do when I see low spending reports. In that yearning, HOW CAN I DO THAT, kind of way :D Probably because it feels like the thing I should better control on a day to day basis. But I appreciate the sharing, it gives me good ideas and a little motivation to try new things every time I see shared reports like this, so thanks!

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