{"id":710,"date":"2019-08-28T20:13:35","date_gmt":"2019-08-29T03:13:35","guid":{"rendered":"https:\/\/modernfimily.com\/?p=710"},"modified":"2020-12-10T00:16:23","modified_gmt":"2020-12-10T07:16:23","slug":"a-look-into-our-monthly-expenses","status":"publish","type":"post","link":"https:\/\/modernfimily.com\/a-look-into-our-monthly-expenses\/","title":{"rendered":"A Look Into Our Monthly Expenses"},"content":{"rendered":"
How can you plan to retire early if you are not in tune with your spending? In order to understand what your FIRE number will be, you have to know what your annual expenses are!<\/p>\n
Not just your current annual expenses, but more importantly what your projected annual expenses will be once you FIRE<\/strong>.<\/p>\n Of course there are many unknowns as to what the future might hold but you have to do the best you can to estimate these future costs.\u00a0 The last thing you want to do is estimate a FIRE number based off your current spending, only to realize it looks much different once you reach FIRE!<\/p>\n This week\u2019s post will focus not only on our current monthly costs, but also what we expect the future to hold.<\/p>\n Below are our current monthly expenses for 2019:<\/p>\n <\/p>\n This comes out to a total annual expense of $55,030.\u00a0 This is MUCH higher than what is reflected in our FIRE number.\u00a0 This is mostly due to all the of money we are shoveling towards our mortgage.<\/p>\n When we bought our Canadian townhouse in June 2016, we purchased it for $315,000 and put $63,000 down upfront (20%).\u00a0 This left us with a mortgage of $252,000 with a 2.59% interest rate for a 25-year term.\u00a0 This means a monthly payment of $1,141 and by the end of that 25-year timeframe our house would be paid off but we also would have contributed $89,963 towards interest to the bank.\u00a0 No thanks!<\/p>\n Thanks to house hacking our previous home<\/a>, we have ALL the funds for the remainder of our mortgage sitting in a high interest savings account earning more than the interest rate on our mortgage (winning!). By paying off our Florida townhouse mortgage in 2.5 years (thanks to house hacking) we never have to worry about housing expenses again.<\/p>\n We could have bought our brand new townhouse in cash upfront but we decided against that since the interest rates were so low.\u00a0The plan from the get-go was to pay the mortgage off quickly, within 5 years, before the interest rates would change as this aligns perfectly with our FIRE date. While some people may have chosen to pay for the house upfront to not have to deal with a mortgage, we decided to go a different route which allows us some flexibility with this cash if an emergency happens to arise.<\/p>\n Therefore, the mortgage expense is a bit of a misnomer as we are not having to put any earned income towards it, the payments are coming directly out of our high interest savings account that was funded by our previous home in Florida.<\/p>\n Our bank allows us a few methods to pay off the mortgage early so we can stick to our 5-year payoff timeframe.<\/p>\n Since the mortgage is a bit of a misnomer, here is what our current monthly expenses look like without the mortgage:<\/p>\n <\/p>\n We are sitting closer to $2,000\/month or ~$23,000 in annual expenses which is what we actually are spending from our earned income each year.<\/p>\n The rest of our monthly home related costs come out to $727\/month.<\/p>\n As for food, we dove into our food costs already, so check out that post if you missed it<\/a>.<\/p>\n Let\u2019s dive a bit deeper on the monthly car costs which total $234\/month.<\/p>\n As for travel, this is slightly lower than our running average of $125\/month ($1,500\/year) due to only one international family trip this year to Florida using points for \u00bd of it (3 one way tickets with points + 3 one way tickets in cash), a trip to Barcelona mainly paid for by points (round trip airfare and 2 out of 3 hotel nights with points), and a few trips out to the cabin in the summer where we spend about $100 on gas round trip. Did I mention we are really big into travel hacking too?? We will get into that at another time in the future\u2026<\/p>\n Miscellaneous is for ANYTHING<\/strong> else not listed on here.\u00a0 I have been tracking our expenses to the penny since 2009<\/strong> and this is the average monthly amount for random shit we buy be it an annual sports center pass, new glasses, going to a concert, clothes, stamps, art exhibits, gifts, a speeding ticket, etc.<\/p>\n The three Finn line items are all of our baby related costs so far this year.\u00a0 We are maxing out her RESP (Registered Education Savings Plan which is like a 529 in the states except for the awesome bonus of the government matching 20% up to $500\/year which equates to us contributing $2,500\/year or $208\/month which is what we are doing \u2013 immediate 20% gain, go Canada go!).<\/p>\n We are spending about $50\/month on additional baby related food (mostly on berries, no joke).\u00a0 And the last line item of $50\/month on activities includes everything from consumables like diapers and wipes to activities like our annual zoo pass.<\/p>\n Luckily, we have learned kids don\u2019t need to be expensive and we are spending less on her now than compared to her first year of life.\u00a0 Don\u2019t worry, there will be a future post covering in detail our baby costs to date.<\/p>\n Here\u2019s what we are anticipating 2020 to have in store for us:<\/p>\n <\/p>\n Ouch $92,562 down the drain in 2020!<\/strong><\/p>\n As mentioned above, we plan to throw an additional $37,000 towards our mortgage, so that comes out to an extra $3,083\/month.\u00a0 That’s a total of $68,704 going towards our mortgage in 2020.\u00a0 But, by the end of 2020 we will only have $8,885 left on our mortgage so it will be wiped out for good in April 2021.<\/p>\n Since again the mortgage is a bit of a misnomer, here is what we have in store for 2020 without the mortgage:<\/p>\n <\/p>\n This comes out to an overall increase in expenses of 4.98% year over year. How so?<\/p>\n Here is what the start of 2021 looks like with the remainder of the mortgage:<\/p>\n <\/p>\n Still high, sitting at $5,068\/month!<\/strong><\/p>\n This of course is due to the mortgage again. We are still dealing with the mortgage and double up payment through April, but after this the mortgage is gone and we are officially debt free<\/strong>! No annual lump sum needed this year either!<\/p>\n Additional changes:<\/p>\n Ladies and gents, boys and girls, the moment you have all been waiting for…\u00a0 May I present to you our projected FIRE annual expenses!<\/p>\n Here is what we are projecting for the remainder of 2021 (and beyond) which is our goal FIRE date:<\/p>\n <\/p>\n Ta-da! Our total annual expenses are projected to be just shy of $35,000 per year.<\/p>\n There you have it! Phew, this was a LONG post but hopefully it provides insight as to how we are calculating our annual expenses once we reach FIRE. As you can see it’s not as simple as looking at what your expenses are today.<\/p>\n How do your monthly expenses compare?\u00a0 Is there anything you can think of that we are missing?\u00a0 Any suggestions for how to lower our projected FIRE annual expense figure?\u00a0 Comment below and thanks again for following along!<\/p>\n If you liked this article and want more content like this, please support this blog by sharing it.\u00a0 Not only does it help spread the FIRE, but it lets me know what content you find beneficial.\u00a0 Writing is NOT my strong suit and it honestly takes me hours to write each post so the more encouragement the better!\u00a0 Engaging in the comments below keeps me motivated.\u00a0 You can also support this blog by subscribing to receive emails anytime a new post is published.\u00a0 Thank you FImily!<\/p>\n We believe in stacking up life hacks to keep your enjoyment levels to the max without depleting your bank account.\u00a0 Here are some ways to further educate yourself and save thousands of dollars over your lifetime by making some simple adjustments:<\/p>\n How can you plan to retire early if you are not in tune with your spending? In order to understand what your FIRE number will …<\/p>\nWhat are our current monthly costs?<\/h2>\n
Our misnomer mortgage expenses<\/strong><\/h3>\n
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Let\u2019s review<\/strong><\/h3>\n
Housing Costs<\/h3>\n
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Food Costs<\/h3>\n
Car Costs<\/h3>\n
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Travel Expenses<\/h3>\n
Miscellaneous Expenses<\/h3>\n
All Things Baby<\/h3>\n
What\u2019s up next in 2020?<\/strong><\/h2>\n
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What\u2019s up in 2021?<\/strong><\/h2>\n
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What You’ve All Been Waiting For (if you’re still reading…)<\/strong><\/h2>\n
Changes We Foresee\u00a0Once We Reach FIRE<\/h3>\n
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Support This Blog<\/h2>\n
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