Announcing My Guilt-Free 2019 Budget Projections

Today is Dec 15, 2018 and it's ten days till Christmas. Yippee. With season's greetings come feelings of reflections of the year. I tend to live in the future (not the moment). I've already taken a sneak peek at this year's income and expenses, and I have so many thoughts. I have so many thoughts on how the year has gone, and I am having trouble containing them or even confining them to one space. That's how I know it's time to write a post.

Based on what my income and expenses have shown thus far, here's what I propose for 2019 (God-willing).

My Working Budget for 2019

GROSS SALARY:	$91,000	($44/HR)
NET SALARY:	$71,000	(INCL 401K CONTRIBUTIONS)
SPENDING BUDGET:	$26,000/ yr	($2,167/MON)
TOTAL SAVINGS GOAL:	$45K/YR	TOTAL = POST-TAX SAVINGS + 401K (45K = 26K + 19K)

2019 PROJECTIONS

MONTHLY SPENDING	$2167/MON	26K/YR			SAVINGS	$45K/YR
Student Loans	$570					Per Pay Period	Notes	Annually
Housing/ Utilities	$1,000	(46%)			401K	$731/pp	Payroll deduction	$19,000
[REMAINDER ≈ $600]					[REMAINDER = 26K]
Tithe	$200
Everyday Expenses -Groceries (~$200/mon) -Dining Out -Gas Other (cable, personal supplies, wellness visit, family, other)	$400				Roth IRA	$231/pp		$6,000
					Taxable account	$834/pp		$20,000

For previous versions, see Budget Struggles.

Notes on my guilt-free budget projections. I generally get a couple hours of overtime each month, that will go toward any extra expenses guilt-free.  My spending budget is pretty basic on purpose. I plan to have $400/mon from my paycheck direct deposited onto a prepaid debit card for Everyday Expenses.  I use the Amex BlueBird card (no affiliate) because it has no fees. Extra expenses might include an extra doctor's visit; maybe I'll finally go on a trip; or my family might need help with a purchase. For any larger expenses that might arise, as they often do, I have a built in cushion in my savings budget. Guilt-free again.

More on the taxable account. Yes, my 401k contributions are automatic payroll deductions. Yes, my Roth IRA contributions are automated twice a month to a brokerage account. The remaining savings (20k) are funneled to a broker but those are semi-automated. This worked in 2018, so I'm going to try it again in 2019. I automated 75% of the amount allocated for the taxable account. So each pay period only 75% of the $834 gets routed to the broker. (I use a robo-advisor for now.) The remaining 25% sits in a savings account and is routed throughout the year when the balance gets uncomfortably high.  I do this so that if a big expense does arise, this money is easily accessible. Yes, I do keep a safety net in my checking and savings, but I really do see that as a safety net for job loss. So the taxable account cushion that lingers in my savings account is in addition to an established safety net. I don't want to ever feel strapped for cash.

Overall, while I have a spending target and savings target in mind, my budget is not immutable. I aim to keep financial independence guilt-free. The savings target and spending target are just tools to give my money some discipline and structure; it can't just be hanging out all willy nilly. If I need to spend more, it's enough knowing that I can. If I end up saving less than my target, it really is okay. Keep in mind a reasonable savings rate to a traditional and comfortable retirement is 20%, so anything above that is just gravy.  I want to be mindful not to get to a place where I start feeling bad for spending money that I earn. Financial independence goals are a choice and really not even the end goal, just an avenue to options.

Comparing 2018 vs 2019 Budget Projections

	2018	2019	Notes
Hourly Rate	43/hr	44/hr	Hourly rate based on hourly rate at the start of each year; historically incremental raises go into effect around April each year.
Estimated Gross Salary	89,440	91,000	The estimate for 2018 was calculated using hourly rate x 40 hrs/ wk x 52 weeks. The estimate for 2019 was calculated using a payment model at work.
Estimated Net Salary	67,080	71,000	The estimate for 2018 was calculated on a simple 25% tax rate. The estimate for 2019 was calculated using a payment modeling application at work that accounts for payroll deductions.
Savings Target	$37,000/yr	$45,000/ yr	For 2018, I hypothesized I could save half my salary and spend half based on the observation that I was already meeting most of my expenses from one of my two monthly paychecks. For 2019, after my first year of tracking expenses, I hypothesized I could keep recurring expenses to under 26k/yr and decided to shoot for a target savings of 45k/yr by funneling most of it away from my checking account. No pressure.
Spending Budget	$30,000/yr	$26,000/ yr

Final Thoughts.

I know this 2019 budget update is a little premature since I haven't done my full Q4 update yet, but with only one paycheck left and two weeks left of the year, I have a pretty good idea of what I've spent and what I've earned in 2018. The only lingering thing is whether I take my car in to get serviced before the year ends. The maintenance work has been pending since at least October. Then the weather just got colder and the days got shorter, and I really don't like running errands that require a huge time commitment.  But I'm just so excited to have gotten through this year and actually stuck with tracking my spending, I just had to offer this sneak peek! Let me know what you think...

Stay tuned for the upcoming Q4 update and reflections to see exactly what I did manage to spend and save in 2018!

#1 Way to Save 100k in Your 30s

I have been in the PF blogosphere for awhile now and have gorged on net worth updates and debt payoff stories. Much to my own chagrin I even published my own debt payoff story. I harbored some reticence because I didn't think the story was really much of an underdog story, but other bloggers had it as cornerstone content, so I did it too.

Lately, I've been stumbling on a few more how I saved x dollars by y time and while enticing at first when I close the post I find myself a little disappointed. It is all starting to get a little sententious for me, I suppose.

Case in point, when I did my post on selective poverty, I hoped to compare FIRE budgets with poverty and be surprised that wow, these people really are living on so little. The data didn't really show that. Then I remembered my own life. My aunt raised 4 kids (none of us were her biological children) on a max income of $40,000.   She did that because that was the best job she could find even after getting her doctorate. She faced a lot of discrimination and eventually went into substitute teaching and staffing group homes until she retired at age 62.

But while she was raising us, we ate free and reduced breakfast and lunch at school because we qualified for it; we had hand me downs and home-made clothes because before reaching her max income that's what we could afford. When things got better, we took lots of fun road trips around America with our pb and j kits in the back; sneaking into hotel rooms when they wanted to charge for each kid; splitting extra value meals at McDonald's; and getting Dairy Queen blizzards in the middle of winter when they were free.

So when I went to write my How I Saved 100k by Age 34 post, the idea stuck around in my draft list for two months because I couldn't in good conscience tell my 10 readers that the way to six-figure savings was to live simply- buying second hand stuff, using credit card rewards, getting a cool side hustle; oh and save 90% or more of your income.

No, I can't do that. I know better. So here's my #1 tip to saving $100k by your next milestone birthday...

#1 Find yourself in a position to earn $100k/ year and then don't spend half of it. Do that twice.

MERJ out!

Single Girl Money | Sep 2018 Savings and Investment Update

Hey there! Welcome back to My Early Retirement Journey. In case you’re just joining us, here’s a little bit about me.  I am a single 30-something, openly Christian, hesitantly immigrant-y, human woman. I love watching TV while eating takeout, and I want to retire early. I currently work as a consultant in a tele-health call center making around $40/hr. I started my professional life in 2015 at the ripe ole age of 31 after a few false starts. I spent 2016 paying off about $10,000 worth of credit card debt. I spent 2017 paying off about $20,000 in private student loans; I still have about $300,000 in federal student loans for which I am currently on an income-based repayment plan for the next 25 years, give or take.  I started really getting into savings and investing late 2017 when I stumbled upon the FIRE (financial independence, retire early) community.  In 2018, I made the decision to try to save for a sabbatical and maybe if all goes well continue the journey to early retirement.  Along this journey, I give all sorts of updates, just like this one.

This is the September 2018 Update of my savings and investments balances, i.e. my personal capital. I don’t call it net worth because my massive student loan debt keeps me at a negative net worth and frankly that’s discouraging.

I am getting a little faster at Excel, so this update did not take quite as long to chart as my June 2018 Savings and Investment Update.  We'll utilize a similar structure here as well. Let's get into it!

Let’s quickly recall some budget items:

2018 Savings goal: $37,000/yr (2017: no goal)
Monthly savings contributions: $3115/mon



When you add in my Safety Net Fund + Regular Savings and Checking, the amount is a little more.



 

Am I on target?

Let's do some quick math together.

My savings goal was to save $37,000 this year.

I finished 8 out of 12 months. So that is (8/12) x $37,000 = $24,667 that should have been invested by now.

Let's see:

Dec 2017 end (investments): 51,333

Aug 2018 end (investments): 83,981

Difference: 32,648 (YTD target: $24,667)

Am I on target? Yes! (this includes interest accrued but still on target)

Notes and trends. Fortunately, I am on target and trending upwards. Praise be! Over the last eight months, I've gotten more comfortable with contributing the max to my traditional 401k (after much hemming and hawing at the beginning of the year). I have become a tad bit more comfortable with my brokerage account. Not where I want to be mentally, but I still am funneling extra cash there. So that is trending upward nicely. Like most people in FIRE, all my savings and investment contributions are automated so I don't see it. That's the main purpose of having a second bank. I use that to make automatic contributions to my brokerage account.

I don’t really count my checking and savings amount yet. I see that as my safety net fund. Experts recommend 6 months. I went ahead and saved for about 1 year of expenses ($30,000) for a couple of reasons. First, it was a default choice because I had that first 6 months in CDs and I didn’t want to cash them out when I first started investing in Dec 2017. Secondly, I have this fantasy of just quitting my job and in case I do, I’d like to have 6 months readily accessible. I mean I probably won’t, but sometimes humans do crazy things. Also, both my brokerage account and 401k are using my traditional retirement age of 65 to allocate my funds at a risky 90% in stocks. I keep going back and forth, but in short, it makes me feel better to have one year’s expenses on hand. I know the compound interest lost is causing investment aficionados to gasp in horror, but again, I’ve only been investing “actively” for about eight months now. That’s all folks!

Questions? Comments? What about you...have you hit your targets at your Fall check-in?

Single Girl Money | Sep 2018 Income and Expenses Update

So I’ve been experimenting with lots of different spreadsheets in the last few months.  Check them out here and here.  I used my June 2018 income and expenses to tryout a few more. It turns out Microsoft Excel has loads of templates to try. It’s been really neat to see it all visualized in so many ways.

Without further ado, here’s a recap of my income and expenses for Jan to Aug 2018, a little early I know.  I don’t currently intend to publish these monthly namely because my income and expenses don’t fluctuate with any significance month-to-month. But I think it's worth checking in with myself and sharing with those on a similar journey. Be inspired to check-in on your finance from time to time. My goal this year is not so much a focus on how much I am spending. Rather my priority is to reach my savings goal.  Check back in a few days for that update or subscribe below because you don't want to miss it!

Income

For the spring semester, I had a side hustle as an adjunct professor. I dove head first into FIRE.  To put it mildly, I didn't love the side hustle. However for the sake of exiting the workforce as soon as possible, I am  mildly interested in some other way to earn money.



Of note, income is just my net pay. In the figures above, it does not include my 401k contributions. This is worth noting because in calculating my savings rate, I do count my individual 401k contributions as part of my total income since it is money I would otherwise have to put towards expenses.  (Updated 02Oct2018 when I realized I completely neglected the Income section!)

Expenses

I still haven’t decided on a good spreadsheet. This data was extracted from a Google Sheets doc that lists all my expenses over way too many categories for Jan to Aug 2018, but I like it enough for now.



 



Notes on expenses.
The first sheet includes the amount I put towards savings each month, most of which is automated so I just count it as an expense. The jump in June was not due to an increase in income, but rather aggregated savings that I had no immediate plans for which was transferred to my investment accounts. Savings is targeted for around $3,100 each month. Check out my working budget page for more information.

The second sheet is monthly expenses thus far. To best trend any particular data point, start from the bottom and move up.  My intention is to trend around $2,500/mon or less.  So far I've been over every month except for June. In fact, my target spending for this year is $30,000 of which I'm already at $23,458, and at month eight, I would want to be around $20,000. So I'm over about $3500.

Of note, May was a high expenditure month due to helping out a sick family member.  June was unusually low due to a break I got on my rent.  August was another high expense month because I bought a mattress (classified under "home"), signed up for a fitness class, went on a self-proclaimed writer's retreat which consisted of a weekend stay in a hotel close by (classified under "travel"). I have also been covering Aunty MERJ's rent for the last three months (classified under "dependents/fam").  Transportation was higher in July because I had to pay my six-month premium for car insurance. Medical and health expenses finally came back down after my surgery earlier this year. I'm still healing from that which has required monthly follow-ups at a $40 copay each visit.  Technology in August was for purchasing a hosting plan for my blog. I had been on Blogger prior to this.

For those of you new to personal finance, I would encourage you to start somewhere with keeping track of your finances, e.g. apps, spreadsheets, envelopes. Visuals really help to trend where exactly your money is going. It's easy to round numbers off in your head and think everything is on track. I will admit I don't particularly enjoy putting the reports together but in the end the updates are worth it because it benefits me to have a physical and mental image of my finances and how they are trending. Overall, it's very beneficial and worth the effort. I would strongly encourage you to start tracking your finances no matter where you are in your personal finance journey.

Savings Rate

A firm tenet in FIRE is recognizing and increasing your savings rate.  Tracking income minus expenses, here is what the data reveals.



Closing thoughts.
I am pretty pleased with my financial progress thus far. I'm a little early for quarter three but I have other things coming up in September and I wanted to get this update out of the way for that. This is my first year of My Early Retirement Journey and the financial focus is simply creating awareness and having some sort of framework or plan for what to do with my money. So far, I believe I’m on the right track! Additionally, it really helps to visualize it all! Thanks to Four Pillar Freedom for the great visualization ideas.  Thanks for stopping by!

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When Can I Retire? Case Study: Nola, MD

CASE:
My first case study is a friend from college. She graduated with no debt from college due to an academic scholarship and generous parents.  By the end of medical school and residency, she had about $200,000 in student debt.  This brings us to now, almost 3 years after entering practice as a physician.

Current Spending: (estimates as she does not track her spending)
$2,500/mon on rent and utilities
$2,000/mon student loans
$400/mon eating out
$400/mon shopping
$450/mon travelling (couple trips a year)
Total spending: $5750/mon
Annual: $69,000 (65.7%)

Savings:
$3,000/mon (toward a down payment for a home)
Total saving: $3,000/mon
Annual: $36,000 (34.3%)
Assets: $100,000 in cash/savings

Other:
Has not given much to retirement.
Does not contribute to her 401k (expresses a desire but is not quite sure how to sign-up). Thinks there is a 5% match!
Knows that there was some automatic retirement contributions made during her residency years but is unsure how to access this information.
Her financial and lifestyle goals:
Pay off her student loan debt.
Buy a house between now and Oct 2018 with a $100,000 down payment.
Pay off house to minimize total interest paid.
Whenever she does retire, the Caribbean sounds nice.

RESULT:

At her current spending: $69,000/mon x 25 (using the rule of 4%) = $1,725,000 needed to retire
Using the Calculator, at her current savings, an compound interest rate of 6%:  Nola can retire in 21 years.

WHAT IF:

If Nola, were to spend like a resident ($45,000/yr net avg while in residency) and save the rest, her projected retirement using the variables above would be in:  12 years 
Annual spending: $45,000/yr
Amount needed to retire using 4% rule: $1,125,000
Annual savings: 105,000 - 45,000 = $60,000/yr

Suggestions:

• Consider tracking spending with a helpful tool like Personal Capital.


• Speak to HR rep and enroll in 401k. Max out 401k.


• Make a point to track down information for retirement contributions made during residency.


• To make a big impact on retirement goals, consider living like a resident, and saving like a physician.


• Open an investment account like Vanguard or Betterment and initiate auto-deposits.


• Consider a budget with any number of free budget spreadsheets available.

CONCLUSION:

Either way, with a hefty salary, Nola, age 34 could still leave the workforce before age 65 (traditional retirement) and retire in the Caribbean. If she lived like a resident, she could stand to reach that goal 9 years earlier!
Comment below with your thoughts!

UPDATE:

After I did the case study with Nola, she contacted her HR person at her current job and was able to locate information from residency for a 403b. She learned that her employer contributes 5% of her salary after 1 year of work even if she does not contribute! Free money! And she had a balance of $17,000 in her 403b plan from residency which she has rolled over to her 401k. Kudos to NOLA on a job well done! This is one FIRE'd physician! 

Related Content:

• What The Heck Does That Mean: A Beginner's Guide to Investment Vocabulary


• Enron and Madoff and Ponzi! Oh My!: How to Background Check Your Financial Professional

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I Took A 3rd Look at My 401k and This is What Happened

So in the wee hours of the late night or early morning before a work day, I try to find just one more way I can accelerate My Early Retirement Journey. I know I can probably cut it down comfortably to 15 years from 30 years, but can I do just a little bit more?

The FIRE blogosphere (millennial rev, ROG, jlcollinsnh, etc..) all swear by Vanguard. They tout the benefits of the Vanguard Total Stock Index and Vanguard Total Bond Index and denounce cherry picking stocks as according to them no one can outpace the stock market. Fine, I’m a big fan of #easychoice / not re-inventing the wheel. So I felt confident enough to put my new found knowledge into practice. I was going to allocate using the above index funds in an 80/20 allocation.

Behold my surprise when my 401k did not have both of those options. It had the Vanguard Total Bond Index but not the total stock! Not wanting to lose momentum, I tried to make the 80/20 allocation work with different funds I did find. My mind was unsettled and I stared at The Prospectus for 2 to 3 hours struck with decision paralysis. After the sun went down, I gave up. And kept my Target Date Fund at 0.77% management fee. Defeated.

Then two nights ago, I re-read jcollinsnh's post on a simple path to wealth for his daughter. He spoke more about tracking the S&P 500. It was a phrase I had seen circling the blogosphere but one to which I had not given additional thought. My brain finally remembered it had seen that in The Prospectus. (Admittedly, some of my better ideas come after the fact…) So I looked back at the Vanguard Funds available in our 401k.

I clicked on the one that looked most similar to what I was looking for. It was called the Vanguard Institutional Index (VINIX). It’s description read: The investment seeks to track the performance of a benchmark index that measures the investment return of large capitalization stocks. The fund employs an indexing investment approach designed to track the performance of the Standard & Poor's 500 Index, a widely recognized benchmark of U.S. stock market performance that is dominated by the stocks of large U.S. companies. The advisor attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

Aha! S&P 500…that’s what I was looking for.
I turned to Google to find out the difference between the two (VFINX vs VTSMX).

MorningStar had this to say: For those who might be unfamiliar with the two index types mentioned, the S&P 500 tracks 500 of the largest U.S. stocks as measured by the value of their shares. ...Total stock market funds, on the other hand, include both large-cap stocks and the many small- and mid-cap stocks left out of the S&P 500.  As we've said, a total stock market index fund encompasses a wider universe of stocks than does the S&P 500, but the difference might not be as great as you think. Stocks in the S&P 500 make up about 75% of the total U.S. equity market, so the overlap is considerable. That said, the roughly 25% of the market that is found only in the total stock market index fund does provide greater diversification because of the presence of smaller stocks. For investors with small-cap exposure elsewhere in their portfolios, the large- and mid-cap S&P 500 fund may suffice. But for a broader, one-stop-shopping fund, the total market index offers maximum diversification within the U.S. equity universe.

Eureka! I could make this work even though Vanguard 500 Fund is yet another fund, but it's close enough to what the Institutional Fund is trying to do for my intents and purposes. I had decision paralysis no more. So this is what I decided to implement in My Early Retirement Journey 2018 Q2:

80% Stocks (3/4 with VINIX, expense ratio, 0.04%; 1/4 with VEXAX, small and mid-cap exposure, expense ratio 0.08%)

20% Bonds (VBTLX - Vanguard Total Bond Market Index Adm; expense ratio: 0.05%)

Current: Fidelity Freedom Fund 2045, expense ratio: 0.75%, managed allocation of 90/10 stock/bond

DISCLAIMER: One of the potential pitfalls with the ‘easy choice/don’t reinvent the wheel’ method is that one person’s idea often gets recycled over and over throughout the blogosphere. I’ve seen that many times in various listicles on myriad subjects outside of personal finance. And of course, there is always the never forgotten pillar that everything on the internet is TRUE. That being said, I do try to look at the background of the bloggers and other posts to see where they get their ideas. Many of them do point to other blogs so I at least have some semblance of point of origin.

Not one FIRE blogger that I follow is a financial analyst. In fact jcollinsnh has a B.A. in English. So I do consider all these things as I make these major financial, potentially life altering decisions. I do do some separate internet searches on things like indexing and Vanguard and its founder to get different perspectives. And I persist, open to the idea that it’s all one big hoax and we could all sink in the same boat but at least I’d have company.

Related Content:

• What The Heck Does That Mean: A Beginner's Guide to Investment Vocabulary


• Enron and Madoff and Ponzi! Oh My!: How to Background Check Your Financial Professional

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Poverty and You: How does your FIRE budget compare?

So in managing my elderly parent's finances, I've applied for quite a few assistance programs and become familiar with the poverty level in America. I think a lot of us are familiar with the concept, but do you know what the actual level is..say even for your family of 2 or 3 or 5?

What's more, for those FIRE and extremely frugal bloggers out there, I thought it'd be interesting to highlight how as this one article pointed out, frugality may be for the rich. Some people are actively choosing to live this way while some were born into it. I think in this community we forget the profundity of the difference. I have a brewing post on the privilege of choice but there are so many roads that could go down, my mind hasn't settled on one just yet.

In the United States, the government publishes the poverty guidelines (and thresholds) as a census tool and as a guideline for eligibility for various social service programs they administer. Here's a look at the 2017 Poverty Guidelines.

Household Size	Federal Poverty Level	175% of Poverty Level	200% of Poverty Level	225% of Poverty Level	400% of Poverty Level
1	$ 12,140	$ 21,245	$ 24,280	$ 27,315	$ 48,560
2	$ 16,460	$ 28,805	$ 32,920	$ 37,035	$ 65,840
3	$ 20,780	$ 36,365	$ 41,560	$ 46,755	$ 83,120
4	$ 25,100	$ 43,925	$ 50,200	$ 56,475	$ 100,400
5	$ 29,420	$ 51,485	$ 58,840	$ 66,195	$ 117,680
6	$ 33,740	$ 59,045	$ 67,480	$ 75,915	$ 134,960
7	$ 38,060	$ 66,605	$ 76,120	$ 85,635	$ 152,240
8	$ 42,380	$ 74,165	$ 84,760	$ 95,355	$ 169,520
each additional household member	$ 4,320	$ 7,560	$ 8,640	$ 9,720	$ 17,280
	Source: http://aspe.hhs.gov/poverty-guidelines 1.22.18

 Source: https://www.nc211.org/federal-poverty-level

So how does this compare to various published budgets around these frugal and FIRE interwebs.

My Early Retirement Journey:
2018 Estimated FIRE Budget: $30,000
Household Size: 1
Poverty Level: A little more than 225% of Poverty Level

Aunty MERJ:(Social Security + pension)
2018 Estimated Income: $17,100
Household Size: 1
Poverty Level: below 175% of Poverty Level

Root of Good:
2018 Estimated FIRE Budget: $40,000
Household Size: 5
Poverty Level:  below 175% of Poverty Level
*At one point they were at $30,000 which would have put them just about at the poverty level for their family size.

Saving the Crumbs:
2017 Expenses: $10,482
Household Size: 3
Poverty Level: below the Poverty Level by almost 50%

Points with a Crew:
2017 Expenses: $60,000
Household Size: 8
Poverty Level: below 175% of Poverty Level

Jessie Fearon:
2016 Estimated Expenses: $44,940
Household Size: 5
Poverty Level: below 175% of Poverty Level

Early Retirement Extreme:
Estimated Annual Expenses: $7,000
Household Size: 1 (just his expenses)
Poverty Level: below the Poverty Level

Notes. For some reason I thought this post would be a lot easier to write, but suddenly when I was actually seeking other blogger's budget, income, and expense reports, I couldn't find any relevant ones. What the..? I felt like when I started blogging I was inundated with the amazingly frugal income and expense reports. But hmm, suddenly all I could find were really high earners living a pretty financially reasonable lifestyle. Bait-and-switch?

Some additional food for thought on poverty in North Carolina.
Living Wage Calculations for North Carolina

Hourly Wages	1 Adult	1 Adult 1 Child	1 Adult 2 Children	1 Adult 3 Children	2 Adults (1 Working)	2 Adults (1 Working) 1 Child	2 Adults (1 Working) 2 Children	2 Adults (1 Working) 3 Children	2 Adults (1 Working Part Time) 1 Child*	2 Adults	2 Adults 1 Child	2 Adults 2 Children	2 Adults 3 Children
Living Wage	$11.36	$23.80	$27.25	$34.16	$18.71	$21.55	$24.57	$27.15	$16.59	$9.35	$12.77	$15.20	$17.39
Poverty Wage	$5.00	$7.00	$9.00	$11.00	$7.00	$9.00	$11.00	$13.00		$3.00	$4.00	$5.00	$6.00
Minimum Wage	$7.25	$7.25	$7.25	$7.25	$7.25	$7.25	$7.25	$7.25		$7.25	$7.25	$7.25	$7.25

source: http://livingwage.mit.edu/states/37

And because we all love a good infographic, had to share this...

Source: NC Justice

 

(23Aug2018 MERJ)

How does your budget compare? 
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Comparing An Actual Retiree's Budget to My Proposed Early Retiree Budget

I recently took over managing my aunt's finance. It's just paying her bills really because she "just doesn't know how."  Not only does this scare me about getting older and losing my ability to care for myself, but it brought up a curious case of, will my FIRE budget really work?.

I recently decided my bare bones budget for both an unexpected loss of income or FIRE is: 500/500/500 (rent/expenses/loan,other, cushion) 

The 67-year old Retiree Budget

 

Auto-withdrawals
GEICO (car insurance)	13th	$70.23
Globe Life	9th	$14.24
Subtotal1		$84.47
Remainder (Total Income - subtotal 1)		$1,340.53
Recurring Bills
Tampa Electric		$76.00
Metro PCS	1st	$45.00
Rent	1st	$433.00
Santander (car loan)	24th	$252.61
Spectrum		$0.00
Subtotal2		$806.61
Remainder (Total Income - Subtotal 1 - Subtotal 2)		$533.92
Living Expenses
Food		$200.00
Gas		$30.00
Dependent		$30.00
Subtotal		$260.00
Remainder (Total Income - Subtotals x3)		$273.92
Remainder for Miscellany		$273.92
Prescriptions
Doctor's office
Gifts
Other

I copied the above data straight from a spreadsheet I'm using to keep track of her finances. For the sake of comparison, I reorganized the line items into the three main categories in my projected FIRE bare bones budget Housing/ Expenses/ Other. I also added $80 for internet and cable as an estimate. It's cancelled right now for Aunty MERJ for non-payment, but it's something I plan to have in one form or another.

 

HOUSING	Projected Cost	Actual Cost	Difference
Mortgage or rent	$500	$433	$67
Tampa Electric	$0	$76	-$76

Total

$500

$509

-$9

 

Expenses	Projected Cost	Actual Cost	Difference
GEICO		$70	-$70
Metro PCS		$45	-$45
Santander		$253	-$253
Spectrum (internet and cable)		$80	-$80
Food		$200	-$200
Gas		$30	-$30
Total	$500		$500
Total	$500	$678	-$178

 

Other	Projected Cost	Actual Cost	Difference
Globe Life		$14	-$14
Dependent		$30	-$30
Medical			$0
Other/Gifts			$0
Total	$0	$44	-$44

Now let's sum these and compare..

Final thoughts.
Based on this actual retiree's typical living expenses, it seems I would be able to get by. Some things would be different for me. For example, I likely would not have the car payment ($253/mon) that Aunty MERJ has. However, since I would not be of Medicare age, I would likely have some sort of health insurance premium. I don't even know what the range of something like that would be.  Overall, I think I would be able to live a simple life and get a couple trips or big expenses in now and then.  Big expenses would likely not include home repairs. So home ownership is probably unlikely unless I increased my  FIRE number or owned the home by the time I retired and thus could re-allocate some of the housing budget for repairs and maintenance.  This exercise was good food for thought and a great jumping off point for future projections.  Thanks for stopping by!

Related Content:

• Financial Update | June 2018 Income and Expenses


• Financial Update | June 2018 Savings and Investment

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