Annual Spending: How close are we to our goal?

Annual Spending

Part 1 of our master plan (as most people seeking FI) is to bring down our annual spending.  As pointed out by many bloggers, you can retire on the 4% rule when you have 25x your annual spending. So the lower your annual spending is, the less overall savings you need.  We are taking a slightly unconventional path to FI.  We really won’t be relying on investment income but rather relying on rental properties and some side businesses to self sustain our annual spending.  Our savings will likely grow significantly but we won’t rely on using it other than for emergencies.  Nonetheless, our goal is to get to a $25,000-$30,000 annual spending. Even as a family of four.

So let’s take a look at 2016 annual spending:



Car Payment (we paid off the rest of our car loan)






Public Transportation


Car insurance (we paid for an annual policy in August and got rid of one vehicle)


Licence Plate Registration


Car Service and Parts


Sub Total 





D’s cell phone


RJ’s cell phone




Natural Gas






Property Tax


Home supplies


Home Insurance (we paid for an annual policy in August)


Home supplies (hygiene, cleaning etc.)


Home Renovations (new deck, fence and office in basement)


Sub Total



Alcohol & Bars






Sub Total



Gifts / Donations


Dentist (deductibles)


Eyecare (deductibles)






Life insurance


Sports (golf, softball)






Dates (for RJ and D)


Fees & Memberships


Baby supplies






Daycare (D was on mat leave for most of the year)








Spa & Massage




Clothes (D)


Clothes (RJ)


Electronics (new iPad, new phone)


Hobbies & crafts




Sporting goods


Misc / Unknown Expenses


Sub Total


Grand Total 


$77,254.71!! So are we close to our goal? 

The short answer is yes… The three largest expenses from 2016 and 5 our of the top 7 expenses will be virtually eliminated by 2019. Stay with me. I will summarize the BIG 7:

1. Mortgage: $19,835.89

Our plan is to use the equity/profit from our house sale to purchase a smaller house with no mortgage. 2019 Projection = $0

2. Car Payment: $8,998.66

In 2016 we paid off the rest of our car loan. That is why this amount was so high.  We do not plan on having any car loans going forward.  We can assume that we will have to replace this budget line with cash for a new (used) car every 3-5 years.  But we do not plan on doing much driving and do plan on sticking with low valued used cars. 2019 Projection (Annual allowance for a new used car) = $1,500

3. Home Renovations: $6,845.93

We spent a significant amount on home improvements in 2016 because we wanted to prepare for the sale of our house.  We will still have the occasional repair and renovations  to do in FI however we should always have the time to do it ourselves.  2019 Projection = $1,000

4. Groceries: $6,530.84

We plan on gardening a lot more in 2019 and will try harder to find more efficiencies on our shopping and cooking however we do plan on having an extra child to feed so this line will not change much.  2019 Projection = $6,530.84

5. Vacations: $6,399.68

We paid for 2 vacations in 2016.  One of which occurred in 2017. We still plan on travelling in 2019 however it will be very discretionary. We will budget for one family trip per year and if it’s a good year, we will do more. 2019 Projection = $3,000

6. Property Taxes: $4,753.97

The next house we will live in will likely have a municipal valuation of under $150,000 and property taxes under $1,500. 2019 Projection = $1,500

7. Day Care: $4,492

We will not be sending our kids to daycare in 2019. 2019 Projection = $0

In Summary

So these simple changes to the BIG 7 expenses results in a difference of $44,326.13.  This brings our annual expenses down to $32,928.58.

A few other things that will be reduced are 1. Car and home insurance (we started paying annually for these in August so the 2016 numbers actually reflect 1.5X the true costs of these). 2. D started cutting the whole family’s hair in 2017 and started making her own makeup. 3. All home utilities should go down when we downsize to smaller home. 4. Public transportation will be eliminated as D will not need to take the bus to work. 5. We don’t pay for gym memberships anymore and only workout at home. 6. We plan on cancelling our life insurance.

There will also be a few items that will increase. 1. Dental and eye care when we do not have medical benefits. 2. Activities and overall home supplies as the household grows up.

Overall I think we are on the right track and with a few more efficiencies, we can easily get to under $30,000 or maybe even $25,000.

As always I welcome any questions or comments.

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