2015 Spending Summary, Minimum Spend to be comfortable, Costs of Owning
I feel a bit uncomfortable sharing this, even though I’ve done it every year since 2006. I’m going to continue to share anyway. If nothing else, it gets my “crying” post off the top of the blog!
My usual disclaimers about my tracking system being very imperfect apply. Some months, I’m very good about categorizing my data and putting my Amazon (or other vague purchases) to the right categories. Sometimes I go 3-4 months without doing any clean-up, and do a best-effort scrub.
Transportation: $1,600. Fuel and auto expenses.
Internet, Phone, Netflix: $1,800
Other Shopping/Spending: $5,500. This catch-all category includes about $2,000 in “Home” purchases, which includes furniture/decor related stuff. The biggest purchase there was blinds for about $700 and fencing for about $200. There is $1200 in “other”, which is mostly cash withdrawals that could have been spent anywhere. We bought a monitor for our home office, and I replaced my smart phone.
Restaurants: $4,200. This is quite high. We had two dinners that were approximately $200 (we treated our parents to a really nice place), but it is mostly a series of dinners out.
Wine: $1,200. We have quit our wine clubs due to being overly stocked on nice wines and wanting to trim the budget. This will be less next year, but not zero.
Gifts: $1,600. A category often underreported since I don’t always remember to tag these.
Insurance: $4,800. Car, Home, Umbrella, and Earthquake. Almost half of this is earthquake insurance, which we routinely question.
Personal Care: $300. Haircuts and some face products.
Pets/Pet Care: $8,600. The purchase price was $1,800. There were a lot of vet bills in the first year (including 1 ER visit and 1 minor surgery). We paid for a lot of socialization classes and training. I’m interested to see what the 2016 cost is, and will be horrified if it remains this crazy high.
Travel: $1,200. This is extremely low for us, largely to balance the dog bill. We made several small road trips, but were able to use miles for flights for Christmas, a summer trip back home for me, and a last minute flight for T’s grandma’s funeral. The spending is from a few hotels, camping fees, BART, and road trips.
Student Loan: $2,700. My minimum payment is half this, but I can’t stand the idea of stretching it out for eternity (despite the low rate)
Home Maintenance: $11,700. This is pretty much just the drainage work we had done last February. We are SO GLAD we did this since it has been raining non-stop this winter.
Mortgage/Property Tax/HOA fees: $51,000.
Minimum Spending to be Comfortable in a High Cost Area
Grumpy Rumblings questioned if I knew what minimum expenditure amount it would take to feel comfortable here. I think this provides a enough information to estimate. Roughly speaking, we need ~$84k after taxes/savings to be “comfortable” – less comfortable than we currently are, but still comfortable.
I explain my assumptions, but I don’t necessarily justify them. It is clearly a rough estimate.
Costs of Owning vs Renting in a high cost area
Being committed to staying in the area, we chose between two somewhat undesirable options: stay in the skyrocketing rental market indefinitely, or move into the also skyrocketing home market. The rent vs. buy calculation I did at the time of purchase showed that we break even after ~7 years (then come out ahead) – but there are so many assumptions that I don’t put a lot of weight on that.
While owning our home is much more expensive in the table above, the tax implications make a difference. Generally, we did not have a reason to itemize taxes before we had a mortgage interest deduction. The ability to itemize allows our state taxes to be deducted as well as interest and a portion of the property tax. The overall savings (vs. not itemizing) is on the order of $12k this year. We buy down the risk of an expensive home by pre-paying the mortgage, but it still feels like a risk compared to living in a low cost area.