We thought we would throw out how we estimate our future expenses. Well, we base them on our current spending but make some adjustments for costs in the future. For example we won’t be paying for daycare in a couple of years, so while we spend about $24,000 on that now we don’t include it in our FIRE calculation. Another big difference between our current budget future budget is that we plan on paying off the mortgage before we retire. We also plan on relocating to another state with our version of ideal topography and climate. That will make a huge difference in the property taxes that we pay, since now we live in Texas which has no state income tax, but high property taxes, which amount to about $15,000/year. Not ideal for a FIRE situation. Ideally, we’d like to live in a state that has lower property taxes, since with minimal income we won’t have to worry much about income taxes.
Below are the details, I’ll use our expenses in 2015 to demonstrate our before-and-after.
Mortgage – currently $1910. Expected – $287.5. This includes tax and insurance. I’ve estimated this based on a house in Virginia the costs $250,000.
House utilities – $260. This is based on exactly what we spend now. While our FIRE house will be smaller, utilities in Texas seem pretty cheap compared to the national average.
Future Health insurance – $353. This is a “silver plan” in Virginia based on our expected income. Online calculators are great for research!
Future Dental – $87.5. These are my estimated out-of-pocket expenses. We may have to get insurance later if the kids need orthodontics, and need more as we age. But I think this is a good start.
Groceries – currently $638.17. Expected – $575. Here, I use a 10% reduction. I think this is reasonable simply because won’t have to buy so many convenience items, and we will have more time to cook at home from scratch – something we both love to do. Ideally, I think our FIRE costs for groceries could get closer to, or maybe below $500.
Internet/Cable – Currently $129. Expected -$50. We have Direct TV now. I am not a fan of TV. We don’t watch enough to justify this, but Mr. SSC loves his football.
Cell Phone – Currently $83. Expected $83. No changes planned. When the kids get older they can pay for their add-on lines themselves. I didn’t have a cell growing up, they don’t need one.
Car insurance – $125. Same as it is now. We have 12 years until the kids start driving. Again, they can pay for it themselves. That’s how we grew up.
House/Yard upkeep – Current and Expected $356. I’m hoping this is less, much less. This covers repairs and upkeep. Since we will have more time, I think we can do better, but we had a disastrous June this year. And eventually appliances will break, and this needs to be accounted for.
Car related expenses – currently $701. Expected $267. Currently we have a 0% loan for Mrs. SSC’s car. We haven’t paid it off since its free money. Anyways we won’t have car loans in the future, or our daily 50 mile commutes on each car, or tolls. This also covers repairs.
Kids clothes – currently $23. Expected $30. Okay, this may not apply in the teenage years, but I’ll have some time to bargain shop while they’re still young. In my detailed budget I do add $200 per kid during their teenage years to cover added expenses like clothes and food and activities.
Gifts and entertainment – current and expected $85. I don’t see how gifts will get less expensive than the future.
Haircuts – $20. I expect this could go up in the future since baby girl doesn’t have much yet. But, despite Mr. SSC’s reservations, I’m hoping to gain the skills to cut our children’s hair. I think I can cut his also, but he doesn’t trust me. He also seems hesitant to trim my hair. So maybe this cost will go up?
Shopping – current and expected $169. This is a catchall category, I’m optimistic I can make it go down 10% in the future when I’ve more time to shop for deals, and find creative ways to not buy things.. and I don’t mean a five finger discount.
Cash – current and expected $40.
Gym – currently $87. Expected $167. I expect that we will join a rec center with swimming and tennis. This is just a ballpark guess until we know what facilities are in our new town.
Allowance – currently $1000. Expected $800. Yes, it’s a lot of money. It covers everything for us – clothes, hobbies, entertainment, drinks out, date night…
College – currently $800. Expected $0. We won’t FIRE until we saved our goal for the kids.
Travel – current and expected $278. We want to travel more, but I think I’ll look into travel hacking and credit card rewards to help fund this in the future.
Daycare – current $1945. Expected $0.
Maids – current $257. Expected $0. Yeah, no self-respecting early-retirement family can justify paying for maids when they’re not working. Right now it’s one of those time versus money decisions we made. I prefer hanging out with my kids more than mopping the floors.
Security system – current $35. Expected $0. I’m not moving anywhere I need a security system.
Dogs – current $236. Expected $236. No matter what MMM says, we love dogs, I don’t care if they cost more. They are worth it for us.
Future state and federal taxes – $100. I don’t account for these in the current budget since they come out of the paycheck. But we’ll have to make sure to cover this cost in the future.
Total – current $9177. Expected $4369. Yeah that’s a big difference.
I take into account a 5% ‘slush’ and multiply by 12 months, and that gives us $55,049 for our FIRE estimate.
There are some things I’m probably leaving out, like the cost of running a blog. Or, just stuff that happens… But, you can’t predict life. I think the biggest thing about trying to predict the future budget for a lifestyle completely unlike your currently living situation is knowing that your family can be flexible. Our allowances are flexible and we realize that in rough years those will be the first to be cut. Someday, the kids might want an allowance, and I’ll give it to them but they will have to work for it. In all likelihood, both of us will have a part-time gig here and there, doing stuff that’s fun or allows us to learn a new skill. Plus, I’ve always wanted to teach, I will give that a try for a few years at some point. So, while the differences in our current and future expenditures look huge, I think they are reasonable and justifiable.
How do your FIRE costs compare to your current costs? Any advice for us?