October Spending

It is the middle of November, and I am just now posting our October spending. The election occupied all my discretionary time-to-think, and I just didn’t have the bandwidth to compute our numbers for October. But I am quite happy with the final results, and now I can get back to managing the household budget:0)

October was another month with pretty low spending – $2327. Interesting fact: this corresponds to about $28,000 per year. As we don’t include our property taxes in the monthly summary, adding them back in gives us $34,000 per year, which is really low -156% of the federal poverty line.


There is nothing particularly interesting in our October spending. It turns out that when nothing special comes up during the month, we can pretty easily keep our spending at about that level. However, November and December will be expensive months. We have several things coming up, including some large pet expenses, some fairly large car expenses, and some large donations.
Our food expenses have settled to between $700 and $800 a month for the last few months and, given that almost everything we eat is organic, I think this is pretty good. We are continuing not to buy processed food, so I am doing quite a lot of cooking.

A popular “rule” for proper budgeting is the 50/30/20 rule. According to this rule, you should spend 50% of your income on essential like rent and food, 30% on discretionary spending, and 20% should go to savings. We don’t follow this rule, and I don’t like it. Let’s start with essentials – by the definition of “essential,” there actually shouldn’t be much flexibility here. You need a place to live, but if you choose for your family of three to live in a five bedroom house (we do this, it is just how it worked out, it is not smart), some of that expense is discretionary. You also need food, but if you choose to pay for all organic, that is also discretionary. Thinking of your rent and food expenses as essential prevents you from seeing your actual choices.


Once you figure out your actual “essential” expenses, the rest of your money is all discretionary. You have two choices for the money. You can spend it on stuff, or you can save it and essentially buy time. If you save about 65% of your take-home pay, you can retire in about 10 years starting from zero. So once the essentials are covered, you get to decide how you want to prioritize spending vs. savings to optimize your happiness. I think if we moved to a smaller house, stopped buying organic, went to one car, and didn’t spend money on child activities, we can probably get to under $2000 a month. But that would be a lot of work and a lot of sacrifice. I think we have our discretionary spending vs. savings optimized to just about the right level at the moment, although moving to a smaller house is still on my to-do list for sometime after the pandemic.

Our August Spending

Well, it is possible that writing this blog is good for our budget. I have been keeping track of how much we spend for several years now and this is our lowest spending month in recorded history! Which shows that way too much of our spending is really discretionary. Our average monthly spending for 2019 was almost $5000 a month excluding property taxes and donations which we tend to do on an annual basis.

Shopping this month included printer supplies (about $150 worth) due to the fact that we are both working from home and homeschooling, some clothes for me ($110, I did really need the clothes) and homeschooling workbooks for the Child. Kid expenses included the Child’s violin lessons (which she takes over Zoom) and school fees (public school). We made a small amount of donations as our area was hit by a major storm so we donated to some local charities.

One significant reason our spending is down is COVID and the fact that both of us are working from home. That decreases our transportation expenses (normally I pay $6-$7 per day for parking and we both drive to work) but it also decreases my random and totally optional daily purchases. When I am at work, I often end up buying lunch or buying coffee and these things add up!

During the first weeks of COVID, our spending didn’t go down, it shifted. I tried to buy things that I hoped would protect my family from the dangers. I stocked up on food, toilet paper, soap, and Clorox wipes. I also bought various masks that I hoped would be good enough to keep us healthy. I have reached the point where I have bought everything that can possibly be useful. All of these things are sitting in our basement as at the moment we simply don’t leave the house but I feel slightly better knowing they are there.

Our low spending (for us) is of course largely due to luck – nothing went wrong this month. The pets didn’t get sick, no appliances failed, no storms damaged our roof or flooded our basement. It is easier not to spend money when there are no emergencies. Still, I do think that writing about money helps me be more thoughtful about how I spend it. It’s a win!

Can we bring our spending lower and is it worth it? Probably we can and probably it is worth it.

Our main financial goal is to be financially independent. That means to be able to live entirely on the passive income generated by investments. The common rule is that to be financially independent, you need to have investments equal to 25 times your annual income. Making some reasonable (everyone hopes) assumptions about the return on stocks, this should allow you to live on passive income forever. I tend to be more conservative, so I am taking 30 times our annual spending to be our financial independence number. Small changes in your annual spending, can have a big effect on this number. For example, if we can live on $40K per year (an average of $3,300 a month) then we need $1.2 million in investments (this doesn’t count money that is not invested such as the value of your home, cars, or money you like to keep in cash). If we need $73K per year (the amount we spent last year), then we need $2.2 million. That is a big difference! In general, cutting your spending by $1000 a month, translates into a decrease of $360,000 in your financial independence number. And of course if you are spending less, you are saving more to reach that smaller number even faster.

No-Snacks September

As we noticed in our annual budget analysis, our family spends way more money on food than most households. That got me thinking if we are optimizing our happiness profits within this part of our budget which lead to me going over all of our food receipts from the past two months. We have been quarantining so all of our shopping since March has been through deliveries and therefore all of our itemized receipts are online. In fact, for July and August we have only shopped at two stores and I know for sure we didn’t do a quick trip for milk I have forgotten about so the data is very accurate. In total, for the two months, we spent $1,793 at the grocery store of which $128 was non-food items (mostly detergents and toilet paper) so we spent $1,664 on actual food. This is $832 a month, way lower than our average for 2019 ($1,231 per month) which is great. What is not so great is that 22% of the money we spent on groceries was spent on snacks! And that is the part of our food budget that is bringing our happiness profits down.

I put everything that is prepackaged processed carbs in this category. For our family, that is mostly cookies, chips, popcorn, and ice-cream. There were some frozen pre-prepared foods (pizza and fries) but the bulk of it was stuff that doesn’t even resemble actual food. So, what is the problem with snacks?

I like snacks too much. It takes too much willpower for me not to eat them when they are lying around. I know processed food is bad for me in all kinds of ways but grabbing a handful of chips is so much easier than figuring out something better to eat. And a bag of kettle corn is an easy replacement for an actual dinner and I can eat it while working.  

Snacks are bad for our family happiness as well. As I am writing this post, the child is apparently raiding the goldfish crackers stash and my wife is having her umpteenth discussion about what “foods” can and can’t be eaten before supper. If the child over-indulges in goldfish, later she’ll say she’s not hungry for supper and I will feel guilty that my child has had nothing but processed carbs all day.

So, it is clear that the $370 wasn’t money well spent. And I don’t do moderation well so my family is going on a no-snack challenge for the month of September. I am sure the child will be excited to hear this plan :0)

To make sure nobody actually starves, we will have to pair this challenge with some sort of plan for what we are going to eat once all the goldfish are gone. My wife is just starting work again after having most of the summer off and the child will be going to online school which means we’ll all be busy and the child will need a lot of attention from us throughout the day. So, our time to cook will be severely limited. I have read many blogs about the value of meal planning and meal prepping. This is supposed to be the ultimate answer to lowering your grocery bill and decreasing your time in the kitchen. And as we would like to achieve both, I will attempt to follow the wise advice of others this month and meal plan and maybe even meal prep. Reports of this adventure to appear in future posts! Stay tuned.

Get to know us through our numbers

National averages from the Bureau of Labor Statistics

One fun way to get to know someone, is to check out what they choose do to with their money. It is not something that we often get to find out about people but our family is an open book so here is what we spent in 2019 together with some US national averages. Starting in September 2020, we will post our monthly spending with a bit more detail than this annual summary.

Housing: $14,918 (avg. $1243 per month)

This includes bills/utilities: $5,756 (avg. $480 per month), property taxes: $5196, and home maintenance and appliances: $3,966 (avg. $330 per month).

Food: $14,774 (avg. $1,231 per month)

Yes, that is a lot! And $11,000 of it is on groceries, not eating out. The average US household spends only $7923 on food. We are vegetarian and drink almost no alcohol. I guess we eat a lot!

Pets: $9978 (avg. $831 per month)

We started the year with four cats, two dogs and a gecko. Sadly, two of our cats passed away during the year and a good chunk of these expenses were incurred in their last weeks of life. The average US family spends less than $1000 per year on pets.

Shopping: $7,667 (avg. $641 per month)

This breaks down to Amazon: $4,057 (avg. $340 per month) and Non-Amazon: $3610 (avg. $301). This includes clothes, shoes, household items, books and workbooks for the kid, as well as some pet food not included above.

Kids: $6,078 (avg. $506 per month)

We have an 11-year-old and a 20-year-old (who is financially self-sufficient). This number includes after-school care, summer camps, and a few relatively cheap activities like soccer. We choose to put the kid in camps all summer. It is expensive but we consider it a good investment into her social and academic development.

Auto/transportation: $2,890 (avg. $241 per month)

This is mostly gas, parking, and an occasional car maintenance expense. We own two newer cars which we bought for cash so no car payments. According to Expedia, 85% of new vehicles and 55% of used vehicles are financed.

Insurance: $2496 (avg. $208 per month)

This includes our home and two cars. Health insurance is mostly covered by our employers and what is not covered is deducted from our paychecks before taxes so it is money we never see.

Health: $1,091 (avg. $90 per month)

We are lucky to have excellent health insurance.

Other: $4586 (avg. $382 per month)

This includes a period during which I had a gym membership, cash withdrawals (about $3,000 total) which I can’t track but much of it went to pay babysitters, and random other expenses.

Donations: $8,694 (avg. $725 per month)

Our donations were on the low-side for us this year because we had made several end-of-the-year contributions in 2018 and were planning to do first-of-the-year contributions in 2020 for itemizing deductions purposes. We typically aim for about 15-20% of our annual spending to go toward donations/charities.

TOTAL: $73,202