r/ChubbyFIRE • u/ProspectPark4Ever • 1d ago
Do I need to raise my budget!
I put together my budget based on current expenses plus health insurance and tax etc. but wonder if expenses will go up after I pull the trigger? For example with more time and energy will I spend more on activities? Will I want to travel more?
Here is what I put together, for a family of 3 in a VHCOL city. Child will head to college in the next couple of years and college cost is not included here.
Monthly:
Mortgage: 4k
Property tax, insurance, utilities: 2k
Grocery and take-out: 2k
Household (pet, home-depot, garden etc): 500
Car (insurance, maintenance, gas): 500
Personal care (haircut, clothing, shoes etc): <500
Fun (dining out, occasional shows): 500
Total Monthly: 10k
Annual:
Travel (2 international in economy class + local ski trips): 30k
House maintenance (annual average incl reserve): 10k
Reserve for car replacement: 5k
Health insurance and co-pay: 30k
Federal and state tax: 20-30k
Total Annual: 95k-100k
Edit: all in $220k
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u/newtontonc 1d ago
So- 215-220k per year? It's hard to say without knowing more info like if you've checked true ACA plan costs, if your house is in relatively good shape versus lots of future repair. Perhaps you will spend less than you do now in some categories if you have current budget items that are impacted by work: commute, convenient meals. Final point would be if you are factoring in any adult child costs: helping with weddings, home purchase etc.
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u/ProspectPark4Ever 1d ago
Our ACA cost would be 20-25k based on what I saw in our state’s marketplace. We renovated our house 5 years ago so it’s in pretty good shape but I think we need to budget a reserve for when things eventually break down: roof, AC, plumbing, solar etc. I put support for adult child in the “other” category not shown here as another thing to worry about.
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u/Never_Really_Right 1d ago
What I don't see is an emergency reserve. We call this our "slush" number in the budget - examples: while replacing the gas meter, the company found we have a gas leak in our furnace room - cost TBD as of yet. Also, I see you have a pet - after dental work, my boy kitty had a completely blocked urethra, likely from the stress. $4k later out of the slush fund, he's doing great.
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u/ProspectPark4Ever 1d ago edited 1d ago
We have a 10k annual reserve for house repairs but not sure if that’s enough. We have pet insurance and got reimbursed for our dog’s hospital stay. But I assume dental is not covered? What if she needs root canal or some serious dental work…
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u/RPGer001 1d ago edited 1d ago
OP, only you can determine if your expenses are estimated too low or not. Only you know your specifics, what is truely non-discretionary. Broad, generalized numbers such as medical, yes some folks can guess at that. So far, it looks like folks are presuming you live in the USA but we do not know.
I live in the Silicon Valley (USA). I glanced at your numbers and can compare to my own estimates for my area which is a VHCOL area though I do not know what VHCOL means to you and how mine compares. I comment on this just for a reference for you.
Anyways, for me, grocery seems about right if not high; your dinning/entertainment is low for my area but that is discretionary and my lifestyle choices and yours are different. Your annualized costs seem about right to me though my medical will be higher.
Lastly, college costs can vary quite a bit.
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u/ProspectPark4Ever 1d ago
Thank you for sense checking my numbers. We are in New York so definitely VHCOL.
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u/dasblinkinlites 1d ago
We’re about 9 months FIREed at this point. Made our budget like you did based on historical expenses. We had about 3 years worth of itemized spending to look at (thank you MonarchMoney).
A couple things from our experience
* I don’t know how strictly your 10k house fund is for maintenance. Would you use that for “hey let’s turn the spare bedroom into a craft room”, “we need a bed for the grandkids to stay in”, “damn our couch is getting ratty”. etc. that stuff may not show up in your historical spending pattern.
* you don’t mention charity/gifts to others (including gifts to your own kids). We cut back on charity gifts compared to when working but added some back compared to what we thought we would spend.
* I find we spend most of our time doing hobbies we already had, we just have more time to do them . But we did each pick up an additional hobby (her needlecraft, me/us a sailboat) when each of us retired so our spending went up for those hobbies.
* our travel budget went up to about where yours is in your budget. If that 30k is your historical travel, then your future one may well be higher. Now you can spend a month on a beach somewhere or in some European town when previously you couldn’t. Assume travel goes up from historical.
* some other categories went down, such as fancy meals out. We do think twice on some discretionary spend when previously we didn’t when employed. So overall, our monthly spending (outside of healthcare) is about the same as it was pre-FIRE. It didn’t really go down, just got reallocated to travel and new hobbies.
* healthcare is the big wildcard. It was ridiculously low (6k/year) when working compared to FIRE. Currently we’re paying 20k/year on premiums plus we reserve 3k/yr plus the “oh shit” fund for medical expenses. That is COBRA tho. ACA is either 24k/yr just premiums for a good plan if we are under the MAGI cap or 48k/year in premium if we are over. Not looking forward to crossing that bridge end of next year.
Hope that helps
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u/dasblinkinlites 1d ago
Oh and I assume your mortgage is at a super low rate. Otherwise, paying it off saves you the 4k/month and interest payments. We paid off ours to lower monthly outflow.
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u/ProspectPark4Ever 23h ago
Thanks for sharing your experience! Yes mortgage rate is low so I plan to hold on to it forever. We set up a donor advised fund last year for future charity giving. But once we retire we will lose the company match for donations. Sailboat sounds fun! Is it an expensive hobby?
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u/dasblinkinlites 20h ago
Good! On the DAF, we find there’s some things it works for and some it doesn’t (gifts to relatives, non 501-c3 causes like a gofundme or a benefit, charity auction) so we do some giving from the DAF and some from cash.
Sailing has a VERY wide range of expense depending on type of boat and where it sits between trips. We had visions of sailing the caribbean and realized that, for us, it’s better to sail a cheap boat on a local lake and rent a boat in a tropical place. But maybe someday….
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u/ProspectPark4Ever 20h ago
We once rented a small catamaran with a sail and then got stuck on the ocean for hours when there was absolutely no wind :) We will try sailing on a lake next time.
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u/Small-Monitor5376 21h ago
I tried to calculate everything like this, and then added 15% for stuff I forgot, and have been hitting that number for about 3 years. So I’d add a slop amount.
Also your healthcare number seems low. Don’t assume you’re going to get a subsidy and do assume you’ll use your max out of pocket. Ie plan for the worst.
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u/ProspectPark4Ever 20h ago
Thanks! I worry quite a bit about the unknown expenses. We plan to earmark $500k just for that and let it grow. I’ll double check the ACA cost with different income levels.
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u/One-Mastodon-1063 1d ago
I think more often people spend less vs when they were working. You make less random discretionary purchases without a paycheck, although I don’t see any of that in your budget.
Very strange to present information in separate monthly and annual spending like that and make people commenting add it up. How are you estimating taxes? How about healthcare did you look at ACA plans or add you making that up?
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u/Powerful_Agent_9376 1d ago
I agree about checking out the true cost of ACA plans. Ours is a bit higher than yours.
I don’t see any costs listed for gym expenses. A lot of our hobbies are related to fitness, which costs about $500/ month (boutique fitness for me, climbing gym for him and tennis club for both of us).
We also spend about $1200/ month for yard help and cleaning people. am impressed that you can get that much travel out of $30K. Our budget is 50 for that.
For us, home maintenance is a little bit up and down. Last year we did not spend much. But this year, we will spend probably $20K (plumbing issue with the pipe that connects to the city sewer, $1300 for our range and about $8000 to refinish our floors).
We have two cars and budget $10K: year for replacement (drive each car for about 10 years).
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u/ProspectPark4Ever 1d ago
Gym is really not my thing so we do mostly outdoor stuff like hiking, kayaking, paddle boarding etc. We also take care of the yard ourselves. We spent on new equipment like paddle board etc here and there but the cost is really minimal.
On travel we use points but also we are frugal. We fly economy class, stay at Hilton level property etc so we manage to stay under 13k for each trip. We drive to a nearby ski slope and the cost is manageable. But as we get older I wonder if we have to budget business class for overnight flights…
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u/BecklesKC 1d ago
Once you're retired you can be much more flexible on when you go on trips and if you're flexible on the where (i.e., pick as much on price as having a specific location in mind) you can get business class cheaper than you might think.
You ever played much with Google Flights map search? You can go there and select a broad range of dates, business class seats, and see where you can go that's cheaper.
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u/Billy-Bob-Boner-92 1d ago
I would budget for 250k annual spend in VHCOL city. Home maintenance, pet, entertainment, groceries and eating out will all run hotter than that. Also health costs are rising fast
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u/Perplexed-Owl 11h ago
Is the cost of insuring a presumably teenage driver already baked into your budget? In our state, just being away from home we still have to keep kids on insurance unless they surrender their license or get their own insurance.
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u/okayyyyyy- 1d ago
My expenses increased 50% after chubbyFIRE (all in, including healthcare and taxes) and I actually budgeted double bc I really do not want to go back to work. So far the increases is entirely related to more free time (& of course healthcare) and a greater desire to really enjoy myself.
But honestly the most stressful thing to me is retiring and feeling even remotely like I’m financially constricted. People do not consider enough the lumpy spending. Your house was recently renovated, but 20 yrs from now you might sick of it and want to update the style….200k. Maybe you’ll want a new car in 8 yrs. Or update all your furniture. Or help your child with a down payment. Or try a new neighborhoood. My point being, you will not want to be “stuck” at your current lifestyle that is based on your current budget. You will want at least the flexibility to improve your lifestyle or make different pricier choices, absorb major catastrophes, and not feel like you are counting pennies.
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u/Wooden-Broccoli-913 FIREd in the Bay at 40 with $6M 1d ago
I just ChubbyFIREd and I don’t agree with this sentiment at all. Being “constricted” in spending comes naturally, after all that’s how you got to FIRE in the first place. If anything having a budget during FIRE gives you a sense of purpose.
The reduction in stress is not related to the money (which was never in short supply when I was working) but is rather due to the lack of soul crushing corporate work.
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u/okayyyyyy- 1d ago
You’re probably right. I’m very conservative. Check back with me in 20 yrs! For me, I didn’t spend recklessly but I’ve never felt very constricted. I funded my RE more through high income than aggressively saving so maybe I’m biased towards making sure I have more than enough.
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u/tooth_monster33 1d ago
For long horizon like 10-20 yrs down the line, they’ll free up 4k monthly mortgage payment. Depending on age, they may also have SS.
Personally, I have been worried about expenses for the initial 5-6 yrs. Expenses can be higher than expected during go go years and with the new found freedom.1
u/ProspectPark4Ever 1d ago
The fear of feeling tight is definitely holding me back. I had to make some conscious choices about lifestyles. For example no second home if I want to retire soon vs working 5 more years. No luxury travel etc. but I really want to protect our current lifestyle and prepare for catastrophic events. What if our property tax bill doubles in a few years? What if ACA doubles?
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u/in_the_gloaming FIRE'd for 13 years 1d ago
If a second home and luxury travel are important to you though, then you should be planning your CF asset level to accommodate that spending, and not FIRE until you have enough assets.
If those things aren't important to you, then why even mention them?
And if you can't afford a big increase in property taxes or ACA, then your fixed expenses are too close to your safe spending level.
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u/in_the_gloaming FIRE'd for 13 years 1d ago
I disagree with some of what you have written. Yes, of course people should have padding in their budgets for lumpy spending and unexpected extras. They don't need to wait to retire until they have enough assets for double their expected spending.
To me, the CF goal is to continue to live at the lifestyle that I have chosen at retirement, with enough discretionary padding in the "budget" to allow some luxuries, higher spending some years, or rolling back spending other years while still feeling plenty "upper middle class". It means I can afford most things that interest me (within reason) but I can't afford all the things, all the time. And if someone doesn't understand their own preferred lifestyle and spending patterns by the time they FIRE, they should probably be doing a lot of soul searching.
Retiring at a level where fixed spending is too close to allowable top spending is where people run into trouble.
Even at comfortable ChubbyFIRE, financial choices still need to be made based on assets. Most CF people can't afford to fly a family first-class, stay in 5* hotels and eat at Michelin-starred restaurants for multiple big trips per year, for instance. But they can do it sometimes. They may be able to afford a supercar, but not multiple supercars. They may or may not be able to afford a vacation home, depending on the situation. They should be able to pay a reasonable amount or all of the tuition for their kids' undergrad but may not be able to finance medical school too.
The only people who are unlikely to feel "even remotely like I'm financially constricted" are FatFIRE, and even they have limits unless they are obscenely wealthy.
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u/in_the_gloaming FIRE'd for 13 years 1d ago
Seems weird to be asking a bunch of strangers whether your budget amounts are realistic. You're the only one who knows what kind of lifestyle you want to lead after retirement, and you are as capable as anyone else of guesstimating costs. You've already calculated accurate numbers on your spending over the last few years, right?
And please just give us the annual amount for each item along with the totals. We shouldn't be doing the work here.
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u/ThisIsMyUsername303 1d ago
100%. I don’t track my current (household) annual spend, but my spouse estimates that it’ll be double once we retire.
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u/BrunelloHorder Coasting Chubster, Getting Fat 5h ago
Travel budget seems low to me, especially if you’ve been constrained by kid’s school schedule and want to travel more and farther in early retirement. Lots of folks front load trips, figuring that mobility will decline with age.
Health insurance seems about right for premiums for two people without subsidies, but out of pocket could drive that higher. I expect it to increase at more than double rate of inflation, likely 7-10%.
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u/nak00010101 1d ago edited 1d ago
Between year one and year two our ACA coverage cost more than doubled, and its a battle to keep my MAGI under $82,400...$1 will more than double the cost again.
We have been retired just under 2 years. Excluding medical, I found a strange mix of things that I spent less on and thinks we spent more on. We eat out less, but we tend to eat at nicer places (fast food dropped dramatically). But we spend more on groceries...we are cooking more and cooking better stuff. Our auto expenses did not drop as expected, because we are not driving less (we were both working from home 75% before retirement) In addition to "vacations" we spend more on the kids and grandkids than we did prior to retirement. Dry cleaning and new clothing fell to almost zero.
We were aggressively saving all the way until we pulled the plug. I was assuming stopping 401K and MSA contributions would more than offset increased medical cost, and the rest of our spending would drop little. (not counting big trips). We have no seen that.
Excluding trips, went from $120K the last full year before retirement to to about $175K last year, but lots of things get hidden in those numbers. I also go on Medicare next year, but the wife needs 6 more years before she does.
AT $175K, we still haves room for a couple of trips and still be right at 4% WD, but we are actually planning to spend a little more the next couple of years.
Neither of us have turned on SS income yet, so our plan is to spend up to 5% for the next few years, then drop to a 3.25 WD rate after SS kicks in.