We kinda hate tracking our spending. I know it’s a sin among personal finance bloggers, but on the 8-year path to accumulating our savings, we never tracked our expenses much at all. Once we learned that money can buy freedom rather than material things, our desire to consume sorta just disappeared, and spending money stopped being a major issue in our life. We saved a huge chunk of our income naturally.

But now that we run this site, good data on our spending seems a little more useful. So we’ve pored over records and reconstructed our expenses during different periods of our life, like when we first started our careers and when we took a 6-month travel sabbatical in Hawaii.

Generally speaking, whenever we’ve settled down in one place for any length of time, our household spending for two has seemed to hover between $18k – $26k per year in the past (2013 – 2019). That’s what enabled our supercharged savings rate — not high incomes.

Neither of us has ever had a six-figure salary, but that hasn’t stopped us from piling money up fast. Think about it: With household expenses of $24k per year, even a combined income of just $50k per year (post-tax) would result in saving more than half of every paycheck!

If you’re working on getting your spending under control, taking a hard look at the numbers (even just for a little while) could pay off immensely. We decided to break down our own spending over the past 12 months — the time period since arriving back home from our National Parks trip last August.

Your life might be completely different from ours, and we’re not suggesting that you need to copy us. When people share financial information instead of keeping it to themselves, everyone gets an opportunity to learn from one another. That’s what we’re trying to offer by publishing these details — nothing more.

Spending Breakdown: Our Last 12 Months

Before writing this article, we really had no idea how our past year’s numbers would turn out. We don’t keep a budget. But we did have a sneaking suspicion that our expenses would be higher than ever as we tapered off from full-time work into semi-retirement and had to pay for health insurance without an employer’s assistance. That turned out to be true.

Graph of 2020 expenses
Our total household expenses for a family of two, from August 2019 to August 2020. This is the most we’ve ever spent in a single year (without months of travel involved). Compared to the past, our healthcare costs are astronomical because we no longer have full-time jobs. As semi-retirees, we pay for health insurance 100% out-of-pocket.

Despite being our worst year on record, our expenses are still reasonably low. Here are a few ways to break the total down:

  • $28,190 per year for a family of two.
  • $14,095 per year per person.
  • $2,349 per month for a family of two.
  • $1,175 per month per person.

Let’s take a look at each category individually…

Housing ($566/month)

Ironically, housing was still our number one expense this past year, even without any mortgage or rent to pay. About two thirds of our housing costs were condo association dues, which are steep and have been rising over time. Having a condo sometimes feels like a hybrid between owning and renting a home.

Other than that, about 18% of this expense category went toward home improvement and maintenance projects, like finishing up a kitchen cabinet replacement job and wiring up an attic antenna so we could have access to more free TV. 10% went toward property taxes, and another 5% or so toward homeowner’s insurance.

Having a paid-off condo has definitely reduced our cost of living in more recent years, but not as much as you might think. If we were forced to rent, we would probably choose a smaller place for around $900 a month, compared to the $566/month implied in this year’s housing costs — and we’d have a bunch of capital freed up to work for us in the stock market if we sold our house, too. But we also wouldn’t experience any home value appreciation.

Healthcare ($557/month)

Close to 90% of our “healthcare” spending didn’t actually go toward purchasing any healthcare — it paid for insurance premiums alone. In the past, one or both of our employers has covered this cost almost completely, but now that we’re done with full-time work, we’re on our own. It can sometimes feel like a giant waste of money.

The health insurance we buy is one of the cheapest, highest-deductible plans available — but it’s not actually very cheap at all. And our family deductible is something like $13,000, meaning that even with the insurance, we’re still on the hook for the first $13k of medical expenses each year before it kicks in and covers the rest. The only value of this type of coverage is to keep us from going bankrupt in a million-dollar medical catastrophe.

The other ~10% of this spending category went toward a few uninsured dentist visits, including a costly one for a chipped front tooth.

In the United States, healthcare costs represent a huge burden on nearly everyone. Most people are shielded from this fact by employer-sponsored insurance plans, but it really comes out and smacks part-time workers, contractors, business owners, and some early retirees in the face.

Update, 2022: Our taxable income is even lower now (since we don’t work much and still make tax-deductible IRA and HSA contributions), meaning that we qualify for premium tax credits through the Affordable Care Act. This has recently driven our healthcare spending significantly downward from what you see here. Life’s good!

Food ($456/month)

This was a fun category to look at! We really had no idea what to expect. It turns out that about one third of our food spending is on take-out and restaurant visits, while the other two thirds is spent on groceries we cook at home. Our single most-repeated food transaction? Taco Bell, of course.

Spending one third of our food budget at restaurants doesn’t mean we ate out one third of the time. Because eating out costs so much more per meal than groceries, 33% of our food expenditures only bought about 15-20% of the food we ate. If our dining out was fancier than menu-hacked Taco Bell meals, those costs would have been even greater.

Of the groceries alone, about two thirds were purchased at discount stores like Walmart, ALDI, Costco, and Dollar Tree (in that order), while the other one third were purchased at traditional grocery stores like Publix and Lucky’s (mostly stocking up on fancy frozen vegan staples, like Gardein and Beyond Burgers, when they’re BOGO).

Opting for Walmart over “proper” grocery stores saves us a ton of money. Now that Walmart offers free grocery pickup without any exorbitant fees (looking at you, Instacart), it’s more convenient than it used to be.

Utilities ($249/month)

This category breaks down pretty simply: Electricity, cell phones, and home internet service, in that order. We actually found out recently that we’ve been overpaying for electricity because our attic is very poorly insulated. D’oh!

If we wanted our analysis to be perfect, this category should probably be larger (and the housing category smaller), because our condo association dues cover water, sewer, and garbage pickup, which really ought to be classified as utilities instead of housing.

Transportation ($214/month)

Around half of this category was spent on gasoline — we love a good road trip. The other half was split between car insurance, DMV fees/taxes, car maintenance like oil changes and air filters, and not one but two cracked windshield replacements on the same vehicle. That’d normally be covered by insurance, but we just carry liability-only coverage, which saves us more money in the long run.

What’s not represented here is the biggest cost of owning a vehicle for most people — depreciation. Since we didn’t buy a car during the past year, this expense is invisible. However, this hidden cost is truly very close to zero for us because of two things: 1) We have shared one car between two people for the past eight years, and 2) We’ve never bought a new car; we typically opt for hyper-depreciated cars in the four-figure price range instead.

@tripofalifestyle Our cars have been surprisingly reliable and inexpensive to maintain, too! — #newwhip #cars #vroomvroom #moneytok #🏎 #💰 ♬ original sound – Trip Of A Lifestyle

It’s also worth noting that 0% of our transportation costs went toward the 1,000+ miles I logged on my bicycle this past year. Getting around town doesn’t necessarily have to cost anything!

Other ($307/month)

You might find it a little weird that two travel bloggers don’t have a “travel” category in their annual expenses. But the truth is, while we travel a lot, we don’t spend a crazy amount on it. We’re big fans of high-value, low-cost investments, like State and National Park passes. We also sleep in the back of our converted camper van to eliminate the need for hotels, and we keep a cheap national gym membership so we can get showers on the road anywhere we need to. All of that is included in this category.

This past year, we toured the southeast, checked out quite a few State Parks like Big Shoals and Washington Oaks Gardens, tubed the Rainbow River twice, and went to the beach more times than I can count. Overall, we’ve definitely stayed closer to home on average (and avoided air travel altogether) because of COVID-19, but we’ve had our share of fun in spite of that.

Photo of Anastasia State Park at night
Anastasia State Park, Florida.

Aside from travel, the catchall “Other” expense category included Lauren’s makeup and clothing (along with what I consider to be a ridiculous number of returns), a bunch of random Amazon purchases (mostly birthday and Christmas gifts for family members), a few of the things we buy regularly on eBay, some Magic: The Gathering cards, and unfortunately, a non-refundable, prepaid resort stay for a bachelor party that got canceled altogether — RIP.

Implications for Early Retirement

Expenses are everything when it comes to FIRE (financial independence / retire early). In order to permanently retire and live off of investment income alone, you need to have about 25 times your annual expenses accumulated in your portfolio.

Based on our last 12 months’ expenses, that means we’d need just over $700,000 invested today (in addition to our paid-off home) to go the rest of our lives without earning another penny. We don’t have quite that much invested right this second — especially because we’re about to pay cash for another condo and move to the beach, which required us to remove a bunch of money from the stock market.

But over the past year or so, we’ve learned to stop obsessing over our FIRE number, especially since we’re so close to reaching it already. After leaving our full-time jobs, we found that we were very happy to continue doing a little part-time contract work on the side. It doesn’t bother us to make time for the few hours we put in each week, and it helps to keep life a little more interesting.

Because our household expenses are low, that contract work pays all of our bills and then some, meaning we’re not drawing on our investment portfolio at all, even in this state of “semi-retirement.” Actually, we’re still adding to it.

If you’re young and working toward an early retirement, you probably don’t need to plan on earning zero dollars for the rest of your life — it’s not realistic. Once you get most of the way there, you can slow down and have some fun, adding money to the pile at a more leisurely pace.

Update, December 2023: We took our own advice here and wound up with over a million dollars after several (very leisurely) multi-month vacations! Saving money gets easier the more of it you have.

If you’re nowhere near that point right now and feeling a bit discouraged, here’s something else to consider: Suppose for a moment that our net worth magically dropped to $0 today — we’d have to start over financially from scratch. And suppose we went back to work earning $100k per year (after tax) combined between the two of us ($50k each). How long would it take us to build up to complete retirement?

With expenses of $28k per year and an income of $100k, our implied savings rate would be 72%. Running that through an early retirement calculator shows that we’d be all set to permanently stop working in just 8 years, starting from zero. That’s incredible. And that’s the power of low expenses.

“There’s No Way I Could Do That!”

If your annual expenses are dramatically higher than ours, everything we say might sound a bit unrealistic to you, which is understandable. And nobody says that we’re spending the “right” amount anyway — everyone has their own comfort level. If you’re happy with the results you’re getting, you shouldn’t let anyone else tell you that you need to make a change.

On the other hand, you might really want to reduce your expenses, but just don’t see a path forward. So, we’re gonna list out a few common reasons why people think their expenses can’t go any lower, and share some thoughts about each one:

  • “I’m swimming in debt!” – Being in debt sucks, and you can’t just stop paying your bills. It’s easy to feel like loan payments are causing your expenses to be high, but most people who are in debt miss one crucial fact: Principal repayments are not expenditures! When you reduce the principal of a loan, that is a form of saving money. Accrued interest is the only true expense. Don’t discourage yourself from throwing extra money at debt. As the balances go down, the interest will, too. This is a form of “spending” you should rejoice in and actually increase.
  • “I live in a high-cost city!” – There’s no way you’re gonna rent an apartment for $900/month in San Francisco. We get that. So if you absolutely have to live there, then your expenses will probably be much higher than ours. Just remember that where you live is (usually) a choice you get to make. And it doesn’t have to be a permanent choice, either! Strategically moving to an ultra-low-cost town to bank money for just a few years — only to move back later on — is a perfectly reasonable course of action. And in today’s environment of remote work opportunities, it’s more feasible than ever. Aside from moving, there are other housing cost hacks to try too, like living with roommates for a while.
  • “We need one car per person!” – The need for a car largely stems from a choice of location. Personally, we’ve always made sure that at least one of us lived within cycling or walking distance of work. That single decision can often eliminate the need for a car, along with its depreciation, fuel, maintenance, insurance, and registration costs.
  • “I like to have fun!” – Sometimes people look at our life and think we’re depriving ourselves. Nothing could be further from the truth. Sure, we don’t go drinking at bars, we don’t stay in fancy hotels, and we don’t sit down at bougie restaurants very often. But we do hang out with our friends, we do travel a LOT, and we do share good food and romantic evenings. The value of socializing is more about the quality of people you do it with than the luxuries you enjoy along the way. Aside from enjoying cheap recreation, we’ve also learned that sometimes, having a positive default action (like exercise or reading) to fall back on when you’re bored can keep you from spending money to entertain yourself. It’s likely to make you healthier and smarter, too.
  • “I have kids!” – We don’t comment on this often because we’re admittedly completely inexperienced in this matter. But it’s worth noting that the largest expense associated with children is usually childcare. Aside from having to be constantly supervised at a young age, kids are just regular humans with the same basic needs as the rest of us — and those needs don’t have to be expensive to meet. Understand that childcare costs diminish dramatically once children reach public school age. Until then, consider options like allowing a lower-earning parent to stay home or work less for a few years. Remember, every penny saved on childcare costs is more than a penny earned, because income from work is taxed, and going to work comes with a lot of ancillary costs like commuting, too.
Photo of an intracoastal waterway at sunset
Enjoying a sunset over the Matanzas River made a pretty good date for $0.

Maybe none of the above resonates with you. Maybe your life is totally unlike ours, and you have completely different reasons for spending a completely different amount. If that’s the case, I hope you won’t take this whole article as preachy or judgemental.

The main point here is to demonstrate that it’s at least possible to design a life on less money than most middle-class Americans spend. Too many people assume that $50k or $100k in annual expenses is a baseline, when in fact, a super enjoyable life can be lived for a lot less.

It’s good to be armed with that information. If you do manage to consistently spend less money, then you can also spend way less of your life in an office — and way more of it out in the world.

— Steven

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