This month we’re taking the plunge and divulging our monthly expenses, so feel free to peruse and judge if you’d like. Our transition to mindful frugality is a work in progress and there are still plenty of areas for us to cut back without feeling a sense of deprivation. But I’m hoping that we can continue to reduce spending over the next several months to arrive at a happy baseline.
I’ve been tracking our finances for a few years now, but hadn’t worried too much about it in the past. Since switching to a single income household this year though, I’ve recently felt the need to focus more on controlling our spending.
Although our monthly expenses have decreased over the past year, there is still room for improvement. However, I am happy to see some progress already from last year when we spent a whopping $8,900 in July! Let’s see if we can continue the downward trend!
Why share our monthly expenses?
I have a confession. Seeing the details of other finance bloggers’ spending habits and net worth gives me a voyeuristic thrill. You, too? It’s okay. I won’t tell anyone. Everyone’s financial situation is unique and, as such, you probably shouldn’t judge your own financial progress based on what others have achieved. However, I do believe there is value in sharing information.
It has been enlightening to see how many others in the community are happily embracing simpler lives and how little they are able to spend in doing so. I’ve found this knowledge to be incredibly motivating as we’ve committed to the pursuit of financial independence and a lifestyle we hope will be healthier, happier and more fulfilling. I applaud the kindness and openness of the FIRE community in this regard and want to do my best to pay it forward.
Mr. RFL and I both lean toward minimalism and simplicity, which has been a driving factor in our ability to live below our means. Having jobs in a high paying industry has also helped. At the same time, we have worked to ensure that lifestyle creep didn’t follow too closely behind raises or promotions along the way.
If you’re looking for the frugalist of the frugal, you won’t find that here. Life is short and we have no problem splurging on things that make us happy (i.e. travel, wine & music). And while we will continue to spend freely in these value areas, we’d like to ruthlessly cut back everywhere else.
I’m hoping that the commitment to share our spending with you each month will provide us the accountability we need to stick to our goals. And perhaps the occasional motivation needed to “just say no” to impulse buys from Target.
Other information useful in reading this report
Did we just buy a money pit?
We took a risk and bought a complete fixer upper in late 2018… with a toddler. When we moved across the country for Mr. RFL’s job, we knew that we wanted to live close to his work so that he could have a shorter commute and we could have a better quality of life. After viewing MLS listings online in the months leading up to the move, it quickly became clear that the housing market in the area we wanted to live was quite a bit more expensive than the one we were leaving in North Carolina.
Hence, when we found a fixer upper for sale in our desired neighborhood we seriously considered the possibility. The home had an open floor plan, large lot (at least according to Arizona standards) and a lot of potential, so we took the leap. It was priced low for the area but needed more work than the local home flippers were willing to invest. Because of this, our agent was able to get us a great deal on the property.
We created a detailed renovation budget and have been working on projects ever since. Learning some new DIY skills and doing a good bit of the work ourselves where we can has helped to control costs. As this is a whole home renovation, the costs are significant and non-recurring, and are not included in our monthly expenses budget. We have separate assets set aside to cover the expected costs from those in our financial independence portfolio. I will still disclose monthly spending for the renovation each month for transparency. Some of our fixer-upper and DIY adventures will be featured on the blog in the future.
How we define an “expense”
Outside of the renovation costs above, the monthly expenses report below includes all other true expenses in the current month. I want to point out that it does not include any cash outflows for principal payments on debt. As a former accountant, I don’t view principal payments to be “expenses.” Principal payments directly reduce debt and increase net worth. Our current plan is to have all debt payed off by the time we reach financial independence (or at least by the time we retire). However, I do consider remaining loan balances and the future payments when forecasting how long it should take us to reach financial independence.
Our total debt outstanding at the end of July was approximately $253,0000. Substantially all of this is related to our home mortgage. The “mortgage” expenses included in the expense report below include interest due on the mortgage and an allocation of annual property tax and insurance costs. We also regularly make extra principal payments to accelerate the pay down of this loan, which will reduce future interest costs.
We have no credit card or other debt with a high interest rate. However, we do have approximately $17,000 in low interest or non-interest-bearing loans, including the following:
- Student loans – Expected pay off by end of 2021 with a 0.75% interest rate and interest expense of only $3 per month.
- Home renovation project loan – We replaced the 20+ year old HVAC systems as part of our overall home renovation project (see above). The vendor offered us a project loan with 0% interest if paid evenly over four years. Since it’s not that difficult to beat a 0% return, we decided to take advantage of the offer. Payments for this are included in the monthly renovation spending amounts disclosed below.
July 2020 Monthly Expenses
Ok, here we go! Below are our monthly expenses for July, along with some thoughts (or excuses).
| Purchase | Amount | Commentary |
| Mortgage | $1,046 | Monthly interest, property tax and insurance |
| Health insurance | $360 | Health insurance is a necessity. Ours is a high deductible plan that is partially subsidized by Mr. RFL’s employer. |
| Groceries | $906 | Yikes – that is high! We had an abnormally low June ($338), so some of the increase is due to timing of shopping trips. |
| Dining out | $131 | We’ve been ordering more take-out to support local restaurants during the pandemic. Even with that, spending in this category is way down for the year. |
| Wine & whiskey | $245 | We choose to splurge on good wine, beer & whisky as a part of our rich frugal life. It makes us happy. These costs have gone up (A LOT) during the pandemic. Sorry, not sorry. |
| Household supplies | $99 | Toilet paper, cleaning supplies, shampoo and all those other exciting things |
| Utilities | $187 | June bills. This month’s electric bill included a $50 rebate for participating in the company’s annual energy saving program. Good for the environment and our wallet. |
| Internet | $42 | This is a cost we tackled in June. Only took a 15 min phone call to get this down from $67 per month ($300 annual savings expected). |
| Cell phone | $58 | My cell phone. Mr. RFL’s cell is covered by his employer. This is the next cost I’m going to work on reducing… |
| Streaming subscriptions | $51 | Hulu, Netflix, Disney+, Noggin, and Spotify family. We cut the cord years ago, but the subscriptions have gotten quite high lately. |
| Gas for cars | $0 | No vehicle fuel ups this month. The pandemic has turned us into homebodies, and Mr. RFL’s commute is only 15 min. |
| Pest control | $65 | We’ll take this on ourselves in the future, but with scorpions abound we’re currently letting the professionals deal with it. |
| Kid purchases | $76 | Needed some homeschooling and art supplies since we decided to keep our daughter home this year. Pre-K will have to wait another year. I’m going to try my best to teach her something in the meantime! |
| Auto & liability insurance | $366 | Auto insurance for 3 months, plus a 20% mid-policy increase on our general (“umbrella”) liability insurance due to a fender bender Mr. RFL had a few months ago. Does 20% not seem like an insane penalty!? Thinking of breaking up with State Farm. |
| Car taxes & registration | $539 | Property taxes and registration fees for both vehicles (saved $60 by prepaying next year’s fee for my car) |
| Fitness | $75 | Annual work out subscription. Probably didn’t need this, but hoping it gets my butt off the couch more often. |
| Medical | $102 | Annual dermatologist visit & Ibuprofen |
| Air purifier | $291 | Large size for downstairs. It’s super dusty in AZ, so hopefully this will help. |
| Other home purchases | $83 | Chromecast to stream fitness subscription, squeegee for shower, gift wrap, etc. |
| Total July Expenses* | $4,719 |
*Does not include monthly expenses for home renovation of $562.
So, what do you think?
Drop a comment to let us know how this compares to your monthly expenses. Where do you think we should cut back next?
Want to know more about us and why we started this journey? Check out my first post: We’re on a Journey to Financial Independence!
