Is it bad when wine represents 19% of your monthly budget? Oh, it is? Thought so. As you can tell from the caption of this post, our spending this month included A LOT of wine (and a few other October expenses).
The good news is that we don’t spend this much on alcohol every month (is that good news?). However, alcohol does represent approximately 5% of our annual budget.
As I’ve written in previous posts, the Rich Frugal Life philosophy is all about value-spending and enjoying the journey to financial independence. That does mean cutting back in some areas, but not all. Approaching your journey to FI in this way will help to keep you motivated and avoid the feeling of deprivation that I think many people associate with the FIRE community.
Alcohol is one of our value-spending areas. We are big craft beer and wine aficionados, and as such, many of our vacations and purchases revolve around this. Since we are both fully functioning members of society and don’t indulge in excess, we don’t feel guilty about this. However, we do spend more per drink than most people might because we are seeking quality.
It all started in Sonoma…
We spent a few days exploring Sonoma and Napa Valley last year for our anniversary and drank a lot of great wine. So much so, that we ended up joining two wine clubs before we left. After the first wine shipments (and related bills) came, we realized that might not have been the best decision for our budget. We cancelled one, but decided to keep our favorite Sonoma winery.
The cost? Approximately $1,100 – $1,200 per year for 24 bottles. At an average of $48 per bottle, that is way more than we normally spend on wine. Frugal tip – If you want to keep your wine budget low, don’t visit fancy wineries.
After this month’s delivery, we’ve decided to, at least temporarily, quit our wine club. The wine is delicious but expensive, and as such, we tend to drink it less often. The wine fridge is full, which means we can cut this cost for a little while and work through our collection. This will save money in our budget, but we still plan to spend generously in this category … just a little less generously.
Read on for details of our wine & other October expenses, as well as a new section on net worth.
Why share our monthly expenses?
I should confess… 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, therefore, 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’s been extremely motivating to see how many people are happily embracing simpler lives and how little they spend while doing so. This knowledge has given us the confidence to begin our own journey to financial independence and a lifestyle we believe 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.
If you’re looking for the frugalist of the frugal, you won’t find that here. While Mr. RFL and I both tend toward minimalism, life is short and we have no problem splurging on things that make us happy (i.e. travel, good booze & music). However, while we continue to spend freely in these value areas, we’d like to ruthlessly cut back everywhere else. We call this “value-spending.”
I’m hoping this commitment to share our spending with you each month will provide us the accountability we need to stick to our goals.
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 chose 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.
We scored a great deal on a fixer upper with a lot of potential, created a detailed renovation budget, and have been working on projects ever since. We’ve tried to control the costs where we can by learning some new DIY skills and doing a good bit of the work ourselves.
Since this is a whole home renovation, the costs are significant and non-recurring. Because of this, they 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. However, I will still disclose monthly spending for the renovation each month for a complete picture of our spending.
How we define an “expense”
Besides renovation costs, the table below shows all expenses for the month. I want to point out that principal payments on debt are not included. As a former accountant, I don’t view principal payments to be “expenses” since they directly reduce debt and increase net worth. Our current plan is to have all debt payed off by the time we fully retire.
Substantially all debt relates to our home mortgage. The “mortgage” expenses included in the table below include mortgage interest and an allocation of annual property tax, insurance and HOA costs. We also regularly make extra principal payments to accelerate pay down of this loan, which will reduce future interest costs.
The other cost that is now going to be allocated monthly is auto insurance (~$1,230/year).
While we have no credit card or other high interest debt, we do have approximately $16,000 in low interest or non-interest-bearing loans:
- Student loans – Though my parents helped pay for college, I still graduated with student loans for the rest. These should be paid off by December 2021 and carry an interest rate of only 0.75% (approximately $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 took advantage of the offer. These payments are included in the monthly renovation spending.
NEW THIS MONTH – Debt & Net Worth Update
We had total debt of $216,043 outstanding at the end of October, which represents a decrease of over $21,000 from September!
The decrease is primarily due to additional mortgage payments we made after deciding to remove a new pool from our renovation plans. Approximately half of the funds were used to pay down debt while the other half were invested. We also started the process to refinance our mortgage during the month and were able to reduce closing costs by paying down a little extra to get the loan under $200,000.
Our net worth, which includes home equity, cash, and investment portfolio, decreased slightly (0.1%) from September thanks to the market sell off at the end of the month. Don’t worry, we did some shopping at Vanguard during the dip.
Net worth is up 16% for the year so far, which we’ll gladly take given how crazy this year has been and how fortunate we feel to have been left mostly unscathed.
While market decreases don’t normally bother me, the October decline hurt a little more because it pushed us back below our 50% target for financial independence for a few days, after we had finally surpassed it earlier in the month.
I’m debating sharing more information on our net worth and investment portfolio in future monthly updates, but it still feels weird to share. Because of this, we’re going to just ease into things.
Wine and Other October 2020 Expenses
Ok, here we go! Below are our monthly expenses for October, along with some thoughts (or excuses).
| Purchase | Amount | Commentary |
| Mortgage | $1,040 | Monthly interest, property tax, insurance & HOA (decided to include monthly HOA in this category starting this month) |
| Health insurance | $360 | Health insurance is a necessity. Ours is a high deductible plan that is subsidized by Mr. RFL’s employer |
| Groceries | $456 | Still eating most meals at home, so not bad. |
| Dining out | $19 | Two lunches out for Mr. RFL |
| Wine | $747 | WOW. We joined a wine club during our Sonoma trip last year and received a big shipment this month ($$). Also, couldn’t resist snagging a great deal on some of our go-to wines at the grocery store. |
| Auto & liability insurance | $103 | Changing how we report this expense going forward, instead of only including in months we pay it. This is the monthly amount of auto insurance for our two cars. |
| Utilities (electric, gas, water & security) | $223 | September bills. It’s starting to cool off, so these have come down a little. Also includes a surprise $84 refund from the electric company. |
| Internet | $42 | Locked in another promotional rate to save $300 over the next year with a 15 min phone call. Learn how we save money internet and TV here. |
| Cell phone | $58 | I still haven’t done anything to lower this. Laziness wins. |
| Streaming subscriptions | $11 | Way down! We cancelled all TV streaming last month, though still have Disney+ (paid in advance for the year) and Spotify. Exploring the free options and trying to do more productive things. Don’t miss it yet. |
| Gas for cars | $31 | One fill up made 40 cents/gal cheaper with Fry’s fuel points |
| Pest control | $65 | Scorpions scare me. We’re currently letting the professionals deal with this, though have switched to a reduced plan for winter. |
| Garden | $44 | Garden gloves, organic soil, seeds and plants for my winter garden experiment. Determined to develop a green thumb! |
| Life insurance | $162 | Annual payment for my term life policy |
| Car Maintenance | $522 | The Sonata was due for its 60k mile maintenance service. This is a big one $$ |
| Credit Card Fees | $95 | Annual fee for our Amex card. Every year we check that the benefits for credit cards with annual fees are still worth it. Confirmed! Learn how to do this here. |
| Other | $4 | Student Loan interest & extra cloud storage |
| TOTAL* | $3,982 |
*Does not include monthly expenses for home renovation of $348 (HVAC loan).
So, what do you think?
There you have it… our wine & other October expenses. Spending was on point this month, despite a couple large purchases. We expected and budgeted for the car maintenance and Sonoma vineyard delivery ($1,100 combined). Since we both drive less than 5,000 miles a year these days, car maintenance is not expected to be this large regularly, and in fact this was only preventative maintenance to ensure that Mr. RFL is able to drive his car for a long time.
As we get further into this experiment, I’d like to see our average monthly expenses below $3,750 (or $45,000 per year). We’ve avoided childcare costs for the second half of this year because of COVID and my ability to stay home with our daughter after quitting my job in March. However, our costs will go up by about $5,000 for 2021 and 2022 when she enters Pre-K next fall. If we can manage this, then we’ll still be under the target $50,000 expenses for our $1,250,000 FI number.
If you have any recommendations for wines that are a great quality at an even better price, please share! It’d just be cruel to keep that knowledge to yourself.
What was your biggest expense in October (surely, not the Halloween candy)?
