2018 has come to a close and the results are in: Another excellently frugal year!
In addition to being able to compare the last 5 years of expenses to this year, last year, I made estimates on how much we would spend and now I get to compare them to our actual expenditures.
Bills & Utilities: $5,668
We saw a marked reduction in our cost of bills from last year spending about $5,700. Still not sure what happened in 2017, but at least 2018 bucked the terrible trend we had been seeing of ever-increasing costs. We still spent much more than the average, but one big portion of our cost for this category is that our Airbnb guests do use electric and water. Since we no longer plan to do Airbnb in the coming year, I expect to see a reduction in costs, hopefully going back to around 2014 levels. Optimistically, we’ll see this go back to around $4,500, but due to increasing costs in general, I would expect this to most realistically land around $5,500. This is primarly thanks to our increasing HOA dues which are going from about $180 per month up to about $300 per month. The reason for the increase is acceptable, but it stings just the same to have that cost.
We spent about $4,600 in food and groceries this year. I had guesstimated that we would spend $4,359. So, I was a little short, but not too far off. I’m still pretty happy with our food costs as they stand. We eat well, and I feel we eat out as often as we would like. The average is still hovering around $4,100, but I expect that we will spend somewhere around $4,500 again next year, for my estimate, I’ll set it at $4,600.
Shopping & Entertainment: $2,836
ECA got the iPhoneX this year and I got a Nintendo Switch! Oh, luxury… Still, we did well in our discretionary spending. We ended up spending about $650 less than what I had guessed we would last year at $3,500. I don’t think we will have any big purchases this upcoming year… So, I’m going to guess that we hit somewhere in the ballpark of $2,000. This is still well below our average, but pretty much all our gadgets are doing what we want them to, so I’m not sure that we are lacking, if anything in this category. ECA has also decided to cut back more in her clothes budget. She’s been active on our neighborhood’s “Buy Nothing” Facebook group and has found several neighbors that share her style and can wear the same clothes. It’s worked out very well.
We spent a bit over $3,600 in vacations this year, but we did a ton of stuff! We went to San Fransisco, saw the sights, and then drove down highway 1. We went to Glacier National Park, to camp in the mountains and hiking. We went to Universal Studios in Orlando and spent 3 great days playing there! Some of these were a bit impromptu, busting my guesstimate by about $650, which is balanced pretty well by the over-estimate I had of our shopping & entertainment spending. With these together, I think we were right on-track for our discretionary spending. And for all intents and purposes, entertainment and vacations are very closely related. If we spent more on entertainment, I think we could spend less on vacation (our spending history begs to differ with me though!). For next year, we’ve got a couple of vacations planned (or payed for), I expect to stay at about the same level of $3,500.
I’m awestruck by how little we spent this year for transportation. I had guess we would spend $2,100, but we spent about half of that. This does not include the depreciation of the car, which is starting to show its age a bit. The Spark is an excellent commuter car and it’s still one of my best recommendations for anyone who is buying a car and living in the city. It can fit in many places other cars can’t, so finding parking is much easier, it handles well, it gets great gas mileage, and it’s low-maintenance. But, like all things, it has wear and tear, I’m sure I’ll need new tires before the end of the year, and I’ll need to do some more repairs and maintenance. Gas prices have been holding pretty steady, and hopefully that will continue, so I’m going to keep last year’s Guesstimate at $2,100.
Our housing cost has stayed very steady over the last 2 years. This is kind of misleading though, we payed off the mortgage, so we had less than $100 in interest. This was off-set by the massive increases to our property tax (which will likely go up yet again). This was more than I had guessed by about $700, making our housing cost the most unexpected hit to our budget. Unfortunately, we expect that this cost will increase even further with the years and with Seattle’s housing market as it is, we’re strongly considering getting out of it. For next year, this might throw chaos into the mix of prediction of costs, but housing is a big wild card right now. If we don’t change our living situation, it think it will likely be somewhere around $5,250.
Summary: $22,602 spent in 2018!
I had guessed we would spend almost $24,000, but to my surprise, we undershot that by about $1,400! This is also well below the average of about $26,000 we’ve been spending over the last 6 years. This is neglecting the cost of the depreciation of the car still, which will bring those costs up a bit. Still, even if spread that out over 3 years, that would put this year’s cost up to right around $25,500 (and an average annual expenditure over the last 6 years of $27,750).
Using the 4% rule, we’d only theoretically need $693,750 of investments to maintain this standard of living (excluding medical costs and some uncertainties which surely brings up the amount we need to about double that). Overall, I’m highly satisfied with our spending and our progress towards financial independence. Lifestyle inflation has not been a factor in our journey and I think we really got things figured out.
I can’t really say too much regarding the trends we’re seeing. There doesn’t really seem to be much of a rhyme or reason to a lot of the movement from year-to-year for our expenses. Overall, they all make sense when examined in detail, but I don’t think we can really use this to make any sensible predictions. It looks cool though!
Prediction for next year?
Assuming I’ve got a good handle on all the categories, my estimation for next year is… $22,950!
Well, that seems right in the ballpark of the last 3 years, so we’ll just have to see what 2019 brings!