I’ve decided to start documenting my monthly report regarding my progress (or sometimes lack of progress) towards an extremely early retirement.
Before I provide my March numbers, I feel obligated to admit freely that I really let my financial self go over the past 3 years. Before my first kid, I tracked everything and my savings were extremely high. As my kids started taking all of my free time and energy after work, and as my income continued to rise, I got lazy. I’m not proud of it, but my wife and I are taking steps to fix it.
Without further adieu, March info:
Income: $9520 (after taxes and 401K) (normalized, in actuality I make many times more than this)
Income was high this month given that March happened to have 3 paychecks.
Breaking it down:
– Mortgage + Escrow: $2230
– Home Services: $1000 (deductable on a busted AC unit)
– Home Supplies: $400 (I hate my pool!)
– Kids school: $200 (monthly fee)
– Wife’s College loan: $140
– Phone/Internet: $60
– Cell phones: $110
– Water: $120
– Electricity: $290
– Groceries: $310
– Restaurants: $270
– Auto Fuel: $250
– Auto Service: $90
– Auto Insurance: $80
– Doctor: $20
– Gym Membership: $50
– Entertainment: $50
It really hurt to write this down. It’s embarrassing to admit how much money I’m throwing away on a monthly basis on things I don’t value. Fortunately we’re making VERY significant changes over the next 2 months that will change this.
1. I’m changing jobs/cities/houses
I pay ton in home property taxes alone (that’s how Texas makes up for not having a state income tax). I put in my 2 weeks notice yesterday(!), and have accepted a job in Colorado. When I sell my house I will have enough in equity to buy my new house outright. I will pay this off with no mortgage. It’s also worth noting that my new employer is paying all closing costs and moving costs, so the move costs me nothing. It’s basically a get out of jail (money pit) card.
This will remove the monthly mortgage + escrow. Taxes and insurance should be very small, resulting in almost $2K in reduced monthly expenditures (higher cash flow).
It also means way less on electricity and water. And by getting away from my pool, that should drop me another $100/month on average (yes, it is that expensive).
2. Getting rid of my car
My wife will keep hers, and I still have my motorcycle (which is very cheap). We’re looking at houses within 3-5 miles from work, so I will bike or run every day. I’m a little worried about the winter, but I’ll cross that bridge when I get to it. This will reduce insurance, and will also reduce service charges and fuel charges significantly.
3. Canceling gym membership
I run a lot, but I’m thinking that 6-10 miles of biking to work on a daily basis will be a good base. Combine that with the natural beauty of Colorado Springs, and I really would prefer to run outside. I may require a pretty good initial investment in good warm clothes for running, which I don’t have given that I’m in Texas right now.
4. Change in attitude
My wife and I never meant to reach this point. We used to budget wisely, but got caught up in things and lost control of our spending. With the attitude change, we’re getting rid of miscellaneous purchases, eating out less, and eating healthier. I’m hoping that this builds momentum and we find more enjoyment in life.
– Get monthly spending down for the 4 of us, and achieve ERE/FI by summer 2013.