Hiking in Norway
2018 was our 6th full year of early retirement and world travel. It is nice, I highly recommend it.
It was also a year of many firsts – first visit to the Baltic countries, first time to pay rent in 2 places at once, first time traveling around a school calendar, and… the first year without expense tracking.
I’ll review all of that, but first, some highlights of 2018:
- We visited Vietnam, the United Kingdom, Spain, Poland, Lithuania, Latvia, Estonia, Finland, Sweden, and Norway
- Jr is now up to nearly 40 countries, not bad for an almost-4-year-old
- Jr recognizes all of the continents on a map and can ride a pedal bike
- Winnie has become an impressive painter
- I biked over 1,000 miles for the first time since I stopped commuting, and am training for my first triathlon
- (lowlight) We tried (unsuccessfully) to have a second child
Not everything went according to plan but we are all enjoying life.
[instagram url=https://www.instagram.com/p/BuFtSOsA25V/ hidecaption=true width=200]
2018 Cost of Living
Expense tracking is a core tenet of fiscal responsibility and is something we have done religiously since reading Your Money or Your Life 15 years ago. It’s a powerful tool to ensure spending is in line with your values.
Which is nice, but… I’m not really sure how much money we spent this year. Nonetheless, I’m confident the following numbers are correct.
| Expenses | Monthly | Annual | $/day |
| Housing | $2,400 | $28,800 | $79 |
| Health insurance | $75 | $900 | $2 |
| Transportation | $250 | $3,000 | $8 |
| Food | $1,500 | $18,000 | $49 |
| Entertainment | $250 | $3,000 | $8 |
| Misc | $500 | $6,000 | $16 |
| Total | $6,475 | $77,700 | $213 |
| Other | $40,500 | $111 | |
| Total | (~$10,000) <--- | $118,200 | $323 |
That “Other” category is pretty big, so here is a break down:
- Chinese New Year trip to Vietnam – $1,500
- 2 Months in Europe – $6,000 (mostly Airbnb and hotels, plus 3 intra-Europe flights)
- flights were basically free
- 1 Month in the US – $1,000 for a rental car (stayed with friends & family except for 3 nights in a free hotel)
- Dental work – $2,000 (gold, baby)
- IVF – $10,000
- Montessori pre-school – $8,000
- Self-employment taxes – $10,000
- New handbag – $2,000 (our only major purchase of the year)
A picture of a picture of a handbag with a handbag
After all of that, our cash position is about the same as it was a year ago and I didn’t seel any assets. Ergo, expenses < income.
(Technically, I sold some stock early in the year, partly for cash flow reasons. Then I bought it all back in December while rebalancing our portfolio when we no longer needed cash.)
(We still habitually write down each of our transactions into a text doc on our phones, but I haven’t reviewed any of it nor entered it into my handy dandy expenses spreadsheet. Mint and Personal Capital (affiliate link) also have a record, and I could also review credit card statements since we avoid cash.)
Lifestyle Inflation
We broke $100,00 in expenses this year by a wide margin, spending nearly $10,000 each and every month. This was the most expensive year of our lives and a far cry from the $20,000/year we used to spend in Seattle.
I mean, what do you expect when you don’t track your expenses? ;)
A decade ago this would have all freaked me out, but now it feels comfortable and the total is about what I expected. It’s also an interesting example of lifestyle inflation.
“Should we try to have a second child?”
“We have been spending less than we can afford for years now, how about we move into a bigger apartment?”
“The first round of IVF didn’t work, should we keep our lease in Taiwan and go to Europe for the summer before trying again?”
“Jr wants to go to school. The Montessori school is nearby albeit a little pricey. What do you think?”
Each time we discussed one of these decisions, there was really only one question:
“Can our portfolio sustain this level of spending based on the 4% Rule?”
Yes, yes it can.
We have been ramping up our expenses since the day we started this phase of life, spending a bit more each year. This was a conscious choice as part of our sequence of returns risk management.
As a result, technically our average spending rate over the past 6 years is a more reasonable $200/day ($73k/year.)
It also helped us transition psychologically from living off a paycheck to living off a portfolio. For reference, here are the annual spending summaries for the previous 5 years: 2013, 2014, 2015, 2016, 2017.)
Seriously though, track your expenses ;)
World Tour
Since we went to all of the trouble of traveling, here are a few of my favorite photos. See many more on Instagram.
San Sebastian, Spain
1st Pony Ride – Vall de Núria, Spain
Tallinn, Estonia
Stockholm
Playing with Snow – Norway
Hiking, Jotunheimen, Norway
Just like Mommy
Just like Daddy
Conclusions and Projections
2019 is already well underway, and all of our core lifestyle inflation choices are well entrenched and aligned with our values.
We won’t have any planned medical expenses this year, so that will reduce costs $10k or so. Handbags aren’t on any shopping lists, but shoes probably are.
Most likely we will travel for the summer (Australia/New Zealand?) with costs similar to Europe.
We are still debating a return to the US as Jr approaches school age, with projected costs much lower, but that is still 2 to 3 years out.
Thank you for reading and for your support.
Please share your GCC love on Twitter, Facebook, and Instagram.
Jeremy, Winnie, & Julian
Go Curry Cracker!
Great post Jeremy.
I cannot bring myself to stop recording expenses, I use Expense Manager (android) which is linked to my Dropbox, so both what my wife and I input on our respective phones gets updated in real time (without fancy cloud software on the application’s part).
I was wondering about your comment: “Can our portfolio sustain this level of spending based on the 4% Rule?” do you compare the 4% to the amount you had at retirement or to your current NW/Investments? My instinct says current, but the original research always compared it to the original amount (which I admit is a bit arbitrary).
The original research assumed you would spend the same amount every year, adjusted for inflation, so the current year and initial year should cost the same regardless of portfolio value. We’ve never spent the same amount 2 years in a row so good luck with that.
I really think of each year as the start of a new retirement. We should be able to spend the same amount as somebody newly retiring this year.
I touched on that in the post Upward Spending Trajectory.
But, an interesting aside, to sustain the $120k/year we spent this year would require $3 million+. But to sustain the $73k we’ve averaged over the past 6 years would only require $1.8 million. It helps to start slow.
Hi Jeremy
congratulation on the very good standard of living first of all!
I think with a similar budget you can live quite comfortably in the USA (ok…maybe not in Bay Area or NYC)
What do you like more of Taiwan vs USA and the rest of the world (provided you travel a lot I am sure you know well Europe and other countries)?
Thanks
Our 2018 in the US would have been at least $50k more expensive:
Health insurance: $900 -> $12,000 (no ACA subsidies)
IVF: $10k -> $40k
Dental work: $2k -> $6k
Income tax: ~$0 -> $8k
Wow, a $2k handbag? I sure hope that’s a magical “bag of holding”, or it flies or something. That’s a lot to pay for a bit of fabric and leather that merely holds stuff.
Still, the fact you can drop that kind of change on something like that an not worry is pretty impressive. Cheers on another great year!
It’s a nice handbag.
I tracked expenses for about a year after reading YMOYL in the 90s. Once you have a handle on what is going on, I think the marginal utility of actually bothering to track every cent plummets because you have already internalized the core lessons. I really like you didn’t stay stuck in hyper-frugal mode as your wealth went up so much. I’m guessing, however, that without your blog incomes you might not have lived so large. Am I wrong?
If we had regularly tracked expenses this year I bet we would have spent a few % less, most of it in our food expenditures.
But hyper-frugal mode was always a means to an end for us.
>Am I wrong?
Probably. ;)
“…all of our…choices are well entrenched and aligned with our values”. Sums it up nicely. Same philosophy here. Nothing wrong with spending money on things & experiences you value and appreciate. Glad past money allows you to live to the fullest in the present. Great photos by the way.
It’s a good place to be when you can literally spend all the money you want and it all works out.
I say enjoy your handbag, Winnie! ;)
Right?
Very impressive that you can spend that kind of money and not have to worry about it:)
Hope things work out for a second child.
Cheers
We will be a one-child family, that is just how it worked out.
Now we can spend that second kid’s college fund.
Would you ever consider adoption? My parents adopted my sister and I (not together) and then my sister adopted two siblings herself. There are so many children looking to be part of a family! Something to consider for those that have the desire and resources to support more than one child.
I’m glad you’re enjoying the benefits of what you spent so long accumulating. I’ve joked with people lately that “They’ve not worked and saved all these years to make other people rich. Enjoy it!”
Do you think that when the inevitable market correction occurs you’ll dial it back a bit?
>Do you think that when the inevitable market correction occurs you’ll dial it back a bit?
Dunno. There isn’t really any need to
I’ve followed your blog regularly and am both amazed and inspired that you can live such a freeing lifestyle. With that said, can you elaborate how you were able to spend $1,500 p/month on food? I don’t think my family of 4 could eat that much in a month! Let alone for a year. Was this primarily eating out a lot? Also, how are you able to only pay $75 p/month on healthcare? Is it that you are all healthy and simply use healthcare for preventative maintenance or the occasional sickness? I know healthcare is way cheaper outside of the U.S. versus inside, but just curious what that $$ consists of. Thanks!
$1500/month is $50/day or $17/day/person.
We spent more than that in Europe, less than that in Vietnam.
When traveling we eat most meals in restaurants. You might like this analysis of food costs from when we spent 2 months in Chiang Mai, Thailand.
At home in Taipei, we eat our regularly – dinner tonight was $30. We’ll probably do that again tomorrow.
For health insurance, we are all enrolled in Taiwan’s national health system. The basic fee is $25/person/month. A Dr visit has a co-pay of about $3, and basic prescriptions are free.
We also spent $2k on dental work and $10k on IVF, neither of which were covered by insurance (although basic cleanings and fillings are close to free.)
I stopped tracking expenses on the day I turned in my resignation – back in June of 2016. I began eating out for lunch for the remaining 6 months of my notice period, but nothing else changed…habits and all are tough to change. We payed two “rents” during our 6-month RV road trip by keeping our house and paying RV-related expenses. We’re debating going another round of 6-12 months on the road. Our kids haven’t been to 40 countries, but have been to 23 states!
Sounds heavenly and well balanced.
I can understand the handbag. Mrs. RB40 used to buy them when we had good income.
The food expense looks high. Do you guys eat out a lot?
Anyway, looks like you’re enjoying life so it’s worth it.
I think one child is plenty. Our son is such a handful. I don’t think I could handle another one. Have fun in 2019!
We do eat out a lot. Spice of life.
Sounds like you had a great, wait wha… $2000 hand bag, (at this point I fall to the floor in a fetal position then slowly recover, wait maybe that was a currency conversion thing because they were traveling right? Hmm no, but think of the guts in being honest about it on their blog and then remember some of your own lessons from travelling that when you travel you can’t impose your values on the world they instead stretch you and you don’t know what you may not know). Sorry about that I am back now just had to cough, cool to see you living vividly and continuing to explore as a family. Cheers and sincere luck on expanding it.
Maybe it was $2,500, I forget :)
We still track expenses each month using Personal Capital. Easy enough and fairly automated since we charge virtually everything while in the US (and overseas ATM withdrawals for cash = “travel” by default).
So far our spending has been rather consistent year to year in the 30-40k range. Definitely way under 4% spending so, like you, I don’t worry about spending more $ on a given item as long as the spending checks out overall. The years of watching every dollar are over!
When do you start getting hit with college expenses?
I thought this was an April fool’s post.😁
That’s some lifestyle inflation. Do you feel that it sustainable Given your portfolio? Yinz are young, many years to go.
Yes, sustainable. Else we wouldn’t do it.
You will really like this years April 1 post
After reading YMOYL in the 90s I started keeping track of spending, but did so in monthly amounts with no details on what exactly went out each month (a monthly “score” if you will). 24+ years later I’m still doing it at the end of each month and have it on a spreadsheet so that I can see a 12-month and a 24-month average. Very interesting to watch the trends go up or down. Very little work to manage this too, a couple of minutes a month. But huge returns in terms of information!
Sooooo all that travel and now the handbag…your blog is turning from a frugality/FIRE blog to an aspirational lifestyle blog…teehee!
I like your version. I more or less view these annual checkins as my opportunity to course correct.
I really just view this blog as a way to show what we are doing. If it works for others, that’s cool.
Oh, let the lady have a nice handbag for goodness sake. It’s probably a nice Chloe’ that not just carries things, but protects and insulates. So, it multi-tasks. I’m all for it.
So glad you’re able to travel and visit family and take care of your family. It’s a dream for most people and I’m glad you accomplished it. I enjoy your blog. Your travels and wisdom are something I look forward to.
Absolutely. And maybe get her some nice shoes, too.
If somebody really wanted to critique spending choices (which is perfectly fine), there is probably a better place to start than on something that is less than 1.7% of the total.
Thanks so much. It really is an amazing opportunity, and not a day goes by that I don’t feel grateful we were able to pull it off.
Mr Cracker, you have some damn beefy calves. I am impressed.
And thank you, I am forever grateful for you inspiring me to move out when I did. Your post on the FEIE changed my life. It took over a year to fully realize the implications but I now happily live in Chiang Mai. I’d love to invite you for a beer or temple foot massage if you’re ever in town.
In regards to the post, I meticulously track every expense with Excel mobile. But I understand your stance and will likely one day stop as well. Congratulations on your beautiful life, financial peace, and changing the world.
Haha beefy calves. Maybe that’s a new sideline business for you.
The good news about your spending is that about a 1/3 of it is covered by your earned business income.
So in reality you’re living probably at about a 3% withdrawal rate from your portfolio, and most of that might even just be dividends you’re getting from your taxable accounts.
This year we covered all expenses from dividends, interest, and blog income. Some expenses were one-time only (e.g. IVF) and some only exist because of blog income (e.g. SE taxes.)
Ha, thanks for noticing :)
Congratulations on building an awesome life for yourself! We were just in Chiang Mai over CNY, actually. Not sure when we’ll be back but we love it there.
I think this is a good example of how ramping up spending can be judicious after you’ve gotten through those first few years of sequence of return risk.
Something tells me people pulling the plug on work right now could have a very different sequence, and might need to adjust in a different direction. Time will tell, right?
We’re also experiencing an increase in spending recently, now that we have a kiddo and also are considering a second. My goal is to keep things between $40k & $50k for the next five or seven years, and keeping my fingers crossed for a correction now, rather than right after we pull the trigger.
If you ever ramp up spending to the full 4% of current portfolio value, you are effectively restarting your sequence of returns risk window. Which would put us in the same boat as everyone else retiring now.
For somebody retiring into a head wind rather than a tail wind it is indeed a different situation that requires different tactics. We wouldn’t have ramped spending were that the case, or at least not by as much. (We intentionally spent very little in the early years, e.g. traveling in Mexico and Guatemala vs UK and Japan.)
Great recap! Thanks for sharing. We love your pictures! I appreciate the idea of adjusting YOY to living off a portfolio versus paycheck. I think this will be difficult mentally for us at 38 years old, but seeing your gradual process seems sensible. Enjoy 2019 living life just as YOU wish! :)
I was also 38 when I started. It was about 6 months before I stopped thinking about work and maybe 4 years before I stopped thinking about the money.
Food $1,500/mth, $18,000/yr, $49/d: Ah, the Intestinal Fortitude and Constitution of the young to be able to out-bicycle the energy. That would have us blow up and bust. $217/mth, $2,600/yr, $7/d and daily 1-2 hour walks for us.
I’m reaching the point where constitution is lacking
I can really relate to your spending increases over time. When we were young, we saved most of our income (like you and Winnie) and lived lean and were happy with a low expense lifestyle. You don’t need to spend much to be content when you’re young and most of your friends don’t have much either. As we got older, we also loosened the purse strings and indulge a lot more now. Like you, I figure if the spending SWR is 3% (or even lower), why shouldn’t we enjoy some luxuries? Awesome life you have created!
Thank you sir.
After 10 years of a bull market, it is kind of hard not to be way ahead with regard to investments. It’s completely reasonable to spend some of it.
In reading your posts for almost five years, I get more inspired by each post your write.
In the early years, I loved how you spent time in the lower cost of living areas. From the tone of the posts early on vs now, it’s easy to see that different countries and different cultures cost different amounts of money. It’s not that those places were any less fun, just a different culture and different experience/expenses.
Now that the market has done very well, why not enjoy the higher cost of living areas of the world?
Enjoy the time you have to travel. I’m so curious to see how things develop as Julian gets older.
Thanks Nate! Yeah, we more or less have the same lifestyle in different places, just with a different price tag.
With the portfolio growth we figured we could go to Europe every year instead of once every few years.
I think many ER folk really underestimate unexpected medical expenses (and yes, these happen in EVERY country, even if they are more insane in the US). While I’m sorry you had to spend so much on things that should be paid for, it’s great that you budgeted for them.
My condolences again about the IVF, and hoping 2019 brings you all sorts of happiness.
Thanks snowcanyon. I hope you have an incredible 2019 as well!
Which things are you referring to that should be paid for? The IVF and dental work?
Wow, after reading most comments could this post this post become “GCC’s $2,000 handbag” post :D
Joke aside, it’s great to see that you can keep increasing your lifestyle and not to have to worry about it.
It looks like your spending are going over. Do you see a cap after which you won’t get any additional benefit from lifestyle inflation?
We’ve started to travel the world less than a year ago and are really conservative when it come to our spending (we plan to spend $30K on year 1, which is well below what we can get from our passive income sources). Since we feel that we are following your foot steps when it come to world travels, do you have any suggestion on how to best adjust to a slow travel lifestyle when it come to define your spending limit for any given year? Did you guys even set a budget for each year since you started your travels?
We’ve never budgeted. Our lifestyle costs less in Mexico and Guatemala than it does in France and Japan is all.
We aimed to LBYM during the first few years, which meant we were still saving. After that… no holds barred.
Change the GCC strava group from biking to triathlon? That way, we could track all of our activities instead of just biking
done
Not tracking spending?
*GASP*
Welcome to the club! :)
I stopped tracking spending about three years ago (written in 2016): https://forum.mrmoneymustache.com/post-fire/tracking-spending-post-fire/
I have a rough idea/guess, but it’s like.. +/-5k maybe? I don’t know, because I don’t know how much we actually spend! Net worth is regularly increasing, money comes in that more than covers our expenses.
We used to spend ~20,000 a year when in the accumulation stage. Now we spend over $60,000. But here’s the thing: none of our values have changed. We’re still frugal where things don’t matter to us, but we spend on things we value. As we always did. There’s just a lot more to spend on, with multiple kids, in a high COL area (near my folks), etc. And it’s totally worth it.
It means if you want a handbag, and it’s worth it to you, you buy the fucking handbag and don’t think about the cost again. :)
The point isn’t to spend as little as possible, it’s to have spending aligned with your values. Freedom is definitely something we value, but out spending doesn’t impact that, and I don’t advocate anyone cut their spending to the point of unhappiness. Just optimize. Even if that leaves you spending 60k, or 110k.
Keep being awesome.
Thank you for the warm welcome :)
Throughout the year I had a pretty good idea of where we were for total expenses, I think mostly because of the experience of years of tracking everything. Now it kind of happens subconsciously.
If we ever got to the point where I had to intentionally fill up the cash pile again, I’d probably poke around to see what was going on. But as it is, expenses are less than income so party on.
With my trick knee my bicycling days are over… But I am tempted into maybe buying a BMW X3…. or Audi Q5 etc …that would be my splurge
Trying to register for your forum. Impossible to do as verification question asks what flavor crackers is best and whatever I put it will not accept. Please fix immediately or tell me the answer please. Thx.
the best flavor is most definitely curry
Yes, come to Australia! I’ll have a drink with you guys.
:)
I agree with Joe (aka The Great Arebelspy). I don’t GAF about how much the handbag costs, you can afford it. I do wonder if carrying something so conspicuous might make one a target for thieves. I would hesitate to use it to carry passports or large wads of cash.
And I heartily agree with Frogdancer Jones. Go explore the Land Down Under. It’s amazing, mate.