During my first several years of staying below the federal income tax line, I would double-check my spending against my budget by keeping track, down to the penny, of how much I was spending during a sample month each year. But then I got lazy, and haven’t done this for the last couple of years.
In I moved into a new home, with a higher rent. This, I thought, would be a good time to take stock again. So for the last two months I have tallied every expenditure.
My goal is to make sure that the expenses I have to pay for out of my Adjusted Gross Income don’t exceed the amount of that income I’m allowed to have while doing my below-the-tax-line method of federal income tax resistance (this year, that’s $19,000).
For this reason I don’t bother to count some spending, such as business expenses I can deduct or health expenses I pay for out of my tax-free Health Savings Account.
I took the numbers from what I explicitly spent over the last couple of months and then added in a few more items: estimates for my utility bills based on those from past months, my estimated annual charitable donations (based on last year’s total), and a few regular expenses that I didn’t happen to spend anything on this month but that I do spend money on throughout the year and so I felt I should include in the tally (clothing, domain name registration for this site, etc.). Here is what I found from this year:
|Category||Daily expense||Monthly expense|
|Utilities & internet||$3.16||$96.06|
|Food (eating out)||$1.41||$42.88|
|California state taxes||$0.99||$30.23|
(The numbers may not all add up quite right due to rounding.)
There were a few unusual expenses of note this month. I bought some dietary supplements at my doctor’s recommendation (but couldn’t use my Health Savings Account for this). I bought some lighting to brighten up our new home. I got my brother a couple of tickets to an Eddie Izzard performance.
I bought rounds of drinks on a couple of occasions, spending 25% of my booze budget for the two months just like that. I also had a plague of flat tires, and invested in tire liners and tubes and had to buy a fresh patch kit. That explains all of my transportation costs.
I’ve developed a taste for freshly-roasted coffee beans I can get from a roaster downtown but that are pricier than what you can get on the grocery store shelves, so my coffee expenses are higher than they could be. This is definitely an area where I’ve lost some of my zest for frugality.
I’m buying groceries and preparing meals for two people, but my roommate reimburses me for half the cost (in the past, we had a more informal arrangement that lowered my rent, so this year’s numbers may not compare well with previous years’). I do most of my produce, eggs, and meat shopping at farmers’ markets, which can be more expensive than grocery stores, particularly for the eggs and meat. I should try a vegetarian diet some month as an experiment to see how just eliminating meat would affect my food budget.
There are clearly a number of areas in which I can tighten the belt further pretty easily if I want to.
A few years back I started keeping track of my charitable donations. Despite my sympathy with the “effective altruism” movement, my own charitable endeavors are pretty amateurish. Usually I hear about some cause or campaign I think sounds pretty neat, and then dash off a check for some amount that doesn’t seem like it will sting too much at the moment. The effective altruism people think I should find one charity that promises the most bang for the buck and then give them everything I can afford right away. They have a point. But for whatever reason I feel more motivated to give in the way that I do, and that extra motivation counts for something.
For what it’s worth, some of the causes I’ve supported lately have included Prisoners Literature Project, the War Tax Resisters Penalty Fund, the Chelsea Manning welcome home fund, Snowden’s Guardian Angels, Courage to Resist, Albert Einstein Institution, Against Malaria Foundation, International Refugee Assistance Project, Institute for Justice, the Directory of Stoke project, Bike SLO County, and The SLO Village Building Convergence.
Here’s how my current burn rate compares with past years. I’ve had to rejuggle the numbers a bit so that the categories remain the same from year to year. Also in many past years I didn’t account for sales tax separately, which probably messes up the numbers a bit (I’ve thrown that into the “Miscellany” category):
|Utilities & internet||$74.88||$96.06|
|Food (eating out)||$33.26||$42.88|
Some of the numbers compare awkwardly. For example, at some points in the past I have lived in places where utilities were included in the rent, which had the effect of raising the rent and lowering the explicit utility payments. Today, we pay the utilities ourselves, so the situation is reversed. I also for a time got a reduction in rent in exchange for buying the bulk of our household groceries, so, when compared to past years, my grocery budget for those years was elevated as a result while my rent was artificially low.
A $20,604/year burn rate is not sustainable given my current technique of staying below the tax line by keeping my adjustable gross income below $19,000. If I want to keep doing this without digging myself in a hole, I need to trim some of the fat. I’m glad I checked. I had a feeling the higher rent was going to be a problem.
How am I going to trim $135 a month? Here’s my tentative game plan:
- A lot of the fat comes in the miscellaneous column. You went out to the movies three times, bought some brand new lighting, got those Izzard tickets, and spent a ton on a questionably useful nutritional supplement. Remind yourself you can’t really afford to spend like that. Just cutting out those ones I just mentioned would have saved you almost the whole $130.
- Eat less meat, and do more bargain hunting when you do.
- Pay more attention to what’s in-season / on-sale when buying produce.
- Avoid bars altogether, and drink less in general.
- Drop the expensive coffee and find a store brand you like. Face it: before the caffeine kicks in, you’re too groggy to notice the difference anyway.
- Cut back on charitable giving until you get your budget back on track.
Here are the results from years past, if you’d like to compare: