Last month I decided to get more rigorous about my budget. I’d done some estimating before, but thought that in the interests of science I should document things more carefully. So I did something I’ve never done before and am not particularly eager to do again: I carried around a little notebook all month and made careful note of every time I spent money and how much I spent and what I spent it on.

I wanted to make sure I was actually living in my budget since I know how easy it is to spend semi-consciously or to justify “exceptional” expenses. I also wanted to be able to point to some real numbers in case anyone skeptically asks me if I’m really able to live comfortably on $15,000 a year in San Francisco. (According to this article in today’s San Francisco Chronicle, I shouldn’t be able to get by on any less than $27,781.)

So, to enlighten you, to amuse you, or to treat your insomnia, here are my results:

Last September I kept track of every penny I spent so I could really get a fix on my budget and my spending habits and make sure I was living sustainably under the tax-line. For me, this means that I should spend less than $15,000 per year.

The results of my anally-retentive record-keeping were encouraging. But a year has passed, my health insurance has moved me into a more expensive age bracket, and I’ve moved to new housing with lower rent and a different set of utility bills.

So I’ve gone and done it again:

So I’m well below the $15k threshold this year. The lowered rent helped, but the best part is being able to deduct my health insurance premium from my income as a contractor. I couldn’t do this last year because my 2003 income came from being a salaried employee.

I think also that this month’s expenses were unusually high because I was moving in to a new home, so hopefully this will drop some now that I’m settled. Also, I continue to search for a new health insurance plan that will have a lower premium and that will allow me to take advantage of a tax-free Health Savings Account. And I’m redoubling my commitment to make my meals at home.

In each year of my experiment with tax resistance I have, for one month, carried around a pen and a little notebook and have made note of every time I have spent money. I’ve then combined this with a record of my bill-paying from home and of any yearly expenses that didn’t come directly to my attention during the month in order to create an estimate of my budget.

In the Picket Line archives, you can see my results for September 2003 and August 2004.

What I found this year, based on my spending in August, is that my lifestyle costs me about $40 a day:

Here’s how this compares to years past (I’ve had to rejuggle the numbers a bit so that the categories remain the same from year to year):

My rent, utilities and grocery bill have all gone up this year as I’ve moved from the less-expensive Oakland to very-expensive San Francisco. I’ve started getting some Spanish tutoring again, which is a new hunk of spending (but in addition to a one-on-one Spanish tutor who charges me a per-lesson rate, I also exchange English for Spanish instruction with a fellow from Panama who wants help with his pronunciation). I’ve lost the habit of getting lazy and going out to eat, so that expense has gone way down (which also explains in part my increased grocery bill). The best news is that I’ve got a new health insurance plan that is much more reasonably-priced.

To cut to the chase: if last month is a typical month for me this year then I’m still living within my means at a federal income tax-free income level (to do that with my current method I need to keep my taxed expenses under $15,000).

Being able to live sustainably without dipping into savings isn’t just something I’m doing for the sake of argument. Because I have a high-deductible health insurance, I need to keep a few thousand dollars in reserve in case something goes bad. And there’s always the possibility of some huge unexpected expense like, oh, a natural disaster or something. And I’d like to be prepared in case some year it is harder to find contract work than it has been in the past. Also: I hope to spend some money on travel, and I’d have a hard time justifying that if I had to dip into my savings just for day-to-day expenses.

Is there still room for more economizing? Plenty, I think. I do a lot of my grocery shopping at a nearby corner market because of the convenience, but if I hopped on my bike and went across the park I could find better prices up in the Clement Street area. Alas, bus fares rise in San Francisco by 42% (for token users like me) today, so I’ll have a hard time keeping my transportation expenses down even if I do rely on the bike more. About a quarter of my caffeine/alcohol budget last month went to buying a round of beers at a baseball game my sweetie took me and her mom to ($8 a cup!), but even so, I could take a chop at the remaining 75% by dropping my caffeine habit or cutting down on my beer consumption (harder to do now that I’m brewing myself and I want to show off my creations to every visitor). I could cut out the Spanish lessons and try to find more exchange-based tutoring. And that’s all without considering something like moving to a lower-rent area.

But right now I’m pretty comfortable where I am and this looks to be another successful year.

In each year of my experiment with tax resistance I have, for one month, carried around a pen and a little notebook and have made note of every time I have spent money. I’ve then combined this with a record of my bill-paying from home and of any yearly expenses that didn’t come directly to my attention during the month in order to create an estimate of my budget.

In the Picket Line archives, you can see my results for September 2003, August 2004, and August 2005.

This year things were a little more complicated, as me & my sweetie have moved in together. She’s not a tax resister or a voluntary simplicity true believer. We split expenses 50/50, but I still feel like I have to be on-guard to make sure that I’m not subsidizing my tax-free lifestyle with her taxed salary — that would feel like cheating. On the other hand, it wouldn’t be fair for my frugal choices to dictate what sort of life she lives. So we each compromise, although on the whole we tend toward the simplicity and low-expense lifestyle — the advantages of which she appreciates for their own sake.

We’ve set up a joint checking account to pay for common expenses. This makes the accounting a little more complex than it has been in years past, but I’ve still been able to run the numbers.

What I found this year, based on my spending in August, is that my lifestyle costs me about $43.44 a day:

Here’s how this compares to years past (I’ve had to rejuggle the numbers a bit so that the categories remain the same from year to year):

My rent went up a little this year, but my utilities went way down, as did my food bills (I’m doing more home cooking than before, and it’s more efficient to cook for two than for one). Some of that food savings is going into wine and beer, including home brew kits which get me great beer for maybe 60 cents a pint. I’m still working on my Spanish, but by exchanging English for Spanish tutoring rather than taking a for-money course. Bus fares have gone up, and we’re also buying in to the City Car Share program so we can occasionally use a car or truck.

Some of my expenses were unusually high, and I think that this month may not be very representative. For instance, my normally low-maintenance cat needed $213 in vet care this month, and there were some residual costs from the move into our new place in July. Much of this shows up in “Miscellany” above, with some leaking into “Transportation.” I think in a typical month, my costs in these areas will be significantly lower. But no month is completely typical, so gains in those areas might be offset by losses in others. I don’t have the discipline to keep this close an eye on my spending all year, so I have to estimate a bit when considering my yearly budget.

To make a long story short: I’m still living within my means at a federal income tax-free income level (to do that with my current method I need to keep my taxed expenses under $15,000).

In each year of my experiment with tax resistance I have, for one month, carried around a pen and a little notebook and have made note of every time I have spent money. I’ve then combined this with a record of my bill-paying from home and of any yearly expenses that didn’t come directly to my attention during the month in order to create an estimate of my budget.

In the Picket Line archives, you can see my results for September 2003, August 2004, August 2005, and August 2006.

What I found this year, based on my spending in August, is that I have to earn about $26.50 in potentially-taxable income each day in order to maintain my lifestyle:

Here’s how this compares to years past (I’ve had to rejuggle the numbers a bit so that the categories remain the same from year to year):

Not included in any of the above totals were any business-related expenses (since I write these off against my business income), my health insurance premium (which, as a self-employed person, I can also write off) or any medical expenses that I can pay for from my pre-tax Health Savings Account.

The trouble with doing this accounting for only a single month and then trying to extrapolate to the whole year is that no month is a typical month. Last year, my accounting-month coincided with some unexpectedly large veterinarian bills, which skewed the totals upwards. This month, I received as a gift a $100 Trader Joe’s card, which we spent on wine, which brought my drinks-of-vice spending totals down.

My big-ticket discretionary spending items this month included a donation to Amnesty International at a fundraiser, a taxi ride for a friend from the same fundraiser, a round of beers at a local pub, a single beer at Camp Curry in Yosemite Valley (pricey as it was, after coming back from an all-day hike up Half Dome, it would have been worth twice the price), some other supplies for the Yosemite trip (I carpooled with someone who refused to let me buy gas, so the trip itself was free), and the ingredients for a batch of oatmeal stout.

Other than that, living was cheap. This was my cheapest-eating month since I’ve started keeping track, in part because I was never tempted to hit a restaurant. I’ve gotten into a good groove of cooking at home, inspired by our many local grocers, butchers, and fishmongers, and by our small vegetable and herb garden. And it’s harvest season, so I took a walk up to the Presidio a while back and collected enough wild berries for two pies and two pints of berry syrup — free-of-charge.

From the looks of things, I’m still living well within my means at a federal income tax-free income level (to do that with my current method I need to keep my non-deductible expenses under $15,600 per year). And I’ve got enough slack that I can consider things like, oh, some fancy cheeses to picnic with at next weekend’s “Shakespeare in the Park,” or tickets to the upcoming Ween show at the Fillmore, or another south-of-the-border vacation at the end of the year.

In each year of my experiment with tax resistance I have, for one month, carried around a pen and a little notebook and have made note of every time I have spent money. I’ve then combined this with a record of my bill-paying from home and of any yearly expenses that didn’t come directly to my attention during the month in order to create an estimate of my budget.

In the Picket Line archives, you can see my results for 2003, 2004, 2005, 2006, and 2007.

What I found this year is that, based on what I wrote down in my notebook in August, I have to earn about $34.27 in potentially-taxable income each day in order to maintain my lifestyle:

Here’s how this compares to years past (I’ve had to rejuggle the numbers a bit so that the categories remain the same from year to year):

Not included in any of the above totals were any business expenses (since I write these off against my business income), my health insurance premium (which, as a self-employed person, I can also write off), or any medical expenses that I can pay for from my pre-tax Health Savings Account.

The trouble with doing this accounting for only a single month and then trying to extrapolate to the whole year is that no month is a typical month. There are always some months in which big expenses come up, and other months in which garden harvests or freecycle booty or unexpected gifts reduce expenses. Some months, it seems like everything in the pantry needs re-stocking, other months I can coast on what we’ve got. Some months I brew a lot of beer, other months I drink a lot of beer I’ve already brewed. In July I had a big veterinarian bill; this month no cat-related expenses at all (for this reason the “cat stuff” total I gave above is an estimate based on typical yearly expenses, not based on this month’s expenses).

My big-ticket discretionary spending items this month included a trip across the bay to see Ubu For President, a whitewater rafting trip (mostly paid for in a previous month, but some travel and meals expenses fell in this month), a pitcher of beer at Zeitgeist to help welcome a good friend back into town, a trip down the peninsula for a barbecue, snacks & a beer at a Giants game (we got the tickets free), having a couple of friends over for dinner, and a donation to support the next as-of-yet-unspecified project by the Yes Men. Big spender, eh? I splurged for more memory for my laptop, too, but that only came to a buck plus shipping on eBay.

Other than that, living was cheap. As I mentioned earlier this year, my sweetie & I have signed up for one of those “Community-Supported Agriculture” programs, as part of that whole locavore less-petroleum-based agriculture craze. I also mentioned that this makes for a much more expensive bag of food than what I’d been used to getting from neighborhood markets. However, at the end of August, I see that my food bill hasn’t been dramatically bigger than usual. I was expecting more of a bump, since not only have we decided to shell out more money for our fancy local organic stuff, but food prices in general have been going up. It may be that our weekly flood of produce — supplemented this month in particular by our back-yard garden harvest — has encouraged me to cook less meat-centered meals, which are usually less-costly as well.

From the looks of things, I’m still living well within my means at a federal income tax-free income level (to do that with my current method I need to keep my non-deductible expenses under $16,000 per year). And I’ve got enough slack that I can consider things like, oh, some fancy cheeses to picnic with at the upcoming “Shakespeare in the Park,” or another south-of-the-border vacation.

Of course, that’s assuming I actually go out and earn that $16,000. I’ve been so busy working on my book projects this year that I haven’t managed to find a gig that pays the rent yet… and here it is, September already.

In each year of my tax resistance project I have, for one month, made note of every time I have spent money. I’ve then combined this with a record of my bill-paying from home and of any yearly expenses that didn’t come directly to my attention during the month in order to create an estimate of my budget.

In the Picket Line archives, you can see my results for 2003, 2004, 2005, 2006, 2007, and 2008. Last year I didn’t get around to doing my monthly accounting until December, which is unfortunate, since December is usually an atypical month spending-wise (alas, the whole last half of 2009 was full of atypical spending months for me this year).

When I originally posted this entry, I used incorrect numbers (I had counted some items that my sweetie and I had paid for jointly as items that I paid for myself, and so double-charged myself for the expenses). I have corrected some of these numbers in the text that follows.

What I found this year is that, if I were to extrapolate from my spending in December, I would have to earn about $46.54 $43.08 in potentially-taxable income each day in order to maintain my lifestyle:

Here’s how this compares to years past (I’ve had to rejuggle the numbers a bit so that the categories remain the same from year to year):

Not included in any of the above totals were any business expenses (since I write these off against my business income), my health insurance premium (which, as a self-employed person, I can also write off), or any medical expenses that I paid for from my pre-tax Health Savings Account. I also didn’t include any used book exchanges (where I came out ahead a little this month), or birthday gifts I received. Some items this month we purchased with gift cards, but I treated these as though they had come out of our common household funds rather than as “free” money (this also explains some of our larger booze budget — bottom-shelf wine from Trader Joe’s), which may not be fair because these gift cards don’t threaten to be taxable income. I didn’t try to separate out California state sales tax and other taxes into its own line item, so there’s a lot of state tax in the “Miscellany,” “Utilities,” and beverages-of-vice lines.

The trouble with doing this accounting for only a single month and then trying to extrapolate to the whole year is that no month is a typical month. There are always some months in which big expenses come up, and other months in which garden harvests or freecycle booty or unexpected gifts reduce expenses. Some months, it seems like everything in the pantry needs re-stocking, other months I can coast on what we’ve got.

My big-ticket discretionary spending items this month were a $28 drivers license renewal fee, a $40 YMCA gym membership, a $13 Netflix membership, and $70 I spent on Christmas presents. I’m not real big on the whole gift-exchange extravaganza, and some years I manage to mostly avoid it, but this year I got caught. We also went out-of-town for Christmas, and had gas and bridge toll expenses from that, though overall my transportation costs were surprisingly low this month, especially considering that bus fare went up by a third again this year.

We’re now getting most of our food from two community-supported agriculture groups, one that specializes in veggies and the other that specializes in meat. The meat costs us $86 per month, which gets us five pounds of assorted sausages, four pounds of roasts, and five pounds of ground meat — more than $6 per pound. The veggies cost us $17–$21.50 per month depending on whether or not we order eggs, and represent a pick-your-own style basket of produce that changes from month to month but costs more than double what I would pay for quantitatively-equivalent, but lower-quality produce at the corner market. This extra expanse has increased our food bill substantially. I think I’m going to have to work on some strategies for stretching our food dollar a little better.

The coffee & booze line fluctuates a lot from month to month. I was out of town a lot this summer and so didn’t have time to supervise a home-brewing cycle. In November I brewed a pale ale, an amber, and a stout. But none of these were ready to drink until late last month, so we mostly had store-bought beer in December. I also started several gallons of hard cider this month. So the last couple of months have had a lot more expenses in this area than the coming months will, when we can just coast on the bottles of home-brew for a while.

We bought more than our usual share of household items this month: a cast-iron skillet, a pyrex measuring cup, blackout candles, a soap dispenser, an audio cable, and a toilet-paper holder. This year we purchased health insurance for our cat, which strikes me as a kind of ridiculous thing for a self-professed frugalist to say, but there you have it.

The gist of all this is that if you take December as a typical spending month, I’m no longer still spending at a sustainable burn rate at an under-the-tax-line income (I’d be spending about $1,000 per year too much but with less than $500 per year in wiggle room). Ideally, I’d like to be substantially below substantially below this limit in order to squirrel money away for emergencies, vacations, and the like.

That said, as I mentioned before, December wasn’t a very typical month, and so I don’t feel all that confident in extrapolating from it. I do have the feeling that my spending has gotten too high, though, and I do plan to look for ways to cut back.

Over the course of my experiment in low-income tax resistance, I have periodically run a budget check to make sure I’m living sustainably on this lower income. To do this, for a month I carry around a notebook with me and keep track of every time I spend money. Then I add in any other regular expenses and use the numbers to try to come up with an estimate of my rate of spending.

You can see my reports from past years in the following entries:

• 1 October 2003
• 5 September 2004
• 1 September 2005
• 1 September 2006
• 1 September 2007
• 1 September 2008
• 2 January 2010

I’m overdue for another budget check. I was also curious as to how my spending has changed since I moved from living as a half of a couple in an apartment in San Francisco to living in a room in a house as a single guy in Berkeley.

So last month I started keeping my notebook. I think I may have jumped the gun. Several of my larger expenses were the sort of exceptional things that happen when you move in to a new place, and don’t probably represent typical spending patterns. That distorts the picture quite a bit. But, for what it’s worth, here’s what I found:

Among the reasons why I think this month is probably inflated relative to what my typical spending will be:

• A $103.43 veterinary bill, plus some new-home pet supplies boosted the cat-related expenses a bunch. Ordinary, recurring expenses only amounted to $0.85/day (not the $5.01/day in the above chart).
• A bike tune-up (it’s been mostly in mothballs for the last few years), some minor repairs, a card to give me bike locker access, and a bike light added $64.93 to my transportation costs — if you omit all of these one-time or rare expenses, the transportation line-item goes down to $0.79/day (from $2.96/day).
• I had to stop brewing as I was househunting and boxing up my belongings, so when I finally got established, I started brewing with gusto so as to replenish my stock. But my first batch won’t actually be drinkable for another week or so. I also bought enough bottle-sanitizer to last me a couple of years. So my home-brewing costs are higher than typical.
• I bought myself an expensive new toy: an $80 digital camera. A rare indulgence that I hope to use to fill this blog with nice pictures of the upcoming NWTRCC gathering. That’s about half of my “Miscellaneous” expenses right there.
• I bought more groceries than typical, I think, because of using up the last supplies at the old place and needing to replenish and restock at the new place.

I may have to wait a few months and try again to see if I can get a more stable pulse.

That said, 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):

Not included in any of the above totals were any business expenses (since I write these off against my business income), my health insurance premium (which, as a self-employed person, I can also write off), or any medical expenses that I paid for from my pre-tax Health Savings Account. This year, for the first time, I separated California state sales tax into its own line item in the results shown at the top of the page, just out of curiosity.

A $20,635/year burn rate is not sustainable given my current technique of staying below the tax line by keeping my adjustable gross income below $16,750. If I go ahead and factor out all the genuinely weird one-time expenses from last month, my spending is still a little high: $16,803/year. This just encourages me further to try this again later on in the year to see if things settle down as I expect, or if I need to adopt some more deliberate cost-cutting measures.

In April I kept track of every time I spent money and then used the numbers to come up with an estimate of my current yearly spending. I was a little alarmed at how the numbers came out, but attributed this largely to some exceptional expenses partially due to my recent move to a new home.

As a way of testing this, I decided to keep my obsessive record-keeping going for another month to see how the numbers turned out this time. Here is my comparison:

So, yeah. That’s a big difference. (As before, these expenses do not include things I can deduct from my taxable income, like business expenses, retirement savings, or my health insurance premium.)

Here’s how I think I’m going to deal with this. In each category, if the larger amount is less than twice the smaller amount, I’ll average the two amounts to find my estimated burn rate. If the larger amount is more than twice the smaller amount, I’ll take the smaller amount and amortize the difference between the two over the year to get my estimated burn rate, chalking up the larger amount to large one-time expenses:

A lot of rounding errors crept in over the course of all of that averaging and summing, but I think these are good ballpark figures. My janky estimation method is more of a dart-throw than a science, but ought at least to get me in the neighborhood of a good estimate.

If accurate, this leaves me a little less than $1,000 in wiggle room below my $16,750 adjusted gross income cut-off. Not too bad.

Over the course of my experiment in low-income tax resistance, I have periodically run a budget check to make sure I’m living sustainably on this lower income. To do this, for a month I carry around a notebook with me and keep track of every time I spend money. Then I add in any other regular expenses and use the numbers to try to come up with an estimate of my rate of spending.

You can see my reports from past years in the following entries:

• 1 October 2003
• 5 September 2004
• 1 September 2005
• 1 September 2006
• 1 September 2007
• 1 September 2008
• 2 January 2010
• 1 June 2011

Last month I tried to do this again. But it’s been a kind of strange month, and not representative in many ways. I’m not sure how well this extrapolation technique really works.

For example, my expenses for entertainment this month came to $156.11. In a more typical month, I might not spend anything at all on entertainment. I blame The Bard for much of that: a $35 ticket to see the CalShakes version of Hamlet with my housemates, a $20 donation to Shakespeare in the Park (Henry Ⅴ this year), and a $5 entrance to a Hamlet-themed short play production put on at a San Francisco pub. The rest of the amount came from a $50 donation to the folks organizing a memorial celebration for a good friend of ours who died this year, some used books I bought at an annual library book sale, and a trip to a comedy club to see a friend’s performance.

I also had more charitable donations this month than typical: $25 each to the Bradley Manning Support Fund and the Leukemia & Lymphoma Society (where a friend is running a Team In Training half marathon as a fundraiser). Really, with my tight budget, I should stick to donating my time instead of my money. These donations show up in “Miscellany” below.

I stopped brewing this month in preparation for a move (I’m moving from Berkeley to my old stomping grounds of San Luis Obispo this month), and so I have no home-brew-related expenses this month. Alas, one of my roommates went on a bit of a binge with the home-brew I’d brewed in previous months (and with some of my wine, too… grumble), and I was generous with the bottles at Shakespeare in the Park and elsewhere, so my expenses in the store-bought alcohol category are higher than typical too. Still, it is excessive to spend over $5 a day on booze, and I should have known better.

My upcoming move made me spend a bit more on travel and entertainment at events at which I could connect with friends whom I might not be seeing as much anymore. I also had some miscellaneous moving expenses — packing tape and the like.

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):

Not included in any of the above totals were any business expenses (since I write these off against my business income), my health insurance premium (which, as a self-employed person, I can also write off), or any medical expenses that I paid for from my pre-tax Health Savings Account. Last year I started separating California state sales tax into its own line item, and I continued that this year, and combined that with my expected California income tax bill (I don’t resist my state tax, just as a matter of picking my battles).

A $19,355/year burn rate is not sustainable given my current technique of staying below the tax line by keeping my adjustable gross income below $17,250. If I go ahead and factor out all the genuinely weird one-time expenses from last month, my spending is still high: $18,083/year. This makes me think I should try this accounting experiment again later on after I get settled in San Luis Obispo. My rent will be a little lower there, and I expect my groceries will be cheaper too (I think I underestimated just how much of a premium I was paying to do most of my grocery shopping at Berkeley Bowl and the local Berkeley farmers markets). We’ll see if expenses settle down as I expect, or if I need to adopt some more deliberate cost-cutting measures.

In September, I went through my annual ritual of carrying around a notebook and keeping track of every time I spent money, so that I could try to come up with a realistic look at spending, with an eye to making sure it was sustainable under my deliberately-limited income.

You can find my results in my 2 October Picket Line entry, and if you want to compare this to previous years, you can see those reports in the following entries:

• 1 October 2003
• 5 September 2004
• 1 September 2005
• 1 September 2006
• 1 September 2007
• 1 September 2008
• 2 January 2010
• 1 June 2011

September was a strange month in some ways, and I’ve since moved to a new home in a new city, so I didn’t feel confident I could trust the numbers. I repeated the experiment last month to try to get a better handle on things. Here is what I found:

(The numbers may not all add up quite right due to rounding. Also, some expenses don’t represent my actual spending for the month, but my spending in the 30-day months of September and November increased slightly to account for the average 30.4-day month.)

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; and in many past years I didn’t account for sales tax separately, which probably messes up the numbers a bit):

Not included in any of the above totals were any business expenses (since I write these off against my business income), my health insurance premium (which, as a self-employed person, I can also write off), or any medical expenses that I paid for from my pre-tax Health Savings Account. Last year I started separating California state sales tax into its own line item, and I continued that this year, and combined that with my expected California income tax bill (I don’t resist my state tax, just as a matter of picking my battles).

A $17,221/year burn rate is sustainable given my current technique of staying below the tax line by keeping my adjustable gross income below $17,750. This is encouraging, as my September accounting had put me on notice.

My rent has dropped by $75 per month, but that’s more than made up by a jump in my utilities (which were mostly paid by the landlord in my previous home, which also had more roomies to share expenses) of nearly $100. We’re investigating ways of lowering our utility bills, for instance by trying to get a smaller & cheaper set of trash bins (since we do our own composting), and by borrowing a kill-a-watt electricity usage monitor from the library to figure out which appliances are drawing the most juice.

I’m impressed at how much it costs to own a cat. Last month was a little bit special because it was time for his annual feline leukemia and rabies booster shots, but much of the expense came from ordinary regular expenses like kitty litter and food. Perhaps I should look into cheaper alternatives to what is commercially available in these areas.

I was glad to see that my grocery bill dropped, and surprised at just how much. I really was paying a premium to shop for food at the Berkeley Bowl and at Berkeley farmers markets. The grocery stores and farmers markets in San Luis Obispo are much more reasonable.

My entire transportation budget was consumed in a single trip in a borrowed car to visit friends for Thanksgiving. That $51.99 was what it took to fill the tank and run the car through a carwash. Dang but gas is expensive these days.

In October, I went through my annual ritual of carrying around a notebook and keeping track of every time I spent money, with an eye to making sure my spending is sustainable under my deliberately limited income.

I took the numbers from what I explicitly spent this month and then added in a few more items: estimates for my utility bills based on those from previous months, and some 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. Here is what I found from this year:

(The numbers may not all add up quite right due to rounding. Also, I adjusted the 31-day October totals to correspond to the average 30.4-day month.)

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; and in many past years I didn’t account for sales tax separately, which probably messes up the numbers a bit):

Not included in any of the above totals were any business expenses (since I write these off against my business income), my health insurance premium (which, as a self-employed person, I can also write off), or any medical expenses that I paid for from my pre-tax Health Savings Account. In 2011 I started separating California state sales tax into its own line item, and I have combined that with my expected California income tax bill (I don’t resist my state tax, just as a matter of picking my battles).

A $13,985/year burn rate is quite sustainable given my current technique of staying below the tax line by keeping my adjustable gross income below $17,750.

Here are the results from years past, if you’d like to compare:

• 1 October 2003
• 5 September 2004
• 1 September 2005
• 1 September 2006
• 1 September 2007
• 1 September 2008
• 2 January 2010
• 1 June 2011
• 2 October and 7 December 2012

In September, I went through my annual ritual of carrying around a notebook and keeping track of every time I spent money, with an eye to making sure my spending is sustainable under my deliberately limited income.

In order to meet that target, my taxable expenses must be less than the Adjusted Gross Income ceiling that I need to stay below in order to keep my federal income tax at zero. This year, that means $18,000 annually, or $1,500 per month. My taxable expenses don’t include business expenses, which get subtracted from my gross business income before they have a chance to show up as Adjusted Gross Income. They also don’t include medical expenses, which I can pay for with pre-tax money via my Health Savings Account.

I took the numbers from what I explicitly spent this month and then added in a few more items: estimates for my utility bills based on those from previous months, an estimate of my average monthly expenses on cat stuff (my spending for my expensive, diabetic cat comes in bursts at irregular intervals, so it’s hard to account for by looking at an individual month’s expenses), and some 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. Here is what I found from this year:

(The numbers may not all add up quite right due to rounding. Also, I adjusted the 30-day September totals to correspond to the average 30.4-day month.)

In 2011 I started separating California state sales tax into its own line item, and I have combined that with my expected California income tax bill (I don’t resist my state tax, just as a matter of picking my battles) for the “California state taxes” line.

I didn’t have very many unusual expenses of note this month. I spent $25 to help kickstart a friend’s free and open database of farming and gardening knowledge and $44.09 to rent our public library’s conference room in order to throw a Sharing SLO WikiJam next month. I spent more than usual on home-brewing, as some of my equipment needed replacing and I forgot to bring my refillable malt syrup container to the brew supply store, but I spent less than usual on transportation as my bike is in good repair, the weather has been fine, and I haven’t needed to borrow a car or travel anywhere out of the area. I spent $10 on a component video cable to hook up our hand-me-down DVD player to our hand-me-down projector. I spent another six bucks on a hand-cranked food mill at a garage sale.

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; and in many past years I didn’t account for sales tax separately, which probably messes up the numbers a bit):

Some of the numbers compare awkwardly. For example, during the past decade 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 get a reduction in rent in exchange for buying the bulk of our household groceries, so my grocery budget (and some of the drinks-of-vice budget) is elevated this year as a result while my rent is artificially low.

A $14,905/year burn rate is quite sustainable given my current technique of staying below the tax line by keeping my adjustable gross income below $18,000.

Here are the results from years past, if you’d like to compare:

• 1 October 2003
• 5 September 2004
• 1 September 2005
• 1 September 2006
• 1 September 2007
• 1 September 2008
• 2 January 2010
• 1 June 2011
• 2 October and 7 December 2012
• 1 November 2013

In October, I went through my annual ritual of carrying around a notebook and keeping track of every time I spent money. I do this to double-check that my spending is sustainable under my deliberately limited income.

In order to meet that goal, my taxable expenses should add up to less than the Adjusted Gross Income ceiling that I need to stay below in order to keep my federal income tax at zero. This year, that means $18,000 annually, or $1,500 per month.

My taxable expenses don’t include business expenses, which get subtracted from my gross business income before they have a chance to show up as Adjusted Gross Income. They also don’t include medical expenses, which I can pay for with pre-tax money via my Health Savings Account. And they don’t include contributions to tax-deferred retirement accounts (I contribute to an IRA and a SEP plan).

I took the numbers from what I explicitly spent this month and then added in a few more items: estimates for my utility bills based on those from previous months, an estimate of my average monthly expenses on cat stuff (my spending for my expensive, diabetic cat comes in bursts at irregular intervals, so it’s hard to account for by looking at an individual month’s expenses), my charitable donations (which I’ve been keeping track of throughout the year for the first time this year), 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 (hosting fees and domain name registration for this site, for instance). Here is what I found from this year:

(The numbers may not all add up quite right due to rounding. Also, I adjusted some of the 31-day October totals to correspond to the average 30.4-day month.)

In 2011 I started separating California state sales tax into its own line item, and I have combined that with my expected California income tax bill (I don’t resist my state tax, just as a matter of picking my battles) for the “California state taxes” line.

There were a few unusual expenses of note this month. My cat had another health meltdown (I’ve tried to average the cat expenses over the year, so this month doesn’t stand out in the figures above as much as it did in reality). My big frivolous expense was to take a bus up to San Francisco to join a couple of friends at a Dean Ween Group concert. A generous friend bought me a ticket to the show, but between the Greyhound ride there and back, a CalTrain ride or two, dinner, and a round of drinks at the show, it turned out to be a pretty expensive free ticket.

I also spent one pamper-myself evening at a wine bar with a good book, and joined some friends for dinner & drinks at a Mexican restaurant one evening. About half of my monthly alcohol expenses come from the above three nights, which goes to show just how expensive it can be to go out and booze it up.

Those Greyhound & CalTrain tickets I mentioned amount for most of my unusually high transportation expenses this month. I also borrowed someone’s car to run some errands and topped off the gas tank before returning it, and I shelled out for some rain gear to wear while riding my bike, in preparation for the upcoming El Niño.

My coffee budget is higher than usual, too. Partly this is because we had some internet connectivity issues and I ducked out to a cafe where I could get on-line. Partly it’s because I’ve developed a taste for freshly-roasted beans I can get from a roaster down the street but that are pricier than what you can get on the grocery store shelves. And partly it’s just from enjoying popping in for a cappuccino somewhere from time to time and getting out of the office to work. This is definitely an area where I’ve lost some of my zest for frugality.

A supermarket near my house went out of business, so late in the month I stocked up on some things they were unloading cheap. I’m buying groceries and preparing meals for two people, which also boosts my grocery budget. 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 effect my food budget.

There are clearly a number of areas in which I can tighten the belt further pretty easily if I want to.

I had some crazy idea several months ago that I might itemize deductions this year because my health expenses have been much higher than usual. But because I paid those expenses from my tax-free Health Savings Account, it turns out that I can’t also take an itemized deduction for them. However, before I figured this out, I started also keeping track of my charitable donations because if I were going to itemize, I could add those to the list of deductions (or some of them, anyway: only some of my donations were to tax-deductible charities).

Despite having read a pretty good book on the “effective altruism” movement earlier this year, my own charitable endeavors are pretty amateurish. Usually I hear about (or remember 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 this year include the Prisoners Literature Project, the Leukemia & Lymphoma Society, the War Tax Resisters Penalty Fund, the Chelsea Manning defense fund, a local community garden in progress, GiveDirectly, the Institute for Justice, an ad campaign targeting U.S. terror drone operators, a friend in the Avon Breast Cancer Walk, HelpMeSee, a couple of war tax resisters in bad financial straits, the GnuPG project, and Try Freedom Stories. I also try to send copies of my books to tax resisters who have to spend any time behind bars, but this is arguably promotional rather than charitable, I suppose.

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; and in many past years I didn’t account for sales tax separately, which probably messes up the numbers a bit):

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 get a reduction in rent in exchange for buying the bulk of our household groceries, so, when compared to past years, my grocery budget (and some of the drinks-of-vice and miscellany budget) is elevated as a result while my rent is artificially low.

A $19,910/year burn rate is not sustainable given my current technique of staying below the tax line by keeping my adjustable gross income below $18,000. If I want to keep doing this without digging myself in a hole, I need to trim some of the fat. Good to know. I’ve clearly started to slack on my self-discipline (since when did pampering myself at a wine bar become a good idea for gosh’s sakes?).

Here are the results from years past, if you’d like to compare:

• 1 October 2003
• 5 September 2004
• 1 September 2005
• 1 September 2006
• 1 September 2007
• 1 September 2008
• 2 January 2010
• 1 June 2011
• 2 October and 7 December 2012
• 1 November 2013
• 1 October 2014

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 November 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:

(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):

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:

• 1 October 2003
• 5 September 2004
• 1 September 2005
• 1 September 2006
• 1 September 2007
• 1 September 2008
• 2 January 2010
• 1 June 2011
• 2 October and 7 December 2012
• 1 November 2013
• 1 October 2014
• 2 November 2015

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. Since I was deliberately keeping my income low, I wanted to make sure I was also keeping my spending low enough that my income would cover it. But eventually I got lazy, and haven’t done this precise budget check since 2018. This year I figured I was overdue for a recheck, especially with all the inflation headlines I’ve been seeing, so last month I did another month-long spending audit. Today I’ll summarize what I found.

First, some caveats: By taking a one-month sample and trying to extrapolate that to a year’s budget, I invite some inaccuracies to slip in just due to peculiarities of the sample. For example, I spent exactly nothing on transportation or clothing in May. But over the course of the year I’ll certainly spend some money on that sort of thing. To really throw things off, last month I redirected $4,031 to charity. If I naively averaged my charitable giving this month over the whole year, I’d be donating my entirely yearly budget and then some. But in reality, $4,031 is about all I expect to give this year, so I should spread that out over the whole year to be more accurate.

Also: I’m not counting any medical spending, because I do that via a tax-exempt Health Savings Account. Similarly, I don’t count my savings for retirement as budgeted spending, as I do that in tax-deferred accounts and so can do that with pre-tax money. And I don’t count anything that I can take as a business expense, since such spending also ultimately will not come out of my taxable income.

In the table below, I’ll give both my actual spending numbers for May 2022 and an estimate of how much I’ll likely spend in a typical month this year, based on those numbers and some guesswork.

The takeaway from all this is that my current spending is not sustainable given my below-the-tax-line income-based budget. To be sustainable it would need to stay below $1,645 per month (equivalent to $19,750 per year, my maximum Adjusted Gross Income if I want to stay under the income tax line). I’m not as concerned about this as I might otherwise be for a couple of reasons. One is that I’m still coasting a bit on all that stimulus money the government was throwing around during the onset of the plague. Two is that I save about 40% of my yearly income in retirement and health savings accounts. Now that I’m over-the-hill I have a better idea of whether I’ve saved enough and adopted frugal enough habits to feel secure about my old age, and yeah, I do: secure enough that I feel okay about dipping into my savings a little bit extra to cover the extra cost of a large charitable contribution, for instance.

If I take my charitable contribution out of the pile and pretend it doesn’t count as part of my budget but is a gratuitous extra, though, that only brings me down to about $1,756/month. That’s still too much. The government isn’t showering cash on us any longer, and I should really tighten my belt a bit. The big surprises from my spending this month were coffee (I’d underestimated how much it was adding up) and groceries (price increases had apparently snuck up on me without my noticing).

Why am I spending so much on coffee? Well… I have a pretty good home espresso machine and I’ve been shelling out for some nice coffee from a local roaster who does it just how I like. But it costs a lot more than grocery store coffee. I had been underestimating how much I was going through, and how much more expensive it is than other options. So I’m going to start trying some store brands to see if I can find one that’s a reasonable substitute.

Grocery-wise I have not been a very careful shopper lately. I do prepare my own food for the most part: I don’t eat out much or eat a ton of junk food or pre-prepared meals. I’ve been leaning on that as my technique of food frugality and neglecting to also bargain shop. I tend to do my ingredient shopping at the farmers’ market, which is fun and fresh but not necessarily cheap. And I’ve been buying ingredients more based on what seems like it would be fun or delicious to cook than on what’s well-priced this time of year. With meat especially, I’ve become one of those people who turns up his nose at factory-farmed stuff, so when I get meat it’s the much more expensive varieties. I think I need to give more attention to stretching my dollar when it comes to groceries.

On the plus side, every time I pass a gas station and look at the prices I think how nice it is to be car-free these days.

Rent, of course, is the elephant in the room. I live in one of the least affordable towns in the country. Eventually maybe I’ll have the sense to pack up and go somewhere else, but that’s not an option at the moment. My rent is actually on the low end by local standards, and it’s a modest apartment in the student ghetto adjacent to the local university. Even so, it’s very expensive, and the rent will probably rise when our original lease runs out later this year.

It’s a bit of a pain to do all this accounting, and the results can be a little discouraging and humbling, but it’s good to know where things stand and where I might most effectively look for ways to tighten my belt.

After doing some more research I’ve found a few snags and caveats in the first-draft tax-free retirement plan I posted earlier this month. These are the most concerning ones:

1. I planned that in a couple of years, I would drop my adjusted gross income considerably for a few years because I will have fewer tax credits I can play off against taxable income to get my tax rate down to zero. This is fine from a spending point of view, because I will be able to tap some additional income that does not appear in AGI. However, this threatens to push me out of the Covered California subsidized health insurance marketplace and onto its health-insurance-for-poor-people plan (Medi-Cal). If that were to happen, I would lose my high-deductible health insurance plan and would no longer be able to contribute to a health savings account. That would eliminate a nice tax deduction and also a good tax-free way of paying for health expenses later on in retirement, so I would like to avoid that if possible.
2. Apparently you cannot use any portion of your required minimum distribution from an IRA to make Roth conversions. I hadn’t accounted for that in my original plan.
3. The “combined income” factor that determines how much of my social security benefit becomes part of my adjusted gross income, and so potentially my taxable income, does not adjust for inflation under current law. Currently, if my CI is below $25k, none of my social security is taxable; if it is higher than that but below $34k, 85% is taxable; if it is higher than that, 100% is taxable. But those thresholds are set in stone by current law; if nothing changes, they will be the same in 2037 when I turn 70. In order to keep my CI that low, my spending budget has to stay low to match, but money won’t go as far then, so that represents a significant hit.
4. Oh yeah, about that social security: Currently, the social security program is scheduled to start running short of money in 2032, before I plan to start taking benefits. If nothing is done to fix this problem, benefits could drop to about three quarters of their currently-anticipated values.

Here are some thoughts on how I might address these conundrums:

1. (Low AGI=no HSA) There are a few options here:
   • I could just take the hit and go on Medi-Cal. The loss of the deduction would mean I would withdraw less from my IRA during the years when I had intended to fund the HSA. Having less money in the HSA would mean I would have to pay for medical expenses from IRA withdrawals or from social security in my early 70s instead. Neither of those things breaks my plan, but it makes my zero-tax budgets slightly tighter.
   • I could let my AGI climb out of the zero-tax zone and take the federal tax hit. After all, I’ve been owing (and neglecting to pay) self-employment tax for years. If I were to owe and not pay a smaller amount of income tax, that would for practical purposes amount to the same policy I’ve long been operating under.
   • I could withdraw enough money from my IRA to raise my AGI sufficiently, but then spend that extra money on courses at the university up the street. That way I could qualify for the federal “Lifetime Learning Credit” with which I could eliminate any tax due on the higher income. That university has a good set of courses on artificial intelligence in its computer science department, and on the ethics of technology in its philosophy department, which both seem like good bets for positioning myself to be more capable to contribute meaningfully to humanity’s attempts to weather the incoming crisis. This currently seems like the most attractive option.
2. (RMDs and Roth conversions) My options here appear to be two:
   • Stop making Roth conversions when I hit age 75 and have to start taking RMDs. Turns out that’s no big deal and doesn’t really change my plan much at all.
   • Take additional IRA withdrawals over and above the RMDs in order to make Roth conversions. I don’t think this is worth doing.
3. (CI not indexed for inflation) I don’t have a plan for how to deal with this. The ramifications do not begin until 2038, which is far enough out that I assume the law will change in some meaningful way by then, whether for the worse or the better, and I’m better off waiting to cross that bridge when I come to it.
4. (Social Security unsustainable) If this happens, this will result in slimmer budgets for me during my social security years (after age 70), but nothing unendurable. However, as with the previous item, I assume that by then the law will have changed in some way. The politicians in Congress aren’t about to let every voter on social security take an abrupt 20% cut without trying to cook the books in some manner. Someone will have to get screwed to prevent that from happening, and I might very well be one of the someones, but it probably won’t be in the manner this scenario suggests.

OK. I’m getting pretty tired of running all these numbers, but I wanted to be extra careful to get things right. With much of the above (and several other smaller tweaks) incorporated into my game-plan, here’s how it’s shaking out now: