My total spending for July 2017 was $3,680. The major expense here was buying plane tickets to Spain and getting a few visa things done. In the rest of this post I would like to analyze my spending for the month and break things down a bit more.
$3,680 Of Monthly Spending
This is no light sum to spend month after month. However, I keep telling myself that my actual spending (my core spending) is much less than this. That’s important because if the day comes when I solely need to rely on my investments for income then I’ll have to be more frugal.
Of course, anyone can plan their retirement or financial freedom based on however much money you think you’ll need, even accounting for elective spending such as a vacation home and travel. However, I don’t see a need for that since I’ll always be generating some sort of income.
Different investment portfolios will return different profits. My current portfolio should comfortably return 3-5% most years. I have a little under $600,000 invested which should net me around $22,500/year.
In order to spend $3,680/month, I would need an investment in the $1,100,000 range. This isn’t a difficult sum for any physician to accumulate if it weren’t for all the peer pressure on us to spend more, save less, and work more.
My Basic Monthly Expenses
I like to extract from my spending data how much I needed to spend in order to live the lifestyle I desire. For July that would be somewhere in the $1,550 range.
With my condo paid off, with no debt, and no commute to worry about for work, I have very few major expenses to worry about. It would break down into something like this below:
The current visa situation in the world is that either you have to go through a very lengthy and costly process of applying for a work or student visa or use the 90 day tourist visas which nearly any country will give out to US citizens.
In a way, these shorter visas ensure that you can’t settle in a place for long enough to benefit from the cost-savings. With only 90 days in one place, I have to get short-term rentals and would be forced to eat out more and rely on more expensive transportation options. It’s one thing to be able to settle in somewhere and another to be a temporary residence.
I’ve been indulging when it comes to socializing, the $700 entertainment spending reflects this. I’m watching this category closely but frankly, the income is there – I have a hard time curbing my expenses now that I have reached my financial goals.
But imagine how powerful that money would be if invested. Let’s say I spent only $200/month on this category and took the $500 and invested it, month after month. That could be an extra $80,000 in my portfolio in less than a decade. And $80k could earn me $250/month, every month for as long as I don’t try to raid the principal investment.
The best way for me to start curbing this category is to probably work off of a cash-based system or a prepaid visa card. You can buy the preloaded ones or just go to your bank to obtain one. By carrying around $200 in cash for the entire month or a card loaded with $200, it would be hard for me to spend beyond what I need to.
This month I had to make more ready-made food purchases because I wanted to make sure my fridge would stay empty by the end of the month. It’s really easy to get pre-made hummus or get veggies which are already cut up. And though it may not seem like much, it adds up.
I love that YNAB gives me a snapshot of my overall grocery budget as below:
As you can see, I get a good idea of how much I spent last month, how much I budget on average and how much I spend on average. The more months you have been budgeting for on YNAB, the better idea the software will have.
I spent over $300 in this category. However, I spent quite a few hours at cafe’s doing my writing, working on my business ideas and generating income through some of the telemedicine gigs that I still do.
I’ll need to spend less when abroad since I’m still uncertain whether I’m going to live off of my investments or generate some income from work to sustain my lifestyle.
Next month, August, I will need to spend about $340 to have some repairs done to my condo. I am doing that because I ran out of time to do the work myself and because I want the option of renting out my condo while I’m abroad.
I don’t have property taxes budgeted for in July. It should be somewhere in the $115/month range. I get one bill at the end of the year which I pay off in full.
I’m always really careful about housing expenses. It’s so easy for renovations, repairs, furnishings, and upgrades to rule the budget. Even this little condo which I bought for $141,000 has already cost me over $10,000.
I pay $228 for Kaiser health insurance and I was paying $38 for dental. Though I love my dentist, the dental office’s ancillary staff is quite subpar and so I have decided to cancel the dental insurance and just start paying out-of-pocket.
Now that I will be spending time abroad, I suspect I will have access to cheaper healthcare and dental care. I’ll be maintaining my health insurance since it’s required by most countries for the purpose of a visa application.
Looking Ahead To August 2017
I suspect I will be spending a little more since I will be relocating to Spain. However, I’m planning on keeping my excess spending only in the travel/visa category and otherwise cut back on the entertainment, grocery, and coffee categories.
Look for my next post about my July 2017 income.