I thought it would be easy to talk about my current assets here. It turns out it’s not: I realized while typing this article that I am not willing to disclose how much money I have. I can however state that I feel reasonably close to retirement, hoping to generate enough passive income of my investments to live comfortably with my family, assuming we all do efforts to actually reduce our yearly expenses.
So instead of looking at my income, I’ll have a look at our expenses.
Our family of 4 will have spent about $90’000 this year. This feels gigantic. Not so long ago, when I was living on my own, I had no problem saving money on a $40’000 yearly salary. So what happened?
When I started writing this article, I realized I needed more visibility into how much we spend. It’s not something I’ve ever done before. My former philosophy in life was “make enough money that I don’t have to care about where and how I spend it). I turns out that was a bad move, given that we are spending way more than what I thought.
It’s not all dark though. I found out that more than 25% of our expenses are taxes, and close to 10% are actually investments that my wife had written as expenses (bad ones, probably not even beating inflation, but at least the money is not completely gone). This still leaves close to $60’000 in spending a year, which I’m sure can be dramatically reduced.
I don’t have access to all the cool stuff that Mr Money Mustache mentions on his website. I’ve had the “talk” with my wife about reducing our expenses, but I’m not sure how much she’ll actually accept to do (I found that she spends almost $1000 a year in cosmetics and shampoo, WTF… how am I going to diplomatically explain to her that this is not acceptable?)
The first step after writing this post for me has been to streamline our house budget. Some people say you don’t need that to become frugal, but I believe it is important for us to understand where our money is going these days. My wife and I now share a spreadsheet on google docs, and it does the job nicely. I might share it as a template eventually, if we ever clean it up.
Additionally, I think we’ll need to better categorize expenses vs investments. Investments are an expense, but since they are a promise for some return in the future, it is slightly different from buying groceries or shampoo. We could optimize some of our investments (another reason to fight with my wife), but they are not where the biggest “leaks” can be found.