2015 was the first time Mrs. Groovy and I ever tracked our spending for an entire year. And we engaged in this somewhat laborious task because we plan to retire in October and we need the answer to one fundamental question: Have our savings surpassed the Mustachian Threshold? Do we have at least twenty-five times our annual spending?
Now before I divulge our 2015 spending, I need to introduce a disclaimer. We only tracked the spending done with our net pay. We didn’t track the money withheld from our paychecks for retirement, taxes, Social Security, and Medicare. And we decided to exclude this spending from our tracking for one simple reason: Roughly 98 percent of the spending associated with these payroll deductions will be gone in retirement. In other words, this spending has no bearing on whether our plan to retire is mathematically sound.
So, here, without further adieu is our 2015 spending.
And here’s the breakdown of that spending by category and subcategory.
Twenty-five times our annual expenses (25 x 32,385) comes to $809,628. And I’m happy to report that our savings have surpassed the Mustachian Threshold—by a comfortable margin. Prior to 2015, we were fairly confident we were on track for FIRE, but we weren’t sure. Now that we have concrete spending numbers, we’re more confident than ever about our retirement plans.
A side benefit of tracking your spending is that it allows you to see if your spending reflects your values. Mrs. Groovy and I really value financial independence, travel, spending time with family and friends, and being kind to our fellow Americans. Did our 2015 spending reflect these values?
To find out, I threw our payroll deductions back into our spending mix and ranked the top 10 spending categories. Here are the results.
- Financial Independence (contributions to 401(k), 403(b), Roth IRAs, HSA, and brokerage account): $65,850
- Income/Payroll Taxes: 18,744.93
- Food: $3,719.98
- Travel: $3,592.35
- Gifts/Charity: $2,970.91
- Property Taxes: $2,177.28
- Dental: $2,128.50
- Car: $2,125.94
- HOA: $1,800.00
- Electricity: $1,428.00
If you exclude non-discretionary taxes and food (hey, a man’s gotta eat), our top three spending categories are financial independence, travel, and gifts. Awesome. These are things we highly value and it is reassuring to see that our spending in 2015 reflected that.
The one area that needs improvement, however, is in spending time with family and friends. For dining out and entertainment—a crude measure for spending time with family and friends—we spent a combined $851 in 2015. Not good. We can afford to up our game here and do more socializing. More happy hours, movies, barbecues, and miniature golf with family and friends will mean a more nourished soul.
So that was our 2015 spending. We confirmed that we reached the Mustachian Threshold and that our spending largely reflected our values. How was your spending in 2015? Did you make progress toward financial independence? Did you spend the most on the things you valued the most?