So, this is May Day! as written in the, “help I’m in distress” version, and not the “I’m going to give my neighbor a flower” version. After a few months of tracking a bit more, I’ve come to the conclusion that the best way to really see how much better we can be doing on spending and saving is to NOT spend and therefore save more…ie, a no-spend month!
Backstory…I’ve been trying to calculate our FI date, but there are a few calculators out there. One calculator told me 20 years. Another told me 5. What the hell? I realize one easy way to calculate is simply take annual spending x 25 and that’s the total we’ll need at a 4% withdrawal rate. But our spending can be so volatile…..and I stand by the fact that knowing eventually we’ll have no debt (student loan paid off and no mortgage) and far fewer kid expenses (like activities) make a difference. I’m sure other things will change as well….for example, our insurance costs, which are nearly nil currently, will go up. But it all still makes me confused as to how to compute. I finally decided that Brandon over at Mad Fientist has a spreadsheet that I understand, that I agree with and will calculate it for me, without sugar coating a darn thing. So I did our net worth calc for April (to come…) and worked on that a bit.
15.15 years. Womp womp…
Seriously. But here’s what I love. Changes are already being made. I’m working from home this summer and already made the choice to keep my daughter out of daycare next year, simply do three mornings a week of preschool, and call it good. We’ll save nearly $550 a month. So, next month, for example, as that cost goes away, it will reduce our FI date. But not greatly…it takes time for that reduced cost to annualize and for the calculation to realize that our costs really are going down and we’ll need less to survive on. Motivation nonetheless.
One way to put it all in perspective. Our mortgage, which does still exist and we’d need to have enough money to cover if we retired tomorrow, is costing us 3.3 more years until FI. There’s not a lot we can do about our mortgage. We can move to a cheaper house, but considering what we paid initially, how much we love it and what we’d have to pay to move, it’s not worth it to us. But on the flip side, groceries cost us $1035 monthly (which includes all personal items and cleaning supplies as well), and therefore adds 2.18 to our FI date. But groceries can be reduced. What if we could get that down to $800 on a monthly basis? Then we’d see real progress! So things like this are the goal.
We’ve also spent a lot on house projects lately. I should simply feature them so what we’ve done is clear, but we made the decision to finish the laundry room project and therefore I went to IKEA late April and purchased the $1100 in cabinets we needed to do so (plus a little more in additional purchases). But large purchases like that add up and can really skew the calculation.
Our top 4 things contribution to our FI date being 15.15 years away are as follows:
- Mortgage – 3.30 years
- Groceries – 2.18 years
- House projects – 1.64 projects
- Tuition – 1.31 years
The house projects should really slow down soon and the tuition is going mostly away (can NOT wait!), but we’ve found some data points to really motivate us to make some every day changes.
A long explanation as to why a no-spend month for May, but I really want to see how much we can sock away and how much smaller our spending is when we focus specifically on keeping it to a minimum.
Can’t wait to see how this ends up!