23 Jan

Bruno & Co.’s 2016 Spending

2016 was a big year for us! We finished touring Mexico with Bruno, hunted for the Best Early Retirement City and decided to buy a house with cash in Asheville, North Carolina.  At the end of the year, we found a wonderful house-sitter who cared for our foster cat – Fluffles – and also managed our Airbnb reservations while we traveled to Canada and spent one month with family. In this post, we’ll do a total financial breakdown of our spending and income for the year 2016. In short: Are we broke yet!??

For anyone who has occasionally been following this blog, it’s possible you may feel let down by Team Bruno.  We can’t truly be “retired” if we have an income stream! We bought a house that was more expensive than we had originally budgeted for and now we’re working for money again: hosting Airbnb guests. We’ll delve into some of the other interesting ways we received income this year, but first here’s the High Level Summary for 2016:

Total Spending = $34,435
Total Earned Income = $9,985
Total Net Spending = $24,450

Home Value = $270,000
Investment Portfolio (on Dec. 31st) = $760,000

Net Spend as a % of Investment Portfolio = $24,450 / $760,000 = 3.2%

Conservatively ignoring the added value of our paid-off house, our Safe Withdrawal Rate for 2016 was 3.2%.

Spending Detail

This is our first annual breakdown, but the table will look familiar. A nod to the great Mr. Money Mustache, it is formatted similarly and mirrors many of the Mint.com categories. Also, it does not include income tax paid.

We feel comfortable that the “no frills” living cost is low enough to offset some unexpected surprises, as well as expected future increases like the ACA subsidies going away, property taxes going up and maybe purchasing some Home Liability Insurance.

When we were still saving, I used to ogle year-end financial blog posts every January to see how we compared. I feel like our grocery bill is always higher than most, but we get by with minimal paid entertainment or new clothes. To each her own, I guess.

Earned Income Detail

On the earned income side of things, we were proud to pull in $9,985 this year. Quite unexpectedly, I might add, since we hadn’t originally planned on becoming Airbnb hosts or temporary landlords (enabling tenants to stay through the end of their rental contract in our new home).

Airbnb Hosting = $5,107
House Rental from May-Jul = $2,135
Sale of Bruno’s Specialty Trip Items = $664
Wii Sales = $513
Personal Capital / Website Promotion = $400

With our Central American Road Trip completed, we received additional funds from selling some of Bruno’s specialty items like the 12V Engel fridge, Bruno’s ARB awning & mosquito net, and a few obscure tools & spare parts. Travis also found a brief hobby that proved fruitful: picking up Nintendo Wii’s from the local thrift store at a discount, fixing small problems and reselling them at a profit 🙂

How did your 2016 compare? Do you track your expenses at this level? Bruno recommends these online services for tracking spending and investments. There’s little-to-no recurring work involved, once it’s all setup. The sites spit out colorful pie charts and pretty graphs whenever you want to review them, making personal finance F-U-N!

If you’re not yet retired but striving for FI, we hope you were successful maximizing your income while minimizing your annual spending last year. Any excess income should be going into IRA’s, 401k’s (Canadian RRSPs), and/or low-fee Vanguard funds (Vanguard ETFs for you Canucks).

All in all, we had an extremely privileged, travel-filled 2016. We were in Mexico in January, Canada in February, Jamaica in March, and bought our first house in April. Here’s to keeping optimism high in 2017, keeping long-term life goals in check, planning our next big road trip, and remembering that we’re all just specs of dust in a vast universe.

  • That’s some pretty reasonable spending there FwB! A 3.2% withdrawal rate is very reasonable.

    While our spending is higher (there are 4 of us), we aim for a 3% withdrawal rate. This year was 2.6%.

    Seems like your days road tripping are done. Do you expect your level of spending to rise in the next year?

    • Amanda

      Hey Mr. Tako! Great job staying below 3% with a family of four! Very impressive. Next year should have much fewer expenses for us (home is now furnished) and no major capital improvement projects, other than some landscaping/trees/etc, so I would expect next year’s spending to decrease. We will be on road again this summer – heading North instead of South!

  • You guys definitely had an eventful 2016! Glad the numbers worked out as well.

    • Amanda

      Congrats on reaching all of YOUR 2016 financial goals, FF! Becoming debt-free is a major milestone 🙂

  • Joe

    So you’re doing air BnB and lack homeowners and liability insurance? Stupid move financially speaking so t you think? Americans love to sue. For dumb stuff. .

    Also, a 20-25 + percent drop in the market, i.e., fairly likely as are normal bear markets ( as this bull is now the second longest in 100 years), will leave you with about 17K based on your defined WR– are you ready for that ? Are you assuming nothing in life happens, no repairs or capital spending.

    That’s cutting it pretty close isn’t it ?

    You don’t want to hear this – I still think you guys are kidding yourselves – maybe it’s a millenials thing, maybe it’s a Canada thing, but you’re not retired nor FI – stop selling the sizzle.

    Did you consider you’re one or two hiccups from a failed plan? Maybe not financial ruin but a failed plan. . A protracted market drop, a health issue, a kid, a lawsuit from air BB, a house fire/storm/flood.

    Ps. I am FIREd. Similar cost structure. I still worry. … life can be damn cruel and unpredictable ..

    • Jim H

      It’s good to see Joe out and about this morning spreading love and encouragement. 🙂

      • Amanda


      • Joe

        Just some balance. Beingrealistic not just idealistic. I do suggest holding personal liability — a policy for $1M shouldn’t be more than $500/year.

        The calculus, I think, on FIRE and how close to call it, changes when one becomes a parent and thus totally responsible for someone else’s benefit.

        I suppose you guys can always go back up to Canada if things get tough too – healthcare is about to get expensive here in USA for all the subsidy-using millionaires.

    • Amanda

      Thanks for your concern, Joe. We’ll leave the worrying to you. All we can do is share the facts of how we’re living at the moment. We don’t claim to know everything or be able to predict the future. If things get rough and we get some form of stable employment, we’ll let you know. If we get so desperate that we’re eating out of dumpsters, we’ll write about that too!

      “Airbnb Host Protection” provides comprehensive liability insurance for any issues with guests and our reservations (up to $1M). What we’re still debating is the need for home insurance (liability only) that is completely unrelated to Hosting.

    • Jubilantjill

      I don’t think it would be the end of the world if things didn’t work out, and *gasp* these thirty-somethings had to go back to work for a few years. There’s no shame in needing to get a job. But these 2 don’t “need” a job right now. Maybe they will if there’s a big market crash, maybe they will if a black swan event occurs. Or maybe the market will soar. Maybe they’ll make money in other ways. Maybe they’ll move somewhere where the dollar goes a lot further. They seem like adaptable folks. They’ve bought a house in a hot hot market (NC native here so I know how awesome Asheville is) so they could always rent it out for an amount that would probably cover the cost of living in a cheaper country.
      I just don’t understand why you’re personally offended by their choices. It’s weird. Don’t let it keep you up at night.

  • Jim H

    The Airbnb just shows you are adaptable and can find new ways to make money if needed.
    I don’t feel let down by that. Sounds like you had a really great 2016! I hope to hear more about your story in 2017. Great job~!

    • Amanda

      Thanks for reading, Jim!

  • FIREcracker

    Interesting! Thanks for the detailed breakdown. I’m curious about three things:

    1) Do you have a cash cushion set aside, just in case a market crash happens?
    2) How long did you do Airbnb for?
    3) Are you planning on buying homeowners insurance?

    The 3.2% SWR seems reasonable but one thing to keep in mind is that if you’re relying on capital value when the markets crash, you’d be selling at a loss, and this is especially dangerous during the 5 years of retirement (this is what’s called “sequence-of-returns” risk). That’s why it’s helpful to rely on the dividends and fixed income, without touching the principal, or having a cash cushion for market downturns. Especially in the first few years of retirement.

    However, if you manage to get an income stream going from side projects (the wii repair idea is cool!), you can mitigate this risk. I am concerned about the lack of homeowners insurance + airbnb though. Since you don’t have a long term renter whom you can trust and many people are moving through from airbnb, the chances of them damaging your house is much greater. In addition to that, there’s also the risk of a natural disaster or something completely outside your control.

    Hopefully your expenses will be reduced in 2017 (now that the deck renovations are done), and you can spare some room to buy homeowners insurance? 🙂

    • Travis

      Hey FIREcracker! Hope you’re doing well, and thanks for your comment!

      1.) Nope, no cash cushion. Would the lost growth potential of keeping extra cash in the bank account rather than the market be greater or less than the potential loss I would experience selling stocks in a depressed market? I dunno. I’m guessing the savings are probably slim, so I guess I’ll just keep it all in the market!

      2.) We did Airbnb so far for 4-6 months. Usually have one booking per weekend, give or take.

      3.) I’m learning towards no, but Amanda is on the fence. We need to do more research, but I think our risk of fire is low. We don’t have a gas stove or gas heating, and we don’t use candles or anything. We don’t have many valuables, so if someone breaks in and steals stuff, we’ll just replace it. But I guess I’m open to it, if it’s really cheap.

      If the market drops (which it will at some point), we’ll definitely tighten our belts, reduce expenses, and try to hustle side income (Airbnb) for that time period. I think our home is in a region that has a low risk of natural disasters (earthquakes, hurricanes, forest fires, floods, tree falling on roof, etc). If the house gets damaged somehow, I think we could make it a project and fix it ourselves to keep costs low (replace the roof?)

      Again, thanks for the comment! Amanda and I will definitely research insurance options/costs and discuss further.

  • Awesome year! We came in close at 38k for 2016. We didn’t have the expense of a new house, but we did do a lot of travel. This year should be my first full year of FIRE and I think we will come down a bit more. But CT isn’t the cheapest place to be. The cost of living difference really shows in your property taxes and insurance. Did you guys only pay $83 for liability on Bruno? That’s insane!

    Glad to hear you are well, and best of luck in 2017!

    • Amanda

      Hi Mr. CK! This is also our first full year and I feel like we’re still working out the kinks. I’d also really like to read up on all your travel hacks. It’ll certainly give us the bug to get on the road again.

      Thanks for pointing out Bruno’s insurance! I didn’t adequately comment on that section and will need to update it. It looks low because while Bruno was out of the country late 2015/early 2016, our insurance was temporarily suspended. GEICO still had us making regular payments during that time and as soon as we reinstated the insurance, GEICO credited us our money back. It’s weird. A normal year will be about $180 for liability coverage.

  • Wow, you guys spent almost as much as we did and there’s five of us! 😉 j/k

    I imagine a lot of those expenses will be much lower in future years since you won’t be buying, fixing up, and furnishing a house every year. So that should knock off $5000-7000 or so right there.

    And that airbnb/house rental income looks spectacular and makes the numbers all “work” to bring your withdrawal rate down to something reasonable. Do you think your airbnb income could ever cover your entire $17000 no frills/bare bones budget? That would be a pretty sweet accomplishment if the markets ever do tank (and people keep spending money on vacations which is a big IF).

    Good to see your numbers! Now I’m motivated to finish my post on our 2016 numbers. $39k total spending including $10k on travel. Having tons of discretionary expenses is great since we could always cut those in the event of a Great Recession.

    Question on your spending: how did you get auto insurance for $83 for the year?? I thought I was winning with $450/yr insurance for the two of us but holy crap did you guys give us a spanking in that category. Please share because I’d love to save another $350 or so 🙂

    • Amanda

      Justin – i’m ALWAYS amazed at how your family of 5 manages to keep your spending in check. $39k including $10k on travel really is incredible. If there were 5 of us (and Bruno doesn’t count), I’d fear for our grocery bill. I’ll have to read some of your archives to recall how you feed yourselves so efficiently 🙂 Looking forward to your year-end post.

      I think we could certainly ramp up our Airbnb hosting, but for our own sanity we’re not packing the house every night. There’s a certain threshold of $/night that we’re not willing to drop below in exchange for the hassle of having strangers in your house. This is making for a very quiet January/February calendar, which is ok with us. The $5k we made was for half a Summer, a very full Fall and the Xmas holidays.

      Thanks for pointing out Bruno’s insurance. In my response to Mr. Crazy Kicks below: “I didn’t adequately comment on that section and will need to update it. It looks low because while Bruno was out of the country late 2015/early 2016, our insurance was temporarily suspended. GEICO still had us making regular payments during that time and as soon as we reinstated the insurance, GEICO credited us our money back. It’s weird.”

      A normal year will be about $180 for liability coverage. Still pretty decent. Bruno’s an old man! We also have been with GEICO for a long time, neither of us is commuting, and no speeding tickets… Other than that, don’t really know why it’s so low!

      • I need to give GEICO a call then! We’re probably similar to you in that we have a basic toyota (2009 sienna minivan – excellent road trip vehicle by the way if you don’t need 4×4 – tons of room for a bed and/or cargo!).

        I hear you on the Airbnb strategy of not going to low. You’re optimizing your “profit per hour” given how much you’re willing to work or deal with hassle and not maximizing “profit per year”. I do that a lot with my own money saving/making pursuits. There’s only so much I’m willing to do for a buck or five bucks (and extrapolate that to several hundred dollars).

      • Oh, as for food. Not sure how we get it done so cheap but our groceries is about what you spend and we rarely dine out.

        I guess we’re opportunistic foodies if that makes sense. For example, we found a huge stash of clearance imported Italian food items at our Kroger and LOADED up. Stuff was 75-95% off. Like shelf stable non perishable stuff in some cases, and other refrigerated stuff that had an expiration 2-9 months out. Fancy cheeses, olives, prosciutto, marinated artichokes, sun dried tomatoes, parmesan blocks, mascarpone, etc. So we’ll have incredible Italian dishes or salads or charcuterie trays occasionally and work down on this stash (supplemented with fresh veggies and staples like pasta, sometimes really high end fancy pasta and/or whole wheat pasta). Also substitute ingredients (spiral sliced ham for $1.09/lb instead of pancetta or bacon in a lot of recipes ($10/lb cooked weight) ).

        Tonight we ate alfredo penne with artichokes, sun dried tomatoes, garlic, onion, “pancetta” (spiral sliced ham), capers, and melted blue cheese. Topped with fresh grated parmesan (from Italy). Probably a buck or two per serving compared to $18-25 at a restaurant. Mrs. Root of Good enjoyed her pasta with some kind of champagne from trader joe’s.

        Some probably spend more on rice and beans than we do on the good shizzy!

  • Jay

    Awesome! One more very surprised you would not carry any home insurance though – especially if you plan to travel or rent it out. Also your car liability, even when paying would only by $180 per year? Can you expand on that? We don’t even have collision(we do have comprehensive) and ours on 2 older cars is closer to $1,000.

    • Amanda

      Hi Jay! ok ok we’re being beaten into submission on the home insurance issue 🙂 At the very least, enough to get some quotes but we’re really dragging our feet.

      On the car insurance, we have liability only – no collision, no comprehensive. In other words, if an accident is deemed to be our fault, we are covered for bodily injury & property damage to the other party. NC also requires us to have uninsured motorist coverage. We have the minimum insurance required by the state. If anything happens to Bruno (age: 17 yrs), he is not covered. Hope that sheds some light!

      • PI attorney

        You should not have the minimum required by the state. The personal injury/uninsured/underinsured coverage is the most important part. You should get whatever the minimum is before your insurance company allows you to purchase an umbrella policy. Then purchase the umbrella policy.

        I am an attorney who represents people after they are injured in an accident. You are right that your property damage is easily covered. But if someone without insurance or with a minimum policy hits you and you are injured then the underinsured/uninsured portions of your policy kick in. It is about protecting yourself not protecting others (but it does protect others as well). If you have to go the hospital or have some other major issue happen you will regret having the minimum policy. It happens all the time.

        • PI attorney

          Also, I like your blog 🙂 Sorry for only chiming in with a “nag.”

          • Travis

            Thank you! I’m thinking we’ll just use our own health insurance for whatever car accident occurs? Let me know if that is foolish. Thanks!

  • Congrats on a successful year! Always nice to see spending details from other FI-ers. I’d feel pretty comfortable in your shoes having that much opportunity to cut out the frills if markets drop. Good stuff!

    • Amanda

      Thanks Matt! Hope you & Daniel are enjoying sunny Mexico 🙂

  • RocDoc

    Great idea on the AirBnB rental. That flexible income will give you lots of breathing room if the market tanks. I think it’s fantastic you’re being innovative and thinking of ways to “stretch the stash.” The freedom of FIRE and having a few AirBnB guests here and there is worth not having the harness of a 9 to 5 job. Good effort on both your parts. You’re flying by the seat of your pants and making it work which is cool and fun to watch. I echo the others and won’t beat a dead horse but I’d get homeowners insurance if I were you. Keep up the good job. It looks like you’re having a great life!

    • Amanda

      Hi RocDoc! Thanks for reading and for the kind words. Definitely one of the fun parts of not being tied down to a 9-to-5 is the ability to be creative with where our income is coming from. Home insurance has been purchased! Everyone can breathe easy 🙂