$24,251.50

I spent $24,251.50 in the year of 2008.

That’s about $4,251.50 more than I would like to have spent, but still not wildly off what I expected.

It breaks down like this:

$6,260 Rent
$2,408 Education (Law School Applications / Student Loan Payments / Books)
$2,331 Groceries
$1,762 Cash from ATMs
$1,721 Eating Out
$1,034 Gas (Auto)
$741 Utilities (DSL & Electric)
$422 Public Transit
$421 Auto Insurance
$173 Auto Maintenance
$148 Clothing

$423 Gifts
$362 Travel
$500 Financial
$285 Health And Fitness
$408 Electronics
$1,464 AC/Washing Machine/Pots & Pans/Misc. New Apartment Stuff

The above comes to $20,863, the other $3500 or so went to a bunch of other, small categories not worth mentioning.

Next Year

I’d like to take the data and make predictions about next year’s habits.

$9,000 Rent

In 2009 I expect to move a couple of times to new apartments so my rent costs could get up over $9000 when you count increased rents and security deposits.

$2,000 Education

I expect similar education costs since I’ve heard stories about the price of Law School books. Though I don’t have to worry about any more application fees and I plan to completely eliminate the student loan payments by paying off the balance of my debt within the next few months.

$2,400 Groceries
$1,700 Eating Out

I don’t expect my eating habits to change much. I’d like to eat out less because it would be both cheaper and healthier, but with full-time work and school I think this is a good place to choose to spend a bit more money in exchange for the time savings.

$1,200 Cash From ATM’s

I’d like to keep this amount down. Mostly this money goes to either train tickets, apartment deposits or buying a used motorcycle/car. But I don’t like that it goes mostly unaccounted for. So I’d like to keep this to less than $100/month.

$1,000 Gas

I don’t expect my driving habits to change too much. Though, there is a chance that towards the end of the year, as law school begins, this could increase dramatically.

$750 Utilities
$450 Public Transit
$450 Auto Insurance

There’s no reason any of the above categories should see any changes.

$500 Auto Maintenance

My car has been acting a little funny lately so I expect I am going to need to spend a little money on it sometime this year. I only pay for parts though. It’s nice having a mechanic for a brother.

$600 Clothing

It really surprised me that I only spent $148 on clothing during all of last year. Unless I need to buy a new coat or suit there’s no reason it would go up by itself next year. But I would like to make a conscious effort to be a touch more hip so forcing myself to spend $50/month on at least something is a good goal I think.

$500 Gifts

This will be roughly the same as last year.

$1,650 Travel

I’ll be making at least one cross-country trek in the next couple of months plus I expect to do something over spring break. There will probably be a camping trip or two and a couple of long weekends visiting friends in with this as well.

$0 Financial

That $500 last year went to a specialist to clean up my credit report. Worth the money I think. Though my plans to buy a house went by the wayside, at least my good name is somewhat cleared.

$800 Electronics

This ought to cover a few video games for the summer when school’s out. Plus I plan on finally getting around to building a media PC for downloading/recording tv/music and running MAME, perhaps in the summer.

$1,200 New Apartment Stuff

This ought to cover the expected unexpecteds that inevitably come with moving into new places.

The Expected Grand Total

So that all comes to $24,200. Throw in another $4,000 in forgotten/misc. and I’m up to $28,200. So that’s an increase of ~$4,000 over last year. The increased rent and travel seems to be the bulk of the increase.

The whole point of analyzing my expenses so closely is that really, I don’t quite enjoy working a job all that much. I would much rather be free to be entrepreneurial, adventurous, creative or lazy, whatever suits my mood that day. So by keeping a close eye on things I can plan ahead for a not-so-distant time when I won’t have to deal with things, like alarm clocks, quite so often.

Looking ahead to early retirement I am hoping that, while in retirement, I’ll be able to keep my expenses to below $24,000/year. Of course, that budget will look much different. Much lower transportation costs since I won’t be commuting anywhere. Lower food costs since I’ll have more time to cook at home. No more education costs since I’ll be done with the bulk of my schooling. None of those costs associated with moving since I won’t have to frequently relocate to adjust for work/school demands. Plus my housing expenses will be much lower since I plan to either move to a remote area and build myself a cabin getaway or, if I choose to stay in a more urban area, off-set my housing costs by investing in a rental property or two on the side. So, basically that almost $10,000/year that goes to giving me a place to sleep will instead be going to fascinating projects that will keep me endlessly entertained as I whittle away the hours.

The Verdict and Savings Goals
The $28,200 is less than half of what I expect to earn next year. So I ought to be in good shape come next December.

Some milestones in the months ahead:
1.) Re-establish my 6-month’s of expenses reserve by the end of January. I dipped into it in order to max out my IRA contribution for 2008.

2.) Max-out the traditional IRA for 2009 with $5,000 by the end of March.

3.) Completely pay off all student-loans by May.

4.) Open a new brokerage account and invest $16,000 into various index funds by September.

5.) Get the 401k up to $15,000 by the end of the year.

Long-Term Projection

So If I can get by on $24k/year and one can comfortably withdraw 4% of assets without much worry of drawing down one’s principal over the long-term then I would need assets equaling $600k to retire. I am a little ways away from that goal, but not so far as you might think.

Next years goals will put my liquid assets at just over $40k at the end of the year with no debts. Here’s the projected/hoped for growth in assets at the end of each year:
2009: >$40k Finish Undergrad / Start Law School
2010: >$80k
2011: > $140k
2012: > $210k
2013: > $290k Finish Law School / Start at Brandeis
2014: > $375k Finish at Brandeis / Start Moonlighting as Entrepreneur
2015: > $470k Grow part-time business / Prepare to quit my job
2016: > $500k early- retirement / part-time entrepreneur at 31 years old?

So I’ll try to enjoy myself through law school and I’ll eat up the graduate school engineering curriculum at Brandeis. At which point I’ll start some business in the evenings, most-likely either a web-based service site (with which I have had some mild success in the past) or I’ll find some software niche that I can work on as an independent developer. So long as within fewer than two years I can get my business to be self-sustaining as well as net at least $4,000 per year I will be financially independent. With that large a nest egg I don’t have to worry much about business income fluctuations. And hopefully I will be able to find some success with the business so that I can get my capital, over time, up to over $600-$700k where I can really live comfortably without having to be so mindful of my budget. If, after finishing at Brandeis, I find I have trouble getting a successful part-time business to work then I would likely hold-off on quitting my job or look into working in law for a year or two more while I boost the savings up over $600k. But who knows what will be happening at that point. The best laid plans of mice and men often go awry.

And if all my business ventures fail miserably at least I’ve got my savings to comfortably feed and shelter myself and the law degree to fall back on. I could always get another **gulp** job if I had to.

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