The Known Unknowns of Future Expenses

The date is set. Our FIRE location has been in place ever since we purchased a home in the mountains and knew that was our calling. The investment portfolio along with other income sources should sustain a healthy way of living as we embark on our new journey in just over two years.

For us, the “money in” has been the easier side of the equation to get a handle on. It generally is for most folks. What is inherently harder to get to grips with is the “money out”. As we project a future lifestyle where many things will look different, the expenses, by default, will look much different.

What do we mean by “looking different”? What’s that all about?

Select Areas of Current Spend

Here are a few facts on areas of current spend to frame the data that comes later:

  1. We currently run two homes – a primary residence and a vacation (mountain) home. For many reasons, we have elected not to generate a secondary source of income from renting out the vacation home. Yes, that would off-set some costs for sure but we have absolutely no spare time to handle the hassle of doing that, even with a property manager. Don’t get us wrong, absolutely no complaints about running two homes. That is our choice and part of the grand plan we set in motion three years ago.
  2. We will sell our primary home and relocate family to a new state and our mountain home. Saying good bye to the home we made for our family will be truly gut-wrenching for us. Saying good bye to the mortgage, real estate taxes (boy, they are enormous in our state!!) and primary home insurance will be a cork popping moment. Perhaps a frugal Prosecco as opposed to the pricy champagne.
  3. The cost of working. Ah, that little nugget. Don’t even get me started on the experiences or other opportunities we lose by working. That for us is the most important consideration but the practical aspects (i.e. $$’s, ka-ching) also find a way of spoiling the party. Whether it is running two new or nearly new cars – gasoline, maintenance due to lengthy commuting wear and tear, toll costs on the highway or the plethora of other expenses we need to incur because of two working parents. See points #4 through #10 next.
  4. Before and after-school care are costs we currently need to incur. Our respective work locations and schedule demands military style planning and a war chest reservoir of dough when it comes to out of school care.
  5. Summer camp costs provide a welcome hello to each New Year. The schedules are out by January. The subsequent negotiation with the children that the opulently priced robotics /electronics camp is not really necessary. The choices are then made, the check mailed in and we proceed about our business. A big fat check to provide a summer of educational fun and growth for our children. Yay!
  6. Cleaning the primary home. We get help on an every other week basis. We have cut back from weekly. We just don’t have the physical energy or available time such that we can remove it completely from the expenses list. Thank you Christiana and Mr. Dyson.
  7. Landscaping– although Mr. PIE enjoys the therapeutic aspect of cutting his own lawn every week (don’t worry, it’s a British thing!), there is no way he is lugging 12 yards of bark mulch about the property or devoting endless hours to spring and fall tidy up. We get a shit-load of leaves on our tree-lined property and every single weekend from late September to middle of December would be occupied clearing those bad boys. Snow removal – a long and sloped driveway – anyone joining me at 4.00am in sub-zero conditions for a lung bursting snow-blowing exercise before Mrs. PIE hits the road at 5.15am? No, didn’t think so. $30 well spent in my opinion for the snow-plough guy who hits our driveway ~3am. For the brutal winter we had in the Northeast during 2014/2015, that was a lot of greenbacks.
  8. Convenience eating. A little glimpse into the stuff going on currently will provide an example of what we mean – we need NASA style planning to be able to pick up two kids at 5.00pm, drive them to baseball (at different town locations I may add) and feed them both before game-time at 6.00pm. Four nights out of every five. Yep, that rules out preparing the grilled fish, oven-roasted cauliflower and wild rice in the confines of the home kitchen. Our convenience is Panera pre-ordering, pick-up and sandwiches / drinks in the car on the frantic drive to baseball. Mrs. PIE is Chief Scientist for the Department of Pre-baseball Planning. We don’t do Panera every baseball night but need to do it some nights for the sanity of everybody. Valium anybody? Throw in lunches now and again at work (we are awfully good with brown-bag lunches 4 days out of every 5) and the monthly costs start to creep north.
  9. Parking costs incurred by Mrs. PIE in the city. Her company subsidizes most but does not cover all.
  10. Work appropriate clothing – PIE has business engagements where jeans, Hawaiian t-shirt and flip-flops just won’t cut it. San Diego biotech start-up maybe, not Eastern Seaboard conservative big pharma. I won’t care to look at another single e-mail in my in-box that recommends “business casual” attire. What is “business casual” anyway?
  11. Gym membership. The mountains will be our stair-climb, the cool valley rivers our refreshing post-exercise bath and hitting the winter slopes exactly when we want to, our ski-master. Nothing more to add.
  12. Certain utilities – we have well water in our mountain home and solar paneling. Combined with no need for air conditioning, some aspects of our utility bills will simply disappear (water) or drop a little (electric).

OK, but what about the future expenses? We’ll get to that, hang in there. This pile of stuff above is currently running at $4750 per month, $57,000 per year. As described by other bloggers, mortgage and child-care are also our big ticket items. And it will all go away in July 2018. Sobering.

The two tables below are our best projection for our future expenses. Our investments support a withdrawal rate some way beyond these expenses. As we have mentioned before in a few of our posts, Mr. and Mrs. PIE are a conservative couple. We embrace safety nets and the built-in flexibility to absorb increases in spending for items we can’t easily project for.

Future Expenses

Home and Shelter

The first table is the expenses relate to home and shelter. Many of these are relatively fixed such as property taxes and home insurance. We have zero mortgage on the mountain home. Utilities are hard to predict as we have not lived in the mountain home for extended periods. We have calculated this number based on what we are spending now (in our current home), subtracting a % since we have solar panels and will not need air conditioning. That may be off-set by requirement for increased winter heating. Our future home is ~30% smaller on a square footage basis compared to our current home. That may play into overall reduced heating costs. To be very honest we just don’t know. Keeping this line item similar to our current spend seems a reasonable place to start. We will soon see how close to this number we really are.

table 1_expenses


Home improvement expenses are obviously dynamic. Having just performed some significant upgrades to the mountain home with new roof and new siding, we don’t anticipate incurring more of those specific (and large!) items for a long time, thanks goodness. But “other stuff” happens, even with regular maintenance. The septic tank may need an over-haul, the windows may need replacing, and more.

Internet is essential for obvious reasons and minimal cable TV can be reduced a bit further. We are not spending more on this one in FIRE, that’s for sure.

The second table here is the expenses mapped out for food, healthcare, entertainment, transportation and miscellany. Note zero dollars assigned to financial advice services

 table 2_expenses

Future Food Expenses

Our food expenses (both dining in and out) is an area we choose to spend more. We enjoy cooking all sorts of dishes (Mexican, French, Indian, British pub-style) and look forward to having even more time to do so. Lazy summer days where three healthy meals are prepared in tandem with the outdoor grill – that’s our little bit of heaven. With more time available for planning meals, we actually think our grocery budget will drop by 10-20%. Eating out is also something we will continue to do. Dinner events at local farmer tables is on the list for exploring.

Future Entertainment Expenses

Entertainment expenses is composed primarily of vacation(s) and our main hobby, skiing. A family of 2 adults, 2 kids and covering 4 season passes with periodic equipment refresh for all goes into this line item. Other expenses in here are necessary sporting equipment for the kids, family cinema trips, day trips to museums etc.

For vacation, we already do a lot of travel hacking and expect to do even more going forward. We are going to relish the opportunity to travel on a flexible schedule certainly over the summer months and not be constrained by work commitments. That flexibility will surely also bring some budget favorability. Specifically, traveling on a Tuesday afternoon and returning on a Thursday evening (as an example) is one of many options beyond our typical and more costly Sat –Sat vacation planning. Award availability for flights through travel hacking is much greater if you can be super flexible with travel dates. Free time, indeed. Here are the specifics of what we have secured so far this year with travel hacking:

  • 4 free economy return flights on United to Jackson Hole for February 2017 (admittedly part of that was helped by Mr. PIE building some of those miles through work travel)
  • Majority of hotel costs for our stay in Jackson Hole covered by cash back credit cards
  • 4 free nights in a family suite at Chateau Frontenac in Quebec City between Christmas and New Year
  • 1 economy return flight to the UK for Mr. PIE to travel for a long weekend reunion in the fall with university friends.

A total of nearly $7,000 in free travel. This is good but we would certainly not classify ourselves as experts. The following sites were instrumental in getting us started with travel hacking.

Travel Miles 101

The Points Guy

The introductory free course provided by Brad and Alexi at Travel Miles 101 is excellent for the beginner.

Future Healthcare Expenses

We are not going to go into any detail on healthcare. Suffice to say, a solid silver plan under ACA with workable deductible puts us in this range. Also factored in here is that this number considers income from Mr. PIE pension at age 55. The 51-55 years will cost us much less than this. We have not researched extensively dental plan options and have a placeholder in here for $200 per month. If there are good tools out there to assess dental plan options, we would love to hear about it. It is one area that is often overlooked as much of the focus is on Obamacare which rarely incorporates dental coverage into the health plans. At least for the plans we have been looking at.

Future Transportation Costs

Regarding vehicles, we have made a decision to not pursue running two brand new vehicles. As we described above, both of us have decent sized commutes and it is not an option to have poor reliability of our vehicles mess things up any more. Thus, we each have a new or nearly new car. This is the price of safe and reliable commuting to work. In FIRE, we will still have two used cars although we are discussing the pros/cons of a single car. Not landed on that one yet, but leaning strongly towards two. Our FIRE home will certainly not have the shiny Lexus or high-end BMW parked outside. Not that it does today – we own a Jeep and a Subaru Impreza. The monthly expense for owning is our estimate for two used cars amortized over a 8-year period. Gasoline use should drop considerably without that dreaded combined 13 hours per week of commuting.

Our total expenses are projecting for ~$68,500 per annum. We have room in our investment portfolio + pension income (plus whatever SS brings for both of us) to support a run-rate higher than that. In our minds, that is how it should be. We are realistic that there needs to be ample room for significant up-tick on certain items. Rising healthcare costs, necessary and urgent home maintenance, extended travel to assist siblings with the care of aging parents. The list goes on. We can’t predict but we can prepare.

Parting Thoughts

As former Secretary of Defense Donald Rumsfeld once famously said, “there are known knowns. There are also known unknowns – that is to say we know there are some things we do not know”. He used it in the context of lack of evidence related to WMD in Iraq, which is a million miles from what we are heading towards. We will work our way through our known unknowns with a sense of adventure, no doubt with some trepidation and a nervous smile at times. This is just part of the deal with FIRE, isn’t it?

As you project your future living expenses in either an existing location or new location, what categories are the most taxing to estimate? Which areas do you just find impossible to accurately predict? How are you planning to navigate your known unknowns?


  1. Very in depth analysis, we are no where near this stage but get to gather all the knowledge from people that are closer!

    Everyone seems to put healthcare in the unknown bucket – seems like the rules/laws change constantly.

    I guess you just have to put your best guess out there and adjust to whatever happens – the mountain house sounds awesome and I’m sure you will enjoy it

    I had 4 siblings with 2 working parents, can relate to the intense planning it takes to get everyone where they needed to be!

    1. Glad we can provide some useful substrate to help with your planning. Coordination of kids extra-curricular activities is taxing, for sure. I understand how you can appreciate this given your childhood experiences of parents hustling for 5 kids. Wow.

  2. Wow you nailed it in this post. I think everyone needs to go through a detailed analysis like this before retirement. You can’t just do what the “experts” say and assume 80% of your previous income needs to be replaced for retirement expenses. Just like you’ve laid out, certain expenses will go away and some will go up.

    Great work! Excited to follow your path to early retirement.

    1. Thanks for the feedback. Happy you enjoyed the post!!
      Like many things in retirement planing you have to go beyond the conventional wisdom and media noise. Whether that is on expenses, SWR or tax considerations to name but a few. Doing your own detailed analyses is critical. The amount of nonsense out there in mainstream media can be overwhelming for many and cutting through that requires patience and self belief.

  3. It looks like you have done a good job of really analyzing your spending and what it will look like in the future. Like Mike Tyson said though, “everyone has a plan until they get hit in the face.” As long as you have an emergency fund, I think you will be great!

  4. The emergency fund is something we believe in while working and even more so in FIRE.
    Being able to avoid drawing down your portfolio in an extended bear market is why everyone in FIRE needs 3 years or more of living expenses in readily accessible account. In our opinion at least. Having to pull from your portfolio at the bottom of a market is a hit that will likely not be recoverable. Just like the hits Mike Tyson landed on most of his opponents….

  5. Point 5 is so recognisable… we have 2 big planning slots. One early January for all holidays till the end of the summer. This includes aligning with other parents to reduce the “taxi service” we need to provide. And the planning to queue for some summer camps. Early September, there is another round of planning for the rest of the year.

    The fact that you are thinking about this and will implement it soon is so helpful. I also struggle with the numbers… Our plan is still so far away. For now I just made some big big assumptions. They are wrong, but beat having no plan at all.

    The idea of a big emerengy fund in retirement makes a lot of sense to me

    1. Thank you ATL.

      Mr Money Mustache has a great post today on this topic and the need to provide different avenues of educational fun experiences for our kids. Mrs. PIE also wrote about our challenges with the “arms race” on extracurricular stuff for kids.

      Yes, Emergency fund is critical in our minds to smooth the turbulence of extended market downturns.

      And thinking about stuff now will only help down the line. Good for you.

  6. We are no where near this point of planning in out journey since a lot will change before we hit FI. There are so many variables that come into play when looking at your future vs present spending. Looks like you have a great plan so far in figuring out what your differences will be!

    1. We actually could go into a lot more detail on each category but that would probably bore the readers to death. Still, important to know what the differences are going to be as they are plenty!!

  7. Hi Mr. P.I.E,

    I do agree that this is a very thoughtful and forward looking analysis. Although, not needing to elaborate on the health expenses, I am always a proponent of staying health by keeping active and eating healthy. Maintaining an active lifestyle will save on expenses in more ways than one.

    1. We hope to continue to do even more of both with our outdoor pursuits and ample time for preparing good meals. And really good point to connect the healthy living with reduced expenses. Point well taken.

  8. This is a very astute analysis and your plan for the future appears solid! Like us, planning must offer you a sense of comfort where you can see the full picture of what your expenses may be, which of course allows you to make the best use of your income moving forward. Meals are a tough one for busy families, but it looks like you have a good grasp on that too! – Mrs. FE

    1. Thanks for stopping by. We like to be on top of the things we have some control over yet so many things in FIRE are not clear. But we try to map out the best we can. I like your connection of understanding the future allows you to assign where money goes (balance between saving and enjoying today). Weekday meals in baseball season are all over the place and wish we could find an alternative to Panera on the go.

  9. Wow, this is really helpful. We are in a very similar situation. Two working adults, two kids, mountain home, primary home + another rental. It is a complicated exercise to translate today spending to tomorrows after retirement spending. In some scenarios we should be done today and in other scenarios we still need some cushion. Looking forward to following along!

  10. Hi there and thanks for checking us out. Good to know of other families on the journey to FIRE and happy to share our collective wisdom, mistakes, pain points!!
    We also discuss the “why not now?” topic but our conservative nature keeps us at the corporate grindstone for two more years to ensure that fluffy cushion is well padded. We are probably ultra cautious but a big move like this deserves in-depth due diligence and risk management.

    1. Probably a good idea to just stick it out a bit longer for the extra cushion and piece of mind. It would be difficult to go back to work later and a big hassle trying to find another job if you had to (and possibly for less than you make now). Much easier to just stay where you are now.

  11. It’s an important thing to keep in mind, that’s for sure.

    The only way we can truly plan for the expected, is to plan for it lol. Even when (if?) ever truly stop working, we still plan to continue investing, so our income should theoretically always increase and we’ll never run out. Plus have a large ‘contingency’ budget line for things that may happen.

    If you fail to plan, you plan to fail 🙂 You are wise owls for keeping all this in mind.


  12. Thanks! We’ve been writing and re-writing our future budget. The ‘contingency’ is always there though.

  13. I love the detail that has gone into your planning. And I like how you are using the blog to document it all.

    I’ve found that forcing myself to work out all the details on paper (or on the blog in this case) really helps me think through my plan.

    1. Nothing like formulating your plan mentally and in writing. Makes you think harder and also I find it allows you to see things more clearly.

    1. Thanks for checking us out. We have always been drawn to the mountains as kids, adults and having an opportunity to spend our next life there in FIRE is a blessing. The mountains of the North East have their own ruggedness although not as dramatic as the Rockies of course.

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