Introduction:
Intention is to be transparent about spending for the past calendar year. Living expenses, excluding income tax, totaled $37,000. Assuming an 11% marginal income tax rate, this level of spending requires income of $42,000, below the US GDP per capita of $70,000.
Expenses:
Living expense $19,000:
– Rent: $11,000 (record hostels and AirBnB as rent | $30 per night)
– Medical: $5,000 ($4,000 premiums | $1,000 vaccination & dentist)
– Food: $1,000 ($800 groceries | $2 day | $200 dining)
– Other: $1,000 ($700 T-Mobile service | $300 mail handling)
– Holiday gifts: $1,000
Travel expense $7,000; discrete and specific costs:
– Ferry: $3,000 (Seattle > Alaska | Aleutian Islands | Newfoundland)
– Rental: $1,200 (Dalton Highway SUV and gasoline)
– Flight: $1,000 (Anchorage > Homer | Dutch Harbor > Anchorage)
– Bus: $800 (20 bus tickets in Mexico | train to NYC | plane ticket tax)
– Other: $1,000 (expedited passport | CANUS park pass | NYC day trip)
Auto expense $5,000:
– Gasoline: $3,000 (24,000-mile | 580 gallon | 41-mpg | $4.90 per gallon)
– Maintenance: $1,000 (replace tires | tire rotation | oil change)
– Insurance: $800 (USAA with $1,000,000 umbrella)
Paid $233,000 in federal income tax; paid $6,000 to Deloitte for tax preparation. Deloitte has prepared tax return since 2007 when I moved to Canada, due to the complexities of filing US-Canada tax return. When I returned to the United States, Deloitte continued to prepare my tax return, due to the complexities of carried interest, a form of compensation in the private equity industry. Tax return is often more than 100-pages. Deloitte’s fee compared to adjusted gross income is less than one basis point.
Portfolio is down 15% year-to-date, an unrealized loss. Continue to “buy the dips” each month, and will allow time for the market to correct. I have enough liquidity, more than 10% of the portfolio is in cash, there is no need to panic sell. The portfolio resides in a revocable trust; the principal will be gifted to several beneficiaries upon my death.
Conclusion:
My friend, Jani, suggests that I should try to spend $50,000 each year.
I failed.
garthmonroe 