FIRE Trial Update – 4 Months Expenses Snapshot and Keeping Within Budget

Hello, new recruits of the FIRE battalion and existing FIRE-seekers. Time for a new blog post!

My last blog post on this topic was back in November 2021 and an update is long overdue.

With the recent Channel News Asia articles putting the limelight on FIRE (see below), it is always interesting to take a look at how different individuals are approaching the idea of Financial Independence, Retire Early (optional)

Commentary: By wanting to retire early, millennials are subverting conventional ideas of work and finances (16 Aug 2022)In Focus: Financial Independence, Retire Early – how the FIRE movement goes beyond extreme sacrifice (20 Aug 2022)

I feel that Jun Hwa of Sipping Coconuts put it across very well at the end of the second article.

“But FIRE is a mindset. It’s not just a destination; it’s not a race. If it takes you 20 years, fine. Even if you don’t get to retire early, so be it. In the end, just the act of pursuing FIRE will put you in a financially better place than if you did not even embark on this journey.”

Perhaps my blog post would be an interesting and helpful read to you.

In my humble opinion, we cannot approach FIRE without first understanding our needs, and perhaps our wants as well.

For my case, I have been budgeting and tracking my expenses for many years. With this experience, I now have data that gives a rather good idea of what we need.

I would like to think that this gives me a little more confidence when it comes to making up plans.

Your FIRE numbers will look very different from my FIRE numbers, because we have different lifestyles and are in different situations.

If this is your first time reading about it, a brief re-cap of my definition of FIRE-itis.

FIRE-itis : An imaginary disease that when afflicted, causes the infected to pursue early retirement immediately regardless of their financial readiness. Full-time employment is no longer an option.

I have written a few blog posts regarding my thoughts on pursuing FIRE immediately :

The idea is very simple – I will attempt to live on a fixed amount of alternative income per month as part of my real-life experiment in preparation for the FIRE lifestyle.

Housing – My wife (37) and I (39) live in a HDB apartment with three bedrooms : master for sleep, study for work and fitness for workouts.

Dependents – We have no children and our parents are retired.

Loans – Zero $0 cash obligations for debts. HDB monthly payments are currently 100% via CPF Ordinary Account.

In my previous blog post, I made a few observations based on data collected during those five months and they include –

There was a disproportionate spend on one-off expensesIt is possible to bring down expenses to the $2750 level by aggressively cutting back on food and groceriesBudgeting an extra $250 to make it $3000 per month would make for a much more comfortable buffer for unexpected expenses

Given the above, I have made the following changes –

Adjusted my monthly budget to $3000Organized my budget categories differently e.g. monthly vs annual expenses (that’s what personal finance nerds like to do?) for a clearer presentation, hopefully

To be honest, my budget categories are largely the same as in the past but would look something like this now –

Monthly | Variable and Fixed ExpensesFood and groceriesBillsTransportCharityAllowancesAnnual | Variable ExpensesFamilyHome maintenanceMedical and wellnessGroomingSocialBig-ticket itemsBucketsMeWifeParentsTravelFIRE : save and investOnline | Buffer | MiscellaneousFor everything else that doesn’t quite fit in

One advantage of redesigning my budgets in this manner is that it caters better to alternative income that tends to be volatile and irregular.

For example, Syfe REIT+ distribute quarterly while SSBs’ schedule is twice a year. Affiliate marketing can pay out monthly or adhoc basis whereas crypto is mostly as-and-when rewards are claimed.

The base $3,000 monthly budget can cater to category (1) and (2) since they don’t vary much, whereas the excess income earned (beyond $3000) will be distributed into (3).

You think I would need a better name to replace Buckets huh? Suggestions please?

I had chosen a 4-months snapshot from May to August that coincided with volatile markets/crashes and inflation concerns because why not?

At first glance, the charts look pretty ugly with an average monthly spend of $5181. Oops?

“Buckets” took up a whooping 47% of all expensesThe months of May ($4100) and July ($3700) were kind of .. excessive

What happened to keeping within a $3,000 budget per month?!

One word – travel. Well, mostly.

There were also medical appointments to pay for, preparations for a family wedding (gotta buy gifts, tailor a suit, new pair of shoes, arrange transport etc) to be held in Malaysia and upsized allowances for my family.

But yes, it was still mostly travel-related expenses.

As the world finally opened up in 2022 and mask-less living became an option overseas, “revenge travelling” basically happened and so, we booked or went on trips to Bali, Bintan, Chiang Mai, Bangkok, Malaysia etc.

This is reflected in the charts below with the Buckets mega category taking the number one position in terms of spending.

A lot of our travel bookings were made or paid for in the month of May which explained the huge $4100 spike for the Buckets category just for the month alone.

Then, we stayed in Bali for 8 days in July and stayed at places such as Como Uma Ubud of Christina Ong and Ong Beng Seng fame, and Alila Seminyak, a luxury hotel brand under Hyatt that’s headquartered in Singapore.

Another huge month coming in at $3700 for the Buckets category in July as we booked more trips.

Taking one step back, it was obvious to me that the disproportionate spending for travel and upsized allowances for my family was severely skewing my budget.

Discretionary expenses differ for individuals and are basically things that a household can survive without, if necessary.

On the other hand, non-discretionary expenses are things such as housing, taxes, debt, and groceries. There is no escape from this.

For better clarity, I had included a budget V2 aka the coasting budget that focuses on comfortable living mode.

If you recall, I have written in earlier blog posts on how I’m trying to help my parents to build up some passive income streams to complement what they already have.

These income streams include rental income ($1000) and CPF LIFE ($400) which will supplement the monthly allowances that my brother and I are giving them.

Wait – I’m not saying that I will stop giving allowances, but that the exclusion of these two categories (travel/allowances) will give a far more realistic picture of what is the amount of money that I’m spending monthly for sustaining our normal lifestyle.

Since you may not necessarily need to give allowances to your family or travelling isn’t really your cup of tea, feel free to add or subtract them to see how your numbers compare to mine!

“Buckets” has shrunk dramatically in size after excluding travel and allowancesA lot more stable looking bar charts in V2

Been spending a little more in the month May for family gatherings and medical (appointments, Eu Yan Sang supplements) stuff. Total expenses came up to around $2800.

June and July were relatively quiet months at $1700 and $1500 respectively.

The numbers went up again for August to $2700, as I tailored a suit and bought some mooncakes for the mid-autumn festival which explained the higher expenses.

The reality is that expenses haven’t really changed much from previous months, but that the presentation is now different.

Coming in at an average of $2200 per month, I wouldn’t say that our expenditure is anywhere near frugal for the months of May to August.

We still take Grab rides and order food deliveries.

We enjoy eating out at places like Sushiro, Riverside Grilled Fish or Fish & Co. from time to time.

We have movie nights at home with beer and Eureka popcorn.

We chill at home drinking mimosa cocktails and eating tiramisu dessert.

All in all, I don’t think there were any big surprises based on what I have been seeing for the past four months, which is a good thing.

After going through the expenses, this is what we end up with versus the $3000 budget we have originally allocated –

Average spend per month (exclude travel and allowances) = $2199Average spend per month (include travel and allowances) = $5181 // difference of $2982

For us, a $3000 per month budget would be a comfortable amount suitable for coast FIRE or slow FIRE especially when we tend to prioritize splurging on experiences.

I’ll give an example to recap how I manage my budget –

Let’s assume that I make $5500 in total income for August that I can allocate for September’s use$3000 would be for the usual and boring monthly/annual expensesThe remaining $2500 ($5500 minus $3000) would be divided into 5 equal parts and allocated into the Buckets i.e. myself, wife, parents, travel and FIREI can ‘roll-with-the-punches’ and re-allocate within the first 4 buckets depending on needs (budgets are meant to be flexible) but the FIRE bucket is purely for savings/investments (because inflation)Further fluctuations in September (poor numbers) and October (Syfe REIT+ distributions) income happenSimple example for budget allocation

If you were curious about how my numbers looked like, hopefully this blog post has shed some light on them and given you a chance to relate to your own financial situation.

If you were wondering what tools I use for budgeting, I have been using You Need A Budget for many years.

If you were to ask me what’s my top tip for saving money, it is to cook more meals at home.

One thing is for sure – I would be continuing to track and budget my income! Hopefully, the next FIRE trial update wouldn’t take that long to be ready!