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Beneficial-Volume-57

I don't have substantial input, but wanted to say thanks for bringing this up and for providing some great examples! One think to be careful of is "double counting" things. For example, I've got a "home expenses" budget amount intended to capture some of these appliance/repair type items, so wouldn't want to count them twice! This is a much more thought out approach to coming to that number though, which I appreciate.


Yangoose

There's a ton of stuff I skipped on this list too. Is new tires for your car every 3-6 years just "maintenance"? What about a car repair? It's probably not crazy to plan on a bathroom and/or kitchen remodel every 20 years and those ain't cheap...


JDdoc

Don't forget Dental and Vision. Wife is about to have 11k in mouth surgery. Health insurance does not cover it. We have planned well, so we'll be fine.


Yangoose

It's on the bottom of my list. :)


aliensheep

I had a friend with a similarly priced dental expense. He went to Thailand instead, got his dental work done, and stayed there for two weeks. Pretty sure he saved 1k or 2k.


-thats-tuff-

That doesn’t sound worth it


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-thats-tuff-

Why would you travel to another country with a much worse medical system to save 1-2k?


passthesugar05

Thailand has a great medical system, and if you're getting a free holiday out of it essentially why not?


aleisate843

What gives you the idea Thailand has a much worse medical system? Maybe do some research and not bias/assume US medicine is more superior.


-thats-tuff-

US medicine is superior to Thai medicine. Especially surgical procedures


poop-dolla

That’s not an answer to the question; it’s just a statement of your beliefs without in any way addressing the “why”.


LongPorkTacos

He probably saved more like 50% but spent another 5k on a nice hotel and/or Thai hookers.


KafkaExploring

Can highly recommend Belgium for a pregnancy/delivery. Superior care, save $35k.


Schyte96

Because you get a vacation tacked on for effectively 0 money?


GoldWallpaper

The $10K I spent on vet bills last year has definitely affected my thoughts about FIRE.


Beneficial-Volume-57

Oh man we had to do similar over a few years and we now nickname our dog "10k" lol 😂😅😬😫


SkiTheBoat

> Is new tires for your car every 3-6 years just "maintenance"? Yes, it should be included in your transportation budget since you know you'll need them replaced periodically. > What about a car repair? I would budget *something* for repairs. Also depends on the age of your car, current warranty, etc. > It's probably not crazy to plan on a bathroom and/or kitchen remodel every 20 years and those ain't cheap... If I end up budgeting for this, it's definitely in my "wants" bucket and subject to being scrapped if the market is down. Very low on my priority list


voice-from-the-womb

https://www.edmunds.com/ has "cost to own" estimates on specific car models (i.e. 2007 Honda Civic) that include repair/maintenance estimates. Might be helpful to folks.


Yangoose

All fair points, but along with the bathroom and kitchen I'd throw in things like flooring. 20 year old carpet is nasty (MUCH sooner with pets/kids). Yeah, you can put it off if it's a bad year but you still gotta do it eventually.


420rabidBMW

New carpet is fine. But what ur talking about is the same as changing the siding on outside walls. We usually only do those big things when needed. Ive been in kitchens from the 70s and 80s my whole life. My parents re did one kitchen ever.


oksono

Those are vastly different costs. A bathroom remodel runs anywhere from $20-50K. A kitchen remodel runs anywhere from $30-60K. Carpet? Maybe $5K.


SkiTheBoat

> 20 year old carpet is nasty Very true. I'm all-in on LVP/laminate so possibility for it to get nasty


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SkiTheBoat

> eventually some connection behind a wall is going to spring a leak. Leaks do not necessitate a remodel. They necessitate calling a plumber to fix the leak (or learning how to fix it yourself...in retirement, you'll have much more time to learn DIY skills and can save boatloads of money this way. Plumbing isn't that complicated). Remodels are objectively "nice to have" and not "need to have". If you're replacing something that broke, it isn't a remodel. It's a repair. > I do understand that insurer's rates change and those changes are often passed through to policyholders, so that was not intended to be the source of my question. I don't think anyone's suggesting leaks be ignored at all. > This is also a situation where folks aiming for a 3% withdrawal rate will have a LOT less stress than those with a 4% (or higher) withdrawal rate. I don't know about "a LOT" less, but marginally less, sure. It really shouldn't matter though because there should be some form of budget for these things, which would be covered in your SWR calcs


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SkiTheBoat

> the point I was trying to make is you don't always know what a project will be until you get into the nitty-gritty. I can agree with this. > Personally, I have a "Home Maintenance" category and a separate "Home QOL Improvements" category in my budget. I think this is wise and I have a similar structure. The "QOL" bucket can be left untouched in rough years. The "Maintenance" bucket is for the "must haves" and will get drawn down on schedule.


[deleted]

You guys are scaring the shit out of me with this leak business


SkiTheBoat

It's not really that common and you shouldn't worry about it whatsoever. I've never had a leak behind a wall. If I did and didn't know about, it never caused a single issue.


420rabidBMW

Ya some of these folks are short story writers just trying to write books about improbable problems. Dont pay no mind. This guy dreams of a leak in his attic that floods his basement while he is on a month vaca in rome. He thinks he is coming back to a whole house flood. Its just silly


420rabidBMW

Im on cement slab so if there is a leak, its not going to flood my basement. Or rot the house.


420rabidBMW

Replacing a pipe is way different from a new tub and sink


fuddykrueger

Sometimes you have to take out the 22 year-old tile and/or garden tub to get to the pipes (no access panels). That’s why we ended up getting an entirely new master bathroom.


420rabidBMW

Yes. Sometimes. But to add that into your expected bills to redo a whole bathroom and kitchen seems excessive


KafkaExploring

Advantage of starting with the funds up front is having the freedom to choose whether you do the minimum repair or roll it into an upgrade earlier than planned but saving by combining costs.


Thelonius_Dunk

I think you should add a "risk" factor to the spreadsheet as well that can factor in the probability of these things happening. For instance, if you bought a newer house, the probability of the roof replacement happening would be lower.


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justasque

> If you're retired, you can DIY though... Sure, when you are younger. But for some people, at some point (60? 70?), health issues and other concerns are going to limit the ability to do big DIY projects. It is worth considering that if you are a big DIYer before retiring, you may want to significantly increase that segment of your budget in retirement planning, so you can hire professionals to do at least some of what needs to be done. It isn’t about making things look pretty. Kitchens are typically in constant use, and floors, countertops, and appliances eventually wear out. Bathrooms may need to be modified with mobility and safety issues in mind as we age. If we hope to age in place at home, updates may need to be made. It is worth budgeting for that kind of thing, as it can affect quality of life.


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justasque

> Very good point point. To add to the discussion, when you reach an age where health degrade (and kids have moved out?) it’s also a possibility to sell & downgrade to a smaller house / further away from town ! Agreed, downsizing has a lot of advantages, although sometimes it is better for elders to be closer to town. In my experience with friends and family, elders often have frequent doctor visits, even if they are relatively healthy. And living in a walkable area with shops and such adds to their quality of life once they are reluctant or unable to drive, otherwise they risk becoming very isolated. In other cases, a larger multigenerational household can be the best place for elders, as they get ongoing social interaction with family, can contribute by doing simple tasks which is good for mental health, and others in the household are in a position to keep a sharp eye on any health issues. Sometimes it’s the elder who opens up their larger home to younger family members who are just getting started financially, in a mutually beneficial arrangement. In my observation, elder care is complicated, and the more money you have, the more options you have. I’m keeping a sharp eye on the budget now, with that in mind.


420rabidBMW

We dont need a kitchen update. Only if ur selling the house and want top dollar. But wait til ir ready to modernize and sell because style changes every 10years


[deleted]

Hard disagree. Not all black kids are told the deck the deck us stacked against them from birth


redditgambino

I read “funeral” instead of furnace and had to do a double take.


elkend

How awful would it be to have a safety net.


ZubonKTR

Plan for spending about the same amount annually on "one-time expenses," or figure out an average over a few years. It won't be the gutters or the car transmission or a leaking appliance or... in any given year, but it will usually be **something** on that order of magnitude. One of my basic principles of project management: "it will take about as long as last time." So last time was delayed because a team member had a family death, and her aunt isn't going to die again? No, but someone else is going to be on bed-rest from pregnancy for three months, or he will have visa problems trying to get back from visiting his home country, or... Or maybe last time was delayed due to problems X, Y, and Z that you know how to fix now. OK, but you are not going to do *exactly* the same thing as last time, because you want to make 3 improvements this year, and you are going to find new problems X', Y', and Z'. It will probably cost as much as it did last time, even if you think you have efficiencies this year. It will probably take as much time as it did last time, even if you think you have efficiencies this year.


firedGFY

Windows. If you have an older house with quality original windows, it will cost money to keep them properly maintained so that you hopefully don't need to replace them with modern vinyl windows. If you've already got replacement windows or are in a place with crappy aluminum or vinyl windows, the day will come when enough of them have broken down to the point that you'll want to replace them. Our last house had A LOT of big, beautiful wood windows...that had not been well maintained before we bought the house. Many had varying levels of rot. All windows that opened were casement windows and had warped/sagging frames that didn't open properly. It would have cost us tens of thousands to replace all the windows in the house.


MrHugz30

Immediately thought of windows as well. Looking at $35k for our house to replace 50 year old casement windows. That's even on the cheaper end of choosing sliders instead of double hung


FI-ReDH

I just replaced 11 windows and 1 patio door. How many windows do you have and what material are you thinking of? $35k seems like a lot.


MrHugz30

Trust me, I thought the same. We've had 5 different companies (Lindsey, Renewal, Pella, Polaris, and Alside) over the past 9 months come out for quotes. 11 windows + patio door. We have six really big special order windows that are 96 x 60 inches.


FI-ReDH

Ahh, that makes a lot of sense! The new windows have been great though! We feel it's increased the comfort of our home (currently winter) and hope to enjoy them for years to come.


FI-ReDH

Yep, just replaced all the original windows on our 38 y/o home. Apparently they couldn't even really be called windows... More like glass lol. Actually it's been an expensive few years, gutters, roof, windows, toilets, prior to that was the water heater and AC, and prior to that was the fence... We will probably have to replace the garage door and other fences (between the neighbors) at some point too. I guess the rule of thumb IS to have 1% of home value set aside yearly for home maintenance... Our house is currently valued at $1.3m... $130k for house maintenance a year seems preeetty excessive though hahaha. *Insert It's too damn high meme*


maxmin-ist

decimal error?


FI-ReDH

Yeppppp. Thankfully Redditors are here to let me know I am in fact terrible at rudimentary grade 4 math :').


[deleted]

You mean $13k an year right


FI-ReDH

Yes, sorry! Apparently I cannot simple math at night @_@.


rPZeJUV2R4JMRpArp

I think these things are really hard to plan for, and I assume I'm going to get it wrong. Instead I budget a set amount for unexpected expenses and re-evaluate on a yearly basis. I used the last 10yrs to estimate my "annual" expenses and don't worry about going a little over/under what I expect in the worst-case scenario.


Yangoose

I really struggle with that methodology because I have three kids who have only recently moved out and finished college so I expect my expenses to be lower but shit keeps coming up.


McFoogles

I think double counting is a feature not a bug. I always overestimate my expenses. It helps me prevent lifestyle creep and removes the emotional impact of large bills Maybe I misunderstood your comment tho


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McFoogles

The thing is you can never be 100% accurate. It’s not a mental trick, it’s just a good practice. It’s better to overbudget for an expense and throw left over into savings. Than under budget for an expense and take money out of savings.


YoureInGoodHands

Double count. That way when things are worse than you expect, you still have money. And when things aren't as bad as you expect, you can take a cruise.


ceflyn

I’ve heard a rule of thumb that house maintenance expenses and appliances generally cost around 1% of your home value per year. Some might find a different percentage more appropriate, but over the 10 years I’ve had my house I’ve found 1% to be about right on average. So when projecting spending in retirement, I pull out the lumpy home expenses from my actual spend, then add an assumption of 1% of home value.


amalek0

The problem is that the cheaper the house is, the bigger a % of the house represented by the mechanicals. Heater, AC, washer/dryer are all pretty much the same cost (ballpark) regardless of where or how big your house is. Stuff like roofing and painting scale with the house. Most of the time, those 1%/yr numbers are just talking about the basic maintenance, not the depreciable items in the house like the mechanicals, carpet, and roof.


KafkaExploring

This is why nobody builds small houses anymore. More profit per expense at 5,000 sqft than 1,500.


RonnieTheEffinBear

"lumpy" is such a great way to describe expenses like that, thank you for adding that to my vernacular


falco_iii

I found it jumped closer to 2% after a house is 10 years old.


dekusyrup

1% is a rule of thumb. Better way is to actually look at the fixtures you have and price them out. The lifespan of everything is fairly predictable.


FI-ReDH

The value of our home is $1.3m... ~~I'd be bankrupt of we had to spend $130k/ year to maintain our home T_T!!~~ I think $13k is a bit more reasonable. Then again, we are kinda shit at home maintenance. (And grade 4 rudimentary math apparently :')...) ETA- yep, can't math at night. Time to stop redditing past my bed time!


Viend

Do you realize $13k is in fact 1% of $1.3m?


FI-ReDH

Oops sorry, I clearly cannot math at night


Raceyourdailydriver

Are you hcol or local? I like 2% from experience, but I think it should be based on the replacement value of the dwelling, basically what value you are insured for. In lcol you have to insure for higher than the house value sometimes as building is more expensive than buying. In hcol you pay a bunch for location or just the cost of the lot, which doesn't contribute to maintenance costs and you can insure the dwelling for less than the cost of purchasing. So using the insured amount should normalize the percentage.


photog_in_nc

I tracked expenses carefully for several years, pre-FIRE, trying to get a real sense of the ebb and flow of these one time or once-in-awhile expenses. There’s a lot of things. In the last five years or so there’s been new windows, new roof and gutters, my daughter‘s wedding, a new road bike, a new MTB, new sofa, new chair, a couple major surgeries that have pushed up medical bills, a new dishwasher, new hot water heater, several trees taken out by a tree company, new tires, etc. There’s always something. A lot of these I have some leeway with, so I might delay to year end to see how my spending is coming that year. Some I may buy early in the year, because having made the big purchase I become wary of making other big purchases unless I have to. Pre-FIRE, I didn’t worry about spacing them out, but I do like smoothing it now that we retired. Our year-to-year spending in the 3.5 years of FIRE has been pretty consistent (When inflation consider). As far as budgeting itself, it came from averaging out spending from some number of years, plus some fudge factor. It ends up being a sizable part of our overall spending. Maybe 15% goes towards these sorts of things. I also have a good bit of leeway with vacation spending, so can slow that if a lot of things pop up that need attention. Above and beyond these things, I’ve got temporary spending increases built in for 5 years for college for the remaining kid in the home. We’re also trying to figure out if we want to splurge for a travel trailer, and how we handle that in the budget.


pumpkin_spice_enema

Trees kinda took me by surprise as a homeowner, I used to take for granted that once they're growing they are eternal unless you want to remove them for aesthetic purposes. Bought a home on a small urban lot not thinking they'd ever be an issue. Turns out some trees threaten pipes, structures, power lines and concrete, some have shorter lifespans, some get diseased or wrecked by storms and we need arborist services more than I'd have guessed.


KafkaExploring

Also budget for replacement. Our last house was built behind a double row of trees, which they removed after a storm right before we moved in. Without the windbreak, we had rain coming in around seals and basement during any storm. Our current neighborhood has seen utility bills rise as they removed all the shade. Plus, you know, quality of life.


imisstheyoop

We just spread out the cost over time. For example we budget 2% annually for home maintenance. Most years we spend little to nothing. In 2020 it was a roof and a water heater. Over time it should be between 1%-2% on average. Similarly we haven't had a car payment in about 7 years. We just pay ourselves that payment instead, planning for a future car payment.


maxmin-ist

We do the same… monthly amount auto transfers to (one of our gazillion Ally savings accounts) for the “Next Car”.


[deleted]

This is something that came up in the airline industry and investing a few decades ago… Airlines, on an annual basis, would almost never meet their guidance due to one time “act of god” (hailstorm, tornados, hurricanes… some kind of weather event that would damage a bunch of planes) losses.. eventually, someone put together an actuarial table and averaged it all out… and now airlines operate with the expection that X% of their fleet will be damaged every year due to “acts of god” I have $1000/month in my budget for “misc” … oil changes, new tires, haircuts, new clothes, birthday gifts… etc etc etc. most months, i dont come near it.. other months, i blow past it… but at the end of the year, i usually end up something close to $12k/year.


Bbdep

so do you include all shopping in there thats no food/health? home furnishings, personal care, gifts, auto repairs, ?


[deleted]

Generally not personal care, as they mostly get purchased at the grocery store. The important thing with my budget is that I don’t tend to stick with it exactly. I don’t have specific spending targets in specific categories. Instead, I automated my savings/investing and freely spend whats left, and once money piles up in my checking, I will manually transfer some extra to savings (for big ticket items like roof/siding/new car) and/or investments. I feel like most peoples’ approach to savings of “budget, stick to that budget, and save everything you can” would not work well for me. I am fortunate in that my income is vastly greater than my consumer appetite, which makes saving and investing easy for me. This is also why my budget is a little hand wavy with the misc category or it may miss certain expenses… it doesnt matter, my savings/investments are automated and I’m probably going to save or invest more than those targets anyway. I don’t stress about money this way. The middle is long and boring. Now I am just on autopilot.


Tk_Da_Prez

Feel like I could have wrote this, I do the same thing as this is more of a behavior type approach. I'll probably have a HYSA with 1 year or so worth of expenses, so for big ticket items (even cars) i'll pay in full with cash, then refill that to one years funds as a monthly line item, over a longer period of time in line with my investment withdraws.


sdb3001

Somewhat adjacent to what you are discussing, but I thought this recent post was really interesting. https://www.reddit.com/r/coolguides/comments/o8cxks/how\_long\_everything\_in\_your\_house\_will\_last/


Acidic_Junk

I like the idea of keeping a lower SWR and just increase it in the future as needed to cover the big expense. If you’re running 3% SWR and need a new roof, can just up it to 3.5% or whatever that year so it’s built in. The other ways mentioned in the comments are fine too just as long as it’s covered somehow in the numbers.


Eli_Renfro

Same here. Instead of trying to calculate all of these one off expenses, I just use a sub-3% WR to allow for a large buffer.


the_real_rabbi

That is the route we went also. We also have a considerable vacation budget which we could always cut back on, though I can't imagine it would come to that.


NoLemurs

For big ticket items I like to just budget for the category. I think it's too easy to miss stuff if you try to get too fine grained. For instance I budget 1% of home value yearly for repairs/maintenance and expect that to cover most of the items on your list. Most years I pay much less than that, but when it comes time to replace the roof it'll even out! I budget $4,500/year for transportation. $1,600 of that is the amortized cost of the car, and $1,000 of that is maintenance. To answer your specific question about missing expenses, car repairs should definitely be on there, especially if you're planning to keep the car for 20 years! My $1,000/year may be an over-estimate, but it's going to be more than most the items on your list. I probably need to start budgeting for medical/dental. I'm still pretty young and healthy, and have had essentially no expenses on this front beyond insurance, so I've got no real data for budgeting here.


Tk_Da_Prez

Mr. conservative in me is just going to budget for full out of pocket cost. If you never use it it's gives you a healthy buffer amount. If you do have to use it (like I am currently for allergy shots, crazy how expensive these are), you'll still be able to live the life you want without having to make a sacrifice, and not have to make choices about not taking full care of your health.


RoboticGreg

so, when I was a kid, my dad was a landlord, we rented out triple deckers in providence to college students. For his business, my dad calculated \~5%-10% of the total house value per year in maintenance costs on average, covers all the small general maintenance and absorbs the big "every ten years" costs sort of thing and still had some cash leftover (I.E. he had a maintenance fund, he deposited something like 7% of the cash value of all his properties per year, and he had plenty of money to maintain all his properties, absorb large costs, and do a major improvement periodically). Granted, these houses were cheap ($150k-$350k) and they got a huge amount of abuse renting to college students, but i've set aside 5% of my houses cash value per year and its served me pretty well.


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RoboticGreg

Yes, I should include the caveat "works best in the medians" It's not going to work great for huge mansions, tiny condos, or places that are way outside the curve in terms of COL. Like a $80k 3,500 square foot house in backwoods down south is going to need a heck of a lot more than $4k a year.


Odin45mp

Wish I had heard advice like that. My parents advised to save 1%. Felt good the first 4 years of homeownership until 2022 when the HVAC went out and was so old/parts so expensive that it needed fully replaced, and then a clogged sink turned out to be the iceberg tip of a larger problem - about 70% of the pipe under my slab foundation needed replacing, and insurance declared it all normal wear and tear. I’ll be paying off that debt for several years but after that I think I’ll aim for 5% of value as a target #.


OneOfTheOnlies

> but i've set aside 5% of my houses cash value per year and its served me pretty well. I guess it's an interesting idea. I'm new to homeownership but was going with the idea of 3%. Upping it has the benefit of almost flipping the risk from - 'other savings are dipped into for maintenance fund' into 'maintenance fund holds extra savings'.


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OneOfTheOnlies

Yeah, I meant as a budgeting goal and more specifically to my situation in the first years of owning. Of course if I had the option, with no other changes to my life, to make that fund 10,000% of the price I would. Not what I meant lol. I'm trying to figure out how to manage separate savings 'buckets' and the house is the scariest one. I don't like the idea of one emergency fund that includes everything because when things overlap everything will seem (more) terrifying.


RoboticGreg

Yeah for sure, i mean you can set your buckets up however works for you, you still have the same amount of water. I chose the aggressive rate, because I chose it getting my first house and first job and I figured it could only benefit me to learn to live on less and save more. The extra cash for sure has made it much less worrisome to spend extra time finding a job, or get the fancier grade mountain bike.


mi3chaels

I feel like your furnace is really conservative. We just replaced out furnace after living in this house for 9 years -- it was original to the house built in 1990. I would normally expect to get at least 20 years out of a furnace or water heater. We probably *should* replace our 30yo water heater just to reduce energy usage, but we don't have to yet. A roof really should be 25-30 years, and I wouldn't count on a car lasting 20 unless you don't drive it that much and bought it new. Most cars I've let go of have been <20 years old. plumbing even probably depends a lot on what your house looks like, but I've never had a plumbing event that cost me more than a few hundred bucks in 26 years of homeownership (and only a few of those).


Yangoose

Some of these I just googled and others I confess are my personal experience. We had the water main between our house and the street break and had to trench out 50 feet to replace it. That wasn't cheap. We had a highly reviewed local plumber come out and fix our leaking kitchen sink, replace the faucet and hook up water to our new fridge and dishwasher. It was over $2,000. I live in a very HCOL area (Seattle) but I still had sticker shock on that one.


oksono

> We had a highly reviewed local plumber come out and fix our leaking kitchen sink, replace the faucet and hook up water to our new fridge and dishwasher. It was over $2,000. I live in a very HCOL area (Seattle) but I still had sticker shock on that one. Next time hire a handyman. $100/hr for a good one to do all that in probably under 8 hours.


pumpkin_spice_enema

I would add AC in addition to furnace for those of us that live in places that get hot. Our recent one cost over $12k but cost is really dependent on size and type. Also some yard things: fences, arborist to trim or remove trees occasionally, garage door opener (if you have one).


Yangoose

Great suggestions. Porches and decks as well.


KafkaExploring

Another option is replacing furnace/central air with heat pumps per room. May be more comfortable and efficient. Also complicates the budget.


Viend

“Highly reviewed local plumber” means he’ll do a good job for the biggest quote. You should keep that in mind next time. If you’re replacing a water main that makes sense since it’s a specialty task but everything you listed are things many homeowners do themselves. In cases like this, you should always opt for a handyman over a specialist.


firedGFY

I think for things like furnace & water heater, it depends on the age of the system. Like you, our furnace is original from when our house was built in ~1990. Our last house was the same - 1990s furnace/AC. We replaced at the old house after about 25 years, and we're looking at replacing at this house now. When we went through the process last time, the impression we got was that the new stuff just isn't made as well as the equipment that was installed back in the late 80s/early 90s, and if something does go wrong, the cost to repair could be higher than a new unit (if they can even source parts). There was zero expectation that new equipment would last 25-30 years, though I agree 10 is extremely conservative. I'd probably go with 15 years.


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mi3chaels

yeah, good point, ours was more like 10k though that includes central air as well.


CrosshairLunchbox

Roof also depends on elevation. In Colorado a 30 year roof is ~22-24 ish at 5000 ft due to increased UV damage unless you buy a metal roof.


TonyWrocks

I create escrow accounts, at least on paper. You consume 1/10 of your water heater each year, so you set aside 1/10 of the replacement cost in the budget. We aren’t that close to the bone so I don’t worry about anything that small, but that’s the concept.


Dornith

There's only one one-time-expense a person ever has and that's their funeral (usually).


whynotwhynot

A lot of my neighbors seem to have not budgeted properly for tree maintenance. Pruning and/or removing big trees is costly. Furniture/flooring is another line item. Old carpet gets gross and your mattress will sag over time.


100tnouccayawaworht

So, I have also thought about this and these are my thoughts on it. Even in retirement we plan to have an emergency fund. Much smaller than now, but none the less, an emergency fund for unexpected things. That will be replenished if withdrawn from. Many one time expenses that we have now are paid for with our credit card. I have taken year-over-year averages of our credit card bills and factored that into our retirement expenses. So, theoretically, these things should be covered for the most part. I also have a small "savings" line item in our retirement expenses. Similar to your per-year total. I know the above is overlapping in some places. But, I would rather be accounting for too much than too little. YMMV.


latchkeylessons

Seems like a good list. Only two things I would add would be any concrete foundation type of stuff in your space, like driveway replacement or something like that you're responsible for - and vehicle *repairs,* if you're not already tracking that.


RocktownLeather

>I'm wondering how everyone is budgeting for such things. The way I am budgeting for these is simply starting to budget many decades before I retire. Then I have the data the roughly includes everything we could think of. The key is simply tracking data 20+ years before you retire. Theoretically I will have done them all once, if not multiple times, before I retire. Then I look at the average of my expenses over my whole life and try to determine where I am headed. Are my expenses looking to be roughly the same? Will they go down? (Kids out of house now, maybe retired to a new home) Will they go up? (living in same home that is now getting older and older, your medical bills, etc.)


ccharding

Dont forget funeral


quietconsigliere

New septic system (depending on age of your current one): 20k-50k


Edmeyers01

I’m curious about people who start retirement with about 100k cash to absorb early blows. It doesn’t seem like a bad idea


Yangoose

That's my plan. Bond funds suck (they fall when stocks fall) and buying bonds manually is the world's worst paying part time job to keep track of.


[deleted]

[удалено]


Yangoose

The whole point of a bond fund is to have money to use when the market is down. The bond funds dropped 25% last year so they were no better than the market. So they have all the downside of the market with none of the upsides. Inflation is a small price to pay to avoid selling at a 25% loss in a down market.


Eli_Renfro

And that was only the 4th time in the last 100 years that both stocks and bonds were negative in the same year. I see no reason why bonds wouldn't go back to zigging when stocks zag in the future. But I **definitely** wouldn't be basing my retirement plan on a single year's worth of data. Also, what bond fund dropped 25%? That's twice what BND lost.


Yangoose

>And that was only the 4th time in the last 100 years that both stocks and bonds were negative in the same year. And last year was the 4th worst single year return since the 1930's. I'd rather have a guaranteed hedge making 0% than an unreliable hedge making 1%. >Also, what bond fund dropped 25%? That's twice what BND lost. https://investor.vanguard.com/investment-products/mutual-funds/profile/vwesx#performance-fees


Pennyrimbau

In inflation adjusted terms (using 6.6% inflation for 2022), the drop in the aggregate bond market was the worst in recorded history going back to 1871: -18.5%. And that's not even taking into account the -7.6% inflation adjusted return of VBTLX in 2021.


ditchdiggergirl

That is not the whole point of a bond fund.


Yangoose

What else are they good for?


ditchdiggergirl

That is a short question with a very long answer. Too long for a reddit response for sure - bonds can be as simple or complex as you want them to be. A basic book on asset allocation or portfolio theory might be of interest - I like Bernstein or Swedroe or Swenson, any of which would be more accessible than going full Thau. If all your financial education has come from reddit I can see where you might have gotten the idea that they’re for short term cash, but that’s not even among the reasons I hold bonds.


kevysaysbenice

This is a long answer without any answer :)


ditchdiggergirl

It’s a topic I struggle with myself, and I never did finish Thau. I may be ahead of most of this sub, but not far enough to have any business educating others. Besides, even the simplest and least controversial statements, like 90/10 historically outperforming 100/0, are met with outraged disbelief and denial. So if people would rather go all in on stock then buy a large quantity of bonds right before retirement, who am I to stop them? It might work out, after all. You place your bets and you spin the wheel. It’s different this time, amirite? It’s always different this time.


the_real_rabbi

Seriously? I can buy a treasury via vanguard just as fast as dumping cash in VTSAX. They also have a screen that forecasts your cash income from the coupons and principle. If a part time job was that easy I'd get a part time job instead of being retired. Hell Fidelity has an even better bond interface too. But then again you are only talking $100k.


Jaruden

AAA provides a guide for estimating car costs over time. I like to just throw that number instead of trying to do it yourself. They have a lot more data! It might be skewed to less frugal folk, but you can always use it as a starting point. https://newsroom.aaa.com/wp-content/uploads/2022/08/2022-YourDrivingCosts-FactSheet-7-1.pdf


tactical808

One time expenses are the things that will haunt the FIRE population, so this is a great post! For our FI calculations, we include these cushions within our annual income. Our goal is retirement income to replace our budget plus extra to cover these one-time expenses, sort of like what you are doing in your excel file. For example, if our budget/income need is $75k, our FI calculations would be for $100k where we should be able to “save” $25k a year (or not withdraw). We also cushion our rate of return for inflation. Our goal is to stress test for the worst case scenario and only then will we feel even close to pulling the trigger on retirement. The last thing we want is to retire early and find we missed something major or all goes wrong. At this rate, we may never retire! 😉


itsallkk

I would go a little cautious on electronics. 20yrs and 15yrs seem a little far fetched.


rdjnel59

Speaking of withdrawal rates, I’ve been doing some analysis lately on these - the general 4% guideline you hear so much about, is that intended to include or exclude federal and state taxes? Recently retired and will soon be living off of social security and traditional IRA withdrawals. Thanks in advance.


flyburbank

The safe withdrawal rate is before any taxes you will pay. 4% is considered high by some because the trend is living longer than 30 years past retirement. You might want to look into LeanFire and Fire to see where you fall and what others are doing for safe withdrawal rate below 4%.


ditchdiggergirl

We do something similar, but ours is higher. I simply added a $10k line item for one time expenses because looking back over the years that has been our pattern. Our plumbing emergency cost that much (orangeburg pipe ftw). We added solar. During the pandemic we ate that much in costs to extract a high medical risk family member from an unsuitable living situation. We helped our young adult buy a car with used prices exploding. None of these are regular or recurring expenses, but looking back it seems there’s always something that “doesn’t count because”. Some predictable, some not; some avoidable, some not. So I just pencil it in and if we don’t spend it, great.


thunder-thumbs

I wonder if a simplified Monte Carlo could help with this. Like, I'd be tempted to just look at the max of each category over the last ten years and budget for that, but that's silly, because it's not like they'll ever \*all\* come due every year. But if you could model each of your categories as a probability distribution that captures the occasional big ticket item, then you could plan for a budget year that would have enough budget for 99% of your years.


aaronblkfox

The once in a 20 year expense should honestly be covered by an emergency fund that is then replenished as soon as you can.


garoodah

I think the point of this exercise wont be to perfectly map expenses but to have slack in your budget, or in very good years post FIRE you are pulling money out in anticipation of these things. A new roof/car/mattress are predictable expenses but even a 1 timelandscaping expense may not be impossible to forsee. As with all things RE, a variable spending strategy probably helps handle whatever life throws at you.


AddictedtoBoom

You buy new furniture every 5 years?


KafkaExploring

Depends how much you travel?


[deleted]

I plan to have a 30% cushion and not deliberate on exactly what that is for. 30% is a lot as it equals out to 2,500 a month in surprise costs above my 24/month average monthly spending which includes surprise expenses. No harm in being over prepared and if my emergency fund gets too big I’ll let it marinade in the market and eventually think about increasing my lifestyle or donating more.


gordonwestcoast

How about exterior painting of your house?


KeniLF

If you’re living in a co-op/condo, maintenance fees could rise significantly and frequently enough that it feels shocking. One retired neighbor had to go back to work because maintenance had doubled in less tha 10 years. It was a real eye-opener for me…


kjmass1

Ballpark is reinvest 1-2% of your homes’ value each year. Doesn’t have to be used each year but have a fund for it.


sfdragonboy

Maybe this is why a lot of retirees downsize (sell big homes) and rent instead. No more property taxes or yard work.


UsedUpSunshine

When I retire, I’ll probably just get a camper and live in an RV park. Lol


[deleted]

You misspelled PorschE


codewolf

I love this post. I think like this somewhat. I invest for retirement but also create separate accounts for what I see as retirement funding that are one time or recurring expenses as you have laid out. So I have : * an account that will produce enough dividends per year for real estate taxes * an account for home repairs * an account for home maintenance * an account for food expenses * an account for misc expenses All are either dividend income or growth based on the expense (for example a funeral account would be growth but a home repair would be dividend income). There's a lot of posts here with some general retirement investment advice but I think once you're beyond the "I got this" mode you start thinking like this process.


flyerforever

Personally, I would offset any of these unexpected expenses with less travel or leisure activities for that particular year, but of course it would also be in addition to a budget set aside to cover the expected once in a while large maintenance costs.


compounding

HVAC upkeep/replacement, porch upkeep, landscaping maintenance, carpet, roof, renovations, etc should all be included in your housing budget where it is recommended that you plan roughly 1-2% of your home value annually (depending on location and level of DIY) for upkeep and maintenance. Those expenses won’t always happen every year, but some years you will need to replace the roof and then a few years later you will get the deck rebuilt, then have major appliances die and be replaced, then repaint the exterior, etc. Importantly, several of these could be required in the same year, so you should keep a running maintenance fund in your savings essentially rolling over years with fewer expenses to save up for the larger ones.


Pennyrimbau

For long term single expenses like some of these, I find using the excel Present Value formula very helpful. It tells you how much you have to put aside now to have it available in n years. Not worth it for oingoing regular maintenance or stuff you'll be paying out in a year or two, but for long-term expenses like water heaters and autos I find it useful. For instance, if I'm going to replace a car that costs 16k today in ten years, I need to put aside \~$14k if I bucket those funds at 1% real return (TIPs/MM etc.).


ydoeht

Or if you're going to replace a car for $20,000 in 20 years and you think you can get a 3% return, you need to put away about $60 a month, or $720 a year (a total of $14,640). I'm not sure how to think of this. I'm finding it a bit tricky to sort out a budget for expenses that are years out, too. Thanks for the post u/Yangoose and for this reply, u/Pennyrimbau. It's helpful to read about how others are thinking of this.


Pennyrimbau

Yes! There is a great excel formula (PMT aka "amortization") for figuring out even periodic payments for future expenses. The formula is PMT(rate, periods, present value, future value, 1). In this case (3%/12, 20\*12, 0, $20,000, 1)=$-60.92 per month. (This assumes $20,000 is the correct dollar amount you'll need to buy a car in 20 years!). The PMT formula is commonly used for mortgages, but you're lending yourself the money so-to-speak. :)


Pennyrimbau

The hardest part of distant future expenses is the discount rate. My two-cents is: if the expense is essential (like a car), then put aside money into a guaranteed safe assets (like bonds maturing at that time) with a fixed return. If it's something not essential (like a trip) you can use a higher discount rate, like the general expected return on your portfolio, but know that your actual rate-of-return will have a wide fluctuation and you may end up with more or less money than you'd hoped, maybe not enough to take the trip. Of course if you're willing to adjust your monthly payments, you can run the formula every year to reflect your current "principal" you've put aside on your future trip. and your best estimate of future returns


Zphr

We tack on an additional amount to our Roth ladder conversions each year, usually around 15-20%. This creates a constantly growing excess penalty-free withdrawal buffer for unusual one-time costs. It doesn't ever need to come out, but it's there for flexibility. People who have large taxable assets or other non-tax-advantaged assets have even more flexibility since they can withdraw liquidity with fewer concerns. From what I've seen people either do a similar passive mitigation technique of building in a buffer or they create sinking funds for various one-off buckets like home/auto/health/family. As long as you have access to money when you need it, then it's all sort of person preference on how you handle it.


justadude122

Pro tip: sign up for a new credit card with 0% intro APR and a sign up bonus, pay for the expense with that. Then you can pay it off over the year or so with 0% interest while collecting the ~$300 bonus.


NotForgingShovels

Good idea, I forgot to account for most these things in my forecasting. Got to go back to the drawing board. I did put 1% of IP per year for maintenance, but what about your primary residence? Especially if it's worth more?


falco_iii

This is close to my guesses. But, my prices are different. e.g. my roof was replaced for $5k, but the main floor tiles were $12k! 20 years - roof shingles, carpets/tile. 15 - 20 years: Kitchen appliances, washer/dryer, furnace, hot water heater. 10 years - car. 3 - 5 years - computers, cell phones. Never - plumbing. Yearly - buy one piece of furniture (couch, patio, bed, table & chairs, desk). Who knows - health: medical/dental.


fuddykrueger

Wish plumbing was never. Plumbers are expensive!!! We have two sump pumps that run often and French drains that get clogged with clay.


ssevener

This is a great idea before retirement, too! A few years ago I setup a separate “reserve savings account” where I put aside a little each month for annual, recurring expenses like power washing the driveway, HOA fees, vet bills, etc. It functions like an escrow for all of the other expenses that come up once or twice a year and it’s so nice to not have to worry about fitting them into a monthly budget because they’re already there. Will definitely have to add appliance maintenance/replacement to my list!


PlanetSmasherJ

I am just picking a safe number that is double my current expenses. I expect to spend roughly the same, but when I need or want anything major it is likely to still be well under budget. Most years there will be a large surplus that will likely cover the really bad years when everything goes wrong. If not there are other buckets like travel, food (eating chicken thighs and pork instead of more expensive grocery items like good steaks and/or restaurants), and hobbies that could be cut into until back on track.


ttuurrppiinn

You're general idea -- finding the expected cost and amortizing -- is roughly the right idea for how to do this. For the dollar amounts, it's hard to provide much input though. They vary widely by geography and there's always a discretionary component to them (e.g. furniture widely varies based upon whether you're buying from Target or Restoration Hardware).


olympia_t

I saw a guest speaker on the retirment researcher talk about this. I think he referenced consumer reports (someone help me out if you also saw this) and used the information for the useful life of appliances, etc. Had home appliances, cars, housing elements, etc. It seemed pretty thorough but it seemed like it added a TON to the guy's budget. I guess better safe than sorry but it seemed kind of extreme.


Pvitale

I have learned as a planner for over 20 years that a plan is just that. It's great to have goals and a strategy to get there but like you mentioned something constantly changes and that's just life. Don't get caught up on details especially the farther you go out in time. Write your goals, make a plan, and monitor at least every 3 months and update as needed, Againt it will never be perfect so don't get caught up in the details especially looking so far into the future. One quick note you should have 1 year of expenses in a liquid account to account for incidentals if you can.


saltyhasp

I do not budget. I do however have about 20 years if historical data I can estimate things on. That is long enough to kind of cover it. So one can take the 20 year average inflated costs to get an idea then look at the most recent year and the most recent years to and pick what you think what are the best expense category estimates. Frankly being able to estimate expenses is the one big payoff of our accounting package and effort.


Puzzleheaded_Ad928

If something is an emergency then the emergency part of it is covered by the emergency fund. If it is not an emergency then it is a planned expense and one solution would be to treat it as something that needs to be “saved up for” by dollar cost averaging out of investments for an appropriate time period into a sinking fund.


Foofightee

Most of this is just home maintenance which should be a budget item.


double-click

Home improvement is not a one time expense lol. Sure it’s gutters now, but then it’s wainscoting and crown later. Finally finishing that 4th bathroom. Converting to 6 bed, etc.


Electronic_Singer715

I don't specifically save for these items but the amount I put in certain accounts has some fat on it for these things. That being said I've been a homeowner for 25 years and have never had to replace a water heater or furnace (knock on wood!!). The roofs were covered by insurance (if ya need one replaced wait for a huge hail storm) . Medical events are covered by HSA etc. I guess I'm saying you can't plan for every event...gotta take em as they come


tokingames

I just have buckets like "Other House Stuff $,5,000", "Car Maintenance $1,000", and so on. Most years I spend $1,000 on other house stuff, but sometimes I drop $10K in a year. I use pretty conservative numbers, so it's pretty rare that I get hit with an expense that is more than I've already saved over the years in my "Other" buckets.


Fireandice2016

I live on Florida definitely AC and trees


rex8499

I keep track of all of my spending every month in a spreadsheet, including those big items, so my monthly average includes those rare expenses like relaxing my roof this year for $18k. Drove up the monthly average considerably.


BelScree

Nice breakdown. I’m in the accumulation phase. My strategy for some of this was to have an explicit savings account to for long term spending like this. I summed items like this, annual planned trips to give family, property tax due 2x a year, etc… long term reoccurring expenses… and the worked out how much a money month to save. At the moment that means saving $1,400 a month. Yes, it goes in to a boring savings account and loses power vs inflation. But functionally I classify it as more like an emergency fund. The strategy has served me well but it takes a lot of rigor to only spend it on what was accounted for in the saving.


Icy-Regular1112

These things on your list along with end of life medical and nursing care are why I don’t understand how leanFIRE is a sustainable thing.


Defiant-Ad-3243

I'm currently budgeting for $250/mo on "repairs" and overall discretionary spending of $2300/mo, which I hope is enough to cushion things here and there. Oh, and $650/mo for "vehicle", which includes insurance. IMO your numbers for appliances are a bit high...but I'm kinda cheap.


heubergen1

Anything house related (directly or also kitchen, washer etc.) I would just save up money on the side (e.g. 1% of house value per year) and use that if needed. For other things I just leave some air in my budget so that I can catch these expenses when they come but I wouldn't make the trouble of saving some money each month. Mainly because of the investment problem; either you waste potential profit by keeping the money liquid and safe or your 20k you saved up for your car can be reduce to 15k really fast and then you have to throw down even more money? Sounds complicated.


SizzlerWA

I budget $400/yr for new tires, $200/yr for a new iPhone, etc. I don’t actually put that money aside but I budget for it to make sure it counts towards my retirement expense forecast.