Day 3: What Does Your Life Cost?

Welcome back to ChooseFI’s 5-Day FI challenge.

Today, we’re going to turn our attention to answering this question: “How much does my life cost?”.

This is important, because figuring out your living expenses helps us understand your starting point on the path to FI.

We like to break this down into a couple of different categories.

Big structural living expenses

We start with the big structural expenses – things that you have little choice in changing, at least not quickly. These include:

Your mortgage or your rent
Your car payments
Any type of debt you may have, like student loans or credit card balances.

Controllable living expenses

Then you go to your main line items that you do still have some control over, like:

Groceries: You can shave up to $500 a month off of your groceries, just by being intentional and planning meals.
Cable bill: Do you really need this? Are there alternatives?
Cell phone: If you are paying more than $15 a month for 3 gbs of data and unlimited talk and text for one line, you’re paying too much.
Power and water: By being smart about how much electricity and water you use, you could save at least $100 a month, probably even more.

Discretionary expenses

And the third category is ultimately your discretionary expenses – the things that you have total control over, and which you can out and still live a great life. These include:

Gym memberships
Various subscriptions
Eating out and entertainment

Today's Action Step: Track Your Money

Today, your action step is to look at your bank and credit card statements and actually calculate what your life costs.

You can put them on a sheet of paper, or if you prefer, a Google Doc or Excel spreadsheet. There are even some online tools that can help with that (see the Resources Section below).

So, how much does your life cost?

Now that you have your number, get ready to take action in the next lesson to slash some of your monthly expenses.

Resources To Dive Deeper:

Barrett Family Cookbook: Never pay more than $2 per person per serving again.
Find out where your money is going: A review of Mint (not to be confused with Mint Mobile), a free app to track your expenses.
Track your net worth: A review of Personal Capital, another app that can track your expenses as well as your net worth.