Here’s My Budget Under a Microscope – FIXED and Variable Cost Reality

by Darwin on January 13, 2013

For all the talk about saving money by skipping the lattes and tearing Bounce sheets in half, many people don’t actually have any idea what their fixed costs are each month.  They know they spend up to – or over – their monthly paycheck, but they’re not really sure what’s fixed and what’s variable.  By fixed, I mean, for the most part, there’s not much you can do to change that spending without major lifestyle adjustments (i.e. selling your home and becoming a renter, stop using your swimming pool this summer, etc.).  By variable, this stuff’s way easier to control and is where the bulk of your savings could come from should you need to adjust.  Nevertheless, even though I like to pride myself on being at least a modestly successful saver, investor and future retiree, I’ll openly admit that I don’t always fully analyze and understand my fixed versus variable costs, so I thought I’d put it in writing and share.  I’ve also outlined where I think I have some opportunities and where I’m not where I’d like to be:

  • Mortgage $1,634
  • Taxes & Homeowner’s Insurance Monthly Equivalent $550
  • 2 Cell Phone Bills (w 1 Data Plan) $140
  • Comcast Internet, Phone, Cable $159
  • Gas & Electric Utility $375
  • Water Utility $35
  • Waste Disposal $45
  • Pre-School $200
  • Speech Pathologist $250
  • Auto, Life Insurance $149
  • Pest Control $40
  • Dry Cleaning $25
  • Subscriptions: Sunday paper, Sirius, Businessweek $25

Total Monthly Fixed Costs: $3637

That number is hard to believe since it seems like a few short years ago that I started working and that fixed-cost number alone way exceeded my monthly take-home pay; sobering.  For the most part, these fixed costs are FIXED!  There’s not really much I can do about them.  I already did a no-cost refi (awesome move outlined here) to both shave my monthly payments, AND cut my term by a few years with no costs out of pocket.

Taxes and Homeowner’s Insurance are fixed and only go up with inflation
The cell phone bills are relatively fixed. I’m the only one with a data plan, the wife just has an old-school phone.  But she got the higher minutes and unlimited texts.  In a jam, we could always shave $20 off the total bills by cutting the talk time/texting I suppose.

Comcast bill is already negotiated down from a $200+ in services.  I don’t need $200 in services, but since I get premium channels for free now, discounted DVR, etc., I’ll take it.  I outlined here to to save hundreds per year on your Comcast Bill verbatim.

Water, waste, pre-school, insurance are fixed.

It seems like with 3 kids and all of them having speech issues, it’s a few thousand per year for a decade to get it right – that’s $20,000 on speech we’re looking at across our 3 kids.  Parents underestimate how important speech is in learning, reading, social impact, etc., so it’s worth it to us to pay for a solid teacher when the state/school provided options are not adequate.

I do look forward to the $450 to drop out within 2 years when our daughter hits Kindergarten and hopefully doesn’t require further private speech lessons.  That will be a nice break, as well as my wife probably returning to the workforce by then.

Dry cleaning – I re-wear my pants quite frequently and save money by working from home (see how much I save with just 1 day a week out of the house) occasionally, but still end up with at least one billing cycle each month for dry cleaning.  We both hate to iron and especially for my headquarters trips, I always have to have nicer clothes, perfectly crisp.
Subscriptions could go in a jam as well.  With Spotify and Podcasts now for my long drive, I don’t really use satellite radio much.  And I get most of my news online.  I’ll consider cutting something here; I already cancelled Netflix earlier this year out of the recurring subscription category.


This exercise made me take a harder look at our fixed costs and they just seem too high.  Something had to go, even if just directionally in principal since these don’t make a huge dent.  But after pulling these numbers together last week, I’ve since cancelled the following:

  • Pest control.  My wife disagrees.  She hates the spiders and mice we have occasionally, as we’re pretty close to the woods. And the local company has some gig going where if you cancel and have to have someone come out on a one time basis while NOT on their plan, it’s an arm and a leg.  I’d sooner save the $500/yr and if we need someone once every year or two to take care of an issue for $300 we’re still coming out ahead.
  • Sirius. I used to love Sirius since I basically hate terrestrial radio so much. It’s really terrible, loaded with commercials and the same 6 songs over and over again.  But now with Spotify, podcasts, phone calls I have to make while driving (headset of course!), there’s not really a ton of time to even be listening to it!  Plus, Stern’s nowhere near as entertaining as he used to be and even the music stations aren’t that good compared to Spotify radio and playlists I set up.  I just didn’t have the justification to keep it going.


Now, below is all the stuff we have more control over – Variable Costs

  • Grocery ~$1000-1500
  • Entertainment ~$100-$400 (could include vacations spread across full yr)
  • EZ-Pass ~$20-50
  • Gas ~$150-250 (I’ve been saving 5% with the best gas rewards card)
  • All Other – anywhere from $500-$1500 depending on the month and large purchases, clothes, medical expenses, car repairs, etc.

You probably think $1500 a month on groceries is obnoxious.  That’s the word that comes to mind when I look at it.  But the reality is, we have 3 kids, my wife’s a great cook/foodie, we buy a fair amount of organic, and we entertain a fair amount, especially in the spring and summer with the pool we recently put in.  We’re also both doing South Beach now (I just lost 13 pounds now in a month almost effortlessly – totally cake.  Check out the cookbook for recipes), but anyway, eating a lot of bacon, eggs and vegetables instead of cheap pre-packaged stuff, pastas and cereals costs more.  You don’t get coupons for fresh food very often and you can’t necessarily buy in bulk like stuff that can sit on a shelf for a year.

Cash Back Cards Save Us Hundreds

Fortunately, I get back close to $1000 per year with the best cash back credit cards.  I save an amazing 6% on groceries with this specific Amex Card, 5% on gas with the PenFed Visa (only $15 to join once) and a mix of 5%, 3% and 1% on other categories depending on the category and quarterly cycle, etc by just picking the desired cash back card (see this list of many options) depending on where you spend the bulk of your money.  Bottom line; if you have the top 2-3 cash back rewards cards and use them on the right purchases, you can effortlessly get back several hundred dollars per year in tax-free income.  Added bonus?  Just register them on UPromise like the $75 check I just cashed for doing nothing.

Total Spending Per Month is Quite High

I know, this is a personal finance blog, so you expect to hear that we knit our own clothes and grow all our food in the back yard to have like $1200 in monthly spending.  Well, we don’t.  This is the truth.  We have a pretty high monthly spend in my opinion.  I used to not even make enough money to be able to cover that kind of spending a few short years ago but as I’ve made more money at work and via my side incomes, well, the family has grown and so have the expenses.  Fortunately, I’ve built up a fairly sizable emergency fund, I’ve been saving for retirement and have a decent amount put away in 529 plans so far, but admittedly, during big months or around vacations, we pretty much spend what I make after taxes/investments that are fixed.

So, that’s my budget under the microscope.  Feel free to critique, relate, or comment otherwise.

Incidentally, I recently posted my full 2012 Net Worth Update as well which takes a different approach in looking at how my various assets and liabilities stacked up last year.

What Are Your Fixed and Variable Costs Like?

{ 3 comments… read them below or add one }

Lance @ Money Life and More January 13, 2013 at 6:10 pm

It is always interesting to see how others budgets. If there was an emergency like job loss I’d imagine some of the fixed costs would get cut temporarily but overall they seemed pretty essential to me. My fixed costs are pretty low but I live in a very low cost of living area which does wonders for my wallet. I’m just not a big fan of spending money I guess 🙂


Jules@Faithful With a Few January 14, 2013 at 11:57 pm

The teacher in me is focused on the speech help that you are getting your children. This is a lot of money, but the benefits of getting it for them while they are young are worth every penny! Kudos to you for being proactive parents!


Darwin January 14, 2013 at 11:59 pm

Thanks. My wife’s a teacher too and it’s very important.


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