Recurring Expenses Vs. One-Time Expenses

I discuss dividends and investing a lot here at Dividend Mantra, but I’ve also been very open about my belief that one’s ability to achieve a high savings rate will have far more relevance on their ability to build wealth over the long haul. Being an all-star investor is important, of course, but being an all-star saver is even more important. Put the two together and you’ll be unstoppable.

I tend to look at my expenses through a different set of lenses compared to most people. Most compare their work income to expenses, and if the expenses are covered by income then that’s considered a pretty good situation. Even better if there is a gap between that job income and expenses, and better yet if that gap is large. However, I don’t look at my work income and compare it to how well covered my expenses are.

I instead look at expenses in two different ways, and how I look at them depends on if they are recurring in nature or only one-time expenditures.

Recurring Expenses

I look at recurring expenses as a noose around my neck, quite simply. The more of them I have the tighter the noose becomes. Every recurring expense I have means I am obligated to earn some type of regular income constantly to cover that liability. If I lack an ability to earn a regular income for whatever reason, then I am no longer able to pay whatever recurring bill is in question.

Examples of these types of expenses include a mortgage, car payment, cable bill, phone bill, utilities, etc. These expenses demand a constant stream of income because they are also constant in nature; they never really go away, for the most part.

Building a passive source of income is designed to cover these expenses, because most popular sources of passive income (dividend income, rental homes, fixed income) is designed to fluctuate as little as possible so as to cover likewise consistent bills. The quicker you can reduce recurring expenses while also simultaneously increase passive income, the quicker you can declare yourself financially independent.

I don’t tally up recurring expenses and compare them to my ability to go out and earn a wage. Instead, I determine exactly how much I’ll need invested at a realistic yield to pay for my regular bills. My entire portfolio has a yield of somewhere right around 3.5%, so that’s typically what I use for these calculations.

So, if my recurring/fixed expenses are $1,400 per month, that means I need $480,000 ((1400*12)/0.035) invested and earning a 3.5% yield in order to generate enough passive income to meet my obligations without having to sell off any assets. That’s no small sum of money. So, as I pointed out above it’s in your best interest to minimize your recurring expenses down to a level that is sufficient, realistic and maintainable.

I’ll use myself as an example. As many of you already know, I don’t have a cable television subscription. I instead use a digital OTA antenna and get 5-7 channels (depending on weather), which are HD and free. But, this isn’t always fun or easy. This past Sunday my girlfriend and I had to play digital antenna tetris where we stacked the antenna on top of a box fan, which was then placed atop a dog stroller. This was so we could get football, because for some reason we could only get a signal in that one particular spot. We all do what we have to to save money (and watch football). It’s not always easy, but it sure is fun!

Who loves football?

I look at recurring bills as a noose around my neck because as I’m suffocating myself through my own actions – mounting up bills that require me to go out and work to pay for – my cash flow is also suffocating, as I’m unable to divert cash to investments because it’s being used to pay bills. Reversing that trend and increasing your free cash flow is paramount to your long-term success and ability to build wealth.

One-Time Expenses

I look at one-time expenses a bit differently. Although they aren’t a noose that starts to tighten its grip right from the first day of the month, they do choke off cash flow when they occur. I try to limit these as much as possible, but sometimes this is difficult.

One-time expenses are expenditures or obligations that aren’t recurring in nature. Examples include the occasional replacing of long-lasting, durable goods like furniture, appliances, clothing or even the result or rare events like medical care, gifts or vacations. These expenses can’t always be as easily controlled as recurring expenses, nor can they be as easily forecasted.

Because of their irregular nature, I don’t calculate how much capital I’ll need invested in order to yield an appropriate amount to pay for them. Instead, I do two things. First, I automatically build in a margin of safety to the calculated passive income I need to cover recurring expenses and the capital necessary to yield the appropriate amount of income, thereby having a little capital left over every month to cover unforeseen expenses. Second, I justify each expense on an individual basis and compare the cost of the action to how much invested capital (and hence, passive income) I’d have at a later date if the expense didn’t occur.

For example, I recently discovered that I’m still dressing in clothes that I purchased just out of college. Although I can still physically fit in these clothes, psychologically it feels very strange indeed to wear ripped jeans and graphic t-shirts every day. What was appropriate for a 22 year-old might not best befit someone soon turning 32. I actually realized this a while ago, but my inner frugality convinced me to continue dressing age-inappropriately. So, I’ve mostly stuck to the same set of t-shirts, jeans and extremely casual clothing I’ve had for about a decade now.

Clothes from college!

I decided I have two options. Option 1 is to live with what I have. The clothes still shelter me from the elements and allow me to walk into establishments without fear of being arrested for indecent exposure. Even though I might look funny dressing like a college kid, life could be worse. This option costs $0. Option 2 is to finally update my wardrobe to levels more appropriate for my age and purchase a pair of chinos, maybe a nice pair of dress pants, a blazer or two, some dress shirts and maybe a pair of dress shoes. I figure Option 2 will likely cost me $1,000 if I buy quality clothing that should last a while.

After some deliberation and discussion with people close to me, I decided on Option 2 (this option was heavily favored by everyone). So, I have a one-off expense of $1,000. What I do when I’m faced with a one-time expense like this is I compare this expense to how much future capital I’d have had the expense not occurred. Let’s say I can earn 8% on my money for the long haul. And let’s say I can get by for another ten years with the clothes I have (the only holes in them were there were when I bought them). That means I’d have $2,219.64 ten years from now (ignoring taxes and inflation for simplicity and brevity sake), and figuring that capital stayed invested earning a respectable 3.5% yield I’d have $77.67 per year in passive income coming my way. Doesn’t sounds like much; but it’s more than nothing. And that will only continue to grow for decades on end from there.

After doing the math, I concluded that I’m actually okay giving up my right to that future capital and the passive income stream it would build. Obviously, I usually don’t take the path to spend money but instead quite often choose the future capital. However, the point of the exercise is to add up the numbers and seriously contemplate whether the action is worth the ultimate cost. That $1,000 TV isn’t just $1,000; it’s giving up the right to a lot more future capital and an income stream for the rest of your life. That $3,000 vacation isn’t just three grand. It’s a whole lot more than that. If you’re okay with the ultimate cost after running the numbers, then that’s your decision. But if you just look at one-time expenses for the money that leaves your pocket today and act like it won’t impact you ever again – well, I believe you’d be making a mistake.

Conclusion

The key to looking at recurring expenses and one-time expenses is looking at them differently. Recurring expenses require a source of constant income to pay for. If you plan on ever becoming financially independent, you’ll have to replace your job income with a passive source of income that hits your bank account whether you work or not. And the bigger your monthly nut is, the more your passive income must be in order to meet your liabilities. Conversely, one-time expenses don’t require a constant source of passive income. However, the money must come from somewhere so you’ll want to build in a margin of safety when you figure out how much passive income you’ll need to cover your recurring expenditures. Furthermore, you’ll want to calculate exactly how much one-time expenses are truly costing you. That $3,000 vacation to Europe ends up being a lot more expensive when you compound $3,000 over 30 years at 8%!

How about you? Look at recurring expenses and one-time expenses similarly? 

Thanks for reading.

Photo Credit: Stuart Miles/FreeDigitalPhotos.net

Comments

    • says

      FFdividend,

      Absolutely. Once you have your recurring, regular expenses covered you’re in pretty great shape. There are billions of people around the world that would kill to be in a position like that. I try to never lose perspective of that.

      Best wishes!

  1. says

    I saw the title and thought this was going to be about owning individual stocks vs. ongoing fees with mutual funds.

    I’m about your age and no longer want to dress like a college kid either. I see no problem updating your wardrobe! I have a “miscellaneous” line in my budget which I use for clothing among other things. I tend to buy a pair of sandals here & a shirt there instead of plopping down a grand all at once. I simply replace things as they wear out.

    Thanks for the entertaining read!

    • says

      Compounding Income,

      Haha! That would have been a great discussion too. Although I kind of wrote about that not long ago when I compared index investing to dividend growth investing. Always a lively debate. :)

      I used to buy a piece of clothing here and there, like you do now. However, when I really decided to take charge of my finances a few years ago my frugality took over and I had no room for buying clothes. So, updating the wardrobe has definitely been on the back burner. And the wardrobe was already a bit dated when I started this journey, but I was still in my 20’s so it worked.

      Best regards.

  2. says

    Haha ^ I agree with Compounding Income” and his first sentence. When you reach FI, I foresee your recurring expenses disappear, and several one-time expenses coming about. It will be tough to get an exact amount invested to cover your traveling/adventure expenses, but you did mention having the margin of safety in there (and a budget =) ) so you’ll be fine.

    I on the other hand will have many recurring expenses to cover, at least until my kids are grown. After I reach FI I will continue working to build my margin of safety, but I guarantee you I won’t have my day job forever and make excuses to be stuck there…. Cheers DM

    • says

      Investing Early,

      Yeah, I think it’s imperative to build in a margin of safety with the budget to cover unforeseen expenses. Of course, having a side income or part-time job could also allow one to budget passive income pretty tightly and let the other income cover the rest. There’s many different ways to do it.

      There’s many cases of early retirees that build up the passive income even after they retire. Pete over at MMM is a prime example of this. He continues to build up his passive income and investments even as he lives off the passive income they provide. He probably could have retired much earlier and still would have been fine. Of course, he’s in a unique situation.

      I think as long as you have a few years of budget data in front of you and build in a sufficient margin of safety you’ll be fine. I can look at my budgets and add up my “Everything Else” category and clearly see where non-recurring expenses are coming from. A lot of it is gifts and travel. And these are interesting in that they are semi-recurring because birthdays and holidays have a habit of repeating themselves. :)

      I wish you the best of luck in reaching FI and getting to where you want to be.

      Cheers!

  3. says

    Good post… I don’t have a TV. If I want to watch TV, it is the odd hockey game which I can get up here on Saturday night live on internet in Canada. I buy my clothes at second hand stores. If I need the clothes to look really new I end up paying slightly a little more. I will eventually change this scenario, but I started my journey to FI later than I should of so I make a lot of sacrifices right now.

    I make sacrifices like this so I can grow my passive income at a quicker rate.

    • says

      Investing Pursuits,

      I watch TV here and there. I already had the plasma television when I first started living frugally, so it was easy to cut the cable cord and watch free OTA digital HD programs. I could probably sell the TV, but it just wouldn’t be worth it.

      I actually really love sports. That’s the one thing I miss from having cable TV. And right now I live far away from any sporting events. I do really miss going to a live hockey or football game, or watching them on TV. Luckily, I get the football games on Sunday and so it’s worth whatever we have to do to get reception.

      Good for you for making sacrifices! I know I’ve certainly had my share and I’m much better off now for them. :)

      Take care.

  4. says

    Just a thought, but the one time expenses maybe you can add them all up over a year and divide by 12, and add this to your 1400 figure. As we both know those one time expenses aren’t going anywhere. You want to maintain the same quality of life when you are retired, so you might as well add all monthly expenses over a whole year and divide by 12, which I think should give a pretty good picture of how to budget monthly, maybe you will be up to 1600 or so if you do that, but it is what it is, I am doing the same thing.

    • Debbie M says

      That’s pretty much what I do. Virtually all of my one-time expenses are really part of an ongoing lifestyle. For example, if I am going to have the sort of lifestyle where I own a car, I am occasionally going to have to buy a car, not to mention do car maintenance and repairs. So I do budget for those. Over time, I get better at estimating the monthly costs:
      * Health: $300 ($200 for insurance plus $100 extra) – the extra $100 is much more than I spend, but I just turned fifty, so it seems like I am unlikely to have this good luck indefinitely, you know?
      * Car expenses: $183 – this is based on what I actually spent over the life of my last car, but it seems to be more than what I need for my current car.
      * Next car: $63 – I expect to have my current car for well over 10 years; there should be plenty of time to save.
      * Housing maintenance: $156 – I’ve read you should budget 1 – 2% of the value of your home per year for this; I’m going more toward 1%. After living here for 14 years without much happening since the first couple of years, I can afford to have several things go wrong at once.
      * Property taxes, homeowner’s insurance, and flood insurance – 338 + 92 + 26
      * Long-term fun (expensive things like vacations, electronics, furniture): $200
      * Renovation savings (I’d like to get the clothes washer out of the kitchen into a dedicated laundry room, have covered parking of some kind, add a dishwasher, and do some updating–not granite countertops, but better wiring and stormproofing sorts of things: $134 when I’m working, $0 when I’m not
      * Short-term fun – that’s my everything else category: things like clothes, movies, restaurants, dance lessons, books, games, parties, costumes, gifts, tools, and supplies – $118
      Every year I revise these amounts for inflation.

      Still, some of these expenses can be eliminated or postponed, so you can treat yourself only when you have an extra side job or something. You can say that when this car or computer dies, I just won’t have a car or computer for a while, or I’ll put off taking trips or fixing things that won’t deteriorate if you put off fixing them.

      Your first picture made me laugh! Good job.

      And I know thrift stores and garage sales aren’t as good for men’s clothing as for women’s, but you might want to check out the ones near you–You are a size that other people grow out of, so you might find something. If those don’t work out, you might like a consignment shop.

      Is it wrong that I still dress like I did in college (though without many of the same actual clothes)? Fortunately I live in a very casual town.

    • says

      Took2Summit,

      Well, budgeting for one-time expenses and justifying them are different. I plan to budget for them by adding in a margin of safety to my passive income figures, but I justify them by figuring how much future capital and passive income I’m losing by spending the money. Spending $500 here or $400 there on non-recurring expenses is something to take seriously. Recurring expenses tend to be pretty necessary as for most of us frugalites they are focused on shelter, transportation, food, basic utilities and the like. Non-recurring expenses tend to be non-essential (unless it’s related to medical care), and so even though your monthly cash flow won’t be affected on an ongoing basis you’re still losing that money now and forever.

      Best regards.

    • says

      Debbie M,

      Thanks for the thoughtful comment.

      I’m with you. Some of the one-time expenses recur to the point where they are difficult to avoid or postpone. And that’s fine, but it’s just important to recognize the true implications and cost. Recurring expenses are easier to rationalize and just pay because, for the most part, they’re necessary, but one-time expenses need to be extrapolated out into future cash flow lost. At least, that’s my opinion.

      Thanks for the tips on clothing. I’ve looked around my area at the Goodwill stores and Plato’s Closet (sells used clothing) and there isn’t much to choose from. Goodwill usually has older gentleman’s clothing (and usually larger gentlemen) and Plato’s Closet tends to focus in on clothing that appeals to a much younger demographic. I’ll keep my eyes peeled, though.

      Best wishes.

    • Debbie M says

      I figured you probably already tried for used clothes. Ah well.

      To me, all expenses need to be extrapolated out into future cash-flow lost!

  5. says

    First off… a dog stroller? What the heck is that?!?! :) Thought our furry friends had legs!

    Anyways, I agree there needs to be a distinction between how we think about one off and recurring expenses. But as T2S said above, it is important to factor this in somehow. While it might not accurate, it is still important to develop a stream of income to the point where you cover both the recurring and the estimated one-off expenses. Working that extra year or two, or finding ways of developing a stream of income great enough to cover both is my goal, so that I can live life as I see fit.

    • says

      w2r,

      Haha! Yeah, the dog stroller. My girlfriend bought that recently for her pet Chihuahua. I’m just glad it allows us to watch football on Sundays. :)

      I agree with you. Budgeting for expected one-time expenses through a buffer or margin of safety in the budget is important, as I pointed out in the post. However, being able to pay for the expenses and justifying/rationalizing the actual cost is different. And when I point out recurring expenses as being different, I’m mainly talking about essential costs like housing, transportation, food, etc. These are easy to justify. On the other hand, it’s more difficult to justify a really nice road bike, an expensive pair of jeans or a new lamp. That’s the point behind the article: recognizing how much these one-time expenses really are when you extrapolate them out into lost capital and the income that capital would provide you.

      Best wishes!

  6. says

    It’s funny, this is EXACTLY how I view expenses. My fiancée looks at expenses as x% of her income, which is dangerous because we both make a fairly good living. I see it as a lost future dividend income – literally I envision a stack of money that gets wings and flies away from me, never to return.

    A tip from a somewhat fashion-conscious Swede: Go for quality rather than quantity, choose 100% wool or cotton and avoid polyester, and make it a sport to go shopping during sales and never buy anything unless it’s at least 50% off (at least here in Sweden we have two big sales each year after Christmas and summer). If you can’t find good items on sale, I must also recommend H&M (Sweden’s best stock-listed company and one of my major holdings) for cheap but good quality everyday wear! They have 3000 stores worldwide and several in the US, including an online store at hm.com.

    • says

      Karl,

      Glad we’re on the same page!

      I agree that looking at your human capital or earning potential against how much you spend and comparing the gap is wrong. You should only be comparing how much income you can generate with no work on your part to what your expenses are if you ever hope to become financially independent. Even if you’re not interested in FI this is a noble goal because you never know what can happen in life.

      Thanks for the fashion tips. I’ve been digging around the internet for some tips (I haven’t bought personal clothing in many years) and that’s the general consensus: stick to high quality.

      H&M appears to have nice clothing that’s not too expensive, but there are none around me. I’d have to drive over an hour away for the closest store. However, I do have a discount/outlet mall not too far away and they have quality brands like Calvin Klein and Banana Republic so I might look there this weekend for some new digs. :)

      Cheers!

  7. Anonymous says

    Love your writings DM.

    One important thing with One-Time expenses is also how much recurring expenses will they cause? Few people really analyze the “true costs” or think it through. I once bought a boat(the mother of all money pits, maybe closely followed by owning a horse). I had a one time expense + recurring expenses of gas + oil + insurance + repairs + license and registration + boat dock fees. It can get crazy. Very important to think through the true costs. I have friend that have RV’s, I love to crunch the numbers for them and show the true costs of RV ownership….most of them could take an awesome 2-3 week trip each year to a 5 star hotel for the cash outlay in their RV when they count all the costs. People are bad at math, oh well.

    You do a great job of shedding light on things and promoting rational thinking in others. Thanks for the writings.

    Buster

    • says

      Buster,

      Thanks for the kind words. Glad you enjoy what I write. That means a lot to me! :)

      Great point there. I was going to extrapolate on the fact that one-time expenses can then lead to recurring expenses, but the article was already a bit wordy. I tend to get carried away.

      A great example is the boat. A big one-time expense, unless you get a loan in which case it’s now a recurring expense. Either way, you need to justify that by the lost capital. And then you’re guaranteeing yourself recurring expenses via gas, insurance, slip costs, etc. Great point!

      Please stay in touch!

      Best wishes.

    • says

      Anonymous,

      I noticed that drop late in the day. I was quite busy at work today and didn’t even get a chance to check the market until after lunch. That drop definitely took me by surprise; I didn’t see it coming.

      I’m not sure if I’m going to add or not. I liked at $60, and liked it even more at $55. I’m loving it here at $50. It’s incredibly cheap. The P/FFO is now about 10. The dividend is well-covered and the miss wasn’t really that bad. I think the market just really hates this stock and is looking for anything to punish it. I would be all over this if I didn’t already own a decent-sized position. I’m just not sure if I want to make it even larger than it already is. DLR is a comfortable position size for me right now, and REITs make up just under 5% of my portfolio – which is my target. I think I might be getting a little aggressive by adding, but the shares are quite cheap. It’s something I’ll have to think on overnight. If it drops even further I’ll likely add because it’s too cheap to ignore.

      Best wishes!

  8. says

    “That $3,000 vacation to Europe ends up being a lot more expensive when you compound $3,000 over 30 years at 8%!”

    Ok, but the alternative is never doing anything and not having a life… what’s the point of being super rich if you never get to enjoy it? =p

    • says

      Bridget,

      I didn’t mean you should never buy things or treat yourself or take a vacation. That’s not the point behind the article, living frugally or aiming to achieve financial independence.

      Rather, I simply wanted to point out that every cost has a consequence, and that consequence is far more reaching than you might think at first. That expense means you lost capital that can never be compounded, and you will forever lose a chuck of income. That’s not to say that certain expenses aren’t worth the loss. Quite the contrary, I pointed out how I went through the calculations myself on purchasing clothing and I still chose to buy clothes because I need to update my wardrobe. So, I’m not saying don’t spend money. I’m saying be conscious about what you’re spending it on and realize exactly what that true cost is over the long haul.

      Best wishes!

  9. says

    Well Jason, these are my thoughts:
    Instead of losing time setting up a free tv channel, why don’t you take a walk with your grilfriend and wathc the see waves and have an unforgettable momnet of romance that you will always have with you during all your life ?

    Clothes are of the utmost importance to the magician or sorcer you are, if you want to impress on influential people, maybe your own boss. And moreover they completely change the way you feel inside, your thoughts about companies to invest in and so on. Must we be clothed like teen-agers or prisoners to have some more money ? I had a mini brain stroke some months ago and it changed completely the way I see things. I say that if I do not want to spend anything at all, I might as well be dead right now, no ?

    And for the vacation to Europe, I think you lose nothing not jumping over the ocean. I would advise you to go to Phillipines.

    I respect your way of life and your efforts to keep expenses down, because it is the right way to do. But I strongly advise you not to buy companies with lots of debts, they will take a beating in the next crisis. Take care !

    • says

      Aspenhawk,

      Thanks for stopping by!

      The girlfriend and I get plenty of walks like that. In fact, when we had no car we did quite a bit of walking. :)

      I appreciate your input. And I hear you on the trip to Europe. However, I wonder if Europe isn’t special to you only because you live there? If I were to hear from someone who really wanted to come to America I might also wonder why. Although I will say I’m quite intrigued by Asia – specifically Thailand the Philippines. Cheap living, good food (especially Thailand), nice people, tropical climates, beautiful beaches, etc. Great stuff! :)

      Best regards.

  10. Brandon says

    As a guest poster on Mr. Money Mustache, I should remind you that there are way more than two options regarding the clothes dilemma. Rather than spend $0 or spend $1000, think about going to the local thrift store(s). We just had an early snow here (Carson City, NV) and I went into the local thrift store and got a great pair of waterproof winter boots for $3 and a brand new pair of winter snow gloves for $1. So I have the majority of my heavy winterwear taken care of for an amazing 4 bucks! Sometimes you have to shop around a bit, or try different stores depending on what they have in stock at the time, but you will be amazed at what you can find. Sometimes they have designer clothes, brand new clothes, etc. Last month, they had gotten in whole boxes full of brand new Hanes T shirts that had a national guard logo printed on the back for .99 cents each. I bought 10 of them, and they’ll probably last me 10 years. Nobody will ever know where you got the clothes from, and the stuff is literally 95-99% off new premium retail. Anyways, consider that “Option 3.” For $100, you could probably outfit yourself for half a decade or longer, if you scoped out and waited for the good deals… and something tells me you are familiar with doing that with purchases in some other area…

    • says

      Brandon,

      Thanks for that.

      I agree that there’s more than one way to do it. However, I’ve visited our thrift stores and used clothing shops and there isn’t much there. I think it comes down to the fact that the demographics here in Sarasota skew to a much older population. However, I’m still going to check out the discount stores like Ross and Marshall’s and see what I can round up. :)

      Best wishes!

  11. Anonymous says

    Along time ago back when I was your age and getting my income stream going I came up with the idea I could rent my condo out and live in my car that didn’t work out so well.It is ok that you spent some money I think I know how you feel with that $1000 gone and on your back I feel you you are doing fine.I hate to spend money. Next month you will buy some more income producing stock and all will be fine In your life

    • says

      Anonymous,

      Thanks for the support!

      Your thoughts really echo my own. Sometimes I get really extreme ideas in my head, especially when I’m having a rough week. Then I come back down to reality and still operate in extreme ways, but I tone it down a bit.

      I agree that the money spent on clothing will be gone, but I’ll continue living otherwise quite frugally and keep on trucking along. :)

      Cheers!

  12. Spoonman says

    I like the rigorous way you regard your non recurring expenses. I go through a similar thought process every time I make sizable purchases. On the subject of clothes, someone over at the ERE forum wrote something very interesting on the subject which I will paste here when I can (on the bus now).

    • says

      Spoonman,

      I look forward to the subject matter as discussed over at the ERE forum. I still think that is one of the best resources on the web. Just a great collection of really intelligent people focused on saving money and retiring early. I still stop by all the time, although I don’t post as often as I’d like because life keeps me so damn busy.

      Best wishes.

    • Spoonman says

      Sorry, I thought I had the thread bookmarked. Basically one guy pointed out that you can be “one standard deviation” away from the norm without drawing too much negative attention to yourself. I tend to agree with that observation, if you dress decently and those around you don’t seem to mind, then you can keep old clothes and save some money.

    • says

      Spoonman,

      Great thoughts there. I agree. I think you can mostly “fit in” with the mainstream if you’re not completely extreme.

      It’s interesting. I do lack ambition to a degree, and the inner slacker in me is begging to keep the ripped jeans and baggy t-shirts because it gets me to ER even quicker. Even two extra weeks of work for appropriate clothing seems crazy to this side of my personality. However, another part of me wants to dress professionally and semi-sharp during my free time. Not to “fit in”, but simply to feel good about myself. It’s an interesting internal conflict.

      Thanks for the thoughts. :)

      Best wishes.

  13. says

    Had a similar thought process as you with regard to the TV. I spent about $100 on a decent antenna and a pre-amp, and mounted them in my attic. I get about 25 channels over the air, which is more than enough for my purposes. I know you’re a renter, but if you can get an antenna in a higher location (attic or roof) and put a pre-amp on it, you’ll get a lot better reception.

    • says

      Executioner,

      Nice move on the antenna. My GE antenna was only like $40, but it works okay. Our problem is that we don’t have any higher locations. We could probably get an outdoor antenna and then run the wire inside, but that’s not something I’ve investigated yet.

      Cheers!

  14. says

    I do look at the expenses the same way. And I actually like those recurring. the reason is, that I can plan for them! I can foresee them and save for them. So I save cash for all sorts of taxes, fees, dues, x-mas expenses, and many others. I try to save for irregular expenses too, but it is a lot harder. How much to save, when it will be needed and many similar questions pop out.

    • says

      Martin,

      I’m with you. Regular expenses like rent, utilities, food and the like can be planned for with some reasonable amount of accuracy. Unforeseen expenses, unfortunately, cannot be. However, I do carry a line in my budget for one-time, irregular expenses so I can take a look over the last few years and average them out on a monthly basis and get an idea of what my margin of safety should look like. Budgeting is wonderful in that regard. If you budget down to the penny and have a year or so worth of data I think you’ll find that you can determine how much passive income you need for all expenses.

      Best regards.

  15. Anonymous says

    Honestly, I would just buy cheaper clothes and use that grand towards a Netflix account…go out to the movies less and Netflix pays for itself

    • says

      Anonymous,

      Actually we already have streaming Netflix. My parents gifted me a 1-year subscription last Christmas. I think it’s particularly useful for television shows, but the movies are lacking. It’s a nice service, overall. Although I will say we don’t watch that much television. I’m on the internet either running this blog or researching investments most of the time when I’m home. And that time is rather limited as I work so much and also try to work out and still live a normal life.

      Thanks for stopping by!

      Take care.

  16. says

    Hi Jason,

    I have been trying today to create a blog about DGI in Germany.
    In the U.S., these blogs are usual!
    In Germany, there are NO blogs about DGI.

    I will look at your blog and learn from you!

    Best regards
    Dividend-Sammler

    • says

      Dividend-Sammler

      Best of luck to you! I hope you create a great blog over there in Germany. There are many people that stop by and comment from all over the world here. There are a couple of readers from Germany, but I notice that Sweden is quite popular for dividend growth investing.

      Cheers!

    • Anonymous says

      Hi,
      Good idea to make a blog about DGI in Germany.
      It will be so great to manage a David Fish list’s of german companies.
      Who are the german Champions ?

  17. says

    DM,

    I’m right there with you on the recurring expenses. I try to view them as a “living tax”, because no matter what I do, those are the expenses that will come out of my paycheck automatically just like income taxes and FICA.

    I think some of the readers missed your point on the non-recurring expenses, with your example of spending $1000 on clothes. It’s not just you buying clothes, it’s an example anybody else could use, just substituting in the extra money for a better car, ATV, home entertainment system, literally anything that’s not recurring. The idea isn’t just about not buying anything new for yourself, it’s an example of how any dollar amount eventually adds up when you bring the power of compounding interest into the picture. The more you can save, the more it will pay off in the long run.

    • says

      Kill The Grind,

      I hope you’re killing that thing one day at a time!

      You’re right. The idea behind non-recurring expenses is that the actual expense is much larger when you frame it using the power of compounding interest. That $1000 expense is much more than a grand when you look out over 10, 20 or even 30 years. Not only do you lose the eventual capital and the capital it could have turned into, but also the future cash flow that capital can provide.

      I look at recurring expenses differently because they must be paid to a degree. A “living tax” is a good way to look at them, because in order to live you muse consume food, you must have some kind of shelter, you muse use water, etc. To live means to consume certain items. To then try to extrapolate those costs out over time to look at lost capital and cash flow would be erroneous and a waste of time. That’s why I look at them in regards to how much capital I must have in order to produce the cash flow necessary to pay for my “living tax”.

      Thanks for stopping by!

      Best wishes.

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