I spent $170,000 last year to fund my lifestyle – which areas should I optimize to reduce my expenses?

The good news is that if you are in a position where you can spend $170,000 annually as just your expenses, you’ve probably made it in life. There is also no question that we all wish we had unlimited income, but in reality, there are also times that even with a high net worth, we still want to be mindful of money. 

This is the case with one Redditor posting in r/ChubbyFIRE, who has an annual spending of $170,000 and wants to cut back. This individual is part of a three-person household, and knows they are overspending in certain places, and hopes the Reddit community can identify where. 

While we all wish we were in this Redditor’s shoes and had such problems, the truth here is refreshing as this individual is sensible enough to realize they are spending too much. 

The Current Spend

Aside from the fact that this person should absolutely speak with a financial advisor, they have succinctly broken down their spending for all of Reddit to see. 

In total, approximately $63,000 is coming out for “housing & utilities,” of which $25,000 is the annual mortgage cost and $12,000 is property and homeowner taxes. There will not be a ton of movement in this area as these are fixed expenses, at least during this year. 

The annual spending on Food and Dining is $28,000, which feels like an area for improvement. Spending $11,000 on groceries doesn’t seem crazy, but spending $14,000 on restaurants and bars and $2,000 on coffee shops is a little much. 

If you look at the Travel and Leisure expenses, the $31,000 annual expense includes $19,000 for travel, which could be cut back, but $1,200 in streaming services is nuts. How many subscriptions does one family need? This should be half or one-third the number it is. 

Surprisingly, Shopping and Personal Expenses are relatively low. They bought a costly television and speaker set for $10,000, a one-time cost. Spending $5,000 yearly for shopping is high, but not astronomically so. 

Lastly, Miscellaneous Expenses include $4,800 on Amazon and $1,900 on taxis and ride shares, which is yet another area to cut back. Then you have another $1,800 for transportation between gas and auto insurance. 

Where To Cut Back

I immediately gravitated toward the Reddit comment section and the Redditor mentioning they spent $20,000 on home repairs. If this is a one-time cost, great, but if it’s spending this much annually, it’s both ridiculous and unnecessary. The same can be said about $1,900 on taxis every year, as these numbers can be a starting point for cutting back, and every bit helps. 

However, we also have to be realistic here. Cutting $1,900 in taxis may harm this individual’s quality of life more than anything else. More realistically, cutting $1,900 will not significantly help them reach their FIRE number, so we need to consider more considerable costs. 

This is why we’re continuing to look at the large home renovation expense, as $20,000 annually does make a big difference in compounded investments over time regarding getting to a FIRE number. The same can be said for $19,000 in vacations as this number might be better off halved and over 10 years, $100,000 in investments can grow substantially toward a FIRE number. 

You also have a $4,100 annual expense for a personal trainer, which you can likely replace with YouTube videos or a subscription to something like Apple Fitness+. In the same regard, $1,200 in streaming services is just wild as nobody watches that much content. 

What’s Okay With This Spend

Look, I’m always thinking about FIRE, and I don’t have an issue with an $11,000 annual grocery spend as this isn’t far from where I am. This said, spending $2,000 on coffee can be wiped out with a coffee machine at home or in an office. Buy a Nespresso and call it a day. 

Similarly, Child and Pet expenses of $14,000 per year are okay, as kids and dogs are expensive. As someone who sends two kids to summer camp every summer, I think this family of three is getting off easy. Realistically, if you account for the home renovations being a one-time purchase and the same with the television and speakers, you’re already saving $30,000 in the next year, so this is a great place to start.