A monthly nut is just your monthly expenses. Many of the monthly expenses are fixed and if you keep track of your expenses, you should know what your monthly nut is.
I’m writing this post so I can point to it when I do my monthly cash flow update. I think our monthly expenses are a bit different than most people’s and new readers seem to have many questions/comments. For instance, our housing expense is very high at $2,100 and our transportation cost is very low at about $100. This is because we live in a location with great public transportation and walk score.
These are all the bills that are roughly the same every month and can’t be reduced easily.
Housing – $2,097. This is our mortgage, property tax, and HOA. We live in downtown Portland and we love this location. There are many entertainment options and we save on transportation and utility bills. However, the HOA is very expensive at $460/month. As long as Mrs. RB40 lives and works in Portland, we will stay here because she doesn’t want to move. I don’t want to move either, but we would consider it once she retires or changes job.
Bills – $250-$300. This category includes property insurance, internet access, and utilities. The electric bill is the only one that fluctuates much. We pay anywhere from $50 to $100 for electricity depending on the season.
Transportation – $100/month. This is just gas and maintenance/repairs. We probably drive 500 miles per month and fill up twice. Once I quit working, we probably drive about half that amount. We share one car and that also helps minimize the expense.
We can probably reduce some of these expenses.
Cash allowance – $600-$800. This is a bit of a catch-all category. We each get $75/week cash allowance and we use that money for groceries and other day-to-day expenses. Clothing, eating out, gum, and lunch are just some of the things we use the cash allowance for. I can probably reduce my cash expenses a bit more once I quit working.
Pet, baby – $50/month. This category includes pet food and baby toys/accessories. We usually use cash for diapers, milk, and baby clothes.
Medical – $50? Usually pretty low, but you never know.
Entertainment – This is usually pretty low too. I only put tickets to concerts and shows in this category. We haven’t been to the movies since I got free tickets to see Toy Story 3.
Misc – $50? This category can fluctuate a lot too. I’ll put travel, home repairs, and others here.
So our fixed expenses round out to $2,500. Our variable expense is anywhere from $700-$1,500. However, a big part of that cash allowance goes toward food so the real number is probably fixed $3,000 and variable $200-$1,000.
I’ve been keeping track of our expenses for over a year and usually it is in this neighborhood as long as there are no big emergencies.
Our sweet spot is $3,500/month with an extra $500 budgeted toward traveling. This works out to $4,000/month.
The housing cost is the stand out here, but we can deal with it as long as Mrs. RB40 continues to work. We can always move into one of our rental homes if we really need to reduce this.
Is $4,000/month an unreasonable amount to spend for a family of 3 on the west coast? It works well for us and we’ll be hard pressed to reduce it much further. The only way to make a big dent here is to move to a cheaper location and that’s not in the cards at this time. What about you? What’s your monthly nut? Can you reduce it?
If you need some help keeping track of your finances, you should Use Personal Capital to manage your budget. You can keep track of your income, expenses, and net worth; all in one place.
photo credit: flickr Gimmefood
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.