Is The US Getting Too Expensive?

Over the last few years, the cost of living in the US has risen dramatically. The news tells me that people can’t make ends meet. Even high-income households are having problems keeping up with the bills. This is due to high inflation over the last few years. Housing, transportation, and groceries are more expensive than ever. It’s tough to live in the United States these days. In particular, young families seem to struggle more. Is the US getting too expensive to live in?

The cost of living at the RB40 household hit an all-time high last year. However, I feel like we are doing okay financially. Our net worth is higher than ever and we saved plenty of money last year. We are more established than many families and our fixed expenses didn’t increase that much. Our annual spending increased, but that’s mostly due to discretionary expenses. Our core expenses are under control.

Today, I’ll review our expenses in detail and see what happened over the last 10 years.

Annual expenses

Here is the chart of our annual expenses since 2012.

I kept a detailed spreadsheet of our expenses since 2012 for blogging purposes. It’s a bit obsessive, but the data was useful on many occasions. I highly recommend tracking your expenses if you want to improve your personal finances. You should know where your money is going.

Overall, our annual spending looks okay. It shows the different stages of life we went through.

2011 – I didn’t keep a detailed log in 2011, but we spent quite a bit more than in 2012. Childcare was a bit part of our expense that year. I think we spent about $12,000 on childcare in 2011. I’m sure daycare costs a lot more than that now.

2012 – I retired from my engineering career to become a SAHD/blogger. We lost about 2/3 of our income and I became very frugal. I took RB40Jr out of daycare and that helped a lot.  

2013 to 2018 –  RB40Jr started preschool. Childcare expenses increased a bit, but it was much cheaper than daycare. Once he started public school, our child-related expenses became much smaller.

2019 – Our housing expenses decreased tremendously when we moved to our duplex. We rent one unit out and we share many expenses with our tenant. Also, I started sending money to my parent to help out with their living expenses.

2022 – Our annual expenses shot up. This was due to travel and sending extra money to my parent. My mom was in the hospital and I wanted to help out more. RB40Jr also had more extracurricular activities as he got older.

Categories

Housing – Moving to the duplex made a huge difference. Previously, we lived in a condo and the housing expenses kept rising. The HOA fee and property tax increased every year. I also refinanced the duplex to lower the payment a bit.

Transportation – I purchased our 2010 Mazda5 for $18,000 cash before RB40Jr was born. It’s still going strong and I hope it’ll last until he graduates high school. I feel very lucky to have a reliable vehicle. New and used cars are so much more expensive now. In 2023, I started delivery driving to make some extra income. Transportation expenses increased a bit due to more gasoline consumption.

Groceries – This is where everyone feels the inflation. I complain about high prices every time I go to the grocery store. However, grocery is a small part of our annual expenses. Our grocery spending increased, but it is insignificant compared to the other categories. I probably should stop complaining about how expensive eggs and milk are.

Travel – Here is the culprit. Travel increased our annual expenses tremendously. Like most people, we were stuck at home during the pandemic and we splurged on travel afterward. I think we had our fill, though. Next year, we plan to visit friends and families in the US. We’ll take a break from international travel for a year or two. Travel seems to cost a lot more than the pre-pandemic days. Also, we want to travel more comfortably now. These days, we prefer to stay at a business hotel rather than a cheap motel.

Kid+parent – My dad told me to stop sending money so this category will decrease next year. RB40Jr has more activities now, though. This year, he has a school trip to the Dominican Republic and a couple of extracurricular activities. Also, college is coming up in 5 years. Higher education will increase this category tremendously. I hope he can get a scholarship or two.

Wrap up

The US has seen tremendous inflation over the last few years. Young families are struggling, but don’t lose hope. Keep working hard and save money. Eventually, things will improve. Older households have the advantage because we are more established. The RB40 household’s core expenses are lower than many younger households. It wasn’t always this way, though. My first house had an 8% mortgage rate in 2000. We struggled when we were young too. Keep your heads up!  

Have your household expenses risen over the last few years? Is it harder than ever to live in the United States?

Image credit: Fabian Blank

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.