589 | How to Gain Insights from Your Expense Audit Using a Value Matrix

Summary

Podcast Summary: ChooseFI – "Identify Financial Leaks: And How to Build and Use A Value Matrix"

Podcast: ChooseFI
Hosts: Jonathan & Brad
Episode: Identify Financial Leaks: And How to Build and Use A Value Matrix
Date: March 9, 2026

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Episode Overview

In this episode, Jonathan and Brad take a deep dive into the practicalities of reaching Financial Independence (FI) by focusing on the crucial early steps: identifying spending leaks and applying a value matrix to make intentional decisions about expenses. They share both personal and community feedback from a recently launched expense audit challenge, discuss the growth and engagement in FI local groups, and introduce actionable methods for listeners to optimize their financial lives without falling into deprivation.

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Key Discussion Points & Insights

1. Re-Launching the Expense Audit Challenge

[00:00 - 03:15]

• The hosts reference a previous episode (586) where they launched a community-wide expense audit, encouraging listeners to review their spending from February through March.
• Purpose: Help individuals identify where their money is going and begin the path to FI with updated, interactive tools.
• They outline the value of gaining intentionality, rather than practicing deprivation: “FI is not about deprivation, it is about inspection and building a life that you value and is filled with things that you value.” [00:57, Jonathan]

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2. The Philosophy Behind FI: Options and Optionality

[03:15 - 09:35]

• Brad shares a story about presenting at the University of Richmond, receiving pushback from students who associate spending with happiness.
• Jonathan reframes FI not as retiring early, but as acquiring options and control over time and life choices.
• Quote: “What if you could find a job or a career that you would never want to retire from?...FI isn’t even about the fact that you leave your job. It’s about options.” [05:22, Jonathan]
• Brad emphasizes starting with a high savings rate: “If you tether yourself to a 50% savings rate, you can’t help but be successful financially.” [08:10, Brad]
• Key Insight: Early appreciation for optionality gives younger people an "unfair advantage" compared to their older selves. [08:39, Jonathan]

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3. “The Fire is Spreading” Community Segment

[09:35 - 15:18]

• Highlighting the explosive growth and engagement of FI local groups across the US and abroad (St. Louis, Boston, New Zealand, Australia, and more).
• The St. Louis FI101 event became a template for communities to onboard new members, showing huge demand for entry-level FI discussions.
• Local “case studies” at meetups are bringing in consistent participation and building a sense of global community.
• Notable Moment: Brad hints at attending FI events in Australia and New Zealand in 2027. [13:25]

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4. Real-World Expense Audit Stories from the Community

[15:18 - 21:53]

• Reviewing listener feedback on the expense audit process:
  • Tom: Discovered $12.5K in unaccounted-for "spending leaks" after subtracting one-off expenses, prompting reflection and motivation to tighten up spending.
  • Quote: “It leaked out of the wallet, it leaked through the floorboards and it’s gone.” [18:36, Brad]
• Key takeaway: Even seasoned FI practitioners discover significant, previously unnoticed financial drain. A regular audit is necessary to keep the course towards FI.

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5. Where Do Leaks Occur? Practical Examples

[20:15 - 26:20]

• Delivery services, app subscriptions, convenience fees, and undisciplined big-box store runs are the most common "leak" culprits.
• Listener Mishmash: Noted a sharp increase in groceries and household spend, even after successfully cutting dining out in half.
  • Action Step: Using budgeting tools (e.g., YNAB, Monarch) streamlines leak identification.
• Brad underlines meal planning as the biggest lever for saving money on food, suggesting bulk prepping and intentionality in shopping/cooking.
  • Practical Wisdom: "If you’re buying something that calls for half of something…plan a couple of meals around the ingredients that you bought that week." [25:19, Brad]

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6. Expense Tracking: Broad vs. Narrow Categorization

[29:02 - 36:31]

• Some community members find detailed categorizations overwhelming; suggest broad buckets to reduce friction (e.g., combining dining/groceries, transportation as one lumped sum).
• Boston FI described an effective system using just 8-10 broad categories, requiring only one hour per quarter for an audit.
  • Category Examples: Housing, Utilities, Food, Transport, Pet, Medical, Insurance, Taxes, Other.
• Quote: "You have to do what you’re actually going to complete." [32:02, Brad]
• The goal is actionable insight, not perfection—the best system is the one you will keep using.

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7. Community Data and the Power of Aggregation

[36:31 - 39:30]

• The hosts are already collecting hundreds of expense audits, planning to anonymize and aggregate data to help the community benchmark spending across different categories, cities, and household sizes.
• Value: Seeing actual spending averages can help listeners spot hidden leaks and recalibrate expectations.

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8. From Audit to Action: Introducing the Value Matrix

[39:30 - 46:21]

• Now that listeners have identified their leaks, the next step is decision-making using the Value Matrix: plot each expense on a 2x2 grid:
  • Axes: Cost (high/low), Joy (high/low)
  • Quadrant Analysis:
    • High Joy, Low Cost: Keep!
    • High Joy, High Cost: Consider optimizing
    • Low Joy, High Cost: Cut!
    • Low Joy, Low Cost: Trim or eliminate, unless there’s another reason to keep
  • Quote: "We want to take all of those things and we want to start figuring out where they go on some version of a value matrix." [43:10, Jonathan]
• Community is invited to share their own versions or visuals of the matrix for iteration.

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9. Call to Action & What’s Next

[46:21 - End]

• Challenge: Listeners are urged to perform their own expense audits and share "leaks plugged" with the community for collective encouragement.
  • “The heart is take action and get started on this. You absolutely have to. It's critical.” [46:21, Brad]
• Local FI groups are encouraged to adopt the expense audit and value matrix as interactive sessions.
• Upcoming Episodes Preview:
  • Live Q&A with Alan & Katie Donegan
  • Bryce and Kristy from Millennial Revolution, “Parent Like a Millionaire”
  • Ginger Book Club episode

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Notable Quotes & Memorable Moments

• “FI isn’t about deprivation. It’s about inspection and building a life that you value and is filled with things that you value.” — Jonathan [00:57]
• “Once you have enough, it seems futile to just work a year or two or five extra to afford things that you already can afford.” — Brad [04:14]
• “You have to work. This is just the reality of your twenties. But what if you reframed it… What if you've already tethered yourself to a 50% savings rate?” — Brad [08:10]
• “At 35, you will appreciate this idea of options. 100% guaranteed certainty.” — Jonathan [08:39]
• “It leaked out of the wallet, it leaked through the floorboards and it’s gone.” — Brad [18:36]
• “Even for those of us who have been in the FI community for years, this really matters.” — Brad [46:21]
• “Talk about a win that you could share with the community is what did you find that you took action [on]? …You’re going to be more committed to the ongoing decision to preserve the value that you’ve reclaimed.” — Jonathan [47:05]

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Important Timestamps

• 00:00: Kicking off the expense audit challenge, purpose statement
• 03:15: FI philosophy, optionality, and college student pushback
• 09:35: Community growth & the “Fire is Spreading” segment
• 15:18: Listener stories—expense audits and discovering spending leaks
• 20:15: Practical examples of leaks (apps, groceries, etc.)
• 26:20: Planning an entire episode dedicated to meal planning strategies
• 29:02: Approaches to categorizing expenses for audits
• 36:31: The power and utility of aggregated community data
• 39:30: Introduction and practical use of the value matrix
• 46:21: Call to action for expense audits & upcoming episode previews

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Structure for Taking Action

1. Do an expense audit: Use tools or simple spreadsheets; don’t overcomplicate
2. Identify spending leaks: Look for surprise categories or overages
3. Apply the value matrix: Assess expenses on cost vs. joy axes, and decide whether to keep, cut, trim, or optimize
4. Share your progress: Use ChooseFI’s online platform/community to note wins, losses, and visual value matrices for group accountability and inspiration

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Final Thoughts

This episode arms listeners with the mindset, tools, and community support necessary to detect and patch spending leaks—a foundational move toward financial independence. By infusing intentionality into spending and adopting a practical decision framework (the Value Matrix), individuals can reclaim both their money and their future options. The ongoing dialogue and crowdsourced wisdom from ChooseFI’s vibrant community ensure no one has to walk this road alone.

The fire is spreading.

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For more insights or to participate in the action steps, visit: choosefi.com/login and join your local FI group!

Transcript

[A]

Hello everyone. We are back. Welcome to the ultimate crowdsource personal finance show. I say that and I celebrate that with you because this is what we are experimenting with is what does it look like to bring that show into reality. And so we are going to be building on episode 586 so there's some continuity here. We've stepped away for a couple of weeks and now we're back. We're continuing with our kind of overview or look at the table of contents for the financial independence community. And if you want to think about where we are in the table of contents right now, it looks approximately like what maybe a 5101 might look like. Right. We're starting at the beginning of the table of contents and we're working our way through and we're pulling back in content that we started with many, many years ago. And we're presenting what we believe is the best, most up to date version of that. And then we're making it interactive on the choose if I community platform as well to give you an opportunity to give us direct feedback we which leads directly into this show. And so as we continue, we're looking at this idea of the expense audit. We released a challenge or an action step for ourselves and for the community. We decided to collectively take on this idea of doing an expense audit. And we're looking at it over the window of February to March. Obviously people have different times that they're hopping in. You could still hop in right now, but we're kind of opening that window to put our focus on doing an expense audit. You can get more details on that in episode 586. But now, you know, close to 200 of you have actually taken us up on this challenge and have done it. Many of you have already finished it. A few of you are still in the middle of it. But consider this almost like a midpoint check in and we're going to kind of take some insights, take some feedback that came from this community and we're going to use that to fine tune what it is that we're going to accomplish and also give you some insight on. Okay, well, what do I do with that audit? Right. What do I do with the information that came out of that? So we're going to explore a little bit farther this idea of the value matrix. This is not financial independence and making all doing all these things. It is not about deprivation. Right, we say that, but it is about inspection and building a life that you value and is filled with things that you value. And I think that's A pretty good lead in. So with that, welcome to Choose Fi.

[B]

Before we get started, I keep this podcast entirely ad free for two reasons. First, this is a FI podcast and I don't want to promote products that I don't want you to buy in the first place. And second, I really like the clean listening experience of a show where you don't have to fast forward ads to keep it ad free. All I ask of you as a listener is the next time you open a travel rewards credit card, go to choosefi.com cards and with that, onto the show.

[A]

All right everyone. As you probably have figured out, this is my favorite type of episode and I know it brings Brad and myself both a lot of joy to be able to fully include the community. And this is another one where I think we're going to do a really good job presenting new information and weaving in feedback that you've given us that's incredibly timely. And to help me with this, I have my co host Brad here with me today. How you doing, buddy?

[B]

Hey, Jonathan. I am doing quite well. Yeah, we got a, a nice spring day here in Richmond. Spring has sprung. And I actually forgot to tell you that last week I actually was asked to speak at the University of Richmond for a couple of classes which I, I do every semester. Basically one of our listeners, guy named Trey is a professor there. And yeah, this is one of the most interesting things I do and I have to say this was the first time ever that I really got some, a little bit of, of pushback if you will. But it was actually really insightful questions from, from the students who are looking at life from a perspective of a 22 year old who's getting set to go out into the world. And a couple of them were asking me questions about, about actually spending and how this ties into the expense audit. Actually, interestingly, Jonathan is like, what if these things add value to our lives? What if we want to work a couple of extra years to afford these fancy things?

[A]

You're not allowed to. There was Brad Tracy. Brad, you know, actually we found an alternative speaker next year.

[B]

Yeah, you're out. You're out. Mr. No, but it was interesting looking at life from the perspective of a 22 year old who, and of course this is not just limited to college students, but assuming or presupposing that spending is going to by definition bring you happiness. And that was, that was how these questions were framed. And it was really quite challenging because, because sometimes a spending does bring great joy. There are things that we value that we spend on but to try to describe one more year syndrome to a college student is pretty difficult. And when you've reached your number, when you have enough, that was my response, is once you have enough. To me, it seems futile to, to just work a year or two or five extra to afford things that you already can afford. I just, it's hard to understand the construct, but I do understand, of course, where he was coming from. So I'm curious, what do you think when you hear that if you were challenged with that?

[A]

Well, I would go a little bit farther even and say, what if you could find a job or a career that you would never want to retire from? What if you would actually want to design your life around never having a lease? So phi isn't even about the fact that you leave your job. It's about options. And here's the problem, college students at any level, and humans in general, is we put the cart before the horse and we lock in our stuff and lock out options all the time. And you don't get to go back. I mean, you do. We know this, we're undoing it in real time right now on this show. But we all know it is harder to go back. It was harder to pay off my $165,000 in student loan debt than, than it would have been to have a fresh slate and make choices with the benefit of hindsight, benefit of 2020. And so that is why this inspection in real time and on a regular cadence has to be or should be a priority or a focus. Because you don't want to lock your future self into maybe, you know, unevaluated choices that your current self made. That's what happens. And so you know, when we're doing this, all right, play this out. You say that now, 10 years from now, is this thing that you are worth spending a whole year or two extra working for? Do you think your 10 year future self is going to appreciate that? It's not even that you're going to have the answer, but if you don't have the answer, you're unsure, then you shouldn't rule this out because you can't go back. So this is what we're doing. We're inspecting our choices through the lens of not just how we're going to feel tomorrow about the purchase, but how are you going to feel about it five years from now, 10 years from now, and 20 years. So we're thinking about time horizon and we're thinking about the idea of value, not just the dopamine rush that comes from pressing the trigger on the purchase.

[B]

Yeah, agreed. And it's funny because that is exactly what I hit on also was optionality. I think that's what this is about. It's about freedom and optionality. I love that frame of the 10 year future self. And, and you can really play that out to 20 year future self, 30 year future self. What decision will give you the most options? And I think that to me is why financial independence is just so powerful. Because it gives us options, it gives us freedom. When we have financial space, we can do so many more things. And there's no prescribed method for what a successful fly life is. I think like you're saying, what if it's something you don't ever want to retire from? That's great work until the day you die. That's fantastic. But do it with eyes wide open. Do it from a position of strength. I think that to me is the critical part. And that's, that's what I always tell my daughters. I basically say, look, you have to work. This is just the reality of your twenties. But what if you reframed it to all right before I've done made any quote unquote mistakes or even just major decisions. They don't even have to be mistakes about buying a car or getting a mortgage or whatever it may be. What if you've already tethered yourself to a 50% savings rate? If you tether yourself to a 50% savings rate, you can't help but be successful financially.

[A]

Yeah, if you could solve a 50% savings rate, you're going to be just fine. Right.

[B]

And if you start out from day one of your first job, I think you're in a pretty good trajectory.

[A]

And if you miss it by 25%, you're also going to. Exactly, exactly. I think this is the other thing for that, for the 22 year old. Look at how much appeal this concept of options and financial independence has to the 35 to 50 year old crowd and realize that is your 10 year future self. So whether or not you agree or understand or appreciate this idea now, just let me tell you with 100% certainty. 100%, not 99. 100% certainty. At 35 you will appreciate this idea of options. 100% guaranteed certainty. We, we all want more options, but you have a, almost unfair advantage if you appreciate that fully at the age of 22. And that really. Brad, helps us to kind of talk about this idea. It's a segment that I'd like to run with, you know, kind of once a month. And that has to do with the fire is spreading. The fire is spreading around the world, Brad.

[B]

Yeah, it certainly is. It's been incredible to see you. And I keep a constant watch on. On posts of our local groups who are just crushing it. And there are so many. There are just so going on right now. I know we mentioned previously St. Louis, but I want to really dive into that now because they built something really special there. Kristen Knapp is the one who's revitalized the group and I know her and Alan recently did a FI101 course that has really become a launchpad for 5101 that you and I want to help create and also that other groups are using all across the world. And this has been really neat to see not only the success of their group. I know you send me a screenshot of, oh my goodness, they have 50 RSVP's yeses and there was something like 30 or 40 maybes. I mean, they were going to have what looked like 100 people show up to this. And that's what's actually so cool about the platform you built is, is you can rsvp. You now get email invites and email reminders, which is great. And what's neat is again with, with sharing, right? We talk about crowdsourcing this community and this show. Alan and Kristen took their slides and they sent them to us and we were able to upload them to the new platform. So for all choose to buy. Local admins hearing this, log into the platform, log into the app right on the home screen. We've had so many questions about this. There's a resource vault. You can't miss it. And in there is the five one on one presentation that Alan and Kristin put together in St. Louis. It's ready made for you. Jonathan. You and I are gonna are gonna update this and maybe add our own flavor to it. But in the meantime, for groups that want to get started with this right now, just rock and roll with it, go with it. This is what's so great. It's there. This is community crowdsourcing at its finest.

[A]

Yeah. And you know, not for nothing, when St. Louis did the 5101 event, the RSVPs in attendance for that event was probably 10x anybody had seen up to that point. And it just shows you, you know, if you're trying to think about, you know, what event do people in my community want? They are desperate for a 5101 event. The highest level of attendance you're going to see is for some acknowledgement of how do I Help friends and family onboard to this concept. Maybe, you know, they've been interested, but I don't really want to carry all the responsibility for communicating all this stuff to them. I need them to see that there are real people getting real results and be able to have something like this to come to. And I mean, you know, how do I have a successful group? How do I have a successful event? Just plan out, let people know that you're going to be doing a 5101 at some point, maybe in the spring and put that on the calendar and give people an easy way to make their friends and family aware about it and just, you know, be ready. But you're going to have hands raised to help. You're not going to have to carry this alone. People want to see this happen. I mean, we, I think, Brad, we saw 2,500 members join various local groups for the purposes of, you know, kind of being aware and attending these various events. That was across 316 local groups. So that's an incredible growth just over the last month. And there are many groups. North Shore of Boston doubled its membership size. St. Louis, as you just mentioned, had incredible results. Metro Denver, Los Angeles, San Francisco, Raleigh, Columbus, Ohio, Orlando, Atlanta, San Diego, St. Paul, South Denver, Cleveland, Sacramento, Salt Lake City and Seattle. These communities are rapidly growing financial independence. And I'm going to give a shout out to New Zealand. Tanya just asked. We got to get some more attention over here in the New Zealand groups. And she started a Taranaki tribe of fi and they just have already added seven members. So an invested admin that wants to build real community is absolutely able to get a group and a community started from scratch. And what we're trying to do is just give you the tools to do what you are already doing, but make it easier.

[B]

Yeah, I love that. And yeah, a huge shout out to New Zealand and Australia. I know that we have amazing communities there. I'm actually in all likelihood, I don't want to say this a hundred percent, but in all likelihood next fall I'm going to. Our friend Rob runs an event called tribefi in Australia and Bronwyn, who is a local admin in New Zealand, runs an amazing event there. So there's a pretty high likelihood I'm going to go to Australia and New Zealand in 2027, actually. Jonathan. So fire is spreading for short.

[A]

I love it. I love it. Okay, so I think this is just, just kind of putting it out there if that excites you. The idea of having a way to do a Financial Independence 101. Talk to your local admins about it. See if maybe, you know, if they need any help, offer to help them, but see what it would look like to get something set up for the spring. I promise you, with a little bit of planning, a little bit of just letting people know about it, you will see more attendance for an event like that than anything else that you could possibly spin up. And I think that would probably be a good thing to think about as a once a year type of opportunity to allow people to have a gateway into the topic. And we will do whatever we can to support and promote what it is that you are doing any way we can.

[B]

Yeah, I love that. And another thing, just real quick before we close this out. Case studies have been remarkable. I know in Richmond we reliably have 50 plus people show up at the library for case studies. We had David from Wilmington posted in the group. He said, glad to see everyone that made it out to today's case study. We covered working towards five with kids, ideas for cutting expenses, types of investment accounts and more. Keep an eye out for the next event. And I think that's what's so cool. Jonathan, about the platform is these groups are popping up everywhere. Dustin posted one about their first meetup in Loudoun County, Virginia. I mean, these are not. It doesn't have to be these massive places. It doesn't have to be New York City. Fi is everywhere. That's what's so beautiful. So, yeah, great stuff.

[A]

All right, that's our Fire is spreading segment. We'll probably do one of these once a month. But if you're doing something cool in your local group, you should make sure that we're aware of it. If you're doing it on the platform, we will be. If you are doing it somewhere else, make sure you alert us somehow because we want people to know what's happening in the financial independence community all around the world. Today we're going to be talking about going back to this idea of the expense audit. And we have taken the time to kind of aggregate some of the feedback that we've gotten so far. And we want to build on what we did in episode 586. And when you're doing the expense audit and you're doing as part of the challenge with us, you're going to have the opportunity to kind of leave us feedback along the way. And you can leave us, you know, multiple feedback. In fact, I would imagine there's the feedback of why you want to do one and then maybe what you're finding along the way and then maybe what you're going to do based on the audit. Right. These are three different points of introspection to kind of figure out what does this data mean for my life. And today we're going to share with you a few that we've gotten from listeners already who've made significant progress on this. Tom writes, last year my wife and I spent $25,000 more than our next highest spend year, which was 55k. So for them their anticipated annual spend around 55k. This was 25k more. Half of this was for a one off expense, a new fence, but a decent chunk of the other half I would categorize as spending leaks. I would like to track down where this money is being spent and whether we value the spending or can do simple things to reduce the cost. This exercise will also be valuable to help us dial in our true financial independence number.

[B]

Oh, I love this. This is fairly short email, but there's so many layers in this, Jonathan. Right. So clearly I think understanding your fine number is absolutely critical for knowing where are you going. That's why we're doing an expense audit. That's why we're ultimately trying to figure out what does our life cost because we need to have some sense of what is our fine number. Okay, so it looks like their highest spending year previously, which they would have calibrated themselves to was 55,000. So that's interesting. But $25,000 more now, half of that approximately. So we're gonna, we're gonna take Thoma at his word here and say about 12,500 was on this fence. Okay. That's a one time thing though. That said, we always do say life is lumpy, so there are sometimes expenses.

[A]

There will be a lot of one time things over the course of your

[B]

life, especially owning a home. There's lots of one time expenses. But nevertheless it is important to separate these things. Right. Like you can't imagine you're gonna have a new fence every year. So you wouldn't factor in $80,000 spend, which is what their, their spend was last year as the amount they need for their fine number. So I agree with Tom's contention that like I would take that out when you're factoring your fine number, but man, that leaves the remaining half of that 25,000 overage as this unexpected, quote, spending leaks as he called it. And, and that's such a, that is such an evocative term, Jonathan. I love that because it's, it's the

[A]

best possible way, right?

[B]

Yes. Oh, I love it. I mean, because that is really what it feels like this. You can't even account for it.

[A]

Remember, he doesn't have any value in his brain. He's like, There's 12.5K missing from my wallet. And I don't know why.

[B]

Yes. It just leaked out. It leaked out of the wallet, it leaked through the floorboards and it's gone. It reminds me way back when of Joel and Alexis from. They had a website, I don't know if it exists, called Five180. And they talked about having something like fifty plus thousand dollars in these spending links and they simply couldn't account for it. And we're seeing a lot of people in the fight community with these spending leaks. And this speaks to the absolutely essential nature of doing and undertaking this expense audit. Because, man, that's not insignificant. Right. That's 22 plus percent over their anticipated budget. Just leaked, leaked out of nowhere and they can't account for it. That's, that's clearly suboptimal.

[A]

As your life gets more complex and there's more dependence and there's more things happening and you've just had more time, you got leaks everywhere. Unless you're actively auditing and purging unvalued ones, you're leaking your financial future. I think we got our title, Brad. It's gonna be some variation of that. People will know as soon as they hear it. Yep, that's what happened. And this is what we're doing right now. And so I want to just first thank everyone, just ahead of time, anyone that did this exercise and shared their feedback with us at any part or just did the exercise for the benefits of having the data. It's a huge encouragement to us and I promise you to our community, there will be many, many people that start reviewing and doing an expense audit just because Tom reported 12.5k in spending leaks. And they said, huh, maybe I should do this. We all have these leaks.

[B]

Yeah. And they pop up everywhere, right? I mean, delivery, different app subscriptions, convenience fees. We know lots of people in our community love Target and associated stores like that. Like these things, they add up quickly. They add up really quickly. So 12,500 divided by 52, that's a little more than 200 bucks a week. Right. Like you can see a world where somebody just kind of leaks out to 200 and change a week. I don't think that's, that's impossible to believe. But again, this is material. That's absolutely material. 12,500 per year is another 300 plus grand you need to reach FI. And that's just on leaks.

[A]

And I want to say, you know, at the end of it, like Tom, please don't let this be the last, you know, feedback. We want to know what resolved from this. Right, so this is you, you've prompted us, man, you've, you've lit the conversation, you've given us a springboard for this. But now we need to circle back and after you finish this and really maybe there's an opportunity, this might be the perfect case for the value matrix here. Because really the goal might not be to get 12.5k to 0. That even now we're not necessarily saying, all right, was it 12.5k? Those were all spin. No, no, no, no, no. He says there might be. He doesn't know where it's going. Doesn't mean that it's going to go to zero. It means that we need to inspect this and we need to have that answer that needs to get applied into our value matrix. Now we're going to come back to that, but we want to give a few other community members a chance to kind of give us their feedback. But this is why it's not just expense audit and done and then next year. No, no, no. It's expense audit and then inspection of value via the value matrix.

[B]

Yep. All right. Because. Right. You might recalibrate what your fine number actually is. 55,000 might not be their baseline anymore. And that's fine, obviously. But, but as you said, you need to inspect it. You need to understand, you need to have a grasp on what does my life cost. You simply cannot pursue FI and have a phi number without what does my life cost? And that is going to change. It's going to change both to the up and the down in whatever year it may be, but it is going to fluctuate and it's important to have a grasp on this.

[A]

Right. And back to that 22 year old. Right. That's like, well, what if I'm willing to work one or two years? The reality is it's not the things you value that are probably driving everything into the ground, it's the spending leaks that accrued over time. Because you just put everything in the whole. I'm willing to work a little bit longer for it, so I'm not going to expect any. It is very difficult verging on impossible to out earn all your financial problems to just, I'll just make more. That does not work. And that's demonstrably provable just by Looking at the economics of society, like just there's very few people that are just out earning all of their financial issues. Point in case. All right, speaking of leaks, we got this feedback from Mishmash saying, I'm a ynaber, so I have my data all set. I just completed my year in review and was astonished by my groceries, the bulk food and the household spending. We decreased our dining out by 50% over two years ago. So I know we can do it. I'm hoping to shave $200 on off these three categories. So let me say if you're using a tool like YNAB or maybe Monarch Money and maybe there's some other ones, but one of these tools that are going to be hooked into your credit card transactions and your bank accounts, it's going to be a lot faster and easier, assuming that you've stayed on top of it, to be able to identify leaks quicker. The whole question mark, the question mark about what it is, that's really what we want to get to the heart of here. So, you know, in this case, a ynab or put every dollar to work. That's going to give you a pretty significant advantage in this task.

[B]

Yeah, without a doubt. I mean, the data collection is already done, right? So they're way, way, way ahead of the game. But sometimes you are astonished by what you see and you just don't realize it. I think also frankly, the meal side of things, these categories, so groceries specifically, I think that is both the easiest way to potentially unknowingly have these leaks, but also interestingly in my eyes, at least one of the easiest ways to potentially cut from your budget without losing any value in your life. I think it's just intentionality, Jonathan. I think that to me is the key when it comes to your groceries, is it comes back to the basics. It comes back to meal planning, thinking ahead, buying in bulk and really preparing meals in bulk. I think that's one of the best ways to not just needlessly. It's like a zero waste mentality. I know somebody spoke on this at the economy conference last year and it was fascinating to me. It's just really applies some strategy to when you cook. So if you're buying something, that calls for half of something. Well, okay, the obvious thing is to make double that, right? So you don't waste half of whatever that item is you bought or plan a couple of meals around the ingredients that you bought that week. I know you have a sly smile on your face, Jonathan, because I know you live and breathe this where you used to? No, I don't.

[A]

But I mean, I do it. This is like one of those things. Everybody, we're on waves, right? And there have been times, but it does inspire me and I get excited about it. And I also know our community, various aspects of our community are probably so good at this. So, man, I love the talking point and the opportunity to spend a little bit of time here.

[B]

Yeah, there's really something here. And again, I think at its essence we can talk about like all the specific things that we do. I think for me it's just about planning. That's really at its heart, it's intentionality and planning. But really like the one action step I would say is when you cook, cook for two or three meals, which if, let's say you have two adults, just hypothetically, that's two person meals. That's how I like to talk about it. So make enough for at least four or six person meals. And that way, okay, I cook one time and I just have to reheat and I've got two more dinners. It's. It's really fantastic. And Jonathan, almost invariably that's going to save you a lot of time, which is not worth nothing, obviously, and it's going to save a decent bit of money. So to me, that's just the quick

[A]

hit takeaway, you know, as I. I've kind of taken on this role of mapping out like a content calendar for when it, when you and I get together, what we want to do. And I've been looking at all the topics that we've covered over the last 10 years and I've been trying to think it through. All right, if I were starting over, benefit of hindsight, which by the way, I am, and doing this all over again, what would be the order that I'd want to hit the topics? And so, you know, even feeding that into like some sort of 5, 1 01, et cetera. How would what we talk about here map to what I'd want something to have an opportunity to interact with later. And meal planning or the statement that you just said around the food and the budget. First of all, why is it hard? Well, it's hard because you have to make a decision every single time. It's like eating healthy or losing weight or getting fit or whatever else. There is no set and forget for this. Every single day you wake up, you have to make a decision to be intentional. Even if you have a plan, you have to make a decision to follow the plan. And if you don't have a plan, then you're planning to fail. So with that in mind, Brad nailed it. This is probably disproportionately the biggest black hole that spinning leaks that people have and at the same point the biggest opportunity for massive wins. And so I don't want to derail the whole episode to do that, but I'm already saying, as soon as I heard this, I realized we're not going to be able to do it justice. We have to do it justice. So I'm going to change my whole content planning guideline and we're going to put another challenge or feedback collection for the community. I want you to tell us, preferably with voicemail and notes, et cetera, but just on the platform, and we'll collect feedback for the next month or so. What are your strategies for winning in this area? Brad, I'll just put this to you real quick. Do you still feel like for you as an individual, regardless of family, but you as an individual, you can still hold on to the $2 per person per meal goal of 2018? I know a lot of people are thinking this.

[B]

Oh, that's interesting. That is a challenge. The funny thing is I, I am practicing what I preach here and really following my expenses. So we have a shared document for how much we spend at grocery stores and such. It gets a little muddled, of course, because sometimes it's not just Wegmans or Costco. You might buy something from Amazon. But I think I can actually quickly do an audit on this and figure out what it is.

[A]

Share that with us on our meal planning one, don't do it today because we're gonna have a whole episode about it. But if you could feel really locked, it'll be happening within the next 60 days. And when we get all the community's feedback, you can share the results from what you analyzed on your own personal. And is that fair?

[B]

That is very fair. I think I'm still under $3 per person per meal. I'm pretty, pretty confident even, even nine years later with whatever.

[A]

Give us some context like for what is what's making the list. I'll tell you from your old, your and Laura's old, like meal planning recipe thing that you had, we're still seeing a lot of those meals show up on a weekly basis on what we're seeing on, you know, in the evening. I mean, there's a lot of personal life. Yeah. In our personal. A lot of chicken taco dish still showing up. You know, there's a lot of things like that that we still love It So it doesn't mean deprivation, but let me tell you, it does mean intentionality. You have to have a plan. So as we proceed, we're going to get back and we're going to look at this expense audit. Some of you are probably now you had it on your to do list, life got in the way and now you're like, okay, yep, I need to do this, I see the value. And so I thought this would be a good opportunity. We did get some feedback from some members suggesting how they would fine tune their own tracking of expenses. And since these are based on individuals in the community that have been doing this for periods of time and, and have found a way to build a pattern into their life, it's probably worth just saying out loud or highlighting, you know, individual approaches to what needs to be tracked and how to effectively get the most value for the least amount of work. We're not trying to spend two weeks working on this. It hopefully should just be a couple hour exercise, you know, once a year and you can more or less move on. Now that couple hours might be spread out over a couple days as some more information comes in. But generally the this is not something that you're going to be spending massive amount of time on. So I got this feedback, Brad, that I will share and this is from user, another controls engineer and his suggestion was the number of categories is pretty overwhelming for sorting expenses. When I set up my categories initially I tried to keep things more broad to keep from spending too much time labeling all my expenses. And I think this might turn away people due to the time investment. And so I think really it's this idea of getting the insight in the data versus getting the simplification. And I don't think we're going to nail it perfectly until we've had the chance to get this sort of feedback and iterate it over a couple of years. So I'll be curious, you know, what individuals are doing and how they, whether they agree or disagree. Do we want that level of detail or not? In your own personal life or even using the community app version of this and also here, and this is a really a point, right? I'd be curious about your take on this. He said along with that thought about, you know, the categories, it would be nice to be able to enter a cost for the upper level expense instead of adding all the lower level expenses together. For instance, put a lump sum in for transportation instead of needing to break it into gas insurance repairs. I'm not entirely sure. I mean, I think yes, the option Nice. But the detail might be useful for you as you look over time at some of these individual things. That's really hard to go back, but it's really maybe relatively easy to capture it as an audit once a year. What, what are your thoughts on Brad?

[B]

Yeah, it's tough. I, I can see it both ways. So I think at its essence you have to do what you're actually going to complete. Yeah, right. Like if you're not going to complete it, if you're going to stare at the screen and run away. Okay, well, that's not ideal. I'm with you though. I would love in this particular case that they broke out here. Like, I would like to see how much I spend on gas. I would like to see how much I spend on insurance and repairs. I think that's easy information to get because gas is just all right. I look for whatever it is, BP or Exxon on my credit card bill and I just jot that down. That's simple. I think for me there are instances where I suspect breaking it out too much would be annoying, but this is not one of them. So, yeah, I'm, I'm of two minds with this. I could see doing it either way. But I, I think what I want to glean out of this exercise for myself is all right, how can I, at a glance? Because I agree also that I want to do, and this is another comment they mentioned, which we'll get to in a second, that I want to be able to, at a glance, look at multiple years. Because I don't imagine this is just going to be a one year exercise. I'm going to do this every single year. I'd like to have a sense of what I spend in 2026, what I spend in 2027 versus 2022 or 2023 if I had done it at that point. So I think for me it's what level of data am I looking for that would actually drive some change? Like I don't need to know exactly what my split was on groceries between Costco and Wegmans. That to me, Jonathan, means absolutely zero. I wouldn't waste my time on that. But I think I would like to know how much did I spend on car repairs this year.

[A]

Yeah, and I agree with you that point. Here's the question that you'd want to ask yourself is if you were wanting to review this data a couple years later, would it be meaningful to you? Would there be a decision that you could make from it based on, you know, that level of insight in the case of Costco and Wegmans, you'd have to make a case, but arguably not. I tend to agree with you, Brad. Versus like total dollar amount spent would probably be just plenty in that case. Or the differentiation between groceries regardless of the shop vendor, store and dining out. Right. Like if one number is drastically different than the other, which it probably will be. You might want to space that out. What I love about this exercise and this thought process is this decision or this decision tree has had to been. It has to be solved. Individuals have done this regularly. In the absence of what we're talking about here, we're just highlighting it as a good practice. Boston Phi says. I thought I would add my categories in case the second use case is helpful. When I started to track my spending, I discovered that I am in fact fairly lazy. Okay, I can appreciate that. I mean many categories resulted in me never filling out my spreadsheet. I consolidated into categories I figured would be the most informative to track over time. It now takes me one hour quarterly. That's a good idea. I can see that. One hour quarterly to fill out my spreadsheet. So it's a four times a year. Quick check audit. My categories are housing, which includes rent, mortgage, maintenance and upgrades. Utilities, heat, electric, phone and Internet. Food combined. Grocery and dining out. Transport, anything to do with getting around. Rideshare, taxi, public transportation included loan payments. Gas and maintenance when I owned a car. Pet, which is food insurance, medical, travel, medical so all the copays, deductibles and prescriptions. Health insurance, asset insurance. So homeowners and autos. Income tax is a future category that she's using and you can read the comments there if you want. I'll include this on the episode. Asset tax so property, auto and excise and then other which would be a giant thing for shopping, hobbies, subscription, haircuts, etc. So here's what I'm really curious about as you listen to this. We're going to keep iterating what we are doing as well. Right. And the way that you end up with something that's intuitive and easy is to actually use it and then find the friction points and then solve for the friction points so it doesn't take as much time. Right. And then just kind of keep doing it over time. So there's the familiarity with how to navigate this. We will get something, you know, you if you're doing it individually or us if we're doing it programmatically. Using this, you know, this audit tool, we will get to something that works really really well and minimizes time burden. But your feedback on this, especially for you power users that have been doing this for a long time, is helpful for all of us. Yeah.

[B]

I mean, look, the whole point of this is to take action. That is the whole point of choose a Phi in general is to help you take action. And like Boston Fi said, in this case, she spends, it looks like one hour a quarter. I think that's a pretty good investment of time. I really do. For some people it might be less, some people might be more. But if you're spending four hours a year doing this and getting a handle on what your life costs and not letting all that, that money just kind of sink through the floorboards sometimes because of just laziness or inaction or inertia, I think that's probably a good use of time, but it takes getting up off the couch and doing it. And frankly, Jonathan. So, I mean, we have a couple of things. So if you go to choose a Vet.com login, this platform you've been talking about for everybody, that's where you can access this as you can access everything that Jonathan's building. Of course you can do it on your own. You don't need to use our platform. You can use a spreadsheet. But we're trying to build something really intuitive. And also we're going to take anonymous data and look at, hey, what do. Not necessarily on this, but just in general, like, Jonathan, what are people spending? I think this is what a lot of us are curious about. I talked about this, that I, I had tried to get some information on case studies and such. I'm like, hey, what are people in the fight community spending their money on? I think that would be really interesting. I think it would be instructive for a lot of us of, hey, look, my average spending on groceries is seventeen hundred dollars this month. I'm making this up. But like the average five family of four or single person or whatever it may be, they spend $800 a month. Okay. You might, you might find a spending leak that way. That would be really interesting. I think that that is the point of doing this as a community, in my interpretation. Like, how can we all work together to have a better sense of what does life cost on average? And maybe that might compel you to take some action because you're seeing what your friends, family and neighbors, if you will, in the fight community are doing.

[A]

Yeah. And when you mentioned the aggregate data, you know, when I'm doing statistical analysis and I'm not a statistician, But I can, you know, take a look and use some reasonable and I look at best practices, that sort of thing. I was hoping we're going to need at least 20 budgets. Right? We're going to use 20 expense audits in order to be able to kind of fine tune any results. We're well past a hundred now. Okay. For everybody. We have a hundred plus. We'll probably have several hundred by the time that we're all wrapped up on this. And I've started to put together some data. It's awesome. You are going to love it. You're absolutely going to be thrilled by it. And I think it's going to really give you some clarity on anchoring and we'll be able to even do a little bit of partitioning by geographic location and household size, et cetera. So there is going to be some really good insights. We're going to do that in another episode. But what we want to do right now, the point of this was to remind you and encourage you to do this. I think someone that is in control, in the control phase is if they're not, they should be, but they are auditing their expenses once a year just to make sure they have a handle on it and they're getting value from what they're spending. Boston Fi clearly as well, past that point with the quarterly audit. And I would tell you, I would almost guarantee you those that are doing this are disproportionately going to be closer to financial independence than the peers with similar economic situations that are not. Right. It's just, I would, I would be. If you're going to make a bet, most of us would think about it and say, yeah, that makes sense. Okay, so which cohort would you want to be in? Right. So with that in mind, now we're still, we're moving from expense audit and encouraging you and reminding why it's important to now the decision matrix, the value matrix, which is going to help us figure out the action steps that we're going to make. So going back to Tom, Tom had 12 5k in question mark. Spending leaks. It's probably not going to go to zero. We're asking Tom to kind of reach back out to us, let us know what you conclude. But I want to provide a framework that we can all, you know, iterate and think through for what are we going to do? So you filled out this expense audit and now as you look at it, as you scroll down through the categories, first of all, not everything needs to get carried over into the value matrix. Into the decision tree. Some things are just. They are what they are. You pay utilities, you pay insurance, you pay whatever. And you know that you're getting. It's already optimized, you're happy with it. We need to just lock that in for the year and move on. But then anything that is maybe not optimized or is potentially a spending leak category, all of those, and it's probably going to be 60% of the things on our expense audit, those need to then get ported over into a value matrix. And Brad and I were quibbling, arguing, failing to agree on exactly the semantic and geographic location of the various axes. X, y axis. All we are sure about is that it is a box with four squares.

[B]

We're good. We're good.

[A]

And the axis on one side should probably be cost and on the other side, you know, you have an X and a Y axis and that makes four squares inside of a box should be joy. And we could not for the life of us, in the five minutes that we carved out to go back and forth decide which is Y and which is X and which way they point.

[B]

It's confusing because.

[A]

Thank you, fearless leader, as you guide us into the unknown.

[B]

We're very impressive. Very impressive. But regardless, right, It's. It's high joy and low joy.

[A]

That seems like a Y axis. Is that a Y axis? Yes.

[B]

I don't know. We'll go with yes. So, right, High joy, low cost is obviously that's, that's the grand slam. And then high joy, high cost is another interesting one.

[A]

Yeah.

[B]

Then you have obviously the, the other side of it is the low joy side. So low joy, high cost is the worst of all scenarios. And then low joy, low cost is also not ideal, clearly. So two of the four slam dunks, right? High joy, low cost, low joy, high cost. And then you get into the other ones where I think that's where people are going to spend a lot of their time. Jonathan is this low joy, low cost and high joy, high cost and really dive in from there.

[A]

Someone can share their images. You could also share your better version of this v1 of the value matrix. You know, I've been kind of iterating grading this over time and I was dead set on it until I started talking to Brad and he told me that the one that he drew looked completely different than mine. And I was like, well, how is that even possible? There's obviously only one way to do this. And then we, then I look, I said that makes sense too. So we're still not sure but yeah, to Brad's point, however you want to draw. In fact, if you want to share with us what your value matrix looks like, and maybe it's slightly different, right? But I think what we have to do here is when things are coming in, there is this difference between cut. It just needs to go away, right? It didn't make the cut, it's not going to stay. We don't value it versus trim. And so if it's low joy, low cost, it's probably going to go in the cut pile unless there's some extenuating circumstances. Low joy, low cost, not a huge roi, but it doesn't bring us any joy. It doesn't just without, you know, but if it's high joy, high cost, it doesn't necessarily mean we leave it alone. We might leave it alone, but we might also look to optimize it. And so that's why I say, like, we need to, you know, these categories, we can fine tune them and we can get them all perfect. But I basically want to point out when you get done with your expense audit results, so Tom and other parties here, when you look back at your category, if you've had fixed expenses for years, they're well documented, you understand them, just lock them in and move on. We want to take the variable, we want to take the ones that we're not really sure what it is, why they're showing up, whether they should still show up. We want to take all of those things and we want to start figuring out where they go on some version of a value matrix. And our community, please send us your pictures. Put your pictures in, you know, put them on the site. We can absolutely get the absolute perfect one. But certainly as you look at something like food and you see that you have a, I don't know, $2,000 a month food budget, or, I don't know, would you use the word budget at that point? Or indiscriminate spending allotment, black hole, $2,000 black hole, whatever it is, clearly we're not cutting it to zero. But. But that doesn't mean that we're not doing something with it because we want to get value from the money that we're spending on this category. Right? So we need to decide, did we trim it? What is our target? Right? So we have what? Whatever your expense audit is. This is not the place. Do you write down what it should be? All right, that's the big thing. This is like, this is stepping on the scale after Christmas, after the holiday. This is just the moment of truth. Right. But it's projection, but it's still moment of truth. This is what it is. And then when we go into the value matrix, we should have an opportunity to start to think about what it should be. Should it be zero? Because we're going to make a choice here. Should we trim it and what is our target goal for trimming it? Right. And those different things, high joy, high cost. High joy, low cost. Low joy, low cost. And what was the fourth one, Brad? It's just process of elimination here. Low joy, high cost. Those give us a way to hopefully make the decision a little bit easier. All of those might just be trimming, but certainly if it's high cost, low joy, that is ripe for reclaiming value in other places. Right. So it makes it a little bit easier. But keep in mind it's not binary and it's not all or nothing. It's just getting rid of all the stuff that's fixed. So you don't need to make decisions on that each time. Inspecting the remainder and then having a tool. And I'm going to try to see what it would look like to do that in an interactive way so that you could port over the work that you did in your expense audit. I don't know if I'll have that ready by the time this show goes live, but I'm certainly hoping it's something that I'll be able to develop for us in the next few weeks. I think that makes it more fun and a little bit less laborious and it's something you're going to want to do every single year as you move forward.

[B]

Yeah, I love that, Jonathan. All right, to me, the call to action is literally that it's take action. So if you're listening to this, you now have episode 5 86. You have 589 as a follow up. Get started on your expense audit. We've created an amazing platform for you to do it. Choose a Vet.com login or just do it on your own in a Google sheet or wherever it may be. But the heart is take action and get started on this. You absolutely have to. It's critical you, even for those of us who have been in the fight community for years, this really matters and we are going to find those spending leaks and it'll be really. Jonathan. I think it'll be fun for us to see. Oh, wow. I found that spending leak of $2,700 this year and it just, it just vanished.

[A]

Talk about a win, man. You know, talk about a win that you could share with the community is what did you find that you took action. And I promise you, just by taking the time to say it out loud and share it, you're going to be more committed to the ongoing decision to preserve the value that you've reclaimed.

[B]

Yep, agreed. And you can always leave comments on this episode. So just log into your account at choose a vet. Com, login again and right there at the top there's a little banner that says this episode, the episode title and the episode number. Click it and leave a comment. That's what we want. We want to be able to share this. As you know, this is crowdsourced. We're going to come back to this episode, we're going to talk about these spending leaks. So let us know even if you're listening to this a month or two months or five months later, leave that comment and it's there forever for all of us to see. Hey, I found this spending leak and I took action and I plugged that leak.

[A]

All right, so let's see here. Fire is spreading. If you are excited about this and you'd like to be able to do this in a more interactive way and maybe you'd even like to do it as part of your local group, make sure you let your local admin know that this might be a good exercise, you know, for a group to do as an activity. Talk about this idea of doing a financial independence 101. Whether it's just a one week kind of overhaul or whether it's a multi week thing, whatever it might look like for your group in your area, I think you could have a lot of fun with it. I think these types of episodes can be good right along discussions that require action and there will be questions and these sorts of, you know, groups can provide the interaction that make that a total lock in and an awesome experience. Please keep that in mind. Now, Brad and I have done a little bit of the Wild Wild west in the past with episode planning and release schedule. I talked to Brad about how we would do this, you know, going forward and wanted to give you a preview of what's coming up. So Brad and I will be back together in a couple of weeks to follow up on this episode. But there's a couple really cool episodes planned in the meantime. Brad, can you give our community a preview of what's coming?

[B]

Yeah, you bet. Next week we have a recording of the live event Q and A that we did here. The extraordinary weekend with Alan and Katie Donegan. That was a blast. We took questions from the audience, and it really went deep. I think you're really going to enjoy that episode. And then the following week, we have Bryce and Christie from Millennial Revolution back Jonathan after seven years, that was the last time they're on the show. They have a new book called Parent Like a Millionaire. And I really dove deep into specifically what those in the FI community could take away from. From their experience, from my own experience. And I love their book because it's. It's kind of like a Trojan horse on getting people outside the fight community into the fight community under the guise of parenting. But there's so much there for the fight community. And I really, really drilled down. So, yeah, we have those two coming up. You and I are going to be back. We have a Ginger book club episode coming up soon, so we've got a lot of fun stuff.

[A]

This is going to be exciting. All right, my friends, the fire is spreading. We'll see you next time. As we continue to go down the road less traveled, it.