Spending

These pages cover the money that leaves a plan on a schedule and what happens to what is left. Expenses and Healthcare covers living expenses, the mandatory and flexible split, HSA and 529 qualified expenses, ACA marketplace coverage, and Medicare. Variable Spending sets each year’s budget from the portfolio. Extra Cash Allocation Order spends a year’s surplus. Debt covers loans that are not mortgages. Property covers homes, rentals, and their mortgages. How each of these is paid inside a year, and what happens when there is not enough cash, is covered in how a year works.

• Expenses and Healthcare — How expenses are sized and timed, the mandatory and flexible split, HSA and 529 qualified expenses, premiums taken from a paycheck before tax, ACA marketplace coverage and the premium tax credit, Medicare Part B, and IRMAA.
• Variable Spending — How the amortized budget sets each year’s total spending from the portfolio. What counts as spendable wealth, which income raises the budget, the legacy target, and how expenses flex when the budget is tight.
• Extra Cash Allocation Order — The ordered list that spends a year’s surplus. What counts as extra cash, the four entry types, how each is sized, why order matters, and where whatever is left goes.
• Debt — Loans that are not mortgages. Amortized and interest-only loans, revolving lines and balloons, existing and future loans, how payments are made, extra paydown, and how interest is deducted.
• Property — Homes and rentals you own or plan to buy. Valuation and appreciation, mortgages including ARMs and interest-only periods, recurring costs, rental income and depreciation, and what happens on a sale.