How baseline expenses work in Income Lab

I want to quickly cover some examples of

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how Baseline expenses work in income lab

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so in this

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plan I don't have anything complicated I

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just have $5,000 in Baseline

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expenses and if you go to the cash flows

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tab you'll see those 5,000 I even made

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the plan um just have a

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flat um plan here so no retirement smile

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just uh just very basic oh that was

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weird there we go now if I add

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in some baseline expenses from other

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parts of the plan and that you actually

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can do that so for example I have a

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mortgage here and this wouldn't normally

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be how I would do it but I did call it a

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baseline expense and what that's doing

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is just saying hey you know that big

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blue square that cake uh it contains the

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mortgage that's all that's saying versus

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hey the mortgage is an extra thing if I

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call it an other variable expense so I'm

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calling it a baseline expense again not

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normally that's not best practice but

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I'm doing it here just to uh just to

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show the example same with this uh this

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insurance premium I'm calling it a

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baseline expense and so what happens

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then is

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that uh and I adjusted by the way the

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other the other piece so that we still

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had $5,000 or I guess you know it's

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rounding a little funny here but uh

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$55,000 in total expenses and all that's

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happened I also have some some my

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medicare premiums in there as Baseline

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expenses is just I've eaten up or you

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could almost think of it as like an

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x-ray of those of those total Baseline

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expenses so again let's go back I've got

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total Baseline expenses of

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$5,000 that means 2,600 uh 265 of other

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and then you know bunch of other stuff

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in here okay so what we're doing with

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Baseline expenses we're building up a

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total number um here it's $5,000 and

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then that's the Baseline expenses for

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the whole plan I'm just going to

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actually see some details here um in

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this plan because I've because I've

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created a few Baseline

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expenses let's go

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to um another example of

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this here instead of entering a total

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I've entered an itemized Baseline

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expense still

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265 because that's going to add up to

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5,000 got the same other Baseline

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expenses from elsewhere in the plan um

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in this case it's going to look a little

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bit

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different because I've got an actual

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itemized 2000 and change plus these

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other items and so in order to have

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5,000 through the whole plan we we get

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this other living expenses that just

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kind of jumps in here to kind of fill in

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um this the space um that's left um in

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that case so why do we do this well you

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know let's say for

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example maybe instead of just calling

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them living expenses you know maybe this

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was um you know um

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travel was a th000 and

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you know

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food was uh

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126

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um now I actually have something I might

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have gotten that number wrong but

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uh now I have some actual

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items and that

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other Baseline expense item is really

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just as there to say hey you you said

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that you have have um you know $5,000

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yeah I must have typed in the number

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slightly wrong I'm 38 bucks short um you

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said that you have $5,000 in total

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expenses total Baseline expenses you've

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told us what some of those are but

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because these you know the the mortgage

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payment and things end during the plan

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um we got a I know you got something

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else right there's something else it's

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always $5,000 that's what Baseline

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expenses are all about it's about

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establishing a level that you'll have

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for the whole plan if we were doing a

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smile here an age-based um spending path

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then then it would have the smile shape

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but it would always be saying hey this

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is what we're this is what we're going

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for here is always this amount now if

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you make an expense and other variable

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expense what you're saying then is

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that's an expense over and above the

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Baseline so now I here I've I've turned

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that

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um that mortgage payment into an other

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variable

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expense and now here's the mortgage

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payment if I remove that I've got

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$5,000 right so the mortgage payment is

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an extra here so other variable expenses

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are extras that you're they're in the

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plan the plan is to hit those expenses

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to to actually be able to hit those

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expenses um but they're not part of kind

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of the the overall thing that we're just

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kind of trying to hit every month um so

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that's a little bit of an explanation of

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how Baseline expenses work um and a

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couple of ways that you might see them

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typically if you're just itemizing a

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bunch of Baseline expenses you won't

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necessarily see this

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um this other living expenses piece this

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is here just kind of fill in any gaps

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that you've that you've left

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unspecified um because of uh you know

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because of some some strangeness maybe

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around uh you know in this case mortgage

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payments and and um and the term

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premiums but but typically what you'll

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see if you start to itemize is really

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just that instead of one big lump you'll

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kind of start to see a layer cake of

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your um of your Baseline expenses so

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hope this helps