Answer to Question #178884 in Financial Math for David

Question

Which of the following is NOT an example of a fixed expense.

Mortgage Payments

Insurance

Rent Payments

Buying Food

Answer 1

Buying food is not a fixed expense because you have the liberty to choose what and where to it, meaning its variable.

Typical household fixed expenses are mortgage or rent payments and insurance premiums. While you could theoretically change your monthly mortgage payment by refinancing your loan or by appealing your property tax assessment, this is not an easy switch.

The same is true if you pay rent. You could change this expense by moving to a cheaper home or by getting a roommate, but these are major lifestyle changes.

Your health insurance, car insurance, life insurance and homeowners or renters insurance are also examples fixed costs. You would have to spend several hours researching alternate plans to change these monthly payment amounts.