What is an example of a personal fixed cost?

A personal fixed cost refers to an expense that does not fluctuate with changes in usage or consumption over time, making it predictable and stable. Mortgage payments are the best example of this type of cost because they remain constant over the life of the loan, assuming a fixed-rate mortgage is in place. Homeowners pay the same amount every month, which includes both principal and interest payments, along with property taxes and insurance if they are rolled into the mortgage payment.

In contrast, grocery bills vary by month depending on food preferences, dietary needs, and shopping habits, establishing them as variable costs. Car repairs can also be unpredictable and can vary widely from month to month or even year to year, thus making them another variable expense. Utility bills typically fluctuate based on usage, such as energy and water consumption, which can change according to seasons and consumption patterns, thereby categorizing them as variable costs as well.