Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 04-19-2010, 12:16 AM   #21
Full time employment: Posting here.
Moscyn's Avatar
 
Join Date: Mar 2009
Posts: 728
Home improvements should not be a continually high expense - surely it should reduce in time - so that's one expense you can focus to control on. Eating out twice a week is pretty vague as eating out can cost differently for individuals. I have friends who order expensive wine when they eat out on gourmet dinners weekly. The price would cover 3 eat out meals for me. I do splash on such gourmet dinners - like once a month but not weekly. So, you may wish to look at the expenses on dining out - can you reduce the cost of one dine out meal to save a bit and still splash on the other dine out meal. I enjoy country club, eat out, buy things I like, travel etc. The thing is,on an average, I won't range these treats as pricey because I usually go to the medium to rare (rare being luxurious) range.
__________________

__________________
Moscyn is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-19-2010, 11:37 AM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,626
Here's a list that seems appropriate for this thread:
6-things-youre-doing-to-delay-your-retirement: Personal Finance News from Yahoo! Finance
__________________

__________________
LOL! is offline   Reply With Quote
Old 04-19-2010, 01:17 PM   #23
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 2,677
Quote:
Originally Posted by Global1 View Post
Where did I go wrong? Am I missing something?

Global1
Welcome to the board!

I found that the very act of tracking and inspecting expenses tends to reduce them. You also have expenses that should taper out - your daughter's college expenses, your home renovations (especially if you downsize). The Health Care reforms should help especially if you're in a high-risk pool or have very high insurance rates today.

Everyone has their own optimal budget. Rather than try to reduce yours by some arbitrary number, I suggest you keep recording and inspecting it. I like the concept proposed by Dominguez in Your Money or Your Life. He says that you should get "satisfaction" from your spending. If you aren't reduce expenses in that category. I recommend that book as well as Clyatt's book already mentioned earlier. Focus on the large expenses like cars, housing and any monthly subscriptions.
__________________
walkinwood is offline   Reply With Quote
Old 04-19-2010, 03:13 PM   #24
Recycles dryer sheets
HsiaoChu's Avatar
 
Join Date: Feb 2010
Posts: 389
I've been budgeted to the wazoo for the 37 years of our marriage. Put the wife in charge back then after she spent the equivalent of a week's groceries on yarn for projects that she was making.

I don't believe that I've ever in 61 years had a gourmet dinner with expensive wine. I remember that for three years in a row back when a raise actually raised my paycheck(last year after the raise I got $41 every two weeks less than I did before the raise), we never accounted for the raise or for the sudden increase in her paycheck due that it wasn't being thrown back into her private school that she started for nearly four years, and suddenly realized that we had this enormous amount of money in our checking account that really shouldn't be there. We were sure that it was a bank error. My wife was dutifuly balancing it, and the number just creeped higher and higher, until I noticed one day. I don't write the checks hardly ever, or carry the check book even more hardly ever.

We fixed that. We bought a big retirement house far away. Now there's nothing in our checking account and we just barely make ends meet.

Z
__________________
HsiaoChu is offline   Reply With Quote
Old 04-19-2010, 03:26 PM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
At age 51 25-30x of your annual expense seems like a good target, with 2.7 million and a 1K pension and social security in the 1500-2500 range you are fairly close now.

If you could get another 1 million you could retire now, but I assume another bunch of stock options isn't in the cards. The alternative is much easierl.

When I was in visiting Hawaii, before moving here, while contemplating retirement. I bought this tourist T-shirt Kimo's Hawaii rules. Even though it was trite and tacky it was still the best $12 I spent.

Here are the important ones.
2) The best things in life aren't things.
5) Goals are deceptive - the unaimed arrow never misses.
6) He who dies with the most toys - still dies.
and the most important one.
(8) There are 2 ways to be rich - make more or desire less.
__________________
clifp is offline   Reply With Quote
Old 04-19-2010, 03:32 PM   #26
Thinks s/he gets paid by the post
 
Join Date: May 2008
Posts: 2,264
What's the breakdown of your expenses (10K/mo)?

I'm sure some of the forum members can help tyou with that.
__________________
tmm99 is online now   Reply With Quote
Old 04-19-2010, 03:33 PM   #27
Dryer sheet wannabe
 
Join Date: Apr 2010
Location: Nashville
Posts: 22
I don't know enough about any of this yet to have suggestions (other than to cut expenses and maybe MOVE), but I wish I had your "problems" LOL!
__________________
pawsplus is offline   Reply With Quote
Old 04-19-2010, 03:55 PM   #28
Recycles dryer sheets
HsiaoChu's Avatar
 
Join Date: Feb 2010
Posts: 389
Quote:
Originally Posted by clifp View Post
A

When I was in visiting Hawaii, before moving here, while contemplating retirement. I bought this tourist T-shirt Kimo's Hawaii rules. Even though it was trite and tacky it was still the best $12 I spent.

Here are the important ones.
2) The best things in life aren't things.
5) Goals are deceptive - the unaimed arrow never misses.
6) He who dies with the most toys - still dies.
and the most important one.
(8) There are 2 ways to be rich - make more or desire less.
What are the other less important rules?
__________________
HsiaoChu is offline   Reply With Quote
Old 04-19-2010, 04:16 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
The full list is here. There is also a Kimo's golf rules .
ell The Truth - There's Less To Remember

Speak Softly And Wear A Loud Shirt

Goals Are Deceptive - The Unaimed Arrow Never Misses

He Who Dies With The Most Toys Still Dies

Age Is Relative - When You're Over The Hill, You Pick Up Speed

There Are Two Ways To Be Rich: Make More or Desire Less

Beauty Is Internal - Looks Mean Nothing

No Rain - No Rainbows


__________________
clifp is offline   Reply With Quote
Old 04-19-2010, 05:13 PM   #30
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,158
Do you really hate your current job? If so cut expenses and retire. If not keep working and keep the current budget. I don't think $10k per month is high unless you can't afford it. Spending money isn't a sin unless you don't have it.
__________________
Danmar is offline   Reply With Quote
Old 04-19-2010, 05:37 PM   #31
Thinks s/he gets paid by the post
jIMOh's Avatar
 
Join Date: Apr 2007
Location: Milford, OH
Posts: 2,085
Quote:
Originally Posted by Global1 View Post
I am 51, married with a daughter in college. I left a fairly senior/global job at megacorp in 2005. Luckily I was able to take advantage of stock options, etc. so my current situation is this:
  • $2 million in aftertax accounts
  • $700k in IRA accounts
  • Small pension (no cola)- $1k/month at 55 - no healthcare
  • House paid off/college paid for
Since 2005 I have worked at 3 other companies in senior roles (at current company since early 2009) but my motivation is lagging. What I would really like to do is write business books (I have had one published already) and maybe do a small bit of consulting for limited income. The problem is that our expenses are about $10K/month after income taxes. I track expenses and I really don't feel like there are any huge extravagances - no country clubs, very limited travel, eat out 2/week, etc. Firecalc tells me if I quit today I have a 51.5% chance of success. So I am nervous about leaving the full-time world anytime soon. I feel like I have worked hard to save a good bit but to no avail.

Where did I go wrong? Am I missing something?

Global1
You have a 50-50 shot at lots of things. You have a 50-50 shot my advice is good If you had to retire and the 50% of the time it failed, you have to ask yourself, what would you do when things got bad?

Probably cut back

Which is where my advice will lie... 10k per month of expenses is 120k of expenses per year. Care to outline even half of the expenses?

For example, how many household members and how many cars?
Do you travel for pleasure? Can you outline some trips and their expenses?
Do you hire help? Lawn care, maid services or other? If you had more time, would you consider doing any of these yourself?
Real Estate- how big is the house, and could you sell to downsize costs? This is a double bonus- you might make a profit on the house AND the ongoing maintainance costs should be lower.
Do you pay child support or alimony?

The above ones are low hanging fruit- any one of those could take $500/$1000 month off the budget.

Here are a few other ways to "squeeze" expenses:

1) Who does your taxes? Do they give other advice, or do they just do taxes? If you can find someone which knows investments and taxes, talk to them. Suggestions will include possible deductions you could take if you earned less money, municipal bonds in taxable accounts, and tax strategies for withdrawing money. Do not buy anything, just find a tax guy which knows investment choices too.

2) Eating. I know families of 4 which eat on less than $150/week. My family of 4 eats on about $400/week- this includes eating out. I know of other families which spend $800 month on food because they eat out 4-6 nights/week.
You can save money here, but the items above (cars, taxes, hiring help) are probably larger expenses with more bang for the buck.

3) Cable. I know people with a $300 or $400/month cable bill. If you have 3 or more hi def TVs hooked up to cable, and only 2 adults live in the house, consider cutting back.

4) Does the work you do require you to have a high cost cell phone? You might be able to downsize the phone if you are not working

2.7 M in assets at 4% withdraw rate is an income of $9000/month
in 5 years your pension covers the other $1000/mo

none of this factors in social security.

You can retire, look deeper into the numbers to prove it yourself
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
jIMOh is offline   Reply With Quote
Old 04-19-2010, 06:43 PM   #32
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 943
I'm surprised at the number of responses that include a comment about relying on Social Security. I would think with the OP's assets discounting SS as a reliable source of retirement income would be prudent. I know I never consider SS in my thoughts: if I'm wrong, great, but I would certainly not bank on it given my assets.
__________________
LARS is offline   Reply With Quote
Old 04-19-2010, 09:35 PM   #33
Dryer sheet aficionado
 
Join Date: Oct 2006
Posts: 31
Quote:
Originally Posted by Danmar View Post
Do you really hate your current job? If so cut expenses and retire. If not keep working and keep the current budget. I don't think $10k per month is high unless you can't afford it. Spending money isn't a sin unless you don't have it.
Don't hate my job just would rather do what I want to do than work doing what others want me to do.

Some (not all) expenses. I realize that I will get much abuse over these amounts!
  • Food $1100 mth (groceries $800/mth - company over alot, dining out 300/mth- usually 3 people/meal)
  • Total utilities $1000/mth (including 3 cells phones w/internet access)
  • Home $675/mth (taxes & routine maintainence- I mow my own grass!)
  • Cars $1050mth (3 cars - payments, gas, maintain)
  • Vacation $300/mth
  • Entertainment $250 mth (tickets, golf, fitness club, etc)
  • Healthcare $1250/mth
  • Gifts $125/mth (I know - alot, but DW ethnic family enjoy gift-giving)
  • Cash - $400 mth don't know where it goes
  • Insurance (car/home, umbrella) - $500 mth
  • College/Daughter expenses - $1000
  • Houshold expenses $100 mth
  • home improvements budget $500 mth(eg. - new roof last year)
  • Clothes $125/mth
  • Charities $450 mth
__________________
Global1 is offline   Reply With Quote
Old 04-19-2010, 11:30 PM   #34
Confused about dryer sheets
 
Join Date: Apr 2010
Location: Chicago
Posts: 8
I agree that your spending is not extravagant. Some would say "track the $400 a month that is unaccounted for, then reduce it," but I think that would be quibbling. I can imagine how you could "cut back" on this budget, but do you really want to? Let me put it this way: I spend at least $500 a month on wine alone (in my own home, not counting what I spend in restaurants), and I'd rather work longer than cut back on that. Just because you can get by on less doesn't mean that you "should."
__________________
SEC Lawyer is offline   Reply With Quote
Old 04-20-2010, 12:19 AM   #35
Thinks s/he gets paid by the post
Keim's Avatar
 
Join Date: Feb 2007
Location: Moscow
Posts: 1,128
These seem fairly reasonable to me. I could see cutting the cars substantially. Perhaps get cheaper cell service. Utilities seems higher than I'd expect. You are definitely generous to charities at $5400 per year. I'm not sure I could criticize that. But without knowing more about the lifestyle you wish to maintain, I can't see a lot else.

Quote:
Originally Posted by Global1 View Post
Don't hate my job just would rather do what I want to do than work doing what others want me to do.

Some (not all) expenses. I realize that I will get much abuse over these amounts!
  • Food $1100 mth (groceries $800/mth - company over alot, dining out 300/mth- usually 3 people/meal)
  • Total utilities $1000/mth (including 3 cells phones w/internet access)
  • Home $675/mth (taxes & routine maintainence- I mow my own grass!)
  • Cars $1050mth (3 cars - payments, gas, maintain)
  • Vacation $300/mth
  • Entertainment $250 mth (tickets, golf, fitness club, etc)
  • Healthcare $1250/mth
  • Gifts $125/mth (I know - alot, but DW ethnic family enjoy gift-giving)
  • Cash - $400 mth don't know where it goes
  • Insurance (car/home, umbrella) - $500 mth
  • College/Daughter expenses - $1000
  • Houshold expenses $100 mth
  • home improvements budget $500 mth(eg. - new roof last year)
  • Clothes $125/mth
  • Charities $450 mth
__________________
Keim is offline   Reply With Quote
Old 04-20-2010, 12:35 AM   #36
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,399
Quote:
Some (not all) expenses. I realize that I will get much abuse over these amounts!
Note these expenses total a little under $9k so if you are spending 10k a month you are missing some things. Let me say that I have had spending in the past commensurate with (and exceeding in some categories) this. I don't have your assets. Yet we are retiring this year anyway and doing so requires cutting the expenses. In our case we decided we would rather cut expenses than work longer.

A few comments:

  • Quote:
    Food $1100 mth (groceries $800/mth - company over alot, dining out 300/mth- usually 3 people/meal)
At the end of the day, it isn't so much that your expenses are outrageous ...it is that overall that add up to an affluent lifestyle that will require a lot of capital to maintain. For any one expense you might find someone living on $5000 a month with that same expense. The difference is that person would not have all your other expenses.

In our case, we tried to cut lots of little expenses and didn't get far. I like having a Blackberry, DH enjoys his iphone. We like eating out, I enjoyed the vacations and the new car. But a couple of years ago I realized that if we weren't willing to change our lifestyle then we would be working for a lot longer than I want to work. It may be that you would rather work longer and have the more affluent lifestyle. In my case I decided I would rather have more time than more money.
Can probably be cut somewhat even if you didn't touch the dining out. Eating out is always an issue for us. We spend roughly $700 a month on the grocery part for 5 people and I think we could cut that.
  • Quote:
    Total utilities $1000/mth (including 3 cells phones w/internet access)
I assume this includes your daughter? For our children we gave them a fairly generous allowance but they have to pay for certain things out of it including their clothes, cell phone incremental cost, entertainment expenses, and gasoline and auto insurance.

Our utilities including cell phones probably exceeded that since our electric is very high. The way we are solving that is that we have bought a smaller home about 40% of the size of the house we are selling. Our utility bills will be decreasing substantially.
  • Quote:
    Home $675/mth (taxes & routine maintainence- I mow my own grass!)
Doesn't seem unreasonable, ours was more on the house we are selling. When we downsized we purposefully bought a less expensive house in part to save on taxes.

Quote:
Cars $1050mth (3 cars - payments, gas, maintain)
I am not a big fan of car loans except for someone who really has to have a car to earn a living and doesn't have means to pay cash. I can sort of understand going for a zero percent loan. Those exceptions aside, pay cash for your cars. Is one being driven by your daughter? If so, why isn't she paying for it?
  • Quote:
    Vacation $300/mth
  • Entertainment $250 mth (tickets, golf, fitness club, etc)
None of these are all that unreasonable. However, potentially you could cust some expense here. I'm not saying you have to but really look at where you get the most value and enjoyment. We used to spend more than that on our annual vacation. But one day I realized that I wasn't getting enough enjoyment out of it for the cost. So we stopped going on annual lengthy vacations. Our travel costs went down markedly. I know that for some this would be the last cost to reduce and I understand that. My point is that the cost was more than the enjoyment we were receiving. We still do some vacations, just less frequently and less expensively.
  • Quote:
    Healthcare $1250/mth
  • Gifts $125/mth (I know - alot, but DW ethnic family enjoy gift-giving)
Neither one of these seems all that unreasonable although gifts could perhaps be cut somewhat.
  • Quote:
    Cash - $400 mth don't know where it goes
It is difficult to track all cash. We strive to track all but about $100 of it and succeed reasonably well. The key is to avoid using cash when possible.
  • Quote:
    Insurance (car/home, umbrella) - $500 mth
Hard to comment without knowing the breakdown of this. For us, we have all of this and by far the most expensive part is auto insurance as we have an adolescent son. He does however pay for his auto insurance. We are fine with paying for him to go to college in the fall, but driving is not a necessity for him -- he could live in the dorm and not have to drive. If he wants to drive then our view is that he needs to be responsible to pay his share of insurance.



If a large part of this is home insurance, you could perhaps reduce it by buying a less valuable home.
  • Quote:
    College/Daughter expenses - $1000
  • Houshold expenses $100 mth
  • home improvements budget $500 mth(eg. - new roof last year)
  • Clothes $125/mth
These are basically OK and presumablyt he college expenses are limited in time. $6000 a year for home improvements may be a bit more than you need, but good to have a fund for it.
  • Quote:
    Charities $450 mth
More than I would spend.
__________________
Katsmeow is offline   Reply With Quote
Old 04-20-2010, 01:33 AM   #37
Full time employment: Posting here.
Moscyn's Avatar
 
Join Date: Mar 2009
Posts: 728
Just something else you may wish to do as an extra. If you are unable to give up or reduce any expense now, you may wish to work on the list and see which items can be significantly reduced in the next 2 or 3 years (home improvements, car loans, insurance premiums and daughter expenses perhaps?) and how the items will change when you retire (for eg. meals - I intend to do more lunches than dinners when I retire and cook more dinners at home). However, some items may increase like travelling as you may wish to travel more. The thing is, expenses change through the years. My expense list done 3 years ago differs from the one I have this year (and I intend to retire this year). The numbers may not change drastically but I realised I can reduce here and there as I either outgrow an interest (I used to be big on facials and massage - now it is just massage and not so frequent), became smarter with my purchases (eg. I don't spend much on buying magazines now), pay off a debt or invested in something which helped reduce monthly expenditure (like a golf club membership instead of paying hefty green fees as non-member).
__________________
Moscyn is offline   Reply With Quote
Old 04-20-2010, 02:49 AM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
I basically agree Katsmeow with comments, nothing looks outrageous but in total it is a very affluent lifestyle and almost 3x the median spending.

The lawyers comment about spending $500/month a wine really struck home. When lived in Silicon Valley,I certainly would drink a $100/bottle or two of wine every month either at home or at restaurant. I certainly enjoyed taking trips to Napa. I recently opened a one of two $100 bottle of wines since moving to Hawaii. Yes it was nice but it didn't missed and when I translate into the asset required to an sport a $200 a month wine habit of $50,000, I don't missed it at all.

My biggest comment is that you are thinking like a man a big income instead of like a man with lots of assets. Having both is great but if you want to transition from one to another, you need to think in terms of assets that I need to support this expenditure.

$500/month insurance, my house plus car is $100/month. I bet you have collision on your cars, why? You have 2.7Mil in assets if you wreck a car you are out 25-30K or ~1% of your assets, they are plenty of weeks and even days when your assets will fluctuate that much. Unless you are sure the family is made up of bad drivers and you are getting a great deal from the insurance company you should be self-insuring. You keep the profits rather than give them to an insurance company.

$1050/month for car,again unless it is 0% why have car loans? Even the zero percent loans mean you didn't take advantage of another incentive. Right now the short term risk free interest rates are basically 0%, so I see no reason to have any debt other than mortgage. Instead of budgeting $X/month for a car replacement, say to yourself I am going to buy 5,6,7,8 more cars in my life for us at $Y each. (This is pretty much completely a lifestyle choice, I decided that I will buy one car/decade) When you get above 85 daughter will be wanting to take the keys away anyhow. Subtract that sum from your assets.

$1,000/month for utilities. I realize that Pennsylvania and Hawaii are complete opposite climates, but our electricity rates are the highest in the land, and even with a 5 person family cell phone plan, and two person household I'm paying roughly 1/2 that. So there has to be room for cutting there.

The daughter expense will be ending soon (although you'll probably need up the gift amount). I guess what I am saying is you allocate some of your asset (in the neighborhood of $400-500K) to pay for foreseeable but not reacquiring events like your daughters college, her wedding and future car purchases you can reduce you expense by well over $2,000 a month, throw in some economizing and your expenses look closer to $7000-$7,500. Can your retire on 2.2 million plus a $1,000 month a pension, it certainly seems doable.
__________________
clifp is offline   Reply With Quote
Old 04-20-2010, 05:36 AM   #39
Thinks s/he gets paid by the post
 
Join Date: May 2005
Location: Texas
Posts: 1,038
How big is the house and what does it cost?
__________________
In theory, theory and practice are the same. In practice, they are not.
Lazarus is offline   Reply With Quote
Old 04-20-2010, 06:47 AM   #40
Thinks s/he gets paid by the post
 
Join Date: Apr 2005
Location: Duesseldorf, Germany
Posts: 1,005
I would figure out how much I would have per month to live on in ER and then start today to cut cost "as if already retired" as much as possible, while remaining employed.
Track everything and then recalculate to eliminate work related expenses and to include some goodies that make ER enjoyable.
If that lifestyle is not attractive to you, there is still time to modify the plan.
__________________

__________________
chris2008 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
I just saved a bunch of $ mickeyd Other topics 20 03-26-2010 11:13 AM
Can this computer be saved? Sandy Other topics 13 08-31-2007 08:54 PM
How do you decide you've saved enough? spitting_llama Young Dreamers 25 07-13-2007 03:28 PM
Saved a Few Bucks Bob_Smith FIRE and Money 25 12-07-2006 06:06 PM

 

 
All times are GMT -6. The time now is 06:31 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.