Saved well but still not where I need to be
- Thread starter Global1
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HsiaoChu
Recycles dryer sheets
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What are the other less important rules?
clifp
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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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
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
Danmar
Thinks s/he gets paid by the 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.
jIMOh
Thinks s/he gets paid by the post
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
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.
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
SEC Lawyer
Confused about dryer sheets
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."
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.
Katsmeow
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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:
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.
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.
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?
If a large part of this is home insurance, you could perhaps reduce it by buying a less valuable home.
Moscyn
Full time employment: Posting here.
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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).
clifp
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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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.
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.
chris2008
Thinks s/he gets paid by the post
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.
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.
LOL!
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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We spend more on vacation, charity and eating out annually than the OP, yet are way under $10K a month in expenses including a mortgage.
I am appalled at the cars and utilities. We spend about $2500 a YEAR on electricity, natural gas and water. For the phones, I get a blackberry paid by my employer. The other 3 people in the family are on a cellphone family plan with unlimited texting. These 3 phones cost about $150 a month. With landline and DSL internet make that $200 a month for phones which some folks would find expensive.
The cars. You put car insurance in a separate category, so I'm not sure how you can spend $1050 on cars. Details?
As for the $400 a month cash, I say do not use cash. Charge EVERYTHING on a credit card. It is difficult, but we have reduced my spouse's ATM withdrawals to about $60 a month.
Also where is the spending for hobbies, games, and fun? For example, we have to pay for bicycle stuff, sports equipment, guitar strings, piano tuning, photography equipment, books, etc.
I am appalled at the cars and utilities. We spend about $2500 a YEAR on electricity, natural gas and water. For the phones, I get a blackberry paid by my employer. The other 3 people in the family are on a cellphone family plan with unlimited texting. These 3 phones cost about $150 a month. With landline and DSL internet make that $200 a month for phones which some folks would find expensive.
The cars. You put car insurance in a separate category, so I'm not sure how you can spend $1050 on cars. Details?
As for the $400 a month cash, I say do not use cash. Charge EVERYTHING on a credit card. It is difficult, but we have reduced my spouse's ATM withdrawals to about $60 a month.
Also where is the spending for hobbies, games, and fun? For example, we have to pay for bicycle stuff, sports equipment, guitar strings, piano tuning, photography equipment, books, etc.
Dawg52
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Maybe for some; but ours have not.
Me either, but my budget is less than 1/3 of what is being discussed here and I do have country club dues. So not much room for a decrease. I suspect the OP lives in a much more expensive area of the country though.
My retirement guy says that pretty much everyone thinks there will be 100% SS coverage through 2037. After that, 70%. So younger people may have issues, but most of us older folks won't, or will have limited issues. I'm 47, so in 2037 I'll be 75. I'll still get 70% of SS after that. It's not MUCH money, but it's something.
And with any luck things will improve in that area. They ARE working on it.
My main comment about expenses is that your daughter needs to start supporting herself! When I was in college I worked 20 hours a week during school and 40 hours a week in the summer, Christmas, Spring Break, etc. I got a small monthly stipend from my parents -- that and my paychecks were to cover ALL my expenses other than tuition (which was almost free b/c my parents taught at my university). I had my own (tiny) apt and a car I saved up for (20 years old). I paid for it all. This was well before there were cell phones, but if there had been cell phones I would have had one instead of a landline--but it would have been a $42 plan like the one I have now.
I work at a university and am honestly amazed by how indulgent parents are these days. I really don't think it's teaching kids ANYTHING of value to have them on the gravy train any longer than absolutely necessary. JMHO.
I work at a university and am honestly amazed by how indulgent parents are these days. I really don't think it's teaching kids ANYTHING of value to have them on the gravy train any longer than absolutely necessary. JMHO.
My retirement guy says that pretty much everyone thinks there will be 100% SS coverage through 2037. After that, 70%. So younger people may have issues, but most of us older folks won't, or will have limited issues. I'm 47, so in 2037 I'll be 75. I'll still get 70% of SS after that. It's not MUCH money, but it's something.
And with any luck things will improve in that area. They ARE working on it.
Your mouth to God's ear
. It would be nice to have our current projected SS payments. Help fund some nice travel...
bbbamI
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
You'll get plenty of advice on the tactics of reducing expenses, but let's talk strategy for a minute.
People generally don't do what's best for them-- medical studies indicate that even 90% of cardiac patients apparently don't get scared or motivated enough to make the lifestyle changes (weight loss, diet, exercise) necessary to improve their longevity. If a heart attack isn't enough motivation then I can imagine that it's hard to muster the drive to reduce expenses.
You claim you want to be in charge of your time, but to achieve that noble goal you have to be willing to figure out what brings you value in your life. This may involve a measure of "sacrifice"-- cutting out the "luxuries" (whatever you decide those are) in favor of your necessities. If you can't do without the luxuries then you're not willing to work for your necessities. If you can't figure out what you really value in your life, and if you can't rearrange your life to support those values, then you're not ready to stop working. Simple as that.
You can't drop your income and maintain your current spending without running out of money. If you "can't" figure out how to reduce spending, or raise assets, or maintain income, then you're not really committed-- let alone ready-- to be in charge of your time.
So what do you want to do? I think these are your strategic choices:
- Keep working to build up enough assets to keep up your current level of spending,
- Work hard at self-employed writing & consulting to generate enough income to maintain your spending, or
- Cut spending.
Maybe you'd want to keep an expenses printout (like the one you've posted here) on your desk or in your car. Next time you're dragging your assets to work you can look at that list and think to yourself "Yep, they're all worth it!" If that's not how you feel then you'll be able to focus your attention on what needs to be cut.
Because otherwise you're wasting your time here.
W2R
Moderator Emeritus
I love it! That's a terrific idea.
Personally I can't imagine looking at a list like that while at work, and thinking, "Yep! It's worth it to work here indefinitely in order to provide internet on those three cell phones" and the same goes for most of the other expenses listed.
But it's perfectly likely that Global1 feels differently about that, and that is his prerogative. In that case, he really does not want to retire at this point in life. There's nothing wrong with that, I would hasten to add.
We all have different priorities. Spending that much every year just sounds like work to me.
Texas Proud
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I like how Nords put it.... he usually has a way with words....
This is how I deal with this when my wife want to buy something.... sure Honey, what do you want to give up to get it
As people have said, nothing looks WAY out of line (I would disagree some, but not enough to matter)... but you are spending a reasonable amount of 'everything'... you have to make choices on what you want.. and if you want to spend what you are spending... then you must work.. it is very simple...
BTW, what are you spending the $600 something on 'house'. I thought I read that it was paid for.... What all is in your $1000 utility? I only budget $400, but don't put in cable, cell phone etc. as I do not see them as 'utility', but luxuries that I want... so they are in 'other'...
This is how I deal with this when my wife want to buy something.... sure Honey, what do you want to give up to get it
As people have said, nothing looks WAY out of line (I would disagree some, but not enough to matter)... but you are spending a reasonable amount of 'everything'... you have to make choices on what you want.. and if you want to spend what you are spending... then you must work.. it is very simple...
BTW, what are you spending the $600 something on 'house'. I thought I read that it was paid for.... What all is in your $1000 utility? I only budget $400, but don't put in cable, cell phone etc. as I do not see them as 'utility', but luxuries that I want... so they are in 'other'...
jIMOh
Thinks s/he gets paid by the post
Others have weighed in, here are 2-3 things to consider for RETIREMENT when expenses probably deserve some attention
Having company is a good thing
Eating out is a good thing
If you had more time, would these expenses change? Hunting around for cheaper foods, possibly not needing to eat out, possibly daughter not eating with you as much?
Look for $100 in saving here... maybe even $200. Do not hold back on yourself or take something away you want, just look to do what you do for $100 less. Maybe a different restaurant, maybe a different eating style.
Break this down...
water...
electric...
gas...
cell phones...
cable...
Not suggesting anything get removed, suggesting that as you work less, you might shower less, might not have AC cranked at night or heat cranked at night or something which suggests this goes down. Even if you find $100 to save here, that is less you need to cover down the line. If downsizing a house is an option (even in 5-10 years) you will need to revisit this anyway.
Can you itemize this? Are your property taxes $7200/year?
Are the home improvements listed in this as well? Can you itemize those costs?
This is the big one to me...
Its OK to have 3 cars... its "not OK" to have 3 car payments. In addition car payments are a temporary expense. They should exist for 2-3 years, then go away. There is a thread here on the car behavior of the board.
http://www.early-retirement.org/forums/f28/cars-some-questions-for-you-48509.html
My suggestions here would be to cut this budget into 2 aspects (car cost and maintainance).
The maintainance is $50 an oil change times 8 changes per year is $400. I realize oil changes are cheaper than $50, the idea is that if you spend only $250 per year, the other $150 is there (year over year) for the eventual $500 job to fix brakes or do other less frequent maintainance.
The car cost you have (I am guessing) is about $500 per year. This means you spend $72,000 every 12 years on the acquisition of a new car. If that number seems high ($72k is high) then lower it. $250 per year might be more like it ($36k every 12 years on acquisition of a new car). That could be 18k every 6 years, one 30k car and one 6k used car... you get the idea I hope.
I believe you can cut this cost in half, and my thought is "later" in retirement you will see this expense drop or tail off more than the others. How soon it tails off depends on lifestyle, I just don't see many 70 year olds driving cross country anymore.
Try to track what you spend this on, its possible you are spending more than you realize.
$6000 per year for house improvements...
I assume some of this might be a hobby? Can you itemize what needs to be done?
Here's my thought...
add in the needed costs of next 20 years...
new roof (10k
)new HVAC ($2000
)new driveway every 10 years ($1000 each??)
and whatever else might be done while you still live in the house... (say 20 years)
then add that up ($14,000 is the list above) and divide by 20 (years) and spend $700/year on those projects. If you do not spend money this year (on a new HVAC) bank the $700 so when the $2000 bill arrives, you have the cash to pay for it.
If you do this "right" and also like remodeling yourself, add a fudge factor into this (like $100/mo or $1200/year). What this means is you budget $2000/year for house repairs and improvements (for example) and you spend most of this money each year... knowing that if HVAC needs replacing, that might reduce the next year's budget or change some plans (for example).
**edit to add**
if your current house is a fixer upper, and repairing it is not a hobby, have you considering moving? This could cut costs drastically.
Do not look for one single expense to make the difference... but if you cut $100 from each expense listed (for example) you can retire now with a higher firecalc success rate. It's easier to cut expenses than to increase savings.
