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Re: Budgeting for and during ER
Old 06-04-2005, 08:20 PM   #21
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Re: Budgeting for and during ER

Thanks TH, my DW is pretty excited, the recipe is saved in our doc folder for a future special event!
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Re: Budgeting for and during ER
Old 06-05-2005, 05:05 AM   #22
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Re: Budgeting for and during ER

Quote:
Originally Posted by MRGALT2U
Well, I can't think of a single expense that has not been cut
(in some cases severely) in ER.* I'm not kidding.* Of course,
living on 25% of my pre ER income almost forces this.* Still,
it was pretty easy for us.* DW wishes we had been together
during some of my "glory years".* OTOH, she is in better financial shape
now and so am I.* But, the most important thing is we don't feel
deprived.* Quiite the contrary.............

Prior to retirement (first marriage) I tried budgeting once or twice.
An almost complete disaster.* Now, we don't budget at all
(financial affairs are pretty simple),* but we may in the future.

JG
Hey, I came up with two (2) expenses which are up. Dog food and toilet paper.
I'll keep working on it

JG
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Re: Budgeting for and during ER
Old 06-05-2005, 06:26 AM   #23
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Re: Budgeting for and during ER

Since RE in January I've tried to take a top down approach to cost cutting...get to the big stuff first. Especially recurring monthly items.

Life ins....dumped most of it
Health ins. switched plans, saved $100/mo
Phones.... Had 3 land lines - now 1
Cellfones... kicked the kids off the plan
CATV.... cut services saved 20%
Cars... thats a problem. Dumped 2 out of the old biz fleet. Still have 2. Just inhereted 2. DW doesnt part with stuff easily

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Re: Budgeting for and during ER
Old 06-05-2005, 06:53 AM   #24
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Re: Budgeting for and during ER

As I am coming on on ER, I find I am having urges to spend more money. Kind of like the last hurrah. Or maybe it results from my bout of HGTV watching. I have all this home improvment I want to do. I want to expand our apartment by annexing part of another apartment. I have all these redecorating wants. I know it drives my ERd spouse crazy whenever I talk about this stuff.

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Re: Budgeting for and during ER
Old 06-05-2005, 07:14 AM   #25
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Re: Budgeting for and during ER

Quote:
Originally Posted by MRGALT2U
Hey, I came up with two (2) expenses which are up. Dog food and toilet paper.
I'll keep working on it

JG
Re the tp.

Not to be indelicate, but didn't you get married after you ERd?
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Re: Budgeting for and during ER
Old 06-05-2005, 09:55 AM   #26
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Re: Budgeting for and during ER

I'll join this party just to give another side.

"Possum Living" was never in our plans and since retiring 2 years ago we have continued to live and spend as we did when working, other than reducing retirement savings.*

Quicken, detailed budgeting, spreadsheet projections, and LBYM before ER got us to a place where we didn't need to cut expenses to live a full retiree live.* This might not be everyone's cup-of-tea but it fit our style and allows me to sleep comfortably.*

Nibbling around the edges was never my style and the big expenses (heat & Light, Prop taxes, groceries, health care, mortgage and car payments, etc) go on as usual.* Our discretionary spending continues within a fairly broad range but is relatively smaller than the above fixed expenses.* We see the grandkids often and vacation regularly.*

JohnP
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Re: Budgeting for and during ER
Old 06-05-2005, 10:16 AM   #27
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Re: Budgeting for and during ER

We've cut back on magazine subscriptions, purchase of books, work clothes for DH, dining out and purchase of new vehicles. (keeping our vehicles longer) We've lowered the amount of our life insurance policies and will probably do away with them altogether in the next few years. And we're thru with college bills since the last one graduated last month!

We've spent more money on tools for DH, a large landscaping project, health insurance premiums, and gas for vehicles since we drive "up north" to visit family more often.

And we had the unexpected bill of paying for oldest son's wedding. He and his wife paid for a wedding in Jamica in Oct. and a reception back here but then had to move the wedding up 5 months since he is heading overseas with his Nat'l Guard unit next week. Their funds were a little depleted so we offered to pay for the dinner/drinks at the wedding.
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Re: Budgeting for and during ER
Old 06-05-2005, 10:44 AM   #28
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Re: Budgeting for and during ER

The biggest cut we made, was the second car. It's been over 2 yrs now, and only occassional minor inconveniences.

Dining out way down, DW likes to cook not that she has time
Clothing way down, shorts and tank tops just don't cost that much
Travel costs way up, we love to travel and now we can...

For the first time ever, I'm tracking expenses in quicken, been at it for 5 months now, should be interesting...

...But, I don't track TP separately, so that will always be a mystery.

Beachbumz 8)
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Re: Budgeting for and during ER
Old 06-05-2005, 10:50 AM   #29
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Re: Budgeting for and during ER

Being very frugal all my life, my FI goal to ER was based on increasing my ER budget by about 50%. The increase is for new health related expenses (insurance LTC) and catchup living (food, travel).

It will be an experience to reduce my frugal lifestyle.
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Re: Budgeting for and during ER
Old 06-05-2005, 11:10 AM   #30
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Re: Budgeting for and during ER

I think I could really slim down on expenses in retirement if it allowed me to spend a bit more on travel/leisure. Kind of similar to Beachbumz's approach.
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Re: Budgeting for and during ER
Old 06-05-2005, 12:41 PM   #31
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Re: Budgeting for and during ER

Well lets see...I went from 5 cars to 2 between us. Mcmansion to half-sized but decent tract home. Increased my insurance deductibles to lower payments but increased liability insurance to cover my assets.

In a severe case, I'd sell one of our remaining 2 cars, cut my insurance on the cars, cut the food budget in half by simplifying the menu, drop the movie rentals, cable tv and cable internet...put an antenna up and get a cheap dialup acct. Stop buying anything nonessential and drop the quality level on some other large monthly recurring costs. Defer capital expenditures.

Would bring us to 8000-12000 a year out of pocket. Could do it for years.
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Re: Budgeting for and during ER
Old 06-05-2005, 02:56 PM   #32
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Re: Budgeting for and during ER

th

8-12k/year would cover only our property taxes and groceries! I think I better move to a lower tax state right away

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Re: Budgeting for and during ER
Old 06-05-2005, 03:11 PM   #33
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Re: Budgeting for and during ER

Here's my budget broken down monthly...annotated for how I'd shave it.
Home Ins 62.50 Could be dropped completely as I have no mortgage
Home Tax 191.67
Baby 100.00 Could be cut to $~80
Nat Gas 60.00 Could be cut to 40-50 by dropping thermostat
Water 20.00 Could be cut to $15 minimum
Elec 120.00 Could be cut in half if my wife would just turn the damn lights off when she leaves a room
Trash 35.00 Could be cut to $25 by opting for the smaller trash can option
CATV/BB 85.00 Could be cut to $6 by dropping the tv and cable internet for dialup
Phone 42.00 This is home phone with unlimited long distance and two emergency cells
Car Tax 16.67
Car Ins 93.00 Could cut this to ~60 by dropping collision and comprehensive on our 5 year old cars
Gas 120.00 Could be all but eliminated by just doing local travel a couple of times a week for groceries
Food 650.00 Could easily cut this in half by dropping most meat and expensive packaged foods
Misc 411.26 Could easily drop this to $100 a month
Movie rental 25.00 Could be dropped completely
Toys 250.00 Could be dropped completely

So that $2282 in monthly expenses (minus capital expenses and of course, no health care included as my wife pays for that out of her check) shaved down as described above takes me to $1011 monthly. I drop the food a little more by eating lots of pasta, beans and rice dishes and make a few more tweaks, sell a car to divest those costs, and I can get it to ~800-850 a month.

Of course, this is a 'cheating' budget because it doesnt include health care, involves a lot of things many people wouldnt do like no travel, no eating out, simplfied diet, no major capital purchases 'until further notice' etc. Our regular $28k expense budget plus ~5300 a year in capital costs is a lot more comfortable.

Nice to know that if it all goes to hell in a handbasket, we can live on a lot less. Hope it never comes to that!
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Re: Budgeting for and during ER
Old 06-05-2005, 04:13 PM   #34
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Re: Budgeting for and during ER

So your property taxes (Home tax + Car tax) and groceries (Food) are currently also in the $8-12k/year range - Thought I was really missing something;* your utilities, CATV, gasoline and phone are also similar to mine.* I add more generous misc, health care and LTC ins, condo fees, and DWs not-for-discussion mad money to get to 45-50K/yr - not bare-bones possum living but really what is spent to live like we did before retiring.* It's, personally, what we planned for and it has been accomplished.

Budgeting is highly personal - I had the impression that the topic was about what was a 'living budget' during ER and not a bare minimum if the bottom absolutely dropped out.* If we had to go to $8-12k/year I'm sure that could be accomplished but I'd have a hard time imagining the exterior circumstances that would get us there, maybe the 'nuclear option' level instead of the possum living option.

Best regards

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Re: Budgeting for and during ER
Old 06-07-2005, 11:49 AM   #35
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Re: Budgeting for and during ER

I'm impressed if your 'misc' is higher than mine...we account for everything down to toothpicks and q-tips, including the expensive TP, then I add a 30% fluff factor and 8.5% sales tax. But then I might have a whole separate category of something you lump into 'misc'.

Budgeting is VERY personal. One mans possum living is high times for another. Even at a shaved $12k budget I'm living in a newer very nice home, driving a newer very nice car and eating good food. Ahead of about 65% of the rest of the US to be sure.

The tax/food numbers are pretty fat too...my actual home/car taxes are lower but I factor in about a 35% fudge factor in case we get any special assessments (like last years 3800 water hookup deal). Same for the car tax...i'm paying nearly nothing on two 5 year+ old cars, but I amp up the amount because someday i'll be buying a new one and needing to catch up on the higher rate.

Not an accountants budget to be sure, just base costs with a layer of fudge added on. Most categories are high water points; this budget is my winter peak gas bill and my summer peak electric bill. Not too cold here in the winter, but 95-100 in the summer is the norm.

Then the no debt, no 'funny fees' aspect is probably also unusual. I've lived in condo/homeowners associations before. Wont live in one again.

I have a hard time imagining what would take me to that 8-12k budget too. My wife would have to lose her health care job, and she's one of the longest tenured, most highly regarded people at the hospital, not be able to find another one, I'd have to not be able to find a part time job, our portfolio would have to hit a hole the size of rhode island, and our cash reserves and heloc would have to either run out or something (like 18% interest rates on the heloc) would have to prevent us from tapping them. I keep enough cash for 2-3 years although I'd like to invest that someday when I find something cheap enough to buy.

But its nice to know that a very comfortable survival could be had even under the worst conditions. I ran a simulation that took us through the worst part of the depression 3 times in series and we could still squeak through.
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Re: Budgeting for and during ER
Old 06-07-2005, 11:55 AM   #36
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Re: Budgeting for and during ER

Most of you know that I am a "worst case" planner. The only thing
I can imagine that would derail our ER is a major health crisis.
Honestly, I can't conjure up any other doomsday scenarios.

JG
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Re: Budgeting for and during ER
Old 06-07-2005, 01:07 PM   #37
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Re: Budgeting for and during ER

th

Not trying to give you grief - just trying to understand and still asking myself (after 2 yrs retired) if our spending is right for us or not.* Just when I thought I had a handle on finances, there is another gift for the kids and/or grandkids (up to a count of four now), my son's college expenses or dad needs some comfort item in the nursing home.* This month I must have spent $300+ on mulch, plants, driveway sealer and deck sealer.* I just try to plan and adjust to the inevitable spikes in expenses.* *

Additionally, on another subject, I predict that you will have a delightfully different coming years discovering yet another world with your daughter and new wife.* My only child (a son) was born on my forty third birthday and brought his own special joy into a life that had previously been dedicated to work and catching up after putting myself through 6 years of college.* *

Best Regards

JohnP
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Re: Budgeting for and during ER
Old 06-07-2005, 01:45 PM   #38
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Re: Budgeting for and during ER

Quote:
Posted by: ex-Jarhead Posted on: Today at 01:38:32 PM
Insert Quote
I usually pass when it comes to budgeting, spending, etc., but after TH's comprehensive spending and budgeting, I feel forced to make a comment.
My comment is: You are going to end up with more than you can spend at a time when you won't feel like spending anymore, if you don't loosen up at this stage.
I retired at 49, my wife never had a job, and I stilll had a 16 year old in tow. I was responsible for about 20% of my mothers income.

We retired without a defined benefit program from anyone, and had to secure our own health ins.
We also bought a house that was 3400 Sq. feet, (prev. was 1900). (Moved 600 miles away after I pulled the pin). (Retired 19 years ago).
My wife and I both came from humble beginnings, and there was never a thought or a possibility of an inheritence.
We have never budgeted, and currently have 3 cars, the same house, and I play a lot of tournament golf and fly-fish. We have a packgage from Dish that includes pro-football and baseball packgages, and when we feel like it we go out to eat. (I also help my kids out from time to time, if the situation warrents it.).
Point being, "Possum living" for TH, and most of the young posters I've read on this board, is not required. (Commen sense is O.K. though).
My net worth, by the way, was probably a solid middle from what I've seen posted when I bailed out.
Nothing wrong with spending only what you want to, but don't short-change yourself in early retirement because of the "fear factor".
If you are bright enough to get to this point, you'll be able to figure it out.
Regards, Jarhead
Good advice
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Re: Budgeting for and during ER
Old 06-07-2005, 02:39 PM   #39
 
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Re: Budgeting for and during ER

That's useful to see your expenses, TH.* I put in my totals for each of your categories, and the results were about the same ($32,000 instead of $27,000 -- main difference was more for gas and teenager).

However, it's the additional expenses that I had in 2004 that made our total so much higher:

Airline* * * * * * * * * * *2015
Healthcare* * * * * * * * * 5169
Car Repairs* * * * * * * * *3130
Hardware, Garden** * * ** * 1604
Home Improvements** * * ** *1450
Computer* * * * * * * * * **1405
Charity* * * * * * * * * * *1271
College related* * * * * ** *497
Restaurant* * * * * * * *** *763
Vacation* * * * * * * * * ** 912
Firewood* * * * * * * ** ** *416
Tax Prep* * * * * * * ** * * 325

Our elec rate is .13/KWH, and we spent only 840 on electricity -- what is your rate? It's got to be more than wife-lights that makes your elec bill high.
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Re: Budgeting for and during ER
Old 06-07-2005, 02:53 PM   #40
 
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Re: Budgeting for and during ER

Quote:
I usually pass when it comes to budgeting, spending, etc., but after TH's comprehensive spending and budgeting, I feel forced to make a comment.
My comment is:* You are going to end up with more than you can spend at a time when you won't feel like spending anymore, if you don't loosen up at this stage.
This is good advice.

If you run Firecalc and it gives you a 100% safe SWR, just remember that this covers the period from 1928-1935 - The great depression.

A lot of posters on this forum warn that future returns may not be as good as the past, so they pad in another 2% to costs to Firecalc.* But I think if your Portfolio survives the Great Depression, that is about as good a planning as you should do.

And think about it, if another depression did come, we'd all pull in our horns and spend about half of what we currently spend. Firecalc assumes you just keep on spending!

For a good Depression Experience go and See the Movie "Cinderella Man" - Probably one of the best movies I've ever seen, If not the Best. . A shoe in to win Best Picture next year! This will give you an idea of how bad the depression was.

My grandparents lived through the Great Depression and all throughout the 50's, 60's, and 70's all I heard from them was 'When the next Depression comes' - They lived life frugally to the end and deprived themselves of a lot of comforts and experiences needlessly. They died in the 1980's at ages 87 and 88. They only knew true bliss when they became senille in their early 80's and no longer had the mental faculty to worry about money anymore.
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