How Did You Do On Your Expense Budget in 2010?

[Moemg]

I'm going to make a concerted effort to convince myself that we really can spend a lot more money, then I'm going to find some stuff to spend it on.

I bet you fail miserably at that .There is something built inside us that is inherently thrifty . I debated getting an ereader for two years and would not pull the plug until the price dropped under $150.

 

[KM]

About 3% under, and that was after deciding to replace our old countertops with granite ones, having our inground pool filled in, and repaving our driveway. I had reduced our 2010 budget in a lot of places, as this was the first full year DD was no longer living at home and I knew it would be cheaper. Guess I didn't reduce it enough.....

Expenses that were less include: groceries, clothing, dining out, car maintenence, miscellaneous credit card, heating oil, water, electric, and medical expenses (DD is diabetic, so that was a big reduction when she went off on her own).

Expenses that were more include: cable (just went up again), house maintenence, and vacation (3 trips to visit DD and flew her and bf up to visit).

I take my monthly expenses and divide by 4 to get my weekly budget. Always gives me that extra cushion. I showed DD how to do that when she created her 2010 budget. I sat with her last week and helped her balance her 2010 budget out and reset it for 2011. She promptly took her excess and maxed out her ROTH. It's nice to have one kid who gets it. DS on the other hand..... *sigh*

 

[rescueme]

Well, our "budget" wasn't a forecast of expenses, it was the total we were allowed to spend based on the 4% SWR strategy.

OK, I understand. Our measurement is based upon different "standards" if you will.

During my days as a minor manager in a major corporation I was criticized if my budget was exceeded. It was also criticized if it was under budget vs. forecast and interium adjustments of expensed due to new projects (up) or supplier discounts (down).

I guess I retired, but still keep those old practices in place, in my annual retirement tracking for budgets vs. actual expenses.

For instance, my budget measurement of 1/1/2010 - 12/31/2010 was at a 2.2% variance. That included personal ROI, personal rate of inflation (not the governments), and included not only those standard increase items (such as taxes, insurance, etc.) but also some minor "add-on's" (such as a Carbonite subscription for three years).

Also, for DW/me, our measurement against a 4% withdrawl rate would not make sense at this time. We're above 4% (not actually, since DW is still wor*ing, but expected to retire in 2011), but we don't have a lot of our "elder life income sources" yet on-line. Those include three SS sources (me, claiming aginst my DW at age 66), my DW's SS at her FRA, my SS at age 70, and two small pensions for DW at age 65 (2.5 years away). At age 66 (we're the same age) our WD rate against our joint portfolio is forecast at just over 2%. If we were to use that as a "budget", we certainly would be under (as you are, today).

It just seem from my way of accounting that you had a problem with forecast vs. reality. However, seeing what you have done explains the varience....

 

[Nords]

So, rather than showing that I'm bad at forecasting, it shows that I'm bad at spending.
I'm going to make a concerted effort to convince myself that we really can spend a lot more money, then I'm going to find some stuff to spend it on.

I bet you fail miserably at that .There is something built inside us that is inherently thrifty . I debated getting an ereader for two years and would not pull the plug until the price dropped under $150.

Good luck with that, Al. I haven't been able to really turn on the spending faucet either. It's not the money, it's the value-- or the thrill of the hunt.

Spouse says "What do you do if you can afford anything you want... and you don't want anything?" "If" hasn't turned to "when", but we're beginning to understand why.

 

[rescueme]

Spouse says "What do you do if you can afford anything you want...

Maybe get a "surfer girl" (no, not your DW)

Just don't let your DW know or she may cut down your "longboard" ...

 

[Katsmeow]

Retirement budgeting question. Obviously, some expenses are real and will occur but not annually. I am having trouble figuring out how to best budget for them. For example, roof replacement, car replacement. For those of you who budget, do you budget $X per year for those things and let them accumulate in the budget? If so, do you actually withdraw those amounts from your retirement accounts and have them pile up in your regular accounts?

Or do you figure I can spend $Y not accounting for those future things but since I know that they will exist later I'm not going to budget for them now and will leave that money in retirement accounts. But, because they will exist I will budget $Y-$Z instead leaving a future cushion?

 

[happy2bretired]

I spent about $5,000 less than I took in, but, I really think I kinda over spent this year. A cruise, a trip with DD, in which I partially funded her portion, a reformer, for Pilates, plus some private lessons. I had an generous tax refund and I think I went a little heywire with it.

Gotta save more in 2011...even with a wedding.

 

[Nords]

Maybe get a "surfer girl" (no, not your DW)
Just don't let your DW know or she may cut down your "longboard" ...

I was going to add a metaphorical comment about only being able to surf one longboard at a time but... never mind...

 

[freebird5825]

I don't keep a strict line item budget per se but I make darn sure I transfer enough money to cover my periodic bills into the automatic bill paying account BEFORE I do any other type of spending.
I get paid twice a month - survivor pension on the 1st and annuity on the 17th.
I know exactly how much I need to transfer every 2 weeks to stay "within budget".
I ended up with a nice little cash excess at year end 2010, so I know I cut corners somewhere.

 

[TromboneAl]

I bet you fail miserably at that .There is something built inside us that is inherently thrifty . I debated getting an ereader for two years and would not pull the plug until the price dropped under $150.

Yes, you're right. I have a spreadsheet that keeps a cumulative total of each year's spending "shortfall." It's now up to $96,000.

I could buy a Steinway grand, but then we'd have to keep the house heated day and night...

But seriously, I am going to think of something we can spend more money on. Something that gives me more pleasure than noting how little we spend each year.

 

[NW-Bound]

Why?

"Money is much more exciting than anything it buys." Mignon McLaughlin

 

[Spanky]

We do not have a budget. Our spending is about the same as last year.

 

[Nords]

I could buy a Steinway grand, but then we'd have to keep the house heated day and night...

It's enough to donate the Steinway to the senior center and have a piano tuner on a full-time retainer!

Maybe you could buy a share of that restaurant and hire an excellent jazz band...

 

[RAE]

Well, we were way over budget in my first year of retirement (to the tune of 30% or so). But that was only because of one major unanticipated expense - we loaned a chunk of $$ to stepdaughter and her husband for a down payment on a small house. I might regret this before it's over (probably will), but they needed a house badly (spending way too much on apartment rent, just had a baby), they had no $$ for the down payment, and we (they) got the house for a great price (a foreclosure). So now we will find out if we are going to get paid back on schedule for the loan or not. These are not people that are noted for saving money and being fiscally responsible, so I'll be pleasantly surprised if we do get paid back in full. If not, we'll still be okay, but we might have to cut back on a few things.

 

[Danmar]

I have a " capital" section in our budget that tracks things like transfers to our portfolio, etc. I don't think of these items as ongoing expenses and don't think of them as variances if not budgetted for. Works for us but to each their own.

 

[W2R]

I came out under budget for the year (don't have my spreadsheet here so I can't give an exact number yet), but the amazing thing to me is that $1K of my savings was in December!

I just noticed that this morning that I spent $1K less in December than I had expected to spend. I am still mystified as to how that came to be, but my bank balance is what it is.

I'll have to sit down and analyze what on earth happened between November 30th and December 31st, to lower my spending so much.

I have my spreadsheet now. I came out 17% under budget for 2010, assuming that by "budget" we mean our planned withdrawals plus any regular income sources such as pension. What is a budget? There are so many definitions. One can have a certain monthly "allowance" by dividing the planned yearly withdrawals by 12, but can also have a smaller number in the back of one's mind that seems more prudent.

The mysterious $1K of savings in December ($1K less than spent for the other 11 months of 2010) was due to a combination of things, mostly discretionary, but also including other categories such as very low electricity usage and some regular bills for December falling just barely into November or January.

 

[Zero]

About 15% under budget. Budgeted for $64,000 which included two foreign trips that never materialized. Hopefully one of them will occur in Feb/Mar so it should eat up the budget under-run for 2010.

 

[TromboneAl]

It's enough to donate the Steinway to the senior center and have a piano tuner on a full-time retainer!

Actually, on Monday I am going to call the tuner and ask him how much it would cost to really fix up that piano.

 

[Nords]

Actually, on Monday I am going to call the tuner and ask him how much it would cost to really fix up that piano.

That's gotta be worth more than just the good karma-- like maybe a charitable deduction.

 

[Moemg]

Since Al is going to spend I am also . I'm planning a spur of the moment trip to Savannah and wherever else I feel like exploring this month .

 

[Allegany]

Budget

Spent $16,411 less than the spread sheet budget amount

 

[TromboneAl]

Since Al is going to spend I am also . I'm planning a spur of the moment trip to Savannah and wherever else I feel like exploring this month .

I'll meet you there -- we'll bring our credit cards.

 

[NW-Bound]

Yeah, good market returns give birth to more [-]spending[/-] economic activities, which bring down unemployment, which ...

And they say economic cycles can be controlled ...

 

[East Texas]

Well, we were way over budget in my first year of retirement (to the tune of 30% or so). But that was only because of one major unanticipated expense - we loaned a chunk of $$ to stepdaughter and her husband for a down payment on a small house. I might regret this before it's over (probably will), but they needed a house badly (spending way too much on apartment rent, just had a baby), they had no $$ for the down payment, and we (they) got the house for a great price (a foreclosure). So now we will find out if we are going to get paid back on schedule for the loan or not. These are not people that are noted for saving money and being fiscally responsible, so I'll be pleasantly surprised if we do get paid back in full. If not, we'll still be okay, but we might have to cut back on a few things.

At least you didn't co-sign for them. That could really through a wrench in your financial security.

 

[rescueme]

I am having trouble figuring out how to best budget for them. For example, roof replacement, car replacement. For those of you who budget, do you budget $X per year for those things and let them accumulate in the budget? If so, do you actually withdraw those amounts from your retirement accounts and have them pile up in your regular accounts?

Everybody is different of course. Here's how I do it.

For long term anticipated expenses (using a car purchase, as an example), I have a $500/month payment in my budget, regardless if I'm making payments or not.

When I retired, that $500 was taken from my tax deferred (e.g. roll-over IRA) and the net proceeds (e.g. after tax) moved to my taxable savings.

If I needed to replace my car and needed money for a down payment, monthly payment, or cash buy I would have just taken it out of taxable.

With a few $K in "car savings", I needed to buy another car (for my retirement volunteer work - Meals On Wheels; my current car was not big enough to handle the coolers/hotboxes, nor was it good in snow. Something I needed to count on during bad weather).

In that case, I took the money I already saved up and added to it a withdrawl (including anticipated taxes) for the remainder due, from my TIRA.

What I did not count on (as a new retiree) was that my income was "increased" $30k that year, and bumped me into the next tax bracket. I would have been better off overall if I would have remainded with my $500/month withdrawls and financed the car.

Things you don't really learn till you're retired ...

Like the old saying says "we grow too soon old, and too late smart"...