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Old 08-10-2007, 10:32 AM   #21
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I'm not ER'd quite yet, but I sure hope it's less expensive than while working
For me, the big surprise was in taxes. Income taxes were one of the major expenses while working, and now, at least until I start using my tax-deferred accounts, taxes will be almost zero.

You should be able to make a pretty good estimate of how much your expenses will drop: less driving, no nice clothes necessary, fewer lunches out, etc.

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I wasted $6.99 tonight buying oysters for my boyfriend.
They... um... no, I'm not going to say anything.

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The Dow lost 381 points today saving a few dollars just doesn't seem important.
I've got a system for dealing with this kind of thing. That is, let's say you gain or lose $10,000 in a day on the market, and that night you are considering going into the other room to turn off the cable modem and router for the night -- something that will save .2 KWH, or 2.6 cents. You might say "Hey I gained/lost $10,000, what does 2.6 cents mean?"

But my system is to treat each potential saving independently, and just ask "Is it worth the effort to save that?" In the case of the modem/router, the effort is to push the off switch on the outlet strip with my toe on my way to the bedroom. Almost no effort to save $9.49 per year.

Running joke around here is: Me: "I forgot to turn off the modem last night." DW: "Well that's 2 cents we'll never see again."
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Old 08-10-2007, 10:57 AM   #22
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Yes, I believe living a LYBM lifestyle now as well as during retirement allows one to retire early as well as stay retired. I'm with Nords in that I'm not such a huge researcher anymore in that I've got price points in my head as to what I'd be willing to spend on an item. I think its due to being this way for a long time. Example, we received a flyer from a sports store which had the lightweight hiking shoes featured - they were from $60-$120 a pair - I told my husband - I like those, BUT, let's go find them or wait until they are $20 or $30. Other example - due to husband and I being affiliated with the military, we have access to the commissary and BX - the prices are so much lower at the commissary in general for food, that when I walk into a regular grocery story, I gasp at times. As for the BX, they aren't necessarily the cheapest, but I don't have to pay sales tax (7.75% here), so when shopping, I have to keep that in mind. Other usual suspects; library instead of buy books, don't eat out much or eat a cheap Costco (my husband keeps asking for pizza at Costco...), bring our lunches to work, don't by clothes or only on sale, make gifts for people, don't re-decorate....ever :-), actually look at it as part of your lifestyle, accumulate those things that have meaning and surround your house with that making it a home versus someone else's ideas adoring your walls and floors, invest first, pay bills second, i.e. pay yourself first and make it a hefty paycheck (more than 10%); etc, etc, etc. As for the market - I keep telling my husband not to track that stuff daily, it will just make him sick, but I think there's something in the male mind...yes, a sexist remark, but I'm surrounded by them at home and work - I know how they work better than women (outside of me).
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Old 08-10-2007, 01:14 PM   #23
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Is this the trait that lets you LBYM and not feel you are depriving yourself?
I don't think so. I think that trait is a symptom of the real thing that you and many others do, and that is:

Analyze opportunity cost - aka looking at the big picture
(and being responsible)

If you don't want to buy books, it's because you don't want to take on the loss in savings/investment, that is, you think the opportunity cost is too high. If there was 0 cost to you for buying, of course it would be better to just buy them (more efficient). This is not because you necessarily "like" penny pinching, you may, or may not...but really it comes down to you have analyzed your wants/needs as a WHOLE. Seeing this "big picture", and accepting that eveything is connected (you spend here, and lose some of your financial security), and accepting the responsiblity of making those choices, you end up doing exactly what you're doing.

Being responsible, and analyzing the "big picture", are keys to success in pursuing goals in general, whether it be reaching early retirement, or running a business, or landing on the moon. Sometimes people are good at applying this to some areas of their life, and not others. But generally, I would bet the rest of your life is pretty well under control as well, because you apply these same good qualities to most things you do that are important.

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Old 08-11-2007, 08:04 PM   #24
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Consider your LBYM lifestyle as practice for retirement. Live on your proposed ER budget for a year or two while you are still working. The savings are a second benefit. The expenses are easy to figure. Look at annual income minus deposits into savings. You spent the rest, so that is your expenses.
Knowing our proposed retirement income, we practiced for a few years, then just stopped going to our j*bs. No change in our lifestyle, but 5 more Saturdays per week. I'm skeptical of the hypothetical cutbacks if you haven't been living that way.
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Income minus savings...not so simple...
Old 08-11-2007, 09:41 PM   #25
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Income minus savings...not so simple...

It would be so easy if we had regular jobs to just take our incomes, subtract what we've saved, and then figure that's what our expenses will be. We've had many changes in income AND outgo in the last year...I make commissions, but IRS allows me to subract many expenses from my gross income. My husband has had a tough time finding a good job, and has filled in here and there earning money on and off. We also no longer have college tuition, but are helping our daughter while in graduate school...oh...I forgot to mention that we just sold a house rental near the college where my daughter went to undergraduate school...so, no more income or outgo from that either...For the past 30+years of being married, we've always been saving almost every penny we could, and now...maybe we don't have to?
Ironically, what I think is that we will have MORE money to spend on ourselves than we've ever had before! I was asking if the $3500 seemed realistic for the average retirees with no mortgage, or debt, but having to pay for health insurance and Long term care insurance. I think that barring disaster, we'll have another $1500 a month for fun...and more once medicare and social security are available to us.
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Old 08-12-2007, 04:12 AM   #26
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"Is it worth the effort to save that?"[
I am back to penny pinching. I was buying cat food cans were 32 cents or a box of 12 for 3.92, I rather have them in a box but a dozen loose is 3.84. I wasted minutes considering splurging on the boxed food but put it back and got 6 dozen individual cans.
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Old 08-12-2007, 07:39 AM   #27
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I am back to penny pinching. I was buying cat food cans were 32 cents or a box of 12 for 3.92, I rather have them in a box but a dozen loose is 3.84. I wasted minutes considering splurging on the boxed food but put it back and got 6 dozen individual cans.
I always used to do this type of thing, and will likely return to this when I FIRE. Now, I am often rushed, between w*ork, shuttling kids, managing the house, pets, etc, so these little savings sometimes get away.

My husband is generally pretty good, but can't "shift" between stores when habit is involved. For example, his habit is to buy catfood at the grocery store. We also go to Walmart at least biweekly - where it is cheaper. He can't seem to shift buying catfood at the grocery to Walmart - even if I write it out and remind him. Seems the only solution is hit the stores myself, but that is his job. As long as he goes with the big things, it is a battle I have given up on, for now. I will try again soon I am sure.
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Life swap
Old 08-12-2007, 07:56 AM   #28
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Life swap

There is a TV show Wife Swap where people change lives. I think if we changed lives with most other folks financially, the results would be night and day. There is such a different mindset, from spending any penny in your pocket on "needed things" to taking it a step further to spending every penny you don't have but every dollar you have on your credit limits. The other extreme is having millions but worrying about the price of gas, shutting things off at night, etc.

For us it is just a lifetime habit, and in my mind, saving on the little things is where it is at. Yes, if you make major purchases, it could swap the little things, but those everyday unthinking decisions really add up.

Even basic consumables we try to buy on sale. Either get it at Costco, or stock up. For cereal we regularly eat, I have bought as many as 24 boxes at once (limit of 8 so buy them, put them in the car and go back in and buy more). Usually I empty the shelf before I am done. Just check the dates and make sure you will eat them before the sell by date.

With the gas, we have a few low priced stations around, but I can now check their rates on a web site. So now I just go to the cheapest one, using a 5% back card. It is hard to define exactly, but I think if we did that "life swap" for equivalent lives someone else would spend tens of thousands of dollars more each year. They would essentially live our lives, but not shop for bargains, not bring lunch each day, upgrade our cars, TVs, and everything else. In the end, their lives would still be similar, with so much less financially to show for it.

One big example is the house we live in. We really cannot "afford" it, based on our current income, but our current income is irrelevant versus our net worth. I could make the monthly payment go away at any point (I don't because the interest rate is very low) by dipping in to savings. DW was working when we bought it and it was more manageable then. But she was able to stop without us blinking an eye. We no longer save any money on a monthly basis, but with a decent stock market, our dividends and gains are much greater than my income. We are almost at the point where we could live off the dividends alone. This could only have happened by winning the lottery or day-by-day, year-by-year living an "efficient" life style.
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Old 08-12-2007, 08:37 AM   #29
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Running joke around here is: Me: "I forgot to turn off the modem last night." DW: "Well that's 2 cents we'll never see again."
I got excited and thought there'd be a "savings opportunity" to turn off modem. 7 watt router, 13 cent/kwh, does translate to 2 cents/day. And turning off only saves 8 hours (turning it on in AM) - so the daily savings is less than 1 cent. This is below my "consideration threshold" (but not by much....

I'm an engineer and had a very frugal working class upbringing (by necessity) - so I'm always going to be trying to optimize "spending efficiency" - regardless of how much money I have or don't have.

The founder of Ikea, Ingvar Kamprad, is apparently in the "top 20" wealthiest on the planet. Someone asked him how wealth changed his habits, he said, "I live the same way I alway have, although I no longer re-use disposable plastic cups".
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Old 08-12-2007, 12:33 PM   #30
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... and my boyfriend bought me a new battery as a gift ...

... I wasted $6.99 tonight buying oysters for my boyfriend.
Not to worry! Just list the $6.99 in Quicken as "New Battery".

Ha
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Old 08-12-2007, 01:21 PM   #31
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Not to worry! Just list the $6.99 in Quicken as "New Battery".

Ha
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