Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How much could you cut spending?
Old 07-13-2014, 11:08 AM   #1
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
How much could you cut spending?

Another thread got me thinking, 'Just how much could I cut back on spending if I had to?'

At first thought, 'Not much'

Yea, there were small things, like cut my internet speed, drop one cell phone, maybe cut back on the amount we eat out, which is about four or five times a month. But really these would not amount to a lot.

Then I came up with some larger items. In Tx., over 65 can defer property tax. That is about $7,200 for us. We also budget $8,000 a year for travel.

Results, I think we could reduce our monthly spending about 35% without a major lifestyle change. i.e. cut back electrical a/c use, cheaper food, etc.
__________________

__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 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 07-13-2014, 11:20 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Aug 2004
Location: Laurel, MD
Posts: 2,951
Not retired. My retirement budget includes low, medium and high levels of spending. There is a 32% spread between these. The high spending level includes higher discretionary expenses (e.g. travel, gifts, home maintenance,etc)

Cutting spending can be a lot different from cutting expenses. We are currently facing the music for many expenses that were deferred due to dependent tuition payments (which are now thankfully done except for residual loans).

How does the deferred property tax rule work? I believe some locations charge interest until the tax is paid?
__________________

__________________
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
jazz4cash is offline   Reply With Quote
Old 07-13-2014, 11:25 AM   #3
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
Yes there is a 7% simple not compound interest. However, this would be more of a concern for our kids as it would reduce their inheritance. I would also effect us if we were forced to sell, but, would seem to be an option for a short term reduction. i.e. drop in market that forced reduction in withdrawal rate.
__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Old 07-13-2014, 11:26 AM   #4
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,817
We have some big ticket things we could cut - but would strongly prefer not to.

- We have earmarked, set aside, funds for some large home improvement projects - those could be postponed indefinitely.
- We have a major "once in a lifetime" vacation funded and set aside - that could be cancelled.
- We could stop funding the kids college funding - we're currently budgeting $12k/year in set aside funding. (Their 529's are already funded 2/3's of the way - so we'd still be giving them a boost for school - just not fully funding as we wish to do.)

There are other things we could do -
- cut down to one car.
- cut some of the kids extra activities
- cut back on travel/vacations planned
- stop buying organic and buy less expensive food. (We already cook from basic ingredients - but we currently choose to buy meats/fruits/veggies that are organic... which adds to the grocery bill. We could eat more beans, rice, lentils, etc.)

I've thought about this... In case the future is far worse than firecalc's historical view offers.
__________________
rodi is offline   Reply With Quote
Old 07-13-2014, 11:31 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,431
Quote:
Originally Posted by Rustic23 View Post
... I think we could reduce our monthly spending about 35% without a major lifestyle change. i.e. cut back electrical a/c use, cheaper food, etc.
While I am frugal, I think I can easily cut back about the same, but I will not say it's without a lifestyle change. My bills for home repair run $20K this year already, and who knows if something else may break before the year is over. And I have not done much travel yet.

So, yes I can cut back because having 2 homes is not a necessity, nor is travel. The truth is that most of people's expenses are discretionary to some extent. We can all have a healthy life living in something like this, and I am not sarcastic.

__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 07-13-2014, 11:31 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,018
I started a poll thread on deferring property taxes last year. Here it is:

Deferring property taxes: poll

I found that discussion helpful and decided not to defer my property taxes.

I have cut many expenses since I ERd and my biggest expenses now (by far) are income tax, car payment and travel. Unfortunately the income tax is not discretionary so travel is the elastic category. The car payment has one more year to run and then I will probably loosen the purse strings a little, assuming that there is no major market correction.

If things went sour, assuming the car payment to be part of a reduction, I could probably cut 25% from current spending. Without the car payment, discretionary cuts would be less than 10% of current spending. Eliminating travel completely is not something I am prepared to do.
__________________
Meadbh is offline   Reply With Quote
Old 07-13-2014, 11:35 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
So far to semi-ER we cut over $100K a year and counting (taxes, business expenses and personal expenses), not including saving for retirement.
__________________
daylatedollarshort is online now   Reply With Quote
Old 07-13-2014, 11:37 AM   #8
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,905
To me, the question is not how much COULD I reduce spending, but how much do I WANT to reduce spending. Anybody can reduce spending by any amount if/when life demands it. This is one of the lessons one learns from having varied amounts of resources at different times during life.

I did a quick check of my 2013 spending and found I could cut back 40% easily, keeping the same house and car and so on but not eating out, buying so much "stuff", using air conditioning in the summers, or getting that dental implant. Many people in south Louisiana live similar lifestyles to that so I wouldn't feel this was a gargantuan effort.

If I worked harder at it I could probably cut back 60%.

Beyond that, we are probably talking about soup kitchens and living in a refrigerator box under a bridge.

If we had a 2008-2009 style market crash that lasted several years, I might get to find out how much I could cut back.... I hope we don't, though!
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 07-13-2014, 11:49 AM   #9
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,972
This year I expect to spend $17,000 which is very high for me. That includes 3 months down south during the winter and also includes taxes. I could cut that down to $13,000 without feeling much pain(just cold by not going down south). I could cut it down to $11,000 without changing houses or going car-less but there would be some somewhat difficult sacrifices to drop to that level.

These numbers do include taxes on my low income but they don't include budgeting for replacing big ticket items.
__________________
aaronc879 is offline   Reply With Quote
Old 07-13-2014, 12:19 PM   #10
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,109
We could cut spending by 50% if needed and still live well. Fear of losing health insurance kept me working 3 more years which meant retiree health insurance plus a good DB pension starting at 55, instead of a pension worth much less starting at 62 and having to rely on the individual HI market. (Between us we have various pre-existing conditions).
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 07-13-2014, 12:48 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
Quote:
Originally Posted by aaronc879 View Post
This year I expect to spend $17,000 which is very high for me. That includes 3 months down south during the winter and also includes taxes. I could cut that down to $13,000 without feeling much pain(just cold by not going down south). I could cut it down to $11,000 without changing houses or going car-less but there would be some somewhat difficult sacrifices to drop to that level.

These numbers do include taxes on my low income but they don't include budgeting for replacing big ticket items.
I think you are a great example of freedom = low overhead.
__________________
daylatedollarshort is online now   Reply With Quote
Old 07-13-2014, 12:53 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Jul 2012
Location: Mississippi
Posts: 1,878
I might could cut some, but I am pretty bare bones already. In looking at the numbers, 40% of my expenditures go to property tax and insurance ( home/auto/health). Taking those out my expenses are below poverty level.
__________________
rbmrtn is offline   Reply With Quote
Old 07-13-2014, 01:01 PM   #13
gone traveling
 
Join Date: Sep 2013
Posts: 1,248
Quote:
Originally Posted by NW-Bound View Post
While I am frugal, I think I can easily cut back about the same, but I will not say it's without a lifestyle change. My bills for home repair run $20K this year already, and who knows if something else may break before the year is over. And I have not done much travel yet.

So, yes I can cut back because having 2 homes is not a necessity, nor is travel. The truth is that most of people's expenses are discretionary to some extent. We can all have a healthy life living in something like this, and I am not sarcastic.

Just curious....Is this your vacation house? Looks great....
__________________
eta2020 is offline   Reply With Quote
Old 07-13-2014, 01:29 PM   #14
Full time employment: Posting here.
Lakedog's Avatar
 
Join Date: May 2007
Posts: 654
I'm sure I could cut quite a bit if required but I'm trying to do the opposite and condition myself to spend more. My pup says he could switch to cheapo dog food rather than the grain free stuff he eats now to save a few bucks.
__________________
Lakedog is offline   Reply With Quote
Old 07-13-2014, 01:51 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,431
Quote:
Originally Posted by eta2020 View Post
Just curious....Is this your vacation house? Looks great....
No. Mine unfortunately costs a bit more for maintenance (photos shown below have been posted here on this forum).

However, that photo of that stone house I found on the Web looks great, doesn't it?




__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 07-13-2014, 02:06 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,625
I could cut spending quite a lot. With the house/cars paid for and utilities relatively inexpensive, I could live like a recluse lying in bed all day and just typing on internet forums or watching TV and walk to the store to get food. Eats would be cereal and milk, salads for lunch, and something cheap for dinner, so let's say $10 a day for food. Doctor & dentist are located next to grocery store, so within walking distance. Since I would come in contact with very few actual people and their germs, I don't think I would get sick.

I wouldn't have maids anymore. I don't have cable now. I have enough clothes to last me the rest of my life. I'd have to sell the dog and give up the cars and auto insurance and liability insurance.

What does the budget come to (annually):

$7000 prop taxes and HOA
$2156 homeowners insurance
$3650 food & household items like TP, detergent, soap, toothpaste, shampoo)
$2500 utilities (gas, electric, water)
$0500 home phone & internet
-------
$15,806 (+ healthcare)

It turns out that I have healthcare through my spouse's employer plan which is pretty cheap, but let's just add in $10,000 because she would divorce me if I only spent the list above. OTOH, the list above (except for food) covers 3 people living in this home. Also the 18-year old male driver probably should not be without auto & umbrella insurance ($3000 per year for 4 people including another young adult not living at home).

Wow, that's a lot more expensive than I thought it would be.
__________________
LOL! is offline   Reply With Quote
Old 07-13-2014, 02:38 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,381
Quote:
Originally Posted by NW-Bound View Post
No. Mine unfortunately costs a bit more for maintenance (photos shown below have been posted here on this forum).

However, that photo of that stone house I found on the Web looks great, doesn't it?





I sure hope you are paying for that service and not risking life and limb in retirement! Nice looking place, NW.


Sent from my iPad using Tapatalk
__________________
Mulligan is offline   Reply With Quote
Old 07-13-2014, 03:01 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,972
Quote:
Originally Posted by daylatedollarshort View Post
I think you are a great example of freedom = low overhead.
It works for me but many on this forum spend well over $50K/yr in retirement. That requires a very good income for a couple decades and the willingness to save a large chunk of it. A pension or inheritance would work too.
__________________
aaronc879 is offline   Reply With Quote
Old 07-13-2014, 03:24 PM   #19
Recycles dryer sheets
Sea Kayaker's Avatar
 
Join Date: Aug 2009
Location: Vancouver/Gulf Islands/Baja
Posts: 479
As I sit here a few months before my ER date our monthly spending sits at around $2500. I could easily pare this to below $2000. But when I casually mentioned this to DW, she laid the hammer down. Her reasoning, which I can understand, is that since she may well work another 10 years (a 6 figure job she loves) why should she have to eliminate virtually ALL luxuries? Believe it or not, even on a $2500 budget there is a fair bit of fat we could remove - do we really need the max cable package and warp speed internet?

On another topic, perhaps our biggest goal post ER, is to get a cabin built on our little island property. That cute little place that NW-Bound posted would work nicely on our land. Love that. Would like to see floor plan layout.
__________________
Sea Kayaker is offline   Reply With Quote
Old 07-13-2014, 03:53 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,431
Quote:
Originally Posted by Sea Kayaker View Post
...On another topic, perhaps our biggest goal post ER, is to get a cabin built on our little island property. That cute little place that NW-Bound posted would work nicely on our land. Love that. Would like to see floor plan layout.
You have property on an island? Nice! About the house I posted, search for "Mini-Double Loft Rock House" if you like to read more about it.

Quote:
Originally Posted by Mulligan View Post
I sure hope you are paying for that service and not risking life and limb in retirement! Nice looking place, NW.
I have had an DIY attitude all my life, but the construction of this house makes it impossible for me to do much. I have not had a light bulb recessed in the 25'-high ceiling burning out yet, else would not know how I could even reach it with an extension bulb-grabber pole.

The exterior was nearly impossible for me to stain, let alone doing anything else. After a mere 9 years, I already had to have the lap siding redone recently on 1 side. The scaffold below was set up by the contractor. Thus, as stated in an earlier post my house project bills already ran up to $20K this year, and the year is only 1/2 over.

PS. I still do the staining myself where I can, including the big decks.



__________________

__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound 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
To Cut The Deficit We Must Cut Large Categories haha FIRE and Money 21 01-09-2011 08:10 AM
Poll: Will the US cut spending? REWahoo FIRE Related Public Policy 45 11-16-2010 01:23 PM
2008 Actual Spending and 2009 Budgeted Spending dex FIRE and Money 122 03-17-2009 03:49 PM
Battery breakthrough could cut recharging to seconds FinallyRetired Other topics 20 03-13-2009 01:24 PM
Would you live in a place you didn't like if it meant you could FIRE? Kathryn48 Life after FIRE 66 07-18-2008 01:58 PM

 

 
All times are GMT -6. The time now is 01:54 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.