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My $18K/Yr Basic Expense Budget
11-13-2013, 05:35 PM
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#1
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Recycles dryer sheets
Join Date: Dec 2012
Posts: 145
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My $18K/Yr Basic Expense Budget
My $18K Annual Basic Expense Budget
A lot of people have a hard time accepting that I can actually have a basic living expense budget of $18,000 a year. They read “18,000” and they think I must be living in a hovel or in government-subsidized housing. I must be eating beans and rice 7 days a week. I must be letting my car, (he has a car?), my house (what house??!!) and my health fall apart. And I must be limited to spending my days in front of the boob tube sipping cheap Old Milwaukee beer.
OR -- I must be cooking the books to come up with that $18,000 a year figure. It must actually be something like $36,000 a year for my wife-and-I household. I must not be accounting for my health care being provided by my wife’s employer. Or something. Or all of it. But the $18,000 a year figure CAN’T be real.
Well, it is. And we’re going to go through it line by line. But first, we have to establish a context for my basic living budget -- and in the process (hopefully) answer some questions and lay to rest some misconceptions before they start mucking things up.
What About That Wife?
Am I married? Yes. Does my wife work and earn an income? Yes. Does her employer cover my health insurance? No. Do my wife and I share household expenses that otherwise would jack up that $18,000 number of mine? Nope. That’s right. No.
You see, due to business and job circumstances, my wife and I maintain separate households 102 miles apart. Separate houses. Separate electric, internet and satellite radio services. Separate household expenses right down the line.
We also have separate vehicles, for which we each take separate responsibility.
There are two line items in my budget that do benefit from marriage. Although I don’t know the actual amount, I know that our auto and long-term-care insurance carriers give each of us premium breaks for having bought 2 policies. And that’s the only marriage effect that I can see on my annual basic living budget.
Of course, it’s a whole ‘nother story when it comes to our entertainment and travel spending. Two can travel by car and stay in hotels just as cheaply as one. Two can get restaurant discounts a single diner can’t. And so on. But like I said, that’s another story.
This story is about my $18,000 a year basic expenses budget.
What About That Hovel -- and the Rice and Beans?
I live in a two-bedroom, one-bath non-subsidized 1150 square foot brick house set on 1.25 acres near the Shenandoah River. The house also has a full walk-out basement and an attached 500 square foot garage and workshop. Some might still say that’s a hovel, but it’s home-sweet-home to me. And it’s paid for.
I drive a very well maintained 1996 Dodge Dakota -- also paid for -- with 128,000 miles on its odometer. I like it very much, and it covers that 102 miles to my wife’s house every weekend just fine.
I never eat rice and beans as a main dinner dish. My dinner preference is to go heavy on meats and vegetables. My (monotonous sounding to some) breakfast most days is oatmeal with milk and fresh strawberries. A sandwich and apple cover my lunch. Snacks throughout the day could be yogurt, nuts, fruit or a bowl of cold cereal and milk. Oh, and my beer is Becks, my scotches are Chivas Regal and Speyburn, and my bourbon is Old Crow. (I know, I’m not too picky about bourbons.)
Anyway, you get the picture. (I hope.)
Okay, Alex, So Let’s See That Budget Already!
(my apologies but I don't know how to make it go into columns)
Cost Per Month
Housing
mortgage 0
(paid off)
r. e. taxes 49
home insce 47
home warr. 52
Repairs fund 150
(leveled at $3k)
Utilities
internet 57
land line 10
cell phone 10
electricity 100
(12-mo. avg)
heat oil & gas 50
(12-mo. avg.)
netflix 7
pandora 0
(free service)
Auto
auto loan 0
(paid off)
auto insce 28
maintenance 100
(accrued in a fund)
basic gas 35
(200 mi @ 20mpg)
Health Care **See Note 1 Below**
medicare (A & B) 105
supplemental 51
(medigap)
medicare (D) 18
(prescriptions)
ltc insce 176
(long term care)
dental insce 20
out-of-pocket 35
Groceries “Plus”
groceries 210
liquor 20
pet food 50
(3 cats, 1 dog)
Monthly Total $ 1380 x 12 months = $16,560
Annual Total $ 16,560 (post-tax)
Income Tax “Overhead” 740
**See Note 2 below**
Error Allowance 700
Pre-Tax Annual Total Budget $18,000
Note One: For a detailed look at my health care finances, please go to http://www.early-retirement.org/foru...ml#post1318280.
Note Two: Factors in a $7100 standard deduction and a $3800 exemption for federal. Additional cushion "fudged in" for state.
My Discretionary Spending Pay-Off
Of course, every dollar I don’t spend on basic living expenses is another dollar added to my discretionary spending fund. That’s my pay-off for basic budget vigilance. By keeping my “have to” expenses lower, I have that much more money for my “want to” activities and purchases. More money for travel. More money for day trips, events, eating out, whatever. And if I don’t end up spending that money, my discretionary fund just keeps growing and growing.
For me, it’s a win-win.
What about you? How do you approach your budgeting? Are you squeezing your basic living costs to have more money for fun spending? Or are you opting to be more laid back about your basic living costs because you are comfortable with them?
Alex in Virginia
Other Recent Posts at Early-Retirement.Org
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11-13-2013, 05:43 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Independence
Posts: 7,281
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No water & sewer? You have a well & septic tank?
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11-13-2013, 05:48 PM
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#3
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,473
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Quote:
Originally Posted by calmloki
No water & sewer? You have a well & septic tank?
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No trash service? No clothing or shoes? No stamps, no gifts, no miscellaneous expenses? I am surprised that in your lengthy post, you didn't even mention so many types of expenses.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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11-13-2013, 05:48 PM
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#4
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Thinks s/he gets paid by the post
Join Date: May 2007
Posts: 1,250
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Alex, this is impressive. If you and your wife shared a household, what do you estimate the total budget would be?
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11-13-2013, 05:50 PM
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#5
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Thinks s/he gets paid by the post
Join Date: May 2007
Posts: 1,250
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Quote:
Originally Posted by W2R
No trash service? No clothing or shoes? No stamps, no gifts, no miscellaneous expenses?
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He is apparently lumping this into discretionary spending. He is only accounting for his basic living, barebones budget.
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11-13-2013, 05:53 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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I just burned 10k this week on a new roof and Christmas present ring for SO, and I am not even a rich guy.. Car going into shop this week and nervous I may be attending its wake after a 12 year life. By next week, I may have blown through Alex's yearly budget, and still don't have any rice and beans to eat yet.
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11-13-2013, 05:54 PM
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#7
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Thinks s/he gets paid by the post
Join Date: Sep 2002
Posts: 1,173
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How does the home warranty work and what does it cover?
JDARNELL
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11-13-2013, 05:55 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Looking good so far, though we may be able to help find some other items.
Does your wife pay for the gas for conjugal weekly visits?
Quote:
Originally Posted by Alex in Virginia
...
I drive a very well maintained 1996 Dodge Dakota -- also paid for -- with 128,000 miles on its odometer. I like it very much, and it covers that 102 miles to my wife’s house every weekend just fine.
...
Cost Per Month
Auto
auto loan 0
(paid off)
auto insce 28
maintenance 100
(accrued in a fund)
basic gas 35
(200 mi @ 20mpg)
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But generally, I think people can live on a lot less than what they are spending now. A lot of things or recreational activities that we pay for are not really essential. I am setting my WR to 3.5%, and if my stash goes down to 1/2 of what it is now, I think I can still manage with 3.5%.
It would require a bit of work to redesign the lifestyle, and I believe it can be done if I have to. But even with Medicare, that $18K will take some hard work. For me that is.
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11-13-2013, 06:01 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Previously, you posted you spent 15K on your half of living expenses -
" I am married and my wife still works and covers half of our joint living costs. That’s the way we’ve run our finances for the last 20 years, each of us having to cover our half of those joint expenses."
http://www.early-retirement.org/foru...row-66499.html
So when you lived together you shared the costs and your household expenses were $30K? Was that the same house?
In one post your house is 1500 sq ft on 2+ acres shared with your wife, and the next it is 1150 sq ft on 1.25 acres and you live by yourself. Did you move to a different house from your last post or did your wife move out? I am not really following what is going on from your other post to this one.
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11-13-2013, 06:03 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,821
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Quote:
Originally Posted by Letj
He is apparently lumping this into discretionary spending. He is only accounting for his basic living, barebones budget.
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I guess, there sure seems to be a lot missing.
Seems I went through this exercise years ago, and when I tried to put things in buckets, I missed about half of what I spend. There is a lot of 'misc' in my life I guess.
What about a 17 YO car? It will need to be replaced - there should be a 'replacement car fund' at least.
I guess I'm not following this 'fend off' comment:
Quote:
And I must be limited to spending my days in front of the boob tube sipping cheap Old Milwaukee beer.
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Well, I see $20/month for liquor, and only TV services for entertainment. Of course different people drink different amounts of beer, so $20 will buy craft beer if you drink one about every other day, but I don't see any other entertainment there. So it seems that your budget only allows for 'days in front of the boob tube'?
-ERD50
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11-13-2013, 06:15 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by ERD50
...
Well, I see $20/month for liquor, and only TV services for entertainment. Of course different people drink different amounts of beer, so $20 will buy craft beer if you drink one about every other day, but I don't see any other entertainment there. So it seems that your budget only allows for 'days in front of the boob tube'?
-ERD50
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Alex could be doing hiking, fishing, or planting to occupy his time with little or zero cost. Or since he has Internet access, he can spend a lot of time on this forum, like I do now.
Well, I am still waiting for my health to recover, then in Spring I will be gone for RV'ing again. Can't refuel that little gas guzzler with a $18K budget, that I know.
And to please the missus, I am thinking about doing Alaska with a cruise, and not driving the RV. Do not want the Alaskan experience to become a nightmare for her.
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11-13-2013, 06:41 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
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Alex isn't claiming this is his only spending, just the mostly non-discretionary spending. I guess the weekend visits are discretionary with that monthly mileage allowance.
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11-13-2013, 06:53 PM
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#13
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Thinks s/he gets paid by the post
Join Date: May 2011
Location: South Eastern USA
Posts: 1,068
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<munches popcorn>
__________________
All that glitters is not gold. -G. Chaucer, W. Shakespeare
All that is gold does not glitter. -J.R.R. Tolkien
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11-13-2013, 06:57 PM
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#14
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Recycles dryer sheets
Join Date: Jul 2012
Posts: 103
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Well, I'd be much more interested in what Alex's real expense profile looks like. Any of us could come up with a spartan, bare bones, survival budget. But since that's not how any of us actually live, it would be little more than an accounting curiosity.
My own experience - and I'm not even retired yet - is that after killing your debt, including your mortgage, all those miscellaneous and "discretionary" costs become a much larger piece of what you spend.
__________________
Jeff
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11-13-2013, 07:01 PM
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#15
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Dryer sheet aficionado
Join Date: May 2007
Posts: 46
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I am impressed. Heck, we spend about $2k / yr on my 7 year olds gymnastics classes!
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11-13-2013, 07:05 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by Mulligan
I just burned 10k this week on a new roof and Christmas present ring for SO, and I am not even a rich guy.. Car going into shop this week and nervous I may be attending its wake after a 12 year life. By next week, I may have blown through Alex's yearly budget, and still don't have any rice and beans to eat yet.
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Darn! If I had to stick to a budget, I would make sure I have my rice and bean containers all filled and stacked first before I even think about the roof. Yes, even if the roof looks like this. A guy's got to know what his priorities are.
Oh, and the Xmas ring should be before the rice and beans, I forgot.
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11-13-2013, 07:07 PM
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#17
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,473
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On those categories that Alex is reporting, I spent $18,336 last year. That's more than Alex, but a lot less than I would have guessed because I am not especially trying to be frugal any more and pretty much spend what I want, within reason I guess. The categories listed comprise less than 55% of my total spending.
Some differences are that I don't have a pet or LTC insurance, but I do have cable TV, and my home insurance is $192/month. I haven't seen a phone bill as low as $10 for probably 20 years. I need to ditch that evil device.
Quote:
Originally Posted by Alex in Virginia
What about you? How do you approach your budgeting? Are you squeezing your basic living costs to have more money for fun spending? Or are you opting to be more laid back about your basic living costs because you are comfortable with them?
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Alex, I don't really squeeze either basic or discretionary these days. There have been utterly miserable times in my life when my luck was rotten and I was hungry and so poor, but the last few years things have changed and have become quite the opposite. I ended up with a bigger nestegg than expected, due to over-planning, few catastrophes or unexpected big expenses other than hurricane repairs and a dental implant, a windfall (that I haven't yet touched), and a massively booming market pushing my net worth ever upwards since my 2009 retirement. Despite my best efforts I have only been able to spend 2%/year, and I haven't claimed SS yet. Seems like a crazy, insane dream and I know I am very fortunate. Sometimes I feel like fate is setting me up for a big fall one of these days. But if/when that happens, I still remember how to live on very little. I just don't have to, right now.
I really need to cancel some services that I am getting very little from. I am not getting much from my landline, I would be just as happy with a dumb phone as my iPhone, and I am paying for a DVR that I don't even use. In fact I would be just as happy with basic cable TV so should return to that. But, I just haven't got around to doing any of this for some reason.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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11-13-2013, 07:08 PM
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#18
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,056
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Plenty in the budget I don't understand such as all the liquor and beer you list, so I guess you buy a bottle a month as basic and the rest is discretionary.
You say your basic car expenses includes 200 miles a month so as was mentioned above I guess that covers grocery shopping only and the weekly visits to your wife are discretionary?
Quote:
I drive a very well maintained 1996 Dodge Dakota -- also paid for -- with 128,000 miles on its odometer. I like it very much, and it covers that 102 miles to my wife’s house every weekend just fine.
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__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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11-13-2013, 07:12 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
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I think there is value in looking at what our bare bones expenses are before adding discretionary items into the budget. If I know I can live on $20K discretionary, but I'm comfortable spending $50K per year, that gives me $30K of money to play with. I suspect that is what Alex is really doing here. As he stated in his post, he can spend more on discretionary items if he chooses to, or not do so and put it away for the future. I don't see anything that unusual here. My expenses are about the same except for property taxes, which are significantly higher due to living in Southern California.
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11-13-2013, 07:16 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Posts: 1,778
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Makes sense. It's similar to mine, except you're on Medicare and I (will) pay for my own health insurance, adding about 5K/yr, bringing my total to 23K/yr. It's a nice freedom, to have so few expenses to cover.
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