Portfolio loss means cut my expenses?

[dex]

Quote:

Originally Posted by youbet This thread confirms my suspicion that most on this board are extremely conservative in calculating their FIRE status. When most of us can cut back expenses significantly and still have the budget include some discretionary spending (subbing domestic travel for international travel, for example), that means lots of cushion in those calculations. That would translate into choices to work longer and trade off time for financial security. Quite different from threads 2 - 3 years ago when the focus was on how wasteful it would be to work extra years and then go to the grave with lots of money left in the portfolio! At the youbet household, we're 2.4 yrs into RE and are somewhat dismayed about the current economic situation. Still, our plan has been conservative from the get-go and we're 61 yo, so we're not delaying any activities that require youthful vigor. We are, however, looking at some planned capital expenditures with a very sharp pencil since out cash position is a little tight if the downturn is going to extend out several years.

I tend to agree with you, from a different perspective. People have a combination of savings, social security and possibly an added pension, provided medical insurance that is far greater than their spending needs over their lifetime. In posts it more difficult to get a handle on expense budgets.


I agree on your philosophy of not delaying things and I'm 53.

[NW-Bound]

See, we are more alike than most people think. Being LBYM'ers, we are a lot more conservative than the general public. Despite our NW having a hair cut, the Joe/Jane Blow out there would still want to be in our shoes.

About Nords' post, it is very true that your dollars go further while the spendthrifts are hurting. And Cuppajoe, do you have a pension? It is the time for the "Revenge of the Pensioners", I think. The high-tech workers fearful of lay-offs have to cut back. Same as people like me, with no steady income source as a safety net.

Talk about domestic travel, as I am typing this, my wife on the other PC is telling me she found a timeshare exchange in LasVegas for the week after Thanksgiving. Hey, somebody got to support the economy.

PS. By the way, I am still having some income from working part-time, which covers our bare necessities. If I did not, I would cut expenses way back, I am sure. Not even domestic travel. I would spend time in my mountain hide-away, editing my travel video, and content with watching the Travel Channel. I am very flexible.

[unclemick]

No/yes - looking back this year, didn't cancel any overseas trips but didn't add/take any either and eating out has dropped off. 15th year of ER.

I think there is a subliminal/subconsious? frugal gear which engages when things are perceived as dicey Mr Market wise.

Since my auto deduct from IRA is the first part of each year - 2009 may put me back to trying to live on SEC yield. I think I've been as high as 40% of income from div stocks way back in early ER with paid up fish camp/beater vehicle.

Fat city now a days is 40% non cola pension/early SS with 60% from portfolio/stocks which is a large part discresionary - ie on paper I could live cheap if I let it ride.

heh heh heh - sooo after Christmas/New Years I'll decide how low I want to go for budget expenses in 2009. I can say it doesn't affect me - but it does. .

[Nords]

Quote:

Originally Posted by NW-Bound It is the time for the "Revenge of the Pensioners", I think.

Pension, shmension. You want one, go buy a Vanguard annuity. It's probably cheaper and less hazardous than my way.

[NW-Bound]

Hey, don't confuse me with those who envy pensioners. I am only saying it's time for those with steady income to enjoy their purchasing power. I would not do anything different. Besides, if everyone cuts back, the economy would be worse.

PS. I should have used the word "being jealous" rather than "envy" in the post above. To me, the two mean completely different things. One could envy a successful person in life, and says he wished he could have taken a different career, or path through life to be the same. Jealousy is the irrational emotion, that makes a person thinks the other did not deserve what he was getting.

At this point, I am not sure I should have taken the same career path as yours, Nords. Military life or government job was never for me. As for jealous, be sure that I am not. Gee, as a newcomer to this forum, I did not know this tension might have risen in the past.

[Gardnr]

Quote:

Originally Posted by FIREdreamer I think that there is fear that the recession will be protracted. By cutting expenses now, a 5-year cash stash may last a few years longer therefore further delaying the sale of other assets like bonds and stocks which should improve a portfolio's longevity. I don't think that this is a bad idea. Agile, mobile, hostile... Sure, theory is great, take your 4% SWR, live it up and chances are you'll be OK. But in practice, I think that a bit of flexibility and caution probably doesn't hurt.

Yep, the tendency is to act conservatively to guard against the failure that could result from a period of time that's worse than anything in FC. With all that's occurring right now it's prudent to do so.

[W2R]

I am still working and will be for about a year. If this economic mess is just beginning, I plan to retire anyway but will cut back as necessary. I have worked on how I will cut back as part of my retirement planning. I have a separate sheet in my retirement Excel workbook devoted to budgets, including a bare bones budget.



I don't have a very big budget, but even so I can cut back by 40% by just giving up a few things.

• cancel my cell phone and keep my $22 landline
• no unnecessary house improvements, and only minimal maintenance
• no more gym, eliminating gym fees
• walk more, cutting back on gas
• cut my electric/gas bills in half by wearing skimpy clothing in summer, and drinking icewater to cool down; and wearing warm clothing in the winter and moving around more (thus minimizing energy usage for heating and cooling).
• shop for cheaper food than what I am presently eating; spend 60% of present fairly excessive/lavish amount
• cut back discretionary spending to 60% of present level

I could cut back even more if I cut my own grass but I would choose to maintain that expense as long as possible. I think that I could be perfectly happy with the above economies, though. They really aren't very severe.

[FIREd]

Quote:

Originally Posted by Want2retire I am still working and will be for about a year. If this economic mess is just beginning, I plan to retire anyway but will cut back as necessary. I have worked on how I will cut back as part of my retirement planning. I have a separate sheet in my retirement Excel workbook devoted to budgets, including a bare bones budget. I don't have a very big budget, but even so I can cut back by 40% by just giving up a few things. cancel my cell phone and keep my $22 landline no unnecessary house improvements, and only minimal maintenance no more gym, eliminating gym fees walk more, cutting back on gas cut my electric/gas bills in half by wearing skimpy clothing in summer, and drinking icewater to cool down; and wearing warm clothing in the winter and moving around more (thus minimizing energy usage for heating and cooling). shop for cheaper food than what I am presently eating; spend 60% of present fairly excessive/lavish amount cut back discretionary spending to 60% of present level I could cut back even more if I cut my own grass but I would choose to maintain that expense as long as possible. I think that I could be perfectly happy with the above economies, though. They really aren't very severe.

Wow, W2R, those are pretty drastic cuts! I thought I was a pretty aggressive budget slasher, but you my dear... I don't know if I could cut back on the A/C if I spent the summer in NO! And for me cutting back on food would be very depressing. The day I have to lower our food budget, then I'll know, we are in deep, deep trouble!

Bah, put a bit more money in Wellesley, watch the dividends roll in and don't cut back too much on the cafe au lait and beignets...

[W2R]

Quote:

Originally Posted by FIREdreamer Wow, W2R, those are pretty drastic cuts! I thought I was a pretty aggressive budget slasher, but you my dear... I don't know if I could cut back on the A/C if I spent the summer in NO!

You get used to it, after a while. I normally keep my thermostat around 78-80 during the summer anyway. One summer I went without A/C while I was paying off my house, since I just didn't want to put off paying it down in order to buy a new A/C system that year. It really wasn't that bad, though I prefer having A/C. I took a lot of cool showers, closed most of the blinds and drapes, drank a lot of ice water, and wore nearly nothing (since I live alone). People lived here without A/C for centuries, and if they can do it, I can too in a pinch.

Quote:

Originally Posted by FIREdreamer And for me cutting back on food would be very depressing. The day I have to lower our food budget, then I'll know, we are in deep, deep trouble!

I choose a lot of luxuries when it comes to food. For example, tonight I had Steamfresh veggies with my grilled salmon (yum!), and I would imagine canned veggies would have been cheaper and just as healthy.

Quote:

Originally Posted by FIREdreamer Bah, put a bit more money in Wellesley, watch the dividends roll in and don't cut back too much on the cafe au lait and beignets...

I probably won't have to cut back, especially at first. I have a lot of years' worth of expenses in money market still. And really, if Wellesley keeps pouring out dividends, I will have more than I presently live on. I'm mostly talking about really bad economic collapse and possibly runaway inflation, which I fear is the next shoe to drop.

[FIREd]

Well, I guess you are right, if we are talking economic collapse, then canned veggies will probably do for me too.... But here is northern Alabama, I could never keep the A/C above 75 in the summer. It's just too darn humid. I don't know, might have to sell a kidney to keep the A/C going!

[Dawg52]

Quote:

Originally Posted by Want2retire I am still working and will be for about a year. If this economic mess is just beginning, I plan to retire anyway but will cut back as necessary. I have worked on how I will cut back as part of my retirement planning. I have a separate sheet in my retirement Excel workbook devoted to budgets, including a bare bones budget. I don't have a very big budget, but even so I can cut back by 40% by just giving up a few things. cancel my cell phone and keep my $22 landline no unnecessary house improvements, and only minimal maintenance no more gym, eliminating gym fees walk more, cutting back on gas cut my electric/gas bills in half by wearing skimpy clothing in summer, and drinking icewater to cool down; and wearing warm clothing in the winter and moving around more (thus minimizing energy usage for heating and cooling). shop for cheaper food than what I am presently eating; spend 60% of present fairly excessive/lavish amount cut back discretionary spending to 60% of present level I could cut back even more if I cut my own grass but I would choose to maintain that expense as long as possible. I think that I could be perfectly happy with the above economies, though. They really aren't very severe.

I can't imagine you having to do all the above. A couple of weeks ago you said you have enough cash to last several decades. Which is good thing.

"If the market completely crashes, I still have enough in cash to last for several decades at my present level of spending so my plans to ER next year would not be endangered. That matters a lot to me."

[W2R]

Well I do have a lot in MM (well maybe a little less because I invested over five years' expenses in the past two weeks), and I'm doing fine, but I don't like to take things for granted.

Life has a way of reversing on us when we least expect it. A month ago all of us had a lot more $$ than we do now. I am still sittin' pretty, but who knows what the future will bring? I sure don't.

The OP wanted to know ways to economize - - these are the ways I could economize if I ran out of MM funds at some point. That could happen pretty fast if we had runaway inflation. Let's see - -with a mere 1000% inflation, a $25K budget could expand pretty fast.

I have always planned expecting a market crash worse than the Great Depression, and runaway inflation that would decimate any savings, all starting in 2010 since I always planned to retire in 2009. Looks like things got an early start. Probably it won't be as bad as what I had planned for, and then I can be relieved and happy about it.

[unclemick]

Quote:

Originally Posted by Dawg54 I can't imagine you having to do all the above. A couple of weeks ago you said you have enough cash to last several decades. Which is good thing. "If the market completely crashes, I still have enough in cash to last for several decades at my present level of spending so my plans to ER next year would not be endangered. That matters a lot to me."

The shear joy of being really really cheap brings a tear to my eye.

Ah the memories! .

heh heh heh - they say you can never go home - inflation being what it is and all.

[W2R]

You guys are making me feel eccentric!

I didn't think the above ideas were THAT extreme. I didn't even suggest doing without my lawn guy. I guess if things get really bad I could get out the lawnmower and do it myself!

[ejman]

Quote:

Originally Posted by Want2retire You guys are making me feel eccentric! I didn't think the above ideas were THAT extreme. I didn't even suggest doing without my lawn guy. I guess if things get really bad I could get out the lawnmower and do it myself!

Well let's see... If things got really really really bad:

Use the hand pump in the secondary well for water (only problem, it's 900 ft down the hill but as a bonus I can drop my gym membership just carrying water uphill)

Wood from the woodlot for heat. As a bonus multiple sources of heat: you sweat when you cut the tree down, you sweat when you cut the tree into logs, you sweat when you split the logs, you sweat when you stack the wood.

Expand the garden currently 1/4 acre - not only healthy but another reason to drop the gym membership.

An finally, the coup de grace: I've been feeding all these deer, wild turkeys and other creeters around the place - They keep coming over for dinner in spite of my best efforts with fences and such. BUT, I see a bright side and some wonderful meals in the future

[slimm]

Quote:

Originally Posted by Want2retire I am still working and will be for about a year. If this economic mess is just beginning, I plan to retire anyway but will cut back as necessary. I have worked on how I will cut back as part of my retirement planning. I have a separate sheet in my retirement Excel workbook devoted to budgets, including a bare bones budget. I don't have a very big budget, but even so I can cut back by 40% by just giving up a few things. cancel my cell phone and keep my $22 landline no unnecessary house improvements, and only minimal maintenance no more gym, eliminating gym fees walk more, cutting back on gas cut my electric/gas bills in half by wearing skimpy clothing in summer, and drinking icewater to cool down; and wearing warm clothing in the winter and moving around more (thus minimizing energy usage for heating and cooling). shop for cheaper food than what I am presently eating; spend 60% of present fairly excessive/lavish amount cut back discretionary spending to 60% of present level I could cut back even more if I cut my own grass but I would choose to maintain that expense as long as possible. I think that I could be perfectly happy with the above economies, though. They really aren't very severe.

W2R, I agree with your sentiments wholeheartedly! I've always maintained a LBYM lifestyle - retired at 42 and immediatley received "flak" from friends/family for continuing to pinch pennies, although my portfolio was in the 7 figure range. I was living in a suburb of San Francisco at the time & my pals were dismayed at the old car (parents hand me down)I drove and the clothes I wore from resale shops. Fast forward 10 years..
I invested in 3 cattle ranches in Oklahoma....having the time of my life, although, it is really labor intensive, I adore the freedom & wide open spaces.
Your notation about reducing spending resonated with me esp. about the utilities. My BF owns an oil company & lives in Dallas - he spends weekends at my ranch. Our first (and biggest!) disagreement happened during a heat wave (July in Oklahoma) and I refused to budge the thermostat from 80 degrees...omgosh, it got ugly!
It's non negotiable about wasting resources AKA money and the thought of dipping into principal is against my principles. The merciless teasing I've received over the years has resulted in several friends asking me for budgeting advice, esp. in the past month.
As an aside, I'm mindful - not miserly....there is a difference!

[youbet]

Quote:

Originally Posted by Want2retire You guys are making me feel eccentric! I didn't even suggest doing without my lawn guy.

Is Frank aware of this passion for "my lawn guy?"

[Dawg52]

I could give up golf.

[W2R]

Quote:

Originally Posted by slimm W2R, I agree with your sentiments wholeheartedly! I've always maintained a LBYM lifestyle - retired at 42 and immediatley received "flak" from friends/family for continuing to pinch pennies, although my portfolio was in the 7 figure range. I was living in a suburb of San Francisco at the time & my pals were dismayed at the old car (parents hand me down)I drove and the clothes I wore from resale shops. Fast forward 10 years.. I invested in 3 cattle ranches in Oklahoma....having the time of my life, although, it is really labor intensive, I adore the freedom & wide open spaces. Your notation about reducing spending resonated with me esp. about the utilities. My BF owns an oil company & lives in Dallas - he spends weekends at my ranch. Our first (and biggest!) disagreement happened during a heat wave (July in Oklahoma) and I refused to budge the thermostat from 80 degrees...omgosh, it got ugly! It's non negotiable about wasting resources AKA money and the thought of dipping into principal is against my principles. The merciless teasing I've received over the years has resulted in several friends asking me for budgeting advice, esp. in the past month. As an aside, I'm mindful - not miserly....there is a difference!

Thank you! I couldn't agree more. Those who choose to spend their money on what they really want, and cut back on the rest, can live on very little. In honor of this thread I temporarily added a line to my signature, which has inspired me in the past.

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Originally Posted by youbet Is Frank aware of this passion for "my lawn guy?"

Well, he hooked me up with my lawn guy to begin with, since he has mowed for Frank and his family for decades. There is no story here, move along, folks...

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Originally Posted by Dawg54 I could give up golf.

Ouch. Or how about this? You could set up a putting green in your back yard, and intensively focus on improving your putting, for a year.

[Dawg52]

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Originally Posted by Want2retire Ouch. Or how about this? You could set up a putting green in your back yard, and intensively focus on improving your putting, for a year.

I said could.