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The Cheapskates Guide to Retirement
Old 05-23-2019, 06:52 AM   #1
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The Cheapskates Guide to Retirement

Not an in depth article, but not an outright fluff piece either. Might be a couple ideas we haven't thought of? From my personal experience, little things really can add up - lots of little things over the course of a year can add up to quite a bit. Splurging on little things is fine, but making a habit of splurging adds up (e.g. I buy a latte at Starbucks a couple times a year, but I wouldn't make a habit of it).

https://www.kiplinger.com/article/re...etirement.html

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You may be well prepared financially for retirement when it comes to all the big-ticket items, such as your investments or your housing expenses. But you may not be thinking much about your smaller, everyday expenses: The book you bought on Kindle. The fancy chew toy you just picked up for the dog. The bottle of wine you gave to a neighbor. And trimming your basic budget might not even be on your radar. “People often have no idea where their money is going,” says Washington, D.C., financial planner Lori Atwood. “Everybody thinks it’s nothing, but these little things add up quickly. And when you are on a fixed income, it matters a lot.”
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Old 05-23-2019, 07:16 AM   #2
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Seems like those little expenses would already be accounted for in your spending history.

Now if someone hasn’t been tracking their spending, I don’t see how they would have a clue about these types of expenses.

So, according to the article many people indeed do not track, have no idea where their money is going.

People here immediately advise tracking spending to newbies trying to figure out if they can retire.
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Old 05-23-2019, 07:19 AM   #3
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Thanks for posting this. I recognize myself in some of the ideas presented in this article. Like the Dr., I find great satisfaction in finding a way to optimize a particular expense. I audit our expenses continuously, so that I know where the $ is going. This year, we have reduced our landscaping and mowing expenses, by changing vendors. We optimized our cable/internet and landline expenses at the beginning of the year. I researched and found generic prescriptions to replace our higher copay brand name drugs. I'm sending less out to the dry cleaner. Who knew that our good table cloths and napkins are wrinkle free and come out just as well if i wash them myself after formal holiday family gatherings. DH is retired so his shirts no longer need to go to the cleaners. As a counter balance to these thrifty habits, we love good food, so the grocery bill is on the high side and we do enjoy dining out (separate checks of course).
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Old 05-23-2019, 07:30 AM   #4
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Agree with tracking. I have found tracking to be much more useful than budgeting. The latter is a ‘best guess / hope’ but tracking is real. Subjective thoughts create budgets, especially with discretionary spending, vs objective data garnered via tracking.
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The Cheapskates Guide to Retirement
Old 05-23-2019, 08:10 AM   #5
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The Cheapskates Guide to Retirement

I’ve gotten comfortable with both budgeting and tracking which, in my mind, are separate but related things. Budgeting is a “best guess” sort of thing (especially for discretionary expenses) while tracking is reality. Forward vs historical numbers, you could say.

Before I started using budgeting software seriously my tendency was to “budget with income in mind” but now I view my budget as independent of income and that helps me better understand what’s going on.

[ADDED] I think I just restated Sanstar’s post...
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Old 05-23-2019, 08:38 AM   #6
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We enjoy cutting our own grass with a fast zero turn mower--35 minutes per week. As retirees, we run televisions all the time and splurge on Dish TV. We more than make up the difference eating out very seldom, and then not at expensive restaurants. We're all on a diet, and not spending much on groceries either. Thankfully my wife's many meds are just about all generic and cheap, but we cannot do anything about the 2 she has to pay for. I take care of my own laundry, and nothing goes to the cleaners any longer. We continue to live very frugally because that's how we were raised. We maintain two houses locally--one of which is waterfront--and we're leaving Saturday for Europe.
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Old 05-23-2019, 08:41 AM   #7
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After we retired I shopped around for all the best deals on cable, phone, car insurance, etc. I do this every few years. Every 2 years we switch between cable companies so we are always getting the low price.
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Old 05-23-2019, 08:48 AM   #8
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This is why I continue to track expenses in detail while in retirement, as using a % remaining of portfolio variant and in a down market would want to know where I can cut if necessary.
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Old 05-23-2019, 08:54 AM   #9
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Imho, the language you use makes a difference. For example, the sub-heading on this article "Thrifty retirees are learning how to cut corners while still living comfortably.".
Are you "cutting corners" if you look for the best deal or do not waste your money?


I hear "deserve" & "must have" a lot when people justify spending money on stuff/experiences that they really can't afford if they were to look at their lifetime money needs. Marketers uses these phrases and people adopt them to their detriment.
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Old 05-23-2019, 09:03 AM   #10
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Originally Posted by Midpack View Post
Not an in depth article, but not an outright fluff piece either. Might be a couple ideas we haven't thought of? From my personal experience, little things really can add up - lots of little things over the course of a year can add up to quite a bit. Splurging on little things is fine, but making a habit of splurging adds up (e.g. I buy a latte at Starbucks a couple times a year, but I wouldn't make a habit of it).

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You may be well prepared financially for retirement when it comes to all the big-ticket items, such as your investments or your housing expenses. But you may not be thinking much about your smaller, everyday expenses: The book you bought on Kindle. The fancy chew toy you just picked up for the dog. The bottle of wine you gave to a neighbor. And trimming your basic budget might not even be on your radar. “People often have no idea where their money is going,” says Washington, D. C., financial planner Lori Atwood. “Everybody thinks it’s nothing, but these little things add up quickly. And when you are on a fixed income, it matters a lot.”
Hmmm... nothing very eye-opening or insightful here, IMHO. We've all heard the incessant advice about how skipping the daily Starbucks cappuccino will save you hundreds of dollars a year, etc. To me, this seems like basic common sense, regardless of whether you're a head-in-the-clouds millennial or a practical-minded retiree. I have a $200/month line item in my FIRE budget for miscellaneous expenses that easily covers these types of small items, although I'm pretty sure I don't typically spend that much on random, impulse purchases. I actually think it's more likely that a retiree would not be accurately projecting and accounting for large, lumpy purchases (like having a new roof put on, or replacing a car or an HVAC unit) than not accounting for this type of miscellaneous, small, impulse buying.
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Old 05-23-2019, 09:10 AM   #11
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The behavioral economists talk about "acquisition utility" and "transaction utility" in a purchase. ("Utility" is the official economists' word for what we would call pleasure.")

Buying a hamburger gives us acquisition pleasure because we would rather have the hamburger than keep the money we pay for it.

Buying a hamburger at 50% off gives us transaction pleasure -- the good deal.

So maybe part of the issue here (and true for me) is that we cheapskates/frugal people really enjoy getting a good deal. Others, who are less frugal, may not get as much pleasure from deals and hence do not pursue them as enthusiastically. If so, Kiplinger is not going to change them very much.

Maybe, too, the "I deserve it" mentality is somehow a heightened love of acquisition utility -- "shop until you drop."
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Old 05-23-2019, 09:23 AM   #12
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I know where all the happy hour food deals in town are since retiring)
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Old 05-23-2019, 09:28 AM   #13
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I doubt very much whether a light goes on and people start doing these things after retirement.

I suspect many of the people who follow all or part of this advice have done so most of their lives. They buy on value and they shop. For all goods and services.

We have no financial challenges. But we have always shopped on value and on utility. We did not change overnight when we retired early. Doing this was one of the reasons that we were able to retire early and travel.
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Old 05-23-2019, 09:30 AM   #14
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I’m so glad we could each have a Starbucks every day and twice on Sunday without derailing our retirement (not that we want to—feel free to substitute craft beer or wine or whiskey for Starbucks) . Blow that dough!
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Old 05-23-2019, 09:30 AM   #15
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I doubt very much whether a light goes on and people start doing these things after retirement.

I suspect many of the people who follow all or part of this advice have done so most of their lives. They buy on value and they shop. For all goods and services.

We have no financial challenges. But we have always shopped on value and on utility. We did not change overnight when we retired early. Doing this was one of the reasons that we were able to retire early and travel.

The stats on the percentage of over 55 bankrupts, insolvents, and consumer debt grow larger each year.
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Old 05-23-2019, 09:35 AM   #16
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I realized every time my honey volunteered to go get a dozen eggs, it ended up somehow costing us $20... those are some pricey eggs. Well he would "reward" himself for volunteering by getting a treat or 2 or 3.

To me that is what it really comes down to, if you know where you are spending it, then you are making a conscious choice of whether its worth it or not to you. The big stuff was easy for us both to agree to what we wanted our lifestyle to be like.. it was the small stuff we disagreed with alot.

Once we looked into the details we figured out there was about a $600/month discrepancy which made the difference between us being 100% in FIRECALC or not. Thus I retired and he kept working to cover that shortfall.

However, he knows what he is working for.. ie his $12 a 12 oz bottle microbrew, the $5 a single serving Gellato, and all the little electronic gadgets/software/subscriptions he desires. Its his choice and now an informed choice since we looked into the details.
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Old 05-23-2019, 09:40 AM   #17
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Quote:
Originally Posted by Sanstar View Post
Agree with tracking. I have found tracking to be much more useful than budgeting. The latter is a ‘best guess / hope’ but tracking is real. Subjective thoughts create budgets, especially with discretionary spending, vs objective data garnered via tracking.
+1
We never budgeted, as we are natural born cheapskates
But tracking is useful as we now know exactly where the money goes... still don't budget as we should really spend more.

Tracking is like keeping score in a football game.
Budgeting is like picking players for the team.
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Old 05-23-2019, 09:47 AM   #18
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I've got a book with a similar theme, How to Retire the Cheapskate Way, by Jeff Yeager. It's pretty good, especially for a frugal, simple-living guy like me. It gets a little extreme sometimes, but that's okay; I like hearing about options, even if I don't implement them myself.
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Old 05-23-2019, 09:56 AM   #19
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Originally Posted by audreyh1 View Post
Seems like those little expenses would already be accounted for in your spending history.

Now if someone hasn’t been tracking their spending, I don’t see how they would have a clue about these types of expenses.

So, according to the article many people indeed do not track, have no idea where their money is going.

People here immediately advise tracking spending to newbies trying to figure out if they can retire.
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Originally Posted by Sanstar View Post
Agree with tracking. I have found tracking to be much more useful than budgeting. The latter is a ‘best guess / hope’ but tracking is real. Subjective thoughts create budgets, especially with discretionary spending, vs objective data garnered via tracking.
+1

I have always kept track of my spending, generally speaking, by categories in an Excel file. But 7 years ago I changed my methods and actually started tracking every single penny that I spend and exactly what I spent it on, and *then* categorizing it. Oh, and no more "cash" or "ATM" as a category. I do have "miscellaneous" for things like haircuts or gifts, but I also know exactly what I decided to put in that category.

I enjoy doing this. Different strokes for different folks, but this type of record keeping has done wonders for me. It's sort of like tracking food when I am trying to lose weight. If I record exactly what I spend (or eat), it is easier to spend (or eat) less.

I don't really budget. I do look at and think about my spending. Overall I know what I can safely spend, and if my tracking shows that I need to cut back, then I just go back into cheapskate mode until I am back on track.

Oh, and I haven't spent a cent at Starbucks for at least a decade, maybe two. My choice! I just have other preferences for blowing that dough.
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Old 05-23-2019, 10:00 AM   #20
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I still purchase an occasional book for my almost 9 year old Kindle.

But the vast majority come from the Overdrive site of the Boston Public Library.

I can easily afford to buy the books. But I still prefer free.
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