The Cheapskates Guide to Retirement

[Midpack]

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/r...004-the-cheapskate-s-guide-to-retirement.html

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.”

 

[audreyh1]

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.

 

[Golden sunsets]

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).

 

[Sanstar]

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.

 

[steelyman]

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...

 

[Bamaman]

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.

 

[Teacher Terry]

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.

 

[Dtail]

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.

 

[walkinwood]

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.

 

[Sojourner]

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).

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.

 

[OldShooter]

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."

 

[Teacher Terry]

I know where all the happy hour food deals in town are since retiring)

 

[brett]

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.

 

[Bestwifeever]

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!

 

[brett]

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.

 

[karen1972]

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.

 

[Sunset]

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.

 

[ER Eddie]

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.

 

[W2R]

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.

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.

 

[joeea]

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.

 

[NW-Bound]

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...

+1

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.

When I seriously thought of retiring early, I stumbled on this forum and found out that people were a lot more aware of what they spent than I was of mine.

Surely, we were always LBYM, but when your means were going to shrink in retirement, you could have trouble with the same lifestyle. And that was when I started tracking expenses.

Prior to that, I had no idea how much we spent on each category, only that we had plenty of money left over each month. I needed to know more details than that.

At this point, we are already in a rut, but I still track expenses to make sure there are no mischarges, no accounts getting stolen, no undetected lifestyle creep. No budgeting, as our expenses actually get lower due to Bernicke's effect. Currently blowing dough on a DIY experimental solar energy storage system which will take more than 10 years to pay back, so it's more a hobby than anything.

 

[NW-Bound]

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.

I am a book lover, but do not want to build more shelves for them. So, library books it is.

 

[imoldernu]

From this old post...#124... in 2013
http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251-2.html#post1372574

Posting this here, as it's personal, and not either a recommendation or a request for validation... Just a bit more of "FRUGAL".

STUFF WE DON'T SPEND MONEY ON

Life Insurance
New Clothing
Haircuts
Hair styling
Pedicures/manicures
Beauty products
Movies
Concerts
Sporting events
Restaurants (more than $8 meal)
Books
Music
"New" Computers (since 2002)... all refurb or reclaim
Software... (Twice in lifetime.. total $30) all other "free"
Car maintenance labor... all DIY except 3 times for major repairs
Brand vs. Generic foods
Premium meat or fish
Financial Advisor
Lawyer
Chiro/Massage/Tan etc.
Tattoos...
New Home Decor.. (all resale)
Cars.. since 1998...
Car Wash and wax... since 1989
Premium TV channels
New Bikes or Exercise equipment
Sporting goods
Cruises (so far)
Group trips
Flying (Airlines)
Lodging (more than 3 star)
Premium Gasoline
Tools (already have more than I'll ever use, including welders etc.)
Housekeeper
Carpet Cleaning
Window/Gutter/Furnace etc. Cleaning... all DIY
Premium booze/wine...
Jewelry
Organic foods
Brand sodas
Painting, remodeling
Weapons
Subscriptions (AARP only)
Gambling
Banking or Credit Card Fees
Appliance or Electronics insurance
Eye Glasses... except for $1readers (since 2000... maybe eye test this year.)
Pets... (except bird feed)
Healthcare maintenance... exercise equipment, pool, advisor etc... (all included in our senior community membership. (no fees)
Pest control... DIY
Only "fee for" is Activities Association (FL).. $6/year

.... for starters...

NW-Bound will remember this

 

[brett]

There are many ways to reduce your expenses, no matter what your financial position or lifestyle is.

We take advantage of last minute travel offers. We sometimes select destinations based on a combo of our bucket lists, attractive air fares, etc, and currency. We don't have to but we do. It is just how we do things.

We don't buy coffee beans at Starbucks. We buy them at Costco at half the price, along with other products if the price/value proposition is present. We could do the former, but why? We travel in the winter so we often buy summer clothing in the fall when it is on sale. We get competitive quotes from time to time on things like insurance, communication costs, etc. to make certain that we are not paying above current market pricing.

We will happily splurge on an expensive meal in a restaurant or a cultural activity. But we have to perceive that the value to us is equal to, or exceeds the price.

We did not cut anything out in retirement. Indeed, our spending increased substantially in certain areas. But, as always, we want value for our dollar. No change whatsoever from our pre retirement days.

 

[Sunset]

From this old post...#124... in 2013
http://www.early-retirement.org/for...of-frugal-retirement-62251-2.html#post1372574

Posting this here, as it's personal, and not either a recommendation or a request for validation... Just a bit more of "FRUGAL".

STUFF WE DON'T SPEND MONEY ON

....
Eye Glasses... except for $1readers (since 2000... maybe eye test this year.)
......

Not sure you are saying no eye doc since 2000, or just didn't buy any glasses since then.

When people get old, I think they should have an eye exam every couple of years, just in case glaucoma/cataract/etc starts to develop.