What could you cut?

[Just_Steve]

By cutting cable, cell phone and stop making extra mortgage payments I could shave 20k a year easy. If I stopped my restaurant habit I could shave another 5 or 6k.

[RAE]

Our annual expenses are roughly the same as yours, but that is in line with what I was planning, so we're doing okay. We spend a bit more on travel than you do, since we head south for 2-3 months each winter. I suppose we could shorten the duration of that trip if necessary, or give it up entirely, but I would not be happy about that, as the winters are long where we live and we really look forward to spending part of the winter in the warmth and sunshine. DW and I also each have a personal expense budget, similar to yours, and again, we could reduce that if necessary, but so far there has not been a good reason to do so. As the years go by, I will probably be even more reluctant to give up things that we enjoy, even if it stretches the budget a bit. In our case, we do not have a goal of leaving a big pot of $$ to anyone else, so we plan to gradually spend our assets down over time (within reason).

[NW-Bound]

Can any of y'all cut back enough to live on 0.5% WR, as we talked about in another thread?

Me, no way. I don't have enough to live on 0.5%. I said that I thought I could, but my wife would leave me.

I did not say that 0.5%WR meant selling the homes and go living full-time in the 25' motorhome, parked under the open New Mexico sky.

But of course, there's always SS, and with early SS for both of us we could live well on 1.5% WR. Not luxuriously, but quite comfortably. Then, if the market crashes hard, such that my stash shrinks to 1/2, that WR becomes 3%.

Party on!

PS. Oh wait. If I sold the homes, the proceeds would get added to the stash and my 0.5% is now 30% larger. Maybe I can rent a small home?

[daylatedollarshort]

Our biggest savings could be from downsizing or moving to a lower cost of living suburb or city. Even a few blocks from our house the home prices drop a fair bit because the school boundaries change, but the houses and neighborhood look the same.

Our next biggest discretionary expenses is entertainment. I look for bargain events but we go out pretty often so even discount tickets on top of drinks, tips and train fares it still adds up. We live in an urban area so we could go to one car or actually even no cars and use Uber and mass transit. When one of our kids visits he takes Uber or Lyft to go places so we could do the same.

[Luck_Club]

Quote:

Originally Posted by NW-Bound Can any of y'all cut back enough to live on 0.5% WR, as we talked about in another thread? Me, no way. I don't have enough to live on 0.5%. I said that I thought I could, but my wife would leave me.

Not unless the pot was $15 million! Most of my retirement income will be rents, so not relevant to WR, IN my humble opinion.

[Moemg]

I retired at the beginning of the market crash and I do not remember cutting anything despite the fact that my stash dropped by almost 40% so all this talk is crazy .If I really had to I could cut gifts ,charity and trips and still continue with my normal life .

[RetiredGypsy]

We could cut out:
~$800 booze
~$100 Amazon Prime
~$130 Netflix
~$155 other subscriptions
~$1,200 in phone bills
~$150 in reducing Internet speed
~$1,200 in eliminating coffee from groceries
~$1,400 eliminating fast food
~$2,500 cutting fun money in half
~$70 reducing insurance

So we could immediately cut 20% of our yearly budget if we had to, and if it got bad enough there's still wiggle room. After 20% it starts to really dip into survival mode, where there's few options in enjoying food and entertainment.

[daylatedollarshort]

Quote:

Originally Posted by NW-Bound Can any of y'all cut back enough to live on 0.5% WR, as we talked about in another thread?

That is my plan, post SS at least, but I'm trying for zero, after pensions a little easy side income like reward points for travel and gift card and free products for doing reviews. I just like the math part of optimizing expenses and finding bargains. We don't have a lot in stocks so if I want our NW to go up long term it means optimizing expenses or working part-time and I like the thrill of the bargain hunting more than working.

[NW-Bound]

Quote:

Originally Posted by Moemg I retired at the beginning of the market crash and I do not remember cutting anything despite the fact that my stash dropped by almost 40% so all this talk is crazy...

I like to think of the worst possible scenario, and if that does not even scare me (I read blogs of RV'ers who live on NM state land), nothing would faze me.

Back when I was raising children, poverty would affect me more, but now it does not matter as much. Didn't I live the life of a vagabond for a few months at a time living in my small motorhome for cross-country treks? It can be fun.

[Yarnstormer]

ohh lots of room to cut. I could cut out some food spending. I am truly embarrassed by how much we spend (one adult and one teen)
I have two cars, could sell one but it's a collector car and costs next to nothing to own.
Biggest other expense is my mortgage which I wonder now if I should pay it off, as there is little chance of me itemizing with the new tax plan.
I do have a category in quicken called "shopping" that covers Target, Costco, Walmart and other places where you buy multiple categories at once. I plan to start splitting those transactions and see where the money is going.
Not giving up my yard dude. $75/mo to keep the jungle in check and the roof blown off.

[street]

Quote:

Originally Posted by daylatedollarshort That is my plan, post SS at least, but I'm trying for zero, after pensions a little easy side income like reward points for travel and gift card and free products for doing reviews. I just like the math part of optimizing expenses and finding bargains. We don't have a lot in stocks so if I want our NW to go up long term it means optimizing expenses or working part-time and I like the thrill of the bargain hunting more than working.

Good for you and with a small income other then investments your goal of zero is a reality. You have a plan and that is key to make it work. I like your way of thinking.

[mamadogmamacat]

Would never go back to work, enjoy my simple ER life way too much plus the dog and cats would not allow me to. Seriously.

If ever needed could stop charitable giving (my biggest expense or close to it with HC vying with it for first place), then stop eating out and no more gift giving save perhaps for giving used stuff from around the house I suppose like knick knacks and such also could cut back on some grocery items. Believe I could get WR down to less than 1.5% with all this as i do have the pension. may even get it to 0% once I start SS. Certainly less than 0.5% by then.

[FUEGO]

We only spent $32000 in 2017, so not a ton of cutting to be done.

But if we really really had to:

$6000 travel
$1500 groceries (economize a bit with what we buy and cut out the alcohol)
$300 restaurants (we only spent $357 total though)
$200 clothes (only spent $800 total but could have thrift shopped more and looked for hand me downs/free stuff)
$400 plumber (could have toughed it out and figured out how to do the repair myself)
$300 gifts (could have given the kids less $$ for b-day and Christmas)
$100 charitable giving (gave it because we're flush with cash)
$500 random miscellaneous stuff we bought throughout the year

That's $9300 we could cut without being bothered too much. Not having a travel budget would get old after a year or two though we could definitely still do a lot with $1000 or so per year (off season beach house rental for a week or two). That would give us $23000 in annual spending, which is close to our lowest year of spending ($24,000).

We could downsize our house some but wouldn't save a ton on an annual basis. It might free up a little cash since it's paid off. If times were that tough I'd probably hustle up enough work to make ends meet.

[beowulf]

Clearly I'm missing something in the OPs comments. I don't see federal or state taxes or any kind of car fees, gas and maintenance, phone/internet costs (not cable), etc? Those are expenses - to leave them out is disingenuous. It appears he/she is still working as there was mention of what would happen after retirement. Owning a paid off house is great, but there are still taxes, repairs, utilities, etc. I also don't really understand why so many folks talk about cutting back on what seem to be very austere budgets to begin with. If you don't have the money to spend, then you don't spend it. LBYM is possible for most people by simply giving up a few luxuries. But I have no desire to leave our kids a large inheritance by denying ourselves things we want. Reading this list, I sometimes get the impression that there are folks who would recycle toilet paper to save a few bucks if it were feasible. If you can't enjoy life and live like a pauper (when you are far from one), what's the point of living? Life is finite - no mulligans,

That being said, if, for some unforeseen calamity, we had to cut back on expenses, we would probably be able to lower our expenses by at least $4K a month. No cable, no internet, no dining out, sell both cars and buy a junker, no trips (can't call them vacations when you are retired ), no new clothes until everything wears out, no gifts to anyone and lots of other things that add up quickly. That $4K a month seems to the OPs entire budget. What can you possibly cut from that? And why would you if you can afford it.. When I was a 2LT in the Army in 1970, the monthly pay was about $416 a month plus another $48 for subsistence. Since we lived in government furnished housing, there was no allowance for that, but also no expense. But we lived well. One car, one 19" color portable TV with an antenna, no cell phones, no cable, no internet, 30 cent a gallon gas, no computers, no ipads, no DVRs, no new tech coming out every 6 months, etc., etc. Would I want to go back to those days? Not on your life. There are people who enjoy being Luddites, but I love many aspects of technology - it makes for a far better life. I do own an iphone 6S, which I plan to keep for several more years - it does everything I want.

[daylatedollarshort]

I think the goal for me and at least a few, if not more, of the posters here is to live well without the spending a great deal of money part, not through deprivation but creative ways like playing the credit card games and traveling for free with reward points, cool finds at thrift shops or getting bargain vacations and event tickets with last minute bookings or unsold seats.

[Koolau]

It's been a while since I've done an exhaustive evaluation of yearly spending (including all taxes, gummint fees, etc. etc..) For that reason, I'll estimate in terms of 1/4(s) of total spending. I could cut 1/4 if I stopped gifting to kids and charity. I'd easily cut the next 1/4 if I would just move back to the mainland. For instance, I keep an apartment (year round) on the mainland, so that would be my principal residence (already pay for it, so that's sort of like, free housing just by moving.) To give you an idea of the disparity in costs from Paradise to mainland living, my HOA dues cost me more than my mainland apartment rent (which includes utilities.)

I'd have to think how to cut even part of the next 1/4. So let's just say I could cut 1/2 without too much trouble - not that I have any plans for that scenario. YMMV

[DEC-1982]

A cut in travel would give the biggest value in one cut.

[IMATERP]

Our joint fixed expenses are comfortably 30k. 30k is well below 2% of our Withdrawal Rate. Hence, we don't really need to think about cutting anything.

I

[MrLoco]

OP....We all could find items to cut IF we really had to. It all comes down to what quality of life ...i.e. enjoyment do you want in retirement.
Also, if you are not yet at Medicare age....be careful you do not under estimate pre MEdicare healthcare costs. Even with a subsidy under the ACA; the premiums and deductible are an eye opener. Even after age 65, the estimate is that a couple will easily spend out of pocket $200,000 on their healthcare. It really is the elephant in the room in retirement.

[athena53]

This is an exercise I go through every once in awhile because sometimes I can't believe I spend what I do. In 2017 it was $117K, excluding contributions to the granddaughters' 529 accounts and $1K/month I'm sending to my late husband's elderly brother, which will end in November of this year. (DH and I agreed on this in his last months; I wanted to do something for DBIL and DSIL but they would have squandered a lump sum.) So- both of those could go if I were desperate.

Travel was $27,000. Yes, you read that right. About $10K is for travel in 2018. (I travel Business Class on long-hauls.) There's a $750 deposit on a cruise for 2019, too. I could cut back to only road trips to visit family and cut out all but about $3,000.

Charity was $21,000, mostly the church pledge. I'd hate to go back on what I promised to the church but would if I had to.

Health insurance was $9K last year but will be more like $4,500 this year. Thank you, Medicare.

Taxes were $17,000 but that included paying extra when I filed my 2016 taxes. If my finances took a nosedive that would go way down.

So. cuts to charity and travel as well as savings on health insurance would reduce the budget 42%. I'd hate to chisel away at the smaller items; the gym membership keeps me healthy and sane, I spent all of $540 on clothes, I already have the thermostat at 65 degrees during the day and I'm always freezing.

Fortunately I've kept the average withdrawal rate under 4% since retiring 3.5 years ago and my net worth is up 15% in that period.