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Old 08-25-2013, 12:43 PM   #21
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Very valid points nords. My survivor benefits and taxes have already been accounted for when I came up with the $3000 for my pension. My befor taxes pension is around $3300.

I love the suggestions and feedback, I'm very grateful to have found this site!
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Old 08-25-2013, 02:05 PM   #22
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When trying to make a budget work, I like to emphasize the emotional side as well as the financial side. I am only saying this as a thought and not criticism. Since you are still in the working mode, would you consider tracking all monthly expenses and writing them down in a manner that can easily extract the cost of the children to determine how much you are spending on yourselves? There are of course 2 ways to retire and make it work. Retire when your assets/income equal your lifestyle, or retire and make your lifestyle equal your assets/income. I only say this because I believe it is important to make sure you are emotionally Ok with going from spending 85-90k to the amount you are planning to budget for.
I tracked expenses for a couple of years to make sure my pension income exceeded my lifestyle by a comfortable enough amount to cover my current lifestyle plus unexpected expenses. Last year I was bragging how I never have to pay for anything, then boom in the last 12 months I have had my a/c unit go out, then my water heater, and now I have a leak in my roof I have to figure out how to repair. God only knows my eyes and teeth are just waiting for their chance to dig into my wallet. After escaping your work stress, you will then be faced with what to do with your life. If you are the type of person that wants to do things that cost money and the money is not there will you still be happy?
Even though I am doing fine, I am still surprised at how I feel financially trapped now, pertaining to if I ever wished to make a little more money. Going back to work PT would be an exercise in futility for me. I am butting on the edge of the 28% bracket, so a PT would spill me over into that, plus lose a $2100 state tax credit. A $10,000 PT job for a little bonus money would barely net me $3000 after all taxes, loss of credit, and some gas expense.
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Old 08-25-2013, 02:27 PM   #23
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Quote:
Originally Posted by mcdevin1970 View Post

I definitely understand that I am right up against my budget with my expenses and do understand that the money I make from part time work will essentially be my discretionary spending money i.e. entertainment, emergencies, car repairs, house repairs, lawn maintenance, toiletries etc. For me though, that's the idea, I don't mind working for $1000 to $1500 a month at a low stress part time job that provides me with my spending allowance.
The thing is that emergencies, car and house repairs, lawn maintenance, basic toiletries aren't really discretionary in most instances. There may be some that can be deferred if relatively minor.

I am actually big into budgeting and keeping track of spending. I used to be big into budgeting, but I did it in a pie in the sky kind of way. That is I would record spending that was saying I was spending $X on something and had been for a long time. Then I would budget for 80% of it with no real plan of how to reduce that expense by 20%. So, of course, it didn't actually get reduced. I always was going over budget, largely because my budget wasn't realistic to how I wanted to actually live my life. I did this a lot with groceries, for example. I always theoretically wanted it to be less, but didn't actually want to make many of the changes to make it less.

In your case, I don't know if these numbers you area giving are realistic or not given your past spending. I think you need to go through (if you haven't) your actual spending and then make any adjustments based upon when you don't have kids that you are supporting.

I use the program YNAB to track spending and budgeting and it has been invaluable to me if you don't already have something to help you with those things.

I also don't think it is very helpful to do a budget based upon these things come out of pension and these things come out of part-time income. What some YNAB people do, however, is to set up their budget based upon priority rather than item categories. That is they budget first for things that have to be spent and then what is left over goes to discretionary.

In your case the reason for this is that part-time income is much more instable and can fluctuate greatly. I semi-retired 3 years ago and it has been great but it is very hard to project specific income at a specific time. And, if you need a car repair, then the repair doesn't really care that you are between part-time jobs.

So, I think you need to first figure all your desired spending. Assuming that amount is enough to be covered by pensions and part-time work realistically expected then that's all good. If it isn't enough then start seeing what you could cut.

Then, go through all that spending (this should include spending for things that go wrong or long term capital expenditures), and figure out what you could cut if you had a long-term time when you were between part-time jobs. If you can't cut to make it at least for a time without a part-time job then I think you have to be cautious.
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Old 08-25-2013, 07:09 PM   #24
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Katsmeow and Mulligan thanks for the info. I really do need to track my spending for a while as I think this is the only way to assess where money might be flying out the window. I need to clarify from an earlier post, I don't spend 85-90k, that is what my wife and I make combined to include my pension. I went through our checkbooks for the last 4 years and my average per month on just bills: utilities, cable, son's car payment, mortgage etc is right at $4500. Aside from my two sons, my mother and father in law are currently living with us (they will go back to the Philippines in 2 years when my son graduates High school). Needless to say groceries and utilities are much higher than they will be with a smaller home (I currently have a 2500sf home and plan for no more than 1800sf once I downsize in ~ 4 years) with 2 people versus 6. I bought my son a new car for H.S. graduation and currently owe about $10,000. I passed my GI bill (college fund) on to both of them. So my son will receive a monthly stipend of $1125 on top of all his books and tuition being paid for. Of course I will be the one getting this money but plan to save some of it and the rest will pay off his vehicle. I know its not popular here to buy new vehicles but I want both of my sons to have a fully warrantied vehicle that they can use for the next 10 years and not have to worry about anything. Anyway, I pay $302 a month for his vehicle an extra $140 a month in insurance, $243 a month for 4 I phones, $167 a month for my sons braces and on and on. My parents in law and my kids still being in the house kill us as far as the amount of money we spend. I have spent $400 dollars in the last month on my dogs medical issues (I love dogs...but I'm done after this one).

So there is a mentality in my household that we have money for whatever we need and we just sort of live our lives. It wasn't until I read Nords book that i started to realize "why am I killing myself to have all these things we don't need"? I started to envision a life where I could maybe work less or earn less (in a less stressful job) and still have the things that I value. I plan to get rid of cable this week (I pay $105 a month for cable/internet and phone but it was a two year deal and about to expire). I must have internet but rarely watch tv..bunny ears here I come, and don't need home phone.

I will do a thorough investigation of my spending and little by little I plan to squeeze out all of the stuff we don't need (November my cell phone contract is up and I will go to a prepaid option maybe virgin mobile).

So, based on the checkbooks for the last few years I have deducted those expenses that will no longer exist once everyone is gone and the $2955 is what I came up with. I don't feel its a very tight budget as I actually over compensated for most of the expected expenses. Now with 6 people we spend about $700 a month on groceries, my wife and I will get by fine on $400. Utility bills on my projections are actually about what I spend now so I know those will be even less. I misused the term discretionary, if I am working and earning $1500-$2000 a month I feel that is plenty of play around money for whatever...going out to eat, going to the movies, repairing the refrigerator/ car or whatever. Yeah a new roof (sorry to hear about that!), thats a good $10k probably but those expenses are very infrequent and in my case that calls for dipping into the savings.
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Old 08-25-2013, 08:09 PM   #25
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McDevin, ok, is see now pertaining to your budgeting. I was worried you were spending 85-90k now. So you will not be having as severe a drop down in living costs, as I was thinking. It appears you are digging through your expenses and figuring where your money is going which is great. Having money expenses coming off your books soon with no apparent loss in standard of living is a definite plus. I had a few of them go by the wayside just prior to retirement and it definitely made the budget become smaller. As for my roof, it is only 9 years old, so I am not giving up without a fight to find the leak and patch it. The shingles are supposed to last 25 years!
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Old 08-25-2013, 08:54 PM   #26
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Mulligan, I hear ya! Putting on a whole new roof after 9 years is a little early. I'm sure you will be able to pinpoint the problem and fix it for far less than $10,000.

I appreciate the encouragement and I look forward to slashing whatever costs I can to stretch my dollar to the max.
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