Retirement budget for retired military

[mcdevin1970]

I posted earlier about my intentions to semi early retire in 4 years once my sons are finished with college. So my plan is to work maybe 20 hours a week and generate $10k a year with my wife doin the same from age 47 to 59. My wife is 4 years older and we both will draw SS at age 62 my pension is $3000 a month cola protected we will have $100,000 in the bank at that time with about $50,000 in Roth's.

So I wanted to show my budget and see if there is anywhere that I could save to cut my budget to maybe $2500 a month as this would free up $500 for discretionary spending. After all, this is the reason we would work part time to generate maybe $1500 extra for spending. I would feel a lot better if I had money left over from my pension to where even if we didnt work we would be ok.

So here it goes: mortgage - $1200 car insurance - $100 electric - $150 water/ trash/ sewer - $70 home phone/ Internet - $70 dental insurance - $115 medical insurance - $60 hoa - $50 Roth IRA - $300. Savings - $150. Cell phone - $90. Vehicle gas - $200. Groceries - $400 total = $2955.

My pension is military thus the low insurance. Please let me know where I could save or if this budget seems far fetched.

Ps. I apologize for the format, I did this on my I phone

Thanks!

 

[Mulligan]

I believe comparing budgets to other peoples is the equivalent to comparing ones definition of "beauty". With that being said, I can offer some thoughts to reflect upon.
1) I noticed in another post you said your current budget is $85-90k which includes the kids. I know this has been said before, but track every expenditure monthly for a year, then extract the child related expenses from this total to see your true 2 couple expenditures. 2) Your budget appears to leave little room for error and for unaccounted expenses. I net about $5k a month from my pension and originally budgeted 3k a month, with plans of saving 2k a month. Well that never happens. Something is always coming up, house expenses, gifts, birthdays, car maintenance. You name it. I am always around $3500, and I am a single guy living very modestly. 3) You are needing to survive until SS kicks in then your budget will increase, those dozen years could be quite frustrating if you do not continue in part time work capacity. Every unplanned expense ( and believe me there will be plenty) will have to come out of that small nest egg, and it won't last if it is hit frequently. I also retired with few assets but worked part time for 3 years to build them up. I am glad I did and very glad I didn't try to retire with my expenses butting up right next to my income. That is why so many people on this forum discount certain assets or SS because they don't want their retirement to be a monthly stress of "trying to make the numbers work" each month. I can't overemphasize the importance of having a financial cushion whether be in monthly income streams or asset base when attempting early retirement.

 

[mcdevin1970]

Thanks for the reply. You make some good points. I figured that there will always be unexpected expenses. I guess I was just really looking for recommendations on how I could save more money given my current amounts that I have projected. For example am I paying too much for Internet and if so are there recommendations on how I could lower it or is $400 a month in groceries too high for two people etc.

Also I do plan to work part time until 55 then I will utilize my savings maybe $1500-2000 a month and at 59 1/2 I will then have access to my Roth and then SS at 62.

I don't know, I think I'm fine as long as I work part time until 55. My true goal is not to truly retire at 47, but to be in a position where I am ok if I don't work for a few months and to where I can be choosy about the work I do and not be concerned with the salary of said job.

I am tired of having the fear of losing my job and doing something that I don't like 40 hours a week just because I have bills to pay.

Thoughts?

 

[jimnjana]

I agree you need to cut your budget, but it is entirely up to you and your DW but those areas that you can cut. Personally, I wouldn't quit my job until you had a position lined up in FL. Also, I would work full time in Florida, then find a part time position to transition to. Moving expenses etc don't appear to be something you have budgeted for. Having a full time job will help you with the move and will help keep you from chewing up your savings on unplanned expenses. I would also plan on renting in FL until you had a chance to recon the area and select a retirement home without the added pressure of a new job/move etc.

 

[martyb]

My budget for retirement which starts January 2013:

$1300 - mortgage
$400 - groc
$250 - elec & natural gas
$100 - water (includes water, sewer & trash)(will be watering grass some)
$100 - cable (includes tv & internet)
$100 - cell phones
$100 - car insurance
$200 - gas for car
$100 - meds & co-pays
$400- eating out
$500 - misc

total: $3550, round up to $3600

Yes, $400 for groceries + $400 for eating out seems high for 2 people. I intentionally padded it that way because I wanted lots of padding. If we don't spend all that amount then there's more for savings or other discretionary stuff, but that's just my way of padding. Same with the utiliity figures...I use those amounts for budgeting purposes, but you can bet I'll do my best to spend less than the budgeted amounts. The amount budgeted for meds may be more some months, less other months. The $500 misc amount is again discretionary, but I do have one hobby that can be expensive....fishing. I'll be buying a boat soon, and it will cost $$ for gas, oil, insurance and other incidentals.

My pensions will cover the above budget. Not decided yet is whether to accelerate or pay off the mortgage (we're just now buying the house...lol). Wife will get SS when she gets to 62 in 2023, I will only get a small WEP'd SS in 2018. If we pay off the mortgage in say 3 or 4 yrs, that of course will substantially reduce our savings, but we'd then be well under the pension amounts. I'm not sure how I'd feel about the smaller investable acccounts though. It gives me a feeling of security knowing we have that money stashed away. Have to decide how to handle that particular aspect. Forgot to mention that health insurance isn't mentioned in the budget above. That is already deducted before the budget. My pensions are federal civil service and military. The military pension doesn't start until January 2016. In the meantime, wife will be working and we will bridge to my mil retirement from her income, plus at least 1/2 of her pay will still go into her 401k.

 

[Mulligan]

Thanks for the reply. You make some good points. I figured that there will always be unexpected expenses. I guess I was just really looking for recommendations on how I could save more money given my current amounts that I have projected. For example am I paying too much for Internet and if so are there recommendations on how I could lower it or is $400 a month in groceries too high for two people etc.

Also I do plan to work part time until 55 then I will utilize my savings maybe $1500-2000 a month and at 59 1/2 I will then have access to my Roth and then SS at 62.

I don't know, I think I'm fine as long as I work part time until 55. My true goal is not to truly retire at 47, but to be in a position where I am ok if I don't work for a few months and to where I can be choosy about the work I do and not be concerned with the salary of said job.

I am tired of having the fear of losing my job and doing something that I don't like 40 hours a week just because I have bills to pay.

Thoughts?

Looking at your budget and extracting your anticipated mortgage and savings, I see you as a couple trying to live life on $1300 a month. I am single and consider myself fairly spartan, living in a low cost area, and there is no way I could do that. I really don't see any fat at all in your budget. Consider this as a point. The $400 a month food budget will also have to encompass deodorant , toothpaste, toilet tissue, paper towels, lotion, etc. etc. Any entertainment at all? Occasional movie or out for dinner? I don't see how the $400 can cover all of that unless you spend every waking second figuring out how to eat cheap with starches. There was no mention of tv. Are you planning on just using internet with no cable? This is just my opinion and of course only you will ultimately know best, but I think your overall plan of surviving on part time jobs with your pension is certainly doable. I just believe in practical terms that ultimately your ability to implement the plan will be predicated on your ability to work part time. Your savings, cushion money, unexpected expenses, gifts and entertainment expenses will all have to come from earned dollars, not cutting costs. I really don't think there is much to cut from the $1300.
Another suggestion to consider.... If that 100k plus Roth amounts your total nest egg. I would be very cautious about using that as your bridge to SS. Having a nest egg in the elderly years will provide an invaluable sense of security that at your present age may not seem so important. Not trying to bring you down or be negative, just trying to give counter arguments to your thoughts.

 

[nash031]

One area you might look at is your cell phone. Small expenditure, but I just started saving over $40/month by switching from a contract to prepaid. Now, I almost never go over 400 minutes and 200MB of data, so YMMV based on your usage. I WAS paying $80/month, now down to $40.

Drawback is paying full price for a phone, but even with the most brandy-new iPhone, I make up the difference in 14 months.

WSJ did an article about two weeks ago saying that more than half of cell phone users could save by switching to prepaid. I did the math, and they were right.

As for others who have $800 budgeted for food - my wife and I spend a little under $600 for groceries right now. Part of that is I eat a lot as an endurance athlete. Another part of that is I only want to eat quality stuff (grass fed meats, pastured eggs, in particular). To me, the up front investment in my diet costs less than medical expenses caused by eating poorly. I wouldn't hesitate to spend more on food and less elsewhere, simply because what you put in your body is a major, major contributor to how long you get to be retired!

 

[mcdevin1970]

Thanks again for all of the input. For clarification, I anticipate having $100,000 in savings and also 100k in my Roth. I know these are pretty minor stashes of cash compared to many on this board, but I am hopeful that they can help me to completely retire at 55.

I agree with the idea of staying full time until I relocate as I wouldn't be able to get a mortgage without it anyway. I am not totally opposed to working full time up until 55 as long as it is very low stress and has good hours and no weekends though this is not my preference.

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. If the crap hits the fan and I can't find work for 6 months I can utilize a little of my savings if we need something. For me there is a ton of value in knowing that I wont lose my house, won't go hungry, the lights will be on, my AC doesnt have to be set on 83 or furnace on 52 and I can put gas in my vehicle just utilizing my pension. If it comes down to it, I could stop contributing $450 a month to my roth and savings though I don't want to do that.

I really do appreciate all of the advice! There is a ton of knowledge on this forum. I wish I had some of the assets of those on this forum but I unfortunately do not. I just ultimately want to say goodbye to the corporate world and live a fun modest lifestyle where I'm not a slave to bills and live with the daily pressure of needing that next raise to sustain my quality of life or being talked to like a piece of crap just because they know you need the job and the next paycheck.

 

[martyb]

Oops...I said in my post above that my military retirement pay would start in 2016. Actually, it's 2018.

 

[wmc1000]

I have done a lot of spreadsheet work trying to contemplate our 2 person budget. While I massage various areas I always seem to come back to between $3100 - $3500 per month. That is with our house fully paid for and guesstimating what our health insurance costs will be by qualifying through the exchanges at the less than 400% FPL rate. And I only have a $600 mo. amt for groceries and eating out.

 

[Nords]

So here it goes: mortgage - $1200 car insurance - $100 electric - $150 water/ trash/ sewer - $70 home phone/ Internet - $70 dental insurance - $115 medical insurance - $60 hoa - $50 Roth IRA - $300. Savings - $150. Cell phone - $90. Vehicle gas - $200. Groceries - $400 total = $2955.

My pension is military thus the low insurance. Please let me know where I could save or if this budget seems far fetched.

We're a little cynical about frugality measures on this board, because many posters start out asking for help and then end up feeling defensive about the suggestions.

Dental insurance: $115. Unless you're looking at a couple of root canals every year, you're overinsured. (Dental insurance might not cover much for that anyway.) I retired from the military with zero dental insurance, and I visit a (civilian) dentist every 18-24 months for X-rays and a cleaning. When you're paying cash, that costs less than $200.

It requires daily brushing, and I use a lot of dental floss. I've also cut out a lot of sugar & soda from my diet. But you asked for ways to reduce your expenses, and that may be an option for you.

$90 for a cell phone AND a landline? Get rid of one. Spouse and I are contemplating replacing our $27/month landline with a $15/month pay-as-you-go cell phone. There are plenty of other frugal phone options discussed on MrMoneyMustache.com, but the basic idea is to get rid of all the conveniences and just pay for what you use.

When you retire, hopefully your gas bill will drop.

Consider blogging & selling online. For an example of a servicemember who's doing it now (and planning to live on his military pension in a few years) try Mike at LiveTheNewEconomy.com.

 

[martyb]

Hey Nords! I'm paying $16.77 every 2 weeks for dental insurance through my employer & I found a dental clinic that accepts whatever the insurance company pays as full payment. So far this year, I've had 2 root canals with crowns, and a wisdom tooth pulled, and have paid $0 besides the insurance premium! How's that for "frugality"? This place has been in business for quite awhile. I was skeptical at first, but after talking to about 10 people at work who have been using them for years, I decided to give it a try. Have to drive an hour each way, but obviously it's worth it. I'm not sure how they stay in business...apparently the insurance companies don't hassle them.

As far as phones, we dropped the land line several years ago, never missed it. We don't have smart phones, and don't feel like we need them. We do have Verizon, and most likely will be cutting back to a pay as you go service soon. The Verizon contract is over. We've had Trac Phone in the past, and it worked fine for our needs. Not sure what's out there now in the PAYG world, but I'm about to check into it.

We dropped our cable tv awhile back, but in all honestly, after I retired, we'll probably get it back again. I miss my favorite shows....

As stated, there are lots of ways to cut back and/or do things more efficiently. The key is not to make yourself & your family miserable in the name of saving a couple $$. Just try to eliminate the "fat" where you can. The savings will add up!

 

[timwalsh300]

When I list our recurring basic expenses like you did (rent, food, electricity, water, internet, phone service, insurance, gas) it adds up to less than $20k/year. In reality (looking at several years of actual credit card statements, which we use for all of our spending), my wife and I spend roughly double that amount. The difference consists entirely of stuff like occasional travel, gifts, new clothing or linens, a new small appliance or electronic device, new piece of furniture, etc. You are fooling yourself if you only consider your regular monthly bills. If you only have about $150k in savings, it sounds like you are accustomed to spending a lot more than $35k/year.

I also agree with other comments about your phone service. I get by easily with $12/month service from PagePlus and free Google Voice.

Tim

 

[martyb]

I also agree with other comments about your phone service. I get by easily with $12/month service from PagePlus and free Google Voice.

Tim

Tim, thanks for the head's up on PagePlus. I just checked out their website and am gonna give it some consideration. I wish they had more phone choices, though. Otherwise, the price looks attractive.

 

[timwalsh300]

Marty, I just looked at the PagePlus website and it looks like they have really cut their phone selection. Last year I bought their cheapest option which was a $50 Kyocera Torino. Looks like maybe you can still buy that model through Kitty Wireless (whose services, by the way, I highly recommend using in conjunction with PagePlus) for $70. Any old Verizon contract phone will also work on the network.

Tim

 

[martyb]

Marty, I just looked at the PagePlus website and it looks like they have really cut their phone selection. Last year I bought their cheapest option which was a $50 Kyocera Torino. Looks like maybe you can still buy that model through Kitty Wireless (whose services, by the way, I highly recommend using in conjunction with PagePlus) for $70. Any old Verizon contract phone will also work on the network.

Tim

So....I could just keep my current Samsung phone that I'm using now with my Verizon service?

 

[timwalsh300]

My wife is using a Samsung Intensity III that we moved from a Verizon contract plan to PagePlus. The only time it won't work, as far as I know, is if you had the phone on a Verizon prepaid plan. Not sure why.

By the way, we paid Verizon's early termination fee (which essentially amounted to buying the phone) in order to make the switch, saving us over $1,000 compared to staying on the Verizon contract for the full two years.

Tim

 

[martyb]

Mine's a Samsung "Convoy" and I believe my wife's is the Intensity III. Definitely gonna look into it. Sounds like some good savings. Thanks!

 

[mcdevin1970]

Thanks for all the great insight! I hope I didn't come off as defensive because I certainly didn't mean to do so. Nords, thanks for the reply! I just read your book about two weeks ago. It took me all of about two hours...I couldn't put it down. These phone ideas are really helpful, never new about any of these options. Nords, I like the idea of not paying for dental on a monthly basis and will probably go that route once I embark on this semi-retirement journey. Unfortunately, my 16 year old will get braces in September and I will need this insurance for about 18 more months at least as they pay 50%.

Again, don't want to sound defensive at all, but there were many post about my budget having no fat in it and while i agree with that, I am not trying to live strictly off of my pension. The idea was to generate maybe $20,000 a year with my wife and I working part time or even me working full time at a very low stress job until I'm 55. If we can't live on 50-55k a year with two people, I believe thats an issue. At 55 I feel that 100k in savings is adequate when used in conjunction with my pension until age 59 1/2. I would then have another 100K to use until SS at 62. So I figure if I use $1500 a month from 55 to 59 1/2 thats $81,000 over the 4 1/2 years leaving me a 19k cushion still in my savings. At 59 1/2 I now have another 100k plus the 19k to really last me the rest of my life as I and the wife will receive around 2k a month combined in SS and would anticipate using very little of our savings from 62 until we die.

Again, I agree with all of you in your assessments of my budget and potential income as it relates to strictly living off of my pension, but I think this is a doable plan. I think the key to my success is really whether SS will be around and if it is, will it be a reduced amount.

Aside from my not having enough to fully retire on my pension alone, am I off base with this plan to "semi-retire" and utilize my savings/ roth and SS at the above mentioned ages?

 

[Nords]

Hey Nords! I'm paying $16.77 every 2 weeks for dental insurance through my employer & I found a dental clinic that accepts whatever the insurance company pays as full payment. So far this year, I've had 2 root canals with crowns, and a wisdom tooth pulled, and have paid $0 besides the insurance premium! How's that for "frugality"?

Ouch. That's a great deal.

I wish I had a better understanding of who's vulnerable to root canals and other problems, and who's not. I can't tell whether my spouse and I have lucky genetics on our side or if our dental health is a result of our daily maintenance. Only one way to find out, and I'm not willing to stop the maintenance!

As far as phones, we dropped the land line several years ago, never missed it. We don't have smart phones, and don't feel like we need them. We do have Verizon, and most likely will be cutting back to a pay as you go service soon. The Verizon contract is over. We've had Trac Phone in the past, and it worked fine for our needs. Not sure what's out there now in the PAYG world, but I'm about to check into it.

Our landline will be replaced by a two-year-old WalMart low-end LG cell phone that's going to sit on our kitchen counter. The key was realizing what we don't use and just simplifying our lives. It was precipitated by our phone company refusing to fix their broken DSL line, and as a result they're going to lose a landline customer as well.

We dropped our cable tv awhile back, but in all honestly, after I retired, we'll probably get it back again. I miss my favorite shows....

The jury's still out on that one at Hale Nords. Spouse is happy with the status quo and I'm reluctant to mess with it. If we ever have to upgrade our ancient Series 2 TiVos and analog cable then we'd consider Hulu or Roku, but HGTV is really the only sticking point.

Thanks for all the great insight! I hope I didn't come off as defensive because I certainly didn't mean to do so. Nords, thanks for the reply! I just read your book about two weeks ago. It took me all of about two hours...I couldn't put it down.

Thanks! Glad it's helping.

You don't sound defensive, but the forum's posters have been burned on this many times by other budget reviews.

Nords, I like the idea of not paying for dental on a monthly basis and will probably go that route once I embark on this semi-retirement journey. Unfortunately, my 16 year old will get braces in September and I will need this insurance for about 18 more months at least as they pay 50%.

I think the key is negotiating with the orthodontist's billing agent. We paid for our daughter's ortho out of pocket, and when we offered up-front cash (instead of insurance payments over two years) we got a substantial discount. That was cheaper than the cost of the insurance (and the deductions) and the whole office was a lot happier to see our daughter.

Again, don't want to sound defensive at all, but there were many post about my budget having no fat in it and while i agree with that, I am not trying to live strictly off of my pension. The idea was to generate maybe $20,000 a year with my wife and I working part time or even me working full time at a very low stress job until I'm 55. If we can't live on 50-55k a year with two people, I believe thats an issue. At 55 I feel that 100k in savings is adequate when used in conjunction with my pension until age 59 1/2. I would then have another 100K to use until SS at 62. So I figure if I use $1500 a month from 55 to 59 1/2 thats $81,000 over the 4 1/2 years leaving me a 19k cushion still in my savings. At 59 1/2 I now have another 100k plus the 19k to really last me the rest of my life as I and the wife will receive around 2k a month combined in SS and would anticipate using very little of our savings from 62 until we die.

Aside from my not having enough to fully retire on my pension alone, am I off base with this plan to "semi-retire" and utilize my savings/ roth and SS at the above mentioned ages?

The biggest concern is the lack of a safety factor and needing to track your expenses very closely. There's quite a bit more detail on frugal living at forums like MrMoneyMustache.com, Dollar Stretcher (Stretcher.com), and Simple Living.

You need to take a hard look at your pension and your taxes, too. For example you'll want to protect your spouse with Survivor Benefits Program, but can you afford to give up 6.5% of your pension to pay for it? Your pension may not be subject to state tax, but 12 states still do tax that federal income. You also need to estimate your federal taxes in retirement.

You're contemplating Social Security at age 62. Every year you can delay gives you a higher payout (assuming you live long enough) but that also depletes your savings. It's "easy" to contemplate that plan now, but it's a much harsher reality when you're 61 years old.

The basic plan can work but the margins are pretty thin, and one financial oversight (or casualty) can throw the whole plan out the window. Ultimately it comes down to significant spending cuts or working more hours in semi-retirement.

 

[mcdevin1970]

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!

 

[Mulligan]

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.

 

[Katsmeow]

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.

 

[mcdevin1970]

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.

 

[Mulligan]

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!