Saved well but still not where I need to be

[LOL!]

We spend more on vacation, charity and eating out annually than the OP, yet are way under $10K a month in expenses including a mortgage.

I am appalled at the cars and utilities. We spend about $2500 a YEAR on electricity, natural gas and water. For the phones, I get a blackberry paid by my employer. The other 3 people in the family are on a cellphone family plan with unlimited texting. These 3 phones cost about $150 a month. With landline and DSL internet make that $200 a month for phones which some folks would find expensive.

The cars. You put car insurance in a separate category, so I'm not sure how you can spend $1050 on cars. Details?

As for the $400 a month cash, I say do not use cash. Charge EVERYTHING on a credit card. It is difficult, but we have reduced my spouse's ATM withdrawals to about $60 a month.

Also where is the spending for hobbies, games, and fun? For example, we have to pay for bicycle stuff, sports equipment, guitar strings, piano tuning, photography equipment, books, etc.

[Dawg52]

Quote:

Originally Posted by Green Retirement You can spend $9,000 per month. Forget about a current budget, your expenses will go down when you retire, instead you should focus on creating a retirement budget. Create a $9,000 retirement budget and you can retire today.

Quote:

Originally Posted by bbbamI Maybe for some; but ours have not.

Me either, but my budget is less than 1/3 of what is being discussed here and I do have country club dues. So not much room for a decrease. I suspect the OP lives in a much more expensive area of the country though.

[pawsplus]

Quote:

Originally Posted by LARS I'm surprised at the number of responses that include a comment about relying on Social Security. I would think with the OP's assets discounting SS as a reliable source of retirement income would be prudent. I know I never consider SS in my thoughts: if I'm wrong, great, but I would certainly not bank on it given my assets.

My retirement guy says that pretty much everyone thinks there will be 100% SS coverage through 2037. After that, 70%. So younger people may have issues, but most of us older folks won't, or will have limited issues. I'm 47, so in 2037 I'll be 75. I'll still get 70% of SS after that. It's not MUCH money, but it's something.

And with any luck things will improve in that area. They ARE working on it.

[pawsplus]

My main comment about expenses is that your daughter needs to start supporting herself! When I was in college I worked 20 hours a week during school and 40 hours a week in the summer, Christmas, Spring Break, etc. I got a small monthly stipend from my parents -- that and my paychecks were to cover ALL my expenses other than tuition (which was almost free b/c my parents taught at my university). I had my own (tiny) apt and a car I saved up for (20 years old). I paid for it all. This was well before there were cell phones, but if there had been cell phones I would have had one instead of a landline--but it would have been a $42 plan like the one I have now.

I work at a university and am honestly amazed by how indulgent parents are these days. I really don't think it's teaching kids ANYTHING of value to have them on the gravy train any longer than absolutely necessary. JMHO.

[LARS]

Quote:

Originally Posted by pawsplus My retirement guy says that pretty much everyone thinks there will be 100% SS coverage through 2037. After that, 70%. So younger people may have issues, but most of us older folks won't, or will have limited issues. I'm 47, so in 2037 I'll be 75. I'll still get 70% of SS after that. It's not MUCH money, but it's something. And with any luck things will improve in that area. They ARE working on it.

Your mouth to God's ear. It would be nice to have our current projected SS payments. Help fund some nice travel...

[bbbamI]

Quote:

Originally Posted by Dawg52 Me either, but my budget is less than 1/3 of what is being discussed here and I do have country club dues. So not much room for a decrease. I suspect the OP lives in a much more expensive area of the country though.

YouTube - Travis Tritt - Country Club (live)

[Nords]

Quote:

Originally Posted by Global1 Don't hate my job just would rather do what I want to do than work doing what others want me to do.

You'll get plenty of advice on the tactics of reducing expenses, but let's talk strategy for a minute.

People generally don't do what's best for them-- medical studies indicate that even 90% of cardiac patients apparently don't get scared or motivated enough to make the lifestyle changes (weight loss, diet, exercise) necessary to improve their longevity. If a heart attack isn't enough motivation then I can imagine that it's hard to muster the drive to reduce expenses.

You claim you want to be in charge of your time, but to achieve that noble goal you have to be willing to figure out what brings you value in your life. This may involve a measure of "sacrifice"-- cutting out the "luxuries" (whatever you decide those are) in favor of your necessities. If you can't do without the luxuries then you're not willing to work for your necessities. If you can't figure out what you really value in your life, and if you can't rearrange your life to support those values, then you're not ready to stop working. Simple as that.

You can't drop your income and maintain your current spending without running out of money. If you "can't" figure out how to reduce spending, or raise assets, or maintain income, then you're not really committed-- let alone ready-- to be in charge of your time.

So what do you want to do? I think these are your strategic choices:
- Keep working to build up enough assets to keep up your current level of spending,
- Work hard at self-employed writing & consulting to generate enough income to maintain your spending, or
- Cut spending.

Maybe you'd want to keep an expenses printout (like the one you've posted here) on your desk or in your car. Next time you're dragging your assets to work you can look at that list and think to yourself "Yep, they're all worth it!" If that's not how you feel then you'll be able to focus your attention on what needs to be cut.

Because otherwise you're wasting your time here.

[W2R]

Quote:

Originally Posted by Nords Maybe you'd want to keep an expenses printout (like the one you've posted here) on your desk or in your car. Next time you're dragging your assets to work you can look at that list and think to yourself "Yep, they're all worth it!" If that's not how you feel then you'll be able to focus your attention on what needs to be cut.

I love it! That's a terrific idea.

Personally I can't imagine looking at a list like that while at work, and thinking, "Yep! It's worth it to work here indefinitely in order to provide internet on those three cell phones" and the same goes for most of the other expenses listed.

But it's perfectly likely that Global1 feels differently about that, and that is his prerogative. In that case, he really does not want to retire at this point in life. There's nothing wrong with that, I would hasten to add.

We all have different priorities. Spending that much every year just sounds like work to me.

[Texas Proud]

I like how Nords put it.... he usually has a way with words....

This is how I deal with this when my wife want to buy something.... sure Honey, what do you want to give up to get it

As people have said, nothing looks WAY out of line (I would disagree some, but not enough to matter)... but you are spending a reasonable amount of 'everything'... you have to make choices on what you want.. and if you want to spend what you are spending... then you must work.. it is very simple...

BTW, what are you spending the $600 something on 'house'. I thought I read that it was paid for.... What all is in your $1000 utility? I only budget $400, but don't put in cable, cell phone etc. as I do not see them as 'utility', but luxuries that I want... so they are in 'other'...

[jIMOh]

Quote:

Originally Posted by Global1 Don't hate my job just would rather do what I want to do than work doing what others want me to do. Some (not all) expenses. I realize that I will get much abuse over these amounts! Food $1100 mth (groceries $800/mth - company over alot, dining out 300/mth- usually 3 people/meal) Total utilities $1000/mth (including 3 cells phones w/internet access) Home $675/mth (taxes & routine maintainence- I mow my own grass!) Cars $1050mth (3 cars - payments, gas, maintain) Vacation $300/mth Entertainment $250 mth (tickets, golf, fitness club, etc) Healthcare $1250/mth Gifts $125/mth (I know - alot, but DW ethnic family enjoy gift-giving) Cash - $400 mth don't know where it goes Insurance (car/home, umbrella) - $500 mth College/Daughter expenses - $1000 Houshold expenses $100 mth home improvements budget $500 mth(eg. - new roof last year) Clothes $125/mth Charities $450 mth

Others have weighed in, here are 2-3 things to consider for RETIREMENT when expenses probably deserve some attention

Quote:

Food $1100 mth (groceries $800/mth - company over alot, dining out 300/mth- usually 3 people/meal)

Having company is a good thing
Eating out is a good thing

If you had more time, would these expenses change? Hunting around for cheaper foods, possibly not needing to eat out, possibly daughter not eating with you as much?

Look for $100 in saving here... maybe even $200. Do not hold back on yourself or take something away you want, just look to do what you do for $100 less. Maybe a different restaurant, maybe a different eating style.

Quote:

Total utilities $1000/mth (including 3 cells phones w/internet access)

Break this down...

water...
electric...
gas...
cell phones...
cable...

Not suggesting anything get removed, suggesting that as you work less, you might shower less, might not have AC cranked at night or heat cranked at night or something which suggests this goes down. Even if you find $100 to save here, that is less you need to cover down the line. If downsizing a house is an option (even in 5-10 years) you will need to revisit this anyway.

Quote:

Home $675/mth (taxes & routine maintainence- I mow my own grass!)

Can you itemize this? Are your property taxes $7200/year?
Are the home improvements listed in this as well? Can you itemize those costs?

Quote:

Cars $1050mth (3 cars - payments, gas, maintain)

This is the big one to me...

Its OK to have 3 cars... its "not OK" to have 3 car payments. In addition car payments are a temporary expense. They should exist for 2-3 years, then go away. There is a thread here on the car behavior of the board.
http://www.early-retirement.org/foru...you-48509.html

My suggestions here would be to cut this budget into 2 aspects (car cost and maintainance).

The maintainance is $50 an oil change times 8 changes per year is $400. I realize oil changes are cheaper than $50, the idea is that if you spend only $250 per year, the other $150 is there (year over year) for the eventual $500 job to fix brakes or do other less frequent maintainance.

The car cost you have (I am guessing) is about $500 per year. This means you spend $72,000 every 12 years on the acquisition of a new car. If that number seems high ($72k is high) then lower it. $250 per year might be more like it ($36k every 12 years on acquisition of a new car). That could be 18k every 6 years, one 30k car and one 6k used car... you get the idea I hope.

I believe you can cut this cost in half, and my thought is "later" in retirement you will see this expense drop or tail off more than the others. How soon it tails off depends on lifestyle, I just don't see many 70 year olds driving cross country anymore.

Quote:

Cash - $400 mth don't know where it goes

Try to track what you spend this on, its possible you are spending more than you realize.

Quote:

[*]home improvements budget $500 mth(eg. - new roof last year)

$6000 per year for house improvements...
I assume some of this might be a hobby? Can you itemize what needs to be done?

Here's my thought...

add in the needed costs of next 20 years...
new roof (10k)
new HVAC ($2000)
new driveway every 10 years ($1000 each??)
and whatever else might be done while you still live in the house... (say 20 years)

then add that up ($14,000 is the list above) and divide by 20 (years) and spend $700/year on those projects. If you do not spend money this year (on a new HVAC) bank the $700 so when the $2000 bill arrives, you have the cash to pay for it.

If you do this "right" and also like remodeling yourself, add a fudge factor into this (like $100/mo or $1200/year). What this means is you budget $2000/year for house repairs and improvements (for example) and you spend most of this money each year... knowing that if HVAC needs replacing, that might reduce the next year's budget or change some plans (for example).

**edit to add**
if your current house is a fixer upper, and repairing it is not a hobby, have you considering moving? This could cut costs drastically.


Do not look for one single expense to make the difference... but if you cut $100 from each expense listed (for example) you can retire now with a higher firecalc success rate. It's easier to cut expenses than to increase savings.

[Bestwifeever]

Quote:

Originally Posted by Dawg52 Me either, but my budget is less than 1/3 of what is being discussed here and I do have country club dues. So not much room for a decrease....

Not to mention the meds!

[Dawg52]

Quote:

Originally Posted by Bestwifeever Not to mention the meds!

Right, country club dues and meds are non-negotiable.

[Katsmeow]

Quote:

I am appalled at the cars and utilities. We spend about $2500 a YEAR on electricity, natural gas and water. For the phones, I get a blackberry paid by my employer. The other 3 people in the family are on a cellphone family plan with unlimited texting. These 3 phones cost about $150 a month. With landline and DSL internet make that $200 a month for phones which some folks would find expensive. The cars. You put car insurance in a separate category, so I'm not sure how you can spend $1050 on cars. Details?

I can totally see spending this. In fact I've been spending more.

On the house we are putting on the market today to sell, our last electric bill was over $900 and was over $1000 the month before (house is all electric and winter was colder than usual). We live in an area with heavy AC use in the summer and electric is over $1000 a month in the summer months.

The house is almost 4500 sf and is not energy efficient in the least.

Now I suspect this will be changing with the 1900 sf house we just bought (first electric bill was $117) but with a large house I can sure see utilities over $1000 a month particularly if it is not energy efficient.

As far as spending $1050 a month on cars we about that. Fuel is about $400 to $450 a month (long commutes to work, this will go way down with retirement). Tolls are about $250 a month -- discretionary but if we didn't incur them a 45 minutes drive would be a 2 hours drive. Again, will go way down with retirement.

Auto insurance is high since we have a male teenage driver in the house.

The OP's costs don't seem outrageous to me really (and I agree he left out the fun stuff) but he has to decide if he wants to change the lifestyle or not.

For us, we decided that being able to retire now meant changing houses. We bought our new house last month and it is much cheaper to maintain. We worked out between mortgage and maintance and utilities the old house was costing us over $50k a year! (New house we paid cash for).

When I had to decide whether to work years longer to maintain that house (lovely though it is) I had little difficulty deciding to downsize to something we could pay cash for that had much lower maintenance costs.

[LOL!]

^Yes, as I recall, we went through this exercise already with you Katsmeow.

As I re-read this thread, I'm thinking the following:

"I'm a f--ing multimillionaire. I should be able to spend $10K a month without problems from my portfolio. What are all these folks telling me that I spend too much? I deserve the good life."

[pawsplus]

Quote:

Originally Posted by Katsmeow I can totally see spending this. In fact I've been spending more.[SNIP] The house is almost 4500 sf and is not energy efficient in the least. Now I suspect this will be changing with the 1900 sf house we just bought (first electric bill was $117) but with a large house I can sure see utilities over $1000 a month particularly if it is not energy efficient.

Well, sure. That's kinda the point here, isn't it? Why do three people (who really should be TWO people b/c the OP's daughter needs to get her own life and her own apt IMO) need a 4500 SF home??

Quote:

As far as spending $1050 a month on cars we about that. Fuel is about $400 to $450 a month (long commutes to work, this will go way down with retirement).

What are you driving?? I drive 3000 miles a month b/t 2 jobs and I spend about $180 a month.

[Global1]

Death by a thousand cuts!

Thanks for all of the feedback. I hope that I can provide a useful contribute to the forum for others as you all have done for me. As I read through the responses I get a sense that many feel like I said at the beginning - nothing extravagent, it just all adds up.

More info - I drive an 11 year old car (a picked up a significant discount on a BMW on my travels while in Germany, then picked up another there 2 years later - my wife's current car). $250/mth times two is part of the car expense - targeted for future purchase. House is 2500SF. Utilities are what they are. Probably could downsize but have company frequently. I certainly hope that their will be savings when daughter starts to work others have told me not to expect that to go completely away from day 1.

[Danmar]

Lots of adice about what kind of car to drive, or insurance to buy blah, blah, blah. Your expenses are fine. We spend multiples of every category. 51 is pretty young and if you don't hate your job the solution seems obvious to me. You need to work more and save more money. Nords post was great. You ain't ready.

[MasterBlaster]

Quote:

Originally Posted by pawsplus My retirement guy says that pretty much everyone thinks there will be 100% SS coverage through 2037. After that, 70%. So younger people may have issues, but most of us older folks won't, or will have limited issues. I'm 47, so in 2037 I'll be 75. I'll still get 70% of SS after that. It's not MUCH money, but it's something. And with any luck things will improve in that area. They ARE working on it.

While I would agree that everyone may get something, I wouldn't count on an increased amount that high income people get now. Relying on present SS payments just wouldn't be prudent.

Keep in mind that what you posted is only an educated opinion by one person. They won't ask your retirement guy when massive deficits force changes in all government outlays. In my opinion changes will come later this decade forced by the bond markets and the higher costs of continued debt. It won't be pretty once those Boomers start to retire in large numbers. Increased taxes alone won't be able to cover all of the promised benefits.

Also the quoted 2037 number assumes that there really is a SS trust fund to draw down. The large SS deficits (absent a trust fund) start around 2017 or so. So in reality SS will have to compete for resources just like all of the other programs.

[Katsmeow]

Quote:

^Yes, as I recall, we went through this exercise already with you Katsmeow

Yes, and it was all helpful and helped me prioritize my goals. I realized that if I wanted to spend an extra $50k a year on a house then I needed to have another $1.25 million in the portfolio while if we were willing to downsize severely that we could retire, well, now. And...now won out. In my case I found that cutting little expenses wasn't really doing it. I could get rid of some cable channels or have one less TV (did both of those) and it saved me $50 or so a month. That is valuable but changing houses was the key.

pawplus

Quote:

Why do three people (who really should be TWO people b/c the OP's daughter needs to get her own life and her own apt IMO) need a 4500 SF home??

I'm the one with a 4500 sf house not the OP. In our case we had 6 people living in it when we bought it. By fall we will be down to 4 people so decided we didn't need it, hence putting it on market to sell.

Quote:

What are you driving?? I drive 3000 miles a month b/t 2 jobs and I spend about $180 a month.

I drive a Prius and drive about 1500 miles a month. Fuel costs are low.

DH drives a Nissan Quest and drives about 3000 miles a month. But he is retiring in a couple of months to those fuel costs will go way down.

[aaronc879]

Quote:

Originally Posted by Katsmeow DH drives a Nissan Quest and drives about 3000 miles a month.

3000 miles per month? He must have one hell of a commute. I put on barely 4000 miles per YEAR and I do have to drive to another city for my job.