Are you unnecessarily frugal?

[REWahoo]

Quote:

Originally Posted by W2R You've got a point. That is a lot of money to set aside! Maybe they have other sources of income like pensions or SS and they spend that on mortgage or loan payments. Maybe you are saying that they should include the mortgage payment in their housing expenses, or their RV loan payment in their expenses too, somehow. I just assumed that they did, I guess.

Or...you could have an unexpected windfall just before you retired - a sale of the company you worked for results in underwater stock options unexpectedly paying off to the tune of six figures 30 days before you walk out the door for good.

Then the first 2+ years of retirement sees your portfolio grow by 20% even though you are withdrawing from it to fund 100% of your expenses. You say, "Man, I've got it made!" and buy yourself a nice RV and a new car, paying cash...in July of 2007. Mr. Market promptly humbles you and reminds you who is boss.

Life is good - and very interesting.

[unclemick]

Yes. The dang mortality table I used has me croaking at precisely 84.6.

16 years of ER has me trying to reverse my 'cheap SOB gears' and enjoy spending more. I really really don't want to have the most customized hot rod wheelchair in the rest home.

(early SS + non-cola pension times 25) + portfolio market value on 12/31 = my sum from which I try to take 5% with optimisism.

However, I worry a lot and hear voices - like psst Wellesley so sometimes chickenheartedness impells me to take the SEC yield plus SS and pension.

heh heh heh - So I shall overcome my yes with a little sinful spending here and there - I hope.

[bbbamI]

Quote:

Originally Posted by Moemg I have been fully retired for two years and I am usually cautious especially in the first few months of the year and then as I see my plan working I loosen up a bit and by November I am carefree .

This will be our approach for this year. Last year we had some income and we were both retired for 10 months, so our spending was a bit more carefree.

Quote:

Originally Posted by Moemg I have noticed that some people have slightly bizarre approaches to the 4% budget . They will be on budget for basic living expense but they make a huge purchase and somehow that does not count towards the 4% . I can understand doing that once but more than once and aren't you eroding your nest egg especially if your 4% is based on the original amount ?

It's probably called 'selective accounting'.

It wasn't a huge purchase, but last year we spent a little more money than planned. This came from spending $10k for home improvements. We really didn't have to spend that much, but we decided to go with a more expensive type of flooring...sooo..I decided half of the cost would go to essential and the other half to discretionary.

Regardless of how we look at it, it was money spent in 2009.

I love being able to create my own spreadsheets!

[W2R]

Quote:

Originally Posted by REWahoo Or...you could have an unexpected windfall just before you retired - a sale of the company you worked for results in underwater stock options unexpectedly paying off to the tune of six figures 30 days before you walk out the door for good.

Six figures? (faint!) That is wonderful! I am impressed that it took you until 2007 to buy the RV. And yes, life does tend to humble us like that now and then, doesn't it? It's almost like "somebody up there" is telling us that we will still have obstacles to surmount as the price for enjoying life.

[Bestwifeever]

We're still waiting for the unexpected windfall of a surprise inheritance or stock (either one would be nice). Since neither is going to happen, I created a very conservative (i.e., expensive) budget with super worse case scenarios for everything (including taxes).

The result is we are living quite a bit below the budget, even including our unbudgeted two big unusual expenses last year came to $30K plus the $6K I sent to IRS when we pulled the funds for those. (And you are so right Moe that at the end of the year I said to DH, look how well we did even with these two big expenses and totally ignored the fact that they weren't in the budget; and we can't do that every year).

So we're sort of faux frugal here.

[W2R]

Quote:

Originally Posted by Bestwifeever We're still waiting for the unexpected windfall of a surprise inheritance or stock (either one would be nice). Since neither is going to happen,

Just as an aside, pointing out that if you thought it was going to happen it wouldn't be unexpected or a surprise....

Quote:

Originally Posted by Bestwifeever I created a very conservative (i.e., expensive) budget with super worse case scenarios for everything (including taxes). The result is we are living quite a bit below the budget, even including our unbudgeted two big unusual expenses last year came to $30K plus the $6K I sent to IRS when we pulled the funds for those. (And you are so right Moe that at the end of the year I said to DH, look how well we did even with these two big expenses and totally ignored the fact that they weren't in the budget; and we can't do that every year). So we're sort of faux frugal here.

Well, if you were still living quite a bit below the budget, even including your two big unusual expenses, then that seems fair to me! You still spent less than your SWR so you would be either option 1 or option 2 on the poll.

[Khan]

Unnecessarily frugal?

Others seem to think I'm depriving myself, but I just don't want stuff; and I hate shopping.

[FreqFlyer]

I made a rare trip to the *gulp* mall this Saturday. After spending the last 10 days in Guatemala I couldn't help but to marvel at the excessive consumption.

I'm not a big shopper and being in a mega-mall just seems to make me feel even more removed from the average American consumer.

[NW-Bound]

Quote:

Originally Posted by REWahoo You say, "Man, I've got it made!" and buy yourself a nice RV and a new car... Mr. Market promptly humbles you and reminds you who is boss...

Or the market recovered so nicely from the low in 2003 and you bought yourself a 2nd home that was more expensive than your 1st home, took nice, nice European trips, and as if it weren't enough, you started to think about an RV...

When the going gets tough, the tough get, er, w*rking.

[Focus]

Oops. Voted without reading the entirety of your question. Sorry about that. I don't qualify -- I'm some years from retirement. You can deduct one vote from the first category. That said, I have no doubt that I'd vote the same after retirement.

[Bikerdude]

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Originally Posted by Coach I accuse my sister of being the cheapest rich person I know, but frankly, I'm almost as bad. Coach

Worse is...the richest person in the graveyard. I voted #2.

[WhoDaresWins]

Quote:

Originally Posted by wishin&hopin Oops. Voted without reading the entirety of your question. Sorry about that. I don't qualify -- I'm some years from retirement. You can deduct one vote from the first category. That said, I have no doubt that I'd vote the same after retirement.

I also miss-posted as I still work...or I would not be up at this hour in the dead of winter. But I still think #2 would be the way I would go in retirement. Right now I am trying to not spend on anything but essentials with the exception of dining out once in awhile and have not cut my food budget. You can see where my priorities lie.

[Walt34]

We're spending according to plan. My decision to get a job skewed things a bit and about 1/3 the income from that is being treated as "play money" but we're still saving the bulk of the unplanned income. The only major purchase was $12k for the motorcycle, paid for from the job income, but I was retired for almost five years before deciding to get the job.

But for the most part we're frugal (i.e., "value oriented"). We've discussed what we'd do differently if for example we won a large lottery. In reality we probably wouldn't do much different.

[Orchidflower]

I've blown lots of money over the years on unnecessary things, but I find that the past 6 years of not working has made me more frugal as each year goes by. My son says that I can't even make myself pay retail now. I can...but it has to be worth it or I can't find it cheaper (haha!).

[Midpack]

Quote:

Originally Posted by Goonie I voted for the 2nd option, "On average my expenses are as projected by my financial plan, I'm not going to risk depriving myself - but I don't want to go crazy.", but also leaned slightly toward the 3rd option of "I try to stick to my plan, but if I want something and go over so what.....", until I read the second part of that, ".....- I can always get a part time job or cut back expenses later."....homey ain't gettin' no part time job!!! NO way, NO how!!! Cut back a bit on expenses later maybe....but WORK? Huh-uh!

LOL

I find the results so far reassuring, most conservative to moderate as I was guessing. I suspect I will err on the side of caution when/if I retire as well. I'll keep watching, but thanks...

[vicente solano]

We are fortunate in that we don´t have tastes or needs too expensive, ergo, we spend as much as we want on what we like. You can conclude that we are a couple of bores not interested in travelling, refined food, jewellry, cars,....

[NW-Bound]

Quote:

Originally Posted by bbbamI It's probably called 'selective accounting'.

Oh yes! I was very frugal, when I was not splurging.

This reminds me of a megacorp where I used to work. They kept losing money quarter after quarter, but tried to put a spin on the quarterly reports by claiming this and that expense was a one-time write-off, and they would show a profit if it weren't for that.

The problem was they always had a different one-time write-off each quarter. Should I use the same excuse? Heh heh heh... This year, a one-time expense for an RV. Next year, a one-time expense for a boat. Heh heh heh... The problem is it is my own money I am talking about. Ugh...

[megacorp-firee]

I couldn't vote because I'm between options 2 and 3.

We are way below my planned budget (1.3% swr). W*rking (whoops wrong word) hard to fix that. DW is still very habit driven.

The thing that kept me from option 3 is the going back to w*rk part. I'm with the group that says 'hell will freeze over' before I do that ...

[TromboneAl]

We spend below our SWR but I keep track of the difference between what we spent, and what the plan allowed. After three years, it totals $61,000.

I was getting better at spending more, but the market retreat scared that out of me for a bit. Maybe I can come out of the shell now.

[JustNtime]

What plan? What Budget?
Well according to iORP, we could spend considerably more than we do - almost double. Since we don't, that amount keeps rising each year. When I retired, I figured I would be tapping savings a little each year, But we continue to LBOM... I suppose that makes us unnecessarily frugal, by some definitions...

Last night my brother asked me about a '10-20-70 plan', I guess it is a way to budget. He was surprised to hear I'd never heard of it. Anyone use that plan here?