How Low Can We Go?

[Bob_Smith]

As we approach RE, my wife and I are trying to determine what we need to spend each month. We have 10+ years of Quicken data, so we know what we have been spending, and we plan to continue to spend at about that level, or a bit lower. But we don't really know "how low we can go" when we eventually encounter a string of bad market years or other setbacks. So we sat down and completed the rather tedious process of making a list of all the stuff we spend now in the "miscellaneous" category. Then we crossed off all the stuff we could do without. We checked exact prices on the remaining items, determined how much we use, and then determined a monthly and annual cost. Then we added tax, plus another 10% for things we haven't foreseen. This is based upon a family of three, and we think these are things we need to feel that we aren't actually suffering. We came in at under $200/month vs. the roughly $600 we spend now. So we know that we could cut expense by almost $5,000/year in this category alone. It helped to see it all in detail. Next we plan to tackle the food budget, and then on to the other categories. Eventually we'll have a better idea of "how low we can go". Obviously, everyone has different needs, but thought this might be of some interest.



THESE ARE ALL MONTHLY AMOUNTS

BATHROOM STUFF

Shampoo $3.50
Cream Rinse $3.08
Soap $1.93
Lotion $6.93
Toothpaste $1.49
Floss $1.40
TP $6.15
Kleenex $1.32
Pads $4.26
Shaving Cream $1.73
Razors $0.65
Band-Aids $1.00
Rubbing Alcohol $0.12
Hydrogen Peroxide $0.10
Deodorant $8.28
Make-up $3.75
Wash Cloths $0.83
Towels $1.66
Hair Dryer $1.67
TOTAL $49.85


MISC. STUFF

Gasoline - 1 1/2 Tanks (675 miles) $35.78
Sam's Club Membership (pays for itself) $2.92
Light Bulbs $1.56
Hair Cuts $21.66
Snow Removal $5.00
Candles $0.33
Mower Gas $0.80
Mower Oil $0.15
Sunday Paper (coupons pay for it) $8.66
TOTAL $76.86


CLEANING SUPPLIES

Laundry Detergent $3.22
Stain Remover $0.32
Toilet Cleaner $1.86
Tub Cleaner $2.37
Windex $0.08
Vacuum Bags $0.27
Shop Vac Bags $0.24
TOTAL $8.36


KITCHEN STUFF & OTC MEDS

OTC MEDS VITAMINS
Allergy Sinus $0.29
Actifed $0.65
Ibuprofen $0.99
Benadryl $0.15
Calcium Carbonate $1.03
Calcium Citrate $2.28
Vitamins $1.81
Fish Oil $1.81
Fiber $4.25
KITCHEN STUFF
Paper Towels $0.48
Foil $1.47
Handiwrap $2.62
Small Baggies $0.86
Gallon Baggies $1.71
Dish Soap $1.06
Dishwasher Detergent $1.06
Garbage Bags $0.88
TOTAL $23.40


OFFICE SUPPLIES

Paper - 500 Sheets/yr. $0.33
Envelopes $0.10
Stamps $5.55
Scotch Tape $0.28
Laminating Tape $0.07
Batteries $2.60
Pens - $0.58
Printer Cartridge $2.29
TOTAL $11.80


EXTRA UNFORESEEN EXPENSES (All Above Expenses x 10%)
TOTAL $17.03


SALES TAX (All Above Expenses x 6%)
TOTAL $11.24

Grand Total Per Month
GRAND TOTAL $198.53


Grand Total Per Year
GRAND TOTAL $2,382.36

 

[JWR1945]

This is a fascinating exercise. It will become a classic when you have completed it.

It reminds me of some of dory36's early posts about what percentage of income that you need in retirement.

It might be worthwhile to have a special section with such topics. (Collected together in one place, archived and edited.)

Have fun.

John R.

 

[unclemick]

We experimented from the opposite direction both pre-ER and post ER.

Set an aggresive spending target-ie really low - live 'paycheck to paycheck' and keep the rest in'untouchable' savings/investments. Spending 'real' money caused us live frugal and learn while doing.

In 1995 a tornado took the roof off and 1998 we had huuricane George. You can live without running water, electricity, cook off a camp stove, but I don't recommend it.

 

[Cut-Throat]

Bob_Smith,

Interesting. I went through an exercise of how low can I go. My budget could be slashed by 50% if I had to, but I'd rather not. This would eliminate Eating out, Electronic toys, Vacations.

You say that you have over 10+ years of Quicken Data. Have you played with the Quicken Retirment Planner that is avaiable on the 2001,2,3,4 Versions of Quicken?

 

[unclemick]

Hey Cut-Throat

Isn't that the whole point of ER? Get the 'core' living expenses under control so you can maximize the fun catagory of your expenses.

I don't budget anymore(after 10 yrs in ER) but do engage in mental exercises occasionally - my 'new truck'is more fun when I thnk of the old econo box we used to have.

In New Orleans the phrase 'live to eat' takes on real meaning when entertaining or eating out and a source of endless ctritique and debate. And we live where some people fish/crab/shrimp to work and then go fishing for fun.


So the catagories can get blurred but I think it is a truly meaning exercise - to crystallize 'what floats your boat fun wise.

 

[Bob_Smith]

You say that you have over 10+ years of Quicken Data. Have you played with the Quicken Retirment Planner that is avaiable on the 2001,2,3,4 Versions of Quicken?

Yes Cut-Throat, I do use it. It is excellent.

 

[Ol_Rancher]

So you want to see how low we can go ...

Perhaps this link can help ..

http://www.stretcher.com/index.cfm


... the Ol' Rancher

 

[TheFIREman]

I worked our minimum budget at CAD$30000 for a family of 5, but I would not like to live on a minimum for more than a year or two. I use (or shortly will be using) gummy's Sensible Withdrawals method http://home.golden.net/~pjponzo/sensible_withdrawals.htm so I need to set the minimum withdrawal to a level that, while frugal, is not downright mean. So I bumped it up to about CAD$45000 while all the children are still living with us (at least another 10 years I am glad to say). Very low is fine for a year or so, but after that you would want to live a little.