What could you cut?

[orangehairfella]

After summarizing our 2017 spending I looked at the number with a bit of disappointment. We live in a paid off home in a low cost of living area, with 2 paid off cars and employer healthcare, and we still managed to spend more than $37000 this year.

But what could I cut?

- $3000 on home improvements, $2000 was necessary but could’ve been delayed
- $5000 on “personal purchases”. This is everything from clothes to going out. DW and I each get half of that per year. We could probably cut this in half, but it wouldn’t be fun.
- $2000 on travel. A lowball, all of the airfare and most of the hotels were paid for with points.
- $1000 on booze
- $700 in union dues. $200 on Spotify.
- We’ll move in RE and save $1300 on neighborhood fees.
- We don’t have cable, our hobbies are cheap/free, we eat out maybe 5 times a year.

So we’re looking at $35k a year (plus healthcare & taxes) in retirement. We could trim down to about $30k a year while still covering needs and most wants. Down to $24k if we had to scrape by for a bit for some reason.

What about others? How much wiggle room do you have?

 

[Jerry1]

I haven't retired, but I'm very impressed in those that can come in under $50,000. If I can do that, I'll be in great shape. My hope is that I have a lot of wiggle room. All the estimators say I can spend about $80K (pre tax) and I'm trying to think in terms of $50K. If that works, the $25K will be discretionary or for emergencies. I'll let everyone know how it goes, but again, $37K is very good.

 

[REWahoo]

But what could I cut?

Do you need to cut? Are you overspending/withdrawing too much or is that $35K spending level an arbitrary number beyond which you are not comfortable?

 

[NW-Bound]

This is a good mental exercise to do to see how much leeway one has. The first thing I did after I started using Quicken and got a full year of expenses, I eyeballed roughly the total annual spending and thought to myself what I could cut out in time of trouble.

Right now, I think I can reduce expenses down to 65% of 2017 expenses, and have no major lifestyle change. That would make it 1.8% WR.

PS. Of course an emergency expense like a major home repair or the necessity to replace a car will blow away that optimistic estimate.

 

[Sunset]

How much we would cut would depend upon the circumstances, but since we are spending less than 4%, I don't see us cutting anything.

One time in the past when working, I cut down to 1 car and used public transport which took 1.5 -> 2 hours each way.

 

[Gumby]

Approximate percentages of our total spending in 2017

13% Restaurants
5% Travel
4% Booze (home)

That's where I'd cut first, if I had to.

 

[wmc1000]

We look at it a bit differently. Our budget is based on our minimum requirements i,e,. about $43K all in. We don't have to keep it that low but it allows us to measure our actual expenses against the basic LBYM numbers. Our base budget numbers are about 1/2 of what firecalc says we could spend comfortably.

 

[Senator]

Cut out the booze.


When I retired, I did not want to think about every $20 bill I spent. If I was going to have to live the rest of my life worrying about a few thousand, I would rather keep working.

I figured my income in retirement would be half of what I projected, and my spending double. I do have a lot of leeway. Even buying a new truck (F350 Platinum, 6.7) and fifth wheel, I did not tap into retirement money. It came out of current revenues.

 

[NYEXPAT]

I could probably cut off the 12 y/o a few years early, but I would get job before I gave up the housekeeper/nanny/cook!

 

[Aerides]

Clearly you can't cut the booze.

But do you need to cut? Are you too close to your SWR with that spending? We went over a bit this year, but mostly due to unplanned post-hurricane repairs not covered by insurance, and going into a bit of a Robbie mode with a vacation.

ER'ing to scrape by is not a fun idea.

 

[Luck_Club]

After summarizing our 2017 spending I looked at the number with a bit of disappointment.

But what could I cut?


- $1000 on booze

What about others? How much wiggle room do you have?

Learned a long time ago after reviewing my credit card statement not to "measure" my alcohol spending. Pay cash, and never look back.

I look every year at my budget, and try and find cash drains. I'm at a point where economizing any more is just not worth it. We spend heavy on a few categories, that in a pinch can be cut back, but I'm not really eager to put the work on my plate:
House keeper $3K per year She's not great but doesn't steal!
Lawn service $2.5K per year ($7K if you count rentals)
other than those we are talking saving $12 a month downgrading cable, or turning the heat down.

compared to:
property taxes totaling $28,000
and Insurances of $6,000 for properties & $5K for auto/umbrella

 

[Midpack]

Our budget has consciously and deliberately been about 1/3rd discretionary spending for about 10 years, since before I retired. We haven’t had to cut back, but we could easily. We could sell the boat, go out to eat less often/cheaper places, less travel/vacation, less concerts/plays, scale back groceries (cook simpler), gifts, and other stuff if/when necessary. Regrettably charity if we had to. For order of magnitude, we spent $56K last year including a driveway replacement and without scaling back discretionary.

 

[W2R]

Category|Total for 2017|Total after MAJOR cut-backs
Groceries|$2,323.72|$2,500.00
Restaurants|$3,396.02|$0.00
Gasoline|$438.40|$0.00
Car|$1,704.42|$0.00
House|$7470.62| $6,300.00
Utilities|$2,848.34|$2,300.00
Fitness|$504.00|$0.00
Clothes|$496.42|$0.00
Miscellaneous|$2,762.29|$0.00
Video Games, apps|$27.51|$0.00
Medical|$14,975.32|$7,200.00
Total|$36,947|$18,300

I take it we are talking about end-of-the-world level cut-backs. No way would I cut back to this extreme level normally. I think I could cut back about half this much with much less angst. Anyway, here goes:

I'd eliminate restaurant eating and buy cheaper food, bringing down my total food bill to $2500. Raman noodles here we come.

Car: I'd stop driving, so no gas. Car insurance is extremely high in New Orleans so I'd drop it. My registration and safety inspection (here, ="brake tag") are both paid up for two years.

House: I'd still pay house insurance, property tax, and mowing. No more upgrades and very little maintenance if any. Mowing is not a necessity for most people but I am not capable of doing it any more.

Utilities: I'd cut way back on electricity and gas usage for climate control. I need my internet and phone.

Fitness and clothes and video games and miscellaneous would be cut out.
I would cut back on medical by delaying implants until money was no longer tight. I'd go toothless in the meantime.

Totals are without income tax. I'd pay, but choose not to indicate how much I pay for income tax.

So, my wiggle room in an end-of-the-world cut back situation would be aroune $18,600. In a more normal situation, I can continue my normal standard of living, off cash reserves plus SS plus pension for a few years.

 

[street]

Well we could cut a few vehicles and all the costs that go along with that. I could sell my ranch and all the costs that go along with having it. I also have a few toys that I don't need but I have them and they cost money also.

For me I get to much enjoyment from those to even consider cutting them from my expenses. But if I had to cut I would most likely start with these items.

 

[Meadbh]

If the SHTF, I could defer income taxes by withdrawing only from after tax accounts. I could defer my property taxes. I could take CPP early. I could reduce my travel and stop accepting wedding invitations in other countries. I could give up golf (.....no, that’s very good for me and good value). I already have cut back on restaurant eating, so not much to cut there, but I wouldn’t buy any more kitchen gadgets. And I could cut out booze. I could reduce the frequency of my dental cleanings. I already use the library pretty effectively, so no savings on books. I don’t have cable, but there is no way I’m giving up high speed Internet. Where I live, I need my car. There isn’t much fat in my budget, but if all those economies weren’t enough, I could sell property.

I suppose I could try to look for a j*b, but it would be last on my list!

 

[gayl]

2017 income 76,107 - expenses 77,413 = -1304

Transfers 27,660 (35%) - Inc 3092 prop tax + savings
Travel 15,478 (20%)
Credit card 8257 (11%)
Dining out Inc Starbucks 3606
Utilities 3456
Home maintenance 1257
+ gardener 1560
Insurance 2200 + upped 300 just now
Groceries 2070
Misc 18,935 (18%)

Transfers + travel lowers it by 55%?

But it won't happen

 

[FlaGator]

Not much I'm willing to do right now - kids at home for several more years in a house and location I'm unwilling to change short of a gun to my head. Could knock off the Club and about half the "social" (GF) budget, but that would only bring the wd rate down by >.25%

Kinda locked for another several years, and planned accordingly before I grabbed the ripcord. Could always cut back, but quit to raise my kids in a reasonably comfortable manner, not to start several years of self-deprivation.

With those personal considerations aside - to the OP, is there a problem you're trying to solve? Your expenses are below what I figured I could manage on my "job at WalMart" plan while working. Suggest you ask yourself why this is a concern. Enjoy your life otherwise.

 

[W2R]

If the SHTF, I could defer income taxes by withdrawing only from after tax accounts. I could defer my property taxes. I could take CPP early. I could reduce my travel and stop accepting wedding invitations in other countries. I could give up golf (.....no, that’s very good for me and good value). I already have cut back on restaurant eating, so not much to cut there, but I wouldn’t buy any more kitchen gadgets. And I could cut out booze. I could reduce the frequency of my dental cleanings. I already use the library pretty effectively, so no savings on books. I don’t have cable, but there is no way I’m giving up high speed Internet. Where I live, I need my car. There isn’t much fat in my budget, but if all those economies weren’t enough, I could sell property.

I suppose I could try to look for a j*b, but it would be last on my list!

Good point, Meadbh. If worst got to worst, I could sell my Dream Home and use the proceeds to pay rent. Same for my car.

 

[rodi]

Travel (10.7% of 2017 spending)
Kids piano lessons (6%)
Could easily cut 20-30% of groceries - which works out to about 2.5% in cuts.
And other little cuts could pick up 2-3%...

So I could cut 20% overall without too much stress.
But I don't want to.

 

[joeea]

What about others? How much wiggle room do you have?

We've been targeting $100k per year during our full retirement years. And we've been saving, investing and working toward that for a long time.

There's a fair amount of wiggle in there. It wouldn't be hard to get that down by 25%, and it could be more if really needed.

But unless something dramatically unexpected occurs, we'll easily be able to spend to plan.

 

[Just_Steve]

By cutting cable, cell phone and stop making extra mortgage payments I could shave 20k a year easy. If I stopped my restaurant habit I could shave another 5 or 6k.

 

[RAE]

Our annual expenses are roughly the same as yours, but that is in line with what I was planning, so we're doing okay. We spend a bit more on travel than you do, since we head south for 2-3 months each winter. I suppose we could shorten the duration of that trip if necessary, or give it up entirely, but I would not be happy about that, as the winters are long where we live and we really look forward to spending part of the winter in the warmth and sunshine. DW and I also each have a personal expense budget, similar to yours, and again, we could reduce that if necessary, but so far there has not been a good reason to do so. As the years go by, I will probably be even more reluctant to give up things that we enjoy, even if it stretches the budget a bit. In our case, we do not have a goal of leaving a big pot of $$ to anyone else, so we plan to gradually spend our assets down over time (within reason).

 

[NW-Bound]

Can any of y'all cut back enough to live on 0.5% WR, as we talked about in another thread?

Me, no way. I don't have enough to live on 0.5%. I said that I thought I could, but my wife would leave me.

I did not say that 0.5%WR meant selling the homes and go living full-time in the 25' motorhome, parked under the open New Mexico sky.

But of course, there's always SS, and with early SS for both of us we could live well on 1.5% WR. Not luxuriously, but quite comfortably. Then, if the market crashes hard, such that my stash shrinks to 1/2, that WR becomes 3%.

Party on!

PS. Oh wait. If I sold the homes, the proceeds would get added to the stash and my 0.5% is now 30% larger. Maybe I can rent a small home?

 

[daylatedollarshort]

Our biggest savings could be from downsizing or moving to a lower cost of living suburb or city. Even a few blocks from our house the home prices drop a fair bit because the school boundaries change, but the houses and neighborhood look the same.

Our next biggest discretionary expenses is entertainment. I look for bargain events but we go out pretty often so even discount tickets on top of drinks, tips and train fares it still adds up. We live in an urban area so we could go to one car or actually even no cars and use Uber and mass transit. When one of our kids visits he takes Uber or Lyft to go places so we could do the same.

 

[Luck_Club]

Can any of y'all cut back enough to live on 0.5% WR, as we talked about in another thread?

Me, no way. I don't have enough to live on 0.5%. I said that I thought I could, but my wife would leave me.

Not unless the pot was $15 million! Most of my retirement income will be rents, so not relevant to WR, IN my humble opinion.