Extreme budget cuts

[Nick12]

I don't really understand the point of this thread. Why cut back? Markets are near all-time highs, inflation is mild, who knows what happens tomorrow but must we practice feeling poor so we are ready to act poor should that be required??

Ha

Some folks regardless of their financial standing choose to be frugal.

 

[RunningBum]

I don't really understand the point of this thread. Why cut back? Markets are near all-time highs, inflation is mild, who knows what happens tomorrow but must we practice feeling poor so we are ready to act poor should that be required??

Ha

What?? So you're not agreeing with the rationale in the first post??

Seems appropriate since a lot are facing smaller tax returns [refunds]

Yeah, me neither.

 

[W2R]

Well gee, I think it's smart to remind ourselves of how we can cope when times aren't so terrific.

I regard threads like this as sort of like brushing up on our skills, even if they aren't needed right now. I don't want to forget how to deal with having less money, in case that ever happens again. Things can be looking pretty good and then life sucker punches you. I think we all have had this happen at some time or other. It helps to have a plan in the back of your mind.

 

[USGrant1962]

My mantra is "focus of what matters" i.e. biggest ticket items. Cutting corners will not get you anywhere. Tackling big ticket items will take out-of-the box thinking. e.g. most people will have housing as their biggest ticket item which can be only addressed by moving to LCOL area.

Agree, big tix are where it is at. I get aggravated with DW when she worries about things that literally cost only $2.

OTOH, I shouldn't get aggravated because we're both LBYM and that is why we are where we are today.

 

[daylatedollarshort]

I don't really understand the point of this thread. Why cut back? Markets are near all-time highs, inflation is mild, who knows what happens tomorrow but must we practice feeling poor so we are ready to act poor should that be required??

Ha

I can't speak for for other posters, but I like cutting back on expenses, not our lifestyle. I enjoyed an afternoon at the wineries yesterday on my discount winery passports as much as, if not more, than the visitors who paid full price at the door, and it left money over to buy wine to take home. We don't cut back by sitting home, instead we go out often and save money by looking for fun and good value activities.

 

[Sunset]

I can't speak for for other posters, but I like cutting back on expenses, not our lifestyle. I enjoyed an afternoon at the wineries yesterday on my discount winery passports as much as, if not more, than the visitors who paid full price at the door, and it left money over to buy wine to take home. We don't cut back by sitting home, instead we go out often and save money by looking for fun and good value activities.

I also take extra pleasure/comfort in getting great value. I nicknamed it slumming.

Any fool can go spend a huge amount of money for something, but it takes skill/luck to get the same thing for less.

 

[tb001]

I appreciate these threads as well. We have three budgets in my planning, one that is relatively padded, which is my baseline for planning, one that reflects some belt tightening and a SHTF budget.

Our home and associated costs are our biggest expenditure, but we could do away with many home services and cut spend pretty significantly. I always find it interesting when people talk about selling the house and moving to a lower col area or smaller home. Great in theory, but if you need to pull that ripcord, it seems to me that it’s very likely it will come at a time when the housing mkt is in bad shape too.

 

[NW-Bound]

... Things can be looking pretty good and then life sucker punches you. I think we all have had this happen at some time or other. It helps to have a plan in the back of your mind.

I had that happened to my health. Luckily, I survived.

Financial trouble is not something I worry about now. It's because I believe I will not be at the point of living under a bridge unless it's a cataclysmic event, which nothing can be done about. Living on 50% less does not scare me.

 

[kgtest]

My SHTF strategy has always been to not necessarily try to trim a few % from the budget here or there, but instead to sell my house and live in something much smaller. I should be able to net a couple/few 100K from that. It probably wouldn't work in a economic meltdown as few would be looking for a larger house, but if I had a personal situation were I could see money would be running out in a few years, this is what I'd do. I'd rather do this than turn the thermostat down 10 degrees or stuff like that.

I think that is probably the best long term solution for SHTF moment. I would definitely take my equity and run. Apparently there are only 16 active homes for sale in my city of 37k people. Its unbelievable I have realtors basically begging me to sell with non contingent offers. Just a huge demand and no supply.

 

[mrfeh]

Even without cutting back I like to keep a car 10 yrs as a minimum.
My last one went 12 yrs.

We are a 2 car family, and also usually keep cars about 12 years, hence the new car roughly every 6 years.

 

[NW-Bound]

Some folks regardless of their financial standing choose to be [-]fruga[/-] LBYM.

^^

Fixed it for you. I would love to be a decamillionaire, and live off a 2%WR. Would you mind to be such a "frugal" person?

In fact, can you imagine a billionaire living off 4%WR? What could he do to spend that money? And if he did, he would be pilloried in the media. All billionaires are LBYM using our definition of 4% WR as the acceptable spending rate.

 

[EarlyBirdly]

Something must be very wrong with me...


When I start collecting SS at 62 (YUP! "Bird-In-The-Hand" Man here) even on the reduced benefit I anticipate pulling less than $8000.00 from my actual Retirement Funds annually.

This will actually give me slightly MORE than I need on a Monthly/Annual basis.

That is figured on current expenses which will be going down by almost 50% in the next year or so.

And NO...I Don't have Multi-Millions in the "Bank" either. Just a modest sum to carry on with.

And YES ...I eat out, take vacations, buy whatever I want whenever I want, and live in a very comfortable home ( with exorbitant taxes ) I have NEVER had a need to micromanage money or adjust wants/needs or go without. Even through Market Crashes and loss of Employment. (Both occurred to Yours Truly at the same time in 2008..Surprise! And, it was absolutely not a problem financially.)

WHAT am I doing wrong?

I must be missing something...?



BirdMan

 

[RunningBum]

Something must be very wrong with me...


When I start collecting SS at 62 (YUP! "Bird-In-The-Hand" Man here) even on the reduced benefit I anticipate pulling 0.008 % from my actual Retirement Funds annually.

This will actually give me MORE than I need on a Monthly/Annual basis.

That is figured on current expenses which will be going down by almost 50% in the next year or so.

And NO...I Don't have Multi-Millions in the "Bank" either. Just a modest sum to carry on with.

And YES ...I eat out, take vacations, buy whatever I want whenever I want, and live in a very comfortable home ( with exorbitant taxes ) and NEVER have a need to micromanage money or adjust needs. Even through Market Crashes and loss of Employment. ( Both occurred to Yours Truly at the same time in 2008..Surprise! And, it was absolutely not a problem financially.)

WHAT am I doing wrong?

I must be missing something...?



BirdMan

Well, for starters, .008% annually on $1,000,000 is $80. So I'm guessing you're missing a little bit of math skills. Maybe you mean 0.8%, or $8000.

 

[Huston55]

Well, for starters, .008% annually on $1,000,000 is $80. So I'm guessing you're missing a little bit of math skills. Maybe you mean 0.8%, or $8000.

Perhaps bird seed is not expensive.

 

[Sojourner]

I appreciate these threads as well. We have three budgets in my planning, one that is relatively padded, which is my baseline for planning, one that reflects some belt tightening and a SHTF budget.

I always take some time to read through these kinds of threads, even though I'm currently spending only about 60% of what FIRECalc says is my SWR at 100% historical success. I guess it's because I think I may stumble across an idea that never occurred to me for saving money in a particular area of my budget. And, as I alluded to above, even though I don't need to save more money, knowing that I'm paying more for something than I could be (or should be) irritates my frugal nature. Always open to new ideas, regardless of any immediate or expected need to "cut back".

 

[Mdlerth]

Consult the oracle

Something must be very wrong with me...

...When I start collecting SS at 62 (YUP! "Bird-In-The-Hand" Man here) even on the reduced benefit I anticipate pulling 0.008 % from my actual Retirement Funds annually.

This will actually give me MORE than I need on a Monthly/Annual basis.

That is figured on current expenses which will be going down by almost 50% in the next year or so.

WHAT am I doing wrong?

I must be missing something...?



BirdMan

Herein lies the answer:
http://www.early-retirement.org/for...h-2019-a-95591.html?highlight=blow+that+dough

 

[EarlyBirdly]

Well, for starters, .008% annually on $1,000,000 is $80. So I'm guessing you're missing a little bit of math skills. Maybe you mean 0.8%, or $8000.

Maybe my calculator is messed up.(?) Edited my previous post for clarity.

In any event, yes...you are near correct with your "guesstimate". Less than $8k/yr from Retirement Funds.


Bird

 

[mrfeh]

maybe my calculator is messed up but:


0.8 x 1,000,000 = $800,000.00


correct?

.8% == .008

 

[EarlyBirdly]

Perhaps bird seed is not expensive.

Ha! Bird seed is Tuesday nights...Last night was an 8 oz dry aged N.Y. Strip.


(BURP)

 

[FIREd]

My non-discretionary expenses are already super low (less than $1,000 a month) and my WR is quite low as well. So it would take a truly catastrophic event for me to consider extreme budget cuts.

 

[razztazz]

My non-discretionary expenses are already super low (less than $1,000 a month) and my WR is quite low as well. So it would take a really catastrophic event for me to feel like I should cut back.

That's where I'm at. I am, and since Day #1 of FIRE have been, right at the margins. "Thin FIRE" But, hey, there's not much beyond the margins that I want or need to do to be happy. The same things I did when I was working only without the work. There's not much I can cut out of the budget in the event of catastrophe, but the way I see it, there's not really anything I'd have to cut.

 

[skipro33]

The OP's presumption that those who are receiving less refund on their taxes also took home less income for the year and that simply is not the case. The reality is that people kept more of their income, not over paying to the government, and probably went on a spending spree without realizing where the extra money was coming from each month.

Personally, I paid about $600 to the feds this year, but that was after taking a draw from my IRA of $10,000 without any taxes paid out on it. Otherwise, I would have received about $400-$500 refund. Typical from previous years.
I keep hearing on the news all these , 'whoa is me, I'm devastated not to get a huge refund this year' stories. Not once do I hear what their actual take-home was for the year, but it's sure to be increased. Those people without a clue how to manage their money for something as simple as a monthly income increase and no clue about how taxes work makes for fake news stories that foment them into thinking it's someone else's fault; not theirs.

 

[daylatedollarshort]

I always take some time to read through these kinds of threads, even though I'm currently spending only about 60% of what FIRECalc says is my SWR at 100% historical success. I guess it's because I think I may stumble across an idea that never occurred to me for saving money in a particular area of my budget. And, as I alluded to above, even though I don't need to save more money, knowing that I'm paying more for something than I could be (or should be) irritates my frugal nature. Always open to new ideas, regardless of any immediate or expected need to "cut back".

+1. I feel like I have been conditioned by advertising my whole life to buy more and pay more for goods and experiences than I really need to, and now I'm trying to pare that down. Like brand name toothpaste is $1 at the dollar store, which is less than the sale price in most of the weekly flyers for the same brand / package size. I've been trying to learn to cook in batches, so we have our own healthy versions of fast food in the freezer. In the summer where we live there are outdoor concerts with some pretty good local bands almost every night of the week in one suburb or another. We never even realized that before because DH didn't even get home from work until after most of the weekday concerts end. Every week in retirement so far we seem to find some additional simple ways to live better for less.

We started out retiring knowing we could move or downsize to help fund our retirement if we needed to, but instead we've ended up staying in the house we had and living on about half of what we could spend just by reviewing and optimizing our expenses. I'm more comfortable relying on relatively low overhead for financial security for our retirement cushion than I am on the stock market, because I can't control the market but we have control over our expenses.

 

[Nick12]

Some senior citizens in the area love the local pizza places but the only way to get to the pizza place when the senior citizen van makes a trip to the local strip mall. The owner of one of the pizza places loves the seniors. The seniors order pizza by the whole pies. They bring them back to their residence, freeze the pizza pies and eat when they want to have a slice of pizza.

 

[EarlyBirdly]

.8% == .008

.8 x 1,000,000 = $800,000


.008 x 1,000,000 = $8000


Pretty sure that's what I was trying to get at...(?)


B-Man