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This is a great thread. About a year ago I posted my projected budget somewhere. I thought it was on this thread, but I see not. I remember that a number of you suggested practicing living on one's retirement budget before retiring.
Since then I've kept a spreadsheet in Excel with every single expense I've had. First I created the budget with expected expenses, then put actual expenses month by month alongside the expected so I could see how I was doing.
For a while, maybe six months, I stuck to what I'd predicted, and then my expenses started to creep up. I realized that although it's possible to predict with some accuracy what would be needed in retirement (barring the variables of health, down-turning of investments, other unforeseen emergencies or major expenses), I could not predict how it would impact me emotionally to stick to a lower budget. It was too much too fast. The things that I missed spending $ on -- items for my home, gifts for the kids (grown), LLBean, weekends away, books, electronic gadgets/accessories, etc. -- became more tempting as I went along.
Now my feeling is that it's better to (1), overbudget, and (2) make changes very, very gradually.
Another item no one has mentioned, unless I missed it, is travel expenses for visiting grown children who live in other areas. Airfares have gone way up in the past few months.
I think when you have a home, property, maintenance, cars, etc., it is very diffiult to predict what your monthly expenses are going to be. You can estimate, but there are usually surprises along the way. It is good to have an emergency fund that is separate from your regular savings/investments. Anticipate that you will have expenses you haven't thought of.
I think when you have a home, property, maintenance, cars, etc., it is very diffiult to predict what your monthly expenses are going to be. You can estimate, but there are usually surprises along the way. It is good to have an emergency fund that is separate from your regular savings/investments. Anticipate that you will have expenses you haven't thought of.
Very true. A month doesn't pass when I don't have some sort of unforseen expense. This can be a car repair, home maintenance, a dental problem, family emergency of the month,- the list goes on. It always seems to cost about $250 to $500.
I'm very good about sticking to a budget and I'm frugal. As I've aged I learned to love a "value driven lifestyle" so to speak. I get a real kick out of getting a deal!
I just factor in that $500/month for unforseen expenses. I include things I know I will have, like property taxes in my monthly budget, but roof repairs come out of that $500. So far that has been enough.
Otherwise I live on about 1500 per month. Winter monthes are a little lower and summer monthes are a little higher, but that is the average. I prefer the lower budget and not working rather than a higher buget and working, which had gotten nearly impossible with pain issues. There is no store or trip or anything that is worth it anymore.
They just had good conversation on CNBC on the downside of the low interest rate environment and that is the inability of many especially seniors to grow their fixed incomes to stay up with inflation etc. A topic that is very important as folks plan their retirement budgets.
I just factor in that $500/month for unforseen expenses. I include things I know I will have, like property taxes in my monthly budget, but roof repairs come out of that $500. So far that has been enough.
Otherwise I live on about 1500 per month. Winter monthes are a little lower and summer monthes are a little higher, but that is the average. I prefer the lower budget and not working rather than a higher buget and working, which had gotten nearly impossible with pain issues. There is no store or trip or anything that is worth it anymore.
So I'm curious on this. When I did a budget, analyzing buying vs renting, I factored in 200.00 for housing maintenance that i would escrow monthly if not used. Did something similar for the car, figuring 100.00 monthly for maintenance. Also figured saving 200.00 per month for replacement cost of a car. I was being fairly nitpicking, running annual costs such as car tax, inspection, tags etc in a monthly escrow fashion separate from maintenance.
So when you say you figure 500.00 a month unforseen, is that overall considering medical, auto, housing etc unforeseens or is that just housing? Right now I'm dashing my budget to hell with medical copays but hoping this too shall pass and this was simply a firedrill to remind myself of the best laid plans of mice and men......
So I'm curious on this. When I did a budget, analyzing buying vs renting, I factored in 200.00 for housing maintenance that i would escrow monthly if not used. Did something similar for the car, figuring 100.00 monthly for maintenance. Also figured saving 200.00 per month for replacement cost of a car. I was being fairly nitpicking, running annual costs such as car tax, inspection, tags etc in a monthly escrow fashion separate from maintenance.
So when you say you figure 500.00 a month unforseen, is that overall considering medical, auto, housing etc unforeseens or is that just housing? Right now I'm dashing my budget to hell with medical copays but hoping this too shall pass and this was simply a firedrill to remind myself of the best laid plans of mice and men......
I think it's very hard to know how much to figure over time for home maintenance because it can vary from home to home and with extraneous factors. If you call the first licensed contractor in the yellow pages and don't get competitive bids you will pay an arm and a leg for everything. We are lucky to know an unlicensed handyman whose skills and reliability and quality of work are suberb and we save quite a bit. Some handymen can be no end of trouble, so beware. However, we needed someone licensed to redo our roof about six or seven years ago and it ran us $4,000. Hopefully it will be a good while yet before that roof needs re-doing.
If you have fairly new construction, say six years old or less, with a little luck it may be a few years before anything substantial has to be done. But we found when our buildings got to be about 25 years old there was a cascade of stuff like wood rot repairs, electrical repairs, pool plumbing repairs, etc. in addition to the more normal stuff like exterior painting. In my experience, you need to do exterior painting on wood surfaces about every six to eight years; we let it go ten years and stuff was looking rather grim. It was a mistake to let it go that long.
I have considered that for everything. My Medical insurance has a 5k deductible and so roughly a years worth would pay my deductible. So far in the 6 years I haven't needed to meet that deductible and have had no health care costs above the $500 well care my insurance allows per year before the 5k starts. My Dr knows my situation and pretty much sees me just yearly, unless I think I need to be seen. I take that back, one year I had about an extra $100. I counted prescription into my monthly as I sorta knew what they would be.
My car deductible is about 2k, so that is included in the $500/mo. The house has basically a 3k decuctible, so that would be included in that $500/mo. I have two brothers in town and they have done smaller repairs for me with me just paying for materials on both the car and the house. I try to keep up with repairs, altho if it isn't urgent I put it off until I have saved the money from my $1500/mo. For instance I need a couple of board replaced on the deck, but with winter coming and I won't be out there walking in that area, I will wait till next spring.
For me it is a number game anyway. I quit working due to pain issues. I had some $$ saved for this "wonderful retirement" I was going to have-haha. That money needs to last until SS kicks in. I think I could safely withdraw 24k/year, sO I try to get be on 1500/mo so I have that cushion for those deductibles. Will it be ok? I don't know, but I really have no other choice. If anything, the least I can spend earlier the better chance I have, right? when I first decided to do this I REALLy fretted about if I would have enough, now I just take it day to day. I did the best I could and am continuing to do the best I can with what I have.
This is the first year in 6 that I dipped into that extra and then only about $1500, so I think I am doing pretty well. As far as a car goes, mine is 8yo and I plan on driving it for quite a while longer. Then I will probably buy something used. Both brothers are into cars so I know they would help me watch for a good deal.
I do have some options, like selling the house and renting, but I don't want to do that until I have to. I like my privacy and quiet.
Last edited by Aqua Blue; 10-19-2011 at 05:50 PM..
Reason: to better clarify a sentence(it was worse!)
You know it's interesting when you put things on a "world" perspective as opposed to a "US" perspective. Our poor would be another countries rich.
We are all "Americanized", and that comes with a certain level of expectations of what normal is. Our standard of living has become so necessary to most, that doing without cable TV is considered a hardship.
Don't get me wrong. I like all those niceties like anyone else, but they aren't life sustaining and necessary to be happy. The only thing seriously lacking in this country is the provision of available or free health care, which is available in all other industrial countries, and many third world countries as well. It is the one serious deficit we have for survival, and it is a big one for some people.
Other than that, having to live on $1,500 or $2,000 a month, should not be considered such a hardship. If we can keep a roof over our head and food in our belly, along with good health, we have it made. Personally, I admire people who have learned to budget on smaller incomes. I think it takes discipline and character, and is something I would like to learn from.
...You can estimate, but there are usually surprises along the way.
It's like the difference between climate and weather.
The climate is what we expect to have happen (like snow in winter)...
but the weather is what we actually get.
Quote:
Anticipate that you will have expenses you haven't thought of.
As we'll keep a heavy sweater and wool socks in the bottom drawer even in July
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