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Old 01-06-2010, 09:16 AM
 
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I know I need some ideas and help. I have never lived by using a budget. Even in the old days when we paid for everything with checks, I never even balanced a checkbook. I did cut back on expenses when necessary but only in a general way so that I could live within my income. I never looked at individual expenses and tried to reduce them. I like the freedom of doing something or buying something I want and then cutting back in other areas without spending a lot of effort performing accounting tasks and micro managing or feeling like the finances are controlling my life.

Now that I am moving towards retirement, I know I will need to implement some sort of budget process. First, much of my income will come from self-directed 401k or after-tax savings. I plan to use calculator programs once or twice a year to adjust how much I can afford to spend. Then every few months I would perform a gross estimate of the moneys actually spent. Hopefully, I will have an excess. The excess would then go to 3 "buckets" - 50% to a fund for emergency, medical, or big expenses such as car replacement, 25% for travel, and 25% for the kids and grandkids, college funds, inheritance, etc.

Does this make sense? Is there a good way or better way to manage money on a macro scale without spending lots of time counting pennies and performing accounting tasks?
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Old 01-06-2010, 09:37 AM
 
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Quote:
Originally Posted by jrkliny View Post
I know I need some ideas and help. I have never lived by using a budget. Even in the old days when we paid for everything with checks, I never even balanced a checkbook. I did cut back on expenses when necessary but only in a general way so that I could live within my income. I never looked at individual expenses and tried to reduce them. I like the freedom of doing something or buying something I want and then cutting back in other areas without spending a lot of effort performing accounting tasks and micro managing or feeling like the finances are controlling my life.

Now that I am moving towards retirement, I know I will need to implement some sort of budget process. First, much of my income will come from self-directed 401k or after-tax savings. I plan to use calculator programs once or twice a year to adjust how much I can afford to spend. Then every few months I would perform a gross estimate of the moneys actually spent. Hopefully, I will have an excess. The excess would then go to 3 "buckets" - 50% to a fund for emergency, medical, or big expenses such as car replacement, 25% for travel, and 25% for the kids and grandkids, college funds, inheritance, etc.


Does this make sense? Is there a good way or better way to manage money on a macro scale without spending lots of time counting pennies and performing accounting tasks?

Lots of posts in other threads on your thoughts and lots of concurrence.

I like online banking via my brick and mortar bank. Everything is laid out for you including previous payments and previous due dates. You know your repeating bills and when they are due etc. Once you get in the pattern of paying them as soon as they come that becomes your new payment date. You can look and see when you last paid each bill and know when you need to pay it again and monitor your cash flow. At the end of the month dump excess money left over into investments and or an attached money market fund to your checking account. If you need money in your checking for a trip etc you can transfer over from the attached money market and do it all online. You have the billing and account information already built in and a simple click and it is paid. You have up todate account balances and someone holding a check isn't a problem. Use your charge card in October call the bank verify the balance and pay it before the statement comes in. This way if November has some reoccuring bills you can minimize the costs for that month.
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Old 01-06-2010, 12:11 PM
 
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Thanks, I am aware of the advantages of online banking. Perhaps I also need to use additional software tools to make this process easier. Maybe this is all easier than I think, but approaching retirement does seem to greatly increase financial concerns.
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Old 01-06-2010, 12:20 PM
 
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"...without spending a lot of effort performing accounting tasks and micro managing or feeling like the finances are controlling my life..."

The answer is:

Live a more simple life. Buy less and spend less and therefore you will have less finances that control your life. Own less and then you will have less items that you have to maintain and possessions will not control your life.

Learn to enjoy the simpler, inexpensive pleasures of life. Live not to keep up with your neighbors; but live to keep a enjoyable slow pace of life--that is the idea of retirement.

Livecontent

Last edited by livecontent; 01-06-2010 at 01:24 PM..
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Old 01-06-2010, 12:31 PM
 
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our plan is just the opposite... enjoy the fruits of decades of saving, working and putting expenditures on the back burner to live even a better life in retirement.

doing the things we always wanted to do, owning a luxury car which we would never think of buying in our saving for retirement mode....

having a winter home down south, a summer place up north .....

its all up to what you want and can afford...

for some a simple life is all they want, for others like myself its pull out all the stops and we are in the last down of the game... whatever we dreamed of doing its a go if we can afford it.
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Old 01-06-2010, 01:25 PM
 
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mathjak, I am with you. Unfortunately there are limits to my finances. I want to spend what I can afford - not more and also not less. I am not looking to keep up with the neighbors. I am trying to downsize and not amass a lot of possessions, but I do want to buy some toys and travel. I am not sure I even know what the "simple life" means but I am sure that I do not enjoy a slow pace. I have lots to do and miles to go.
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Old 01-06-2010, 01:29 PM
 
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our point is not that retirement should be keeping up with the neighbors, but more of keeping up with your dreams and goals.

many think of retirement as pulling in the purse strings and living on the cheap even though they can afford to do things they wanted to.

retirement can be as simple and cheap as you want or as luxurious as your budget allows....

we have a house in the rural poconos of pa as well as live in nyc now..... we live both lives but one thing is for sure, i could never see just living that simple country life year round year after year.
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Old 01-06-2010, 01:36 PM
 
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It is true, there is two ways to go in finances in retirement. Some have means and the desire to spend more and that is excellent, if you can handle it. If you do not have the funds, then accept your life and live with what you can afford. Some have not learned the idea of simple wants and simple needs and continue to spend beyond their resources--that can cause severe problems in retirement when most have less income.

There is another big social issue with those who live beyond their means. These people stress the social support network and want more beyond of what they earned and want to be compensated for what they splurged. They expect others, who have worked and saved, to support them by demanding higher taxes and more entitlements. Not every one has the same money; and one should not expect to have the same lifestyle of others who have gained and saved more resources.

For me, I am tired with maintaining possessions and paying bills. I have never felt that I have given up activities or avoiding buying when I was working; so I have no need to "catch up" at the end. I really just want to go out of life, as naked of possession and with the simple desires, as a baby entering the world.

Livecontent

Last edited by livecontent; 01-06-2010 at 01:50 PM..
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Old 01-06-2010, 02:03 PM
 
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If you've never budgeted (you will be shocked at how much you really do spend) and have limited finances, I would recommend eliminating the last two buckets entirely...the 25% for travel, and 25% for the kids and grandkids, college funds, inheritance, etc. Most financial planners like Suze Orman will tell you that your retirement comes first, let the kids fend for themselves. If you were wealthy, that's a different situation, but sounds like you're not.

Play a game with yourself and by keeping track/write down for three months every penny you spend for everything...I'm not talking gross estimates, write down every penny...you will be surprised. I would suggest reversing your thinking from " how much I have left to spend" to "how much I have left to save". Give it a try, it's really kind of fun and challenging to see how many ways you can save. I bet you'll have plenty for a trip once a year too.

Last edited by loveautumn; 01-06-2010 at 02:17 PM..
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Old 01-06-2010, 02:28 PM
 
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loveautumn, Thanks. I think you might be right about the extra buckets, especially for kids and grandkids. However, the travel bucket is kind of essential. We are about to be grandparents for the first time and the daughter lives just a couple of miles from us. My wife is really having a hard time about moving 3000 miles. Part of the plan is to make a travel bucket so that when we live below the maximum amount we will help fund the travel bucket. We have done a lot of travel at very low cost so I doubt we will need lots of money in this bucket. We will start with maybe $2500 in that bucket. That alone should pay for lots of roundtrip airfares to visit. Later on I would like to use the bucket to include international travel - maybe a low cost trip or two/year. Local travel, like spending a few weeks or months in the camper, will come out of routine living expenses. Part of the reason for moving to a low cost area and downsizing houses is to have the money to do things including travel.
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