I spent way too much money my first year in retirement

[TuborgP]

Originally Posted by AlaskaErik

I pay for almost everything with my credit card. My primary card gives me airline miles, which I do use and more than covers the annual $75 fee. Another card gives me cash rewards, which covers the annual fee by a significant amount. I also pay my cards pay my cards off in full every month. When you're running $4k to $5k a month through credit cards, the rewards add up pretty quick. So what bank trick am I falling for?

Super Bada Bing!

[Giesela]

Originally Posted by tmbf57

So this is embarrassing but I am posting here for advice, not judgement as I already have done more than enough of that on myself.

I retired April, 2017 with a paid off mortgage and over $30k in cash savings, no debt other than a car payment and a 401K account. Apparently and much to my surprise, I have no impulse control Although I have an adequate pension, I am over $15k in credit card debt I still have my 401K, my home is still paid off but I HAVE about $15K in CC debt.


This has been spent on trips, buying new furniture, and other stuff that were WANTS not needs. So the $30k cash I had is now down to $10K because I kept trying to pay off the things I was buying, not wanting to have too much debt. But, I AM STILL IN DEBT.

Currently, I am planning on going back to work part time, per diem in my field and have had some very promising interviews so I am not concerned about obtaining work, if needed I could go back to work full time but at this point I prefer to try to work PT and try to pay down the debt.


I would like feedback from fellow members of the CD forum if they have ever done such a stupid thing and if so, how they managed to get back on track?


I am SO very disappointed in myself as I had been so proud that at retirement we had no debt whatsoever and a paid off home and now not only are we $15K in debt but have spent down about $20K in savings paying off debt we accrued !


Thanks in advance for any advice.

So you want to live entirely on your pension(s) and keep your 401k and never use it? Or your 30 cash.
So...do what other people do. Pretend you don't have a 401K or cash, put your credit cards in the freezer in a big block of ice and pay them down over the next year or however long it takes, depending on how much you can tighten your belt on what your pension is.

While you are doing that, examine whether your pension is just enough to live on and never have a lick of fun or buy anything, or whether you will be able to put away enough for a year trip or 2 trips a year or whatever. can you do it? Do you need to start looking at distributions from your 401K to enjoy your retirement?

[TuborgP]

Originally Posted by Giesela

So you want to live entirely on your pension(s) and keep your 401k and never use it? Or your 30 cash.
So...do what other people do. Pretend you don't have a 401K or cash, put your credit cards in the freezer in a big block of ice and pay them down over the next year or however long it takes, depending on how much you can tighten your belt on what your pension is.

While you are doing that, examine whether your pension is just enough to live on and never have a lick of fun or buy anything, or whether you will be able to put away enough for a year trip or 2 trips a year or whatever. can you do it? Do you need to start looking at distributions from your 401K to enjoy your retirement?

Very true. They need to develop a longer term perspective on their assets and how to use them. Do they have still to be claimed SS benefits or other fixed income streams waiting to kick in.

Could well be early on financial anxiety on top of a limited long term plan/picture.

[tmbf57]

I had posted an update a few days ago, we paid off almost all the debt already and I am beginning a job 2 days per week next week that pays very well, should not bolster our savings and travel needs/wants. Happy we were able to resolve this and lesson learned !

[mountainrose]

Originally Posted by tmbf57

I had posted an update a few days ago, we paid off almost all the debt already and I am beginning a job 2 days per week next week that pays very well, should not bolster our savings and travel needs/wants. Happy we were able to resolve this and lesson learned !

Great news and congratulations!
Your courage in sharing your mistake publically will be a helpful warning for some new retirees.
You may have saved someone else from making the same mistakes.

[tmbf57]

Originally Posted by tmbf57

I had posted an update a few days ago, we paid off almost all the debt already and I am beginning a job 2 days per week next week that pays very well, should not bolster our savings and travel needs/wants. Happy we were able to resolve this and lesson learned !

That should have read "SHOULD bolster our savings" not "should not bolster our savings".

[k7baixo]

Sitting in the United Club in Houston. On this trip, I’ve saved luggage fees ($100) and have spent five hours of a six hour layover in the Club on their dime with free (simple) food, snacks and drinks.

Interest laid in the last 25 years.... nada.

Heck, earlier this year, we collected well over $3000 from insurance when my wife was too sick to travel. Cost of the insurance? Nada. It was a card benefit. And right after we collected, I canceled that card and got another one in my wife’s name. Plus, it comes with 50,000 miles after spending a couple of thousand in the first three months.

I like credit cards....almost no risk esp when compared with debit cards. The trick for us is to track the spending down to the penny to insure we don’t bust the budget and paying the balance every month. It’s easy with the tools today. Automatic payments are great.