Working Out My New Fall/Winter Budget In Retirement.

September is usually the beginning of the year for me. I suppose that dates back to my school years when we all started our learning curriculum in September. I also have a clearer picture in September of what funds to expect to come in every month (i.e Social Security increases). I can then curtail our income to meet those expenses, thus my budget is born.

I wasn’t always like this. Nope. I never paid much attention to my finances and thus I used to suffer for it accordingly. Such as, getting hit with $350 a month in uncollected bank fees and other stupid human tax tricks I used to put upon myself.

No more. I’m a good girl, I am, I am. And I have the paperwork to prove it.

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I draw up a payment chart, clearly outlining the dates certain funds are posted to my checking account throughout the month. I then align my due bills to meet the expected income and the end result is that I ALWAYS pay my bills before they are due! I follow my self-imposed chart religiously and update it twice a year. Once in the fall/winter and again in the spring/summer. Most of my income is geared towards my bills but I make sure I leave enough cash leftover to cover groceries (about $118 a week), gas for the car (about $30 to $40 a week) and some misc spending money ($100 or so).

Most of my bills are the same each and every month (such as insurance, medical and utilities). There’s a fudge-factor category to cover car maintenance, house maintenance, clothes, haircuts and other once-in-awhile expenditures (like sales!!!!)

Normally, my monthly bills are covered by my monthly income. This month, however, I had to withdraw $500 out of my savings to cover my Maine Vacation. That’s expected and anticipated. That’s what the saving account is there for (within reason). I also had to withdraw $3,400 out of savings to cover our annual school property taxes. In February, we have another planned vacation and more property taxes will be due. Those funds will come out of our savings accounts.

Technically, this money isn’t really ‘savings’. It’s the overflow of hubby’s income whenever he works. I squirrel the money into our savings account so technically, we’re really not touching our savings account. I know this money is supposed to last throughout our true, authentic retirement years BUT the less we tap in to it, the longer it will last.

According to Ric Edelman, ‘The Truth About Retirement‘ (a PBS must-see, click here) there’s a good chance most of us are going to live past 95. Up to now, most financial experts predicted we were all going to die by the time we hit our early 90’s. Not so, according to Ric. Thanks to all the technological advances in science and medicine, there’s a very good chance we are going to live a lot longer than we had originally thought in our retirement planning.

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Ric Edelman giving sound financial advice to the masses.

If you haven’t set up a budget yet or some way to track and monitor your expenses, my advice is to start ASAP. Life is long. We need to get our finances under control if we are going to live a lot longer than we expected. We have to make our money last a lot longer as our retirement years are going to be a lot longer too. (and our retirement years are our fun years so it’s best to be prepared IMHO)

Ric Edelman has a whole series of You Tube videos (The Truth About Money)explaining all his new, proven theories on the new, new retirement. I highly recommend you watch Edelman’s informative videos. You can start off by watching this one (and see if you get hooked on Edelman like I did!):

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9 comments

  1. I don’t really agree with him telling people to refinance their paid for house before retirement and pulling money out. That’s not smart. If you can’t afford to live in the house, then you do need to sell. He does make some valid points in the beginning. Knowing how you are going to spend your time in retirement is definitely key.

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    • Hi Sharon. I dunno. Now that we’ve decided to stay in our expensive paid for home, it might have been wise to pull out some of our equity to live on now. We can’t eat the house and you can’t always sell quickly. Ric Edelman has a whole different approach to retirement. For example: because many states are now offering free college, many parent don’t have to save up to pay for their kids education anymore. That’s a new concept. 8 states have already done this, such as N.Y. and Arizona with more following. That’s a biggie when it comes to financial planning.
      Definitely worth a thought.
      Thanks, as always, for your comment.

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  2. Hi Cindi, I read Ric Edelman earlier books fourteen years ago and his latest book at least a year ago. He does have some valid points and you can definitely expand your financial IQ.
    However, I don’t agree with getting a mortgage to free up some money because it is the most costly way to tap the equity as is a reverse mortgage. In thinking of moving two years ago the best no cost alternative was a home equity loan on my existing home. Yes, seniors have difficulty getting mortgages but not home equity loans. And why would you pay thousand of dollars of the cost associated with mortgage fees and higher interest rates when the home equity loans have no cost and free up more of the homes equity value. My state limits the amount available to 80% of fair market value and they calculated it while I was on the phone. Mortgages are based on your income and do not look at your assets. The difference was $200,000 that I could free up in my homes equity. The penalty for closing it at my bank in the first three years was $300. Another reason to go with a home equity loan versus a mortgage is how the interest is calculated. Mortgages amortize interest and you pay more of your total interest then principal in the early years. Some home equity lines are calculated using simple interest. BIG difference in the interest you pay. Interest is only calculated on the amount you owe at the interest rate. So if you add extra to a monthly payment it reduces the principal and there is no More interest charged on money already paid off.
    I also don’t think NY Or Obamacare would look at the equity you would Tap for the calculation of your health premiums.
    IMHO if this is the case that NY doesn’t increase the health insurance premiums, I would really think about how you want the next four years of Nick and your life to be. So your home is worth $400,000 and you need to tap $12,000 a year ( I estimated this from your change in your budget) to have a better quality of life where he doesn’t need to work till he is 65 and starts Social Security. Thus enabling you to use that camper more for travel, and take that Caribbean vacation. Happy times together. So-why not pull the lever? I know Fear can be a terrible Master. And also regret, if something happens in Nick’s health situation is hard to swallow.
    FYI: We took a home equity line of credit, when the kids were in college and for the first ten years of draw we only had to pay the interest of the loan which was less then two hundred a month on $75,000 we took over the course of eight years. I now have a banking relationship that discounts my interest rate and there are also some credit unions that have great rates. When shopping for home equity loans there are several different types and terms. So the consumer needs to do their homework. Sincerely, Lara

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    • Lara I will check in to this. I think that you are right. This may be the way to go. But we don’t need any money but hey! As Edelman says: in case of emergency it’s good to have on hand.

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  3. So when their college years were finished we continued paying the loans interest only and with extra money that had been used for college expenses the next two years we socked it away and earned interest and paid off the loan before they set up fixed payment schedule. The beauty of your situation you know the time frame till Nick gets Medicare which will be more then the twenty dollars a month he pays now and His Social Security. And you could do the same thing with six years on a ten year draw Lara

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  4. The retired IBM exec took out his entire home equity line of credit allowed at 2.4% rate and invested it in the higher yields that are prevalent now and paying the interest only payment. He reminded me with the increase standard deduction it’s not easy to reach the level to itemize .when you don’t have high property taxes. Sincerely, Lara

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  5. So I don’t want to go above the threshold that increases the Medicare premiums s by $300 a month to $400 plus a month instead of $134. Besides I am doing Roth Conversions that increase my income so I have to figure if I will do all my home equity just to have it in case I need for long term care. I am thinking of getting the home equity line of credit establish for the whole 80% but not tap it unless it’s needed. Lara

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    • That sounds like a very good plan. Word on the street is that many people are going to get a year end surprise tax bill because of the new changes.
      Best to be apprised of everything!

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