One of the must-haves in retirement IMHO is maintaining a budget. Without one, you really can’t make proper judgment calls on your standard of living, especially when you are on a fixed income. I have a budget that I refer to practically every single day (or at least whenever I spend money) My retirement financial life is based upon the passive income that comes into my life on a monthly/semi-annual/annual basis. In other words, I can spend only up to the limit of what dollar amount comes in. If I want or need to spend more, I either have to go back to work (never!) or liquidate some assets.
For example: I needed a new winter coat this season. The keyword here is ‘new’. I wasn’t going to Goodwill or a thrift shop. I wanted brand new. I also wanted a down, full length coat to cope with the brutal northeast winters. I had a pre-fixed price in my head: my budget allowed $100. Most down coats however, are usually priced upwards of $200. What to do? How do I keep my budget intact as well as my standard of living? (a wool coat was not an alternative)
First I researched the down coat and the price. The list price was $180. Once I found the item, I searched for discounts or coupons. Luckily a reader sent me a coupon for 25% off. I also discovered if I ordered the exact coat in misses sizes instead of woman’s sizes, I would save $10 off the cost of the down coat. This and the coupon lowered the price of the coat down to $127.50. This was still above my budget limit. What to do? I looked through my hall closet and found two nearly new winter coats I could sell at my local consignment shop. I got $23.20 for one of them and $43.60 for the other. I now had more than enough money to buy myself a brand new down, full length coat without sacrificing my standard or quality of living.
And that’s how it’s done. And that’s how I’ve been doing it all my life. I’m not afraid of inflation. I’m not concerned about my quality or standard of living. My motto is: there is always a way through the maze. You just have to imagine the end result in your mind and then let your brain figure out the rest.
What did I do with the extra cash I now had once I purchased the coat? I bought myself a brand new, wool hat to go with my new coat. I was actually ahead of the game rather than behind it.
My bills for January 2019 are starting to roll into my mailbox. From what I have received so far, here are the annual increases each category will go up starting on the first of the year:
- $212.40 medical supplemental insurance
- $578 propane gas
- $231 property taxes
- $36 internet fees
- $235.08 satellite TV
- $39.38 sanitation
- $135.96 car insurance
- $208 home insurance
So far, I am looking at an annual increase of $1676 to cover my standard bills. That comes to $140 more a month. The above list is NOT taking into account what I pay for food, gas, clothing, haircuts, home maintenance and repairs, all of which we know will be going up. Will my income be increasing next year by $140 a month? I doubt it. So, what do I do to continue to maintain my standard of living as inflation rears its ugly head? The first thing I did was look over my total budget and all of my categories. Was there anything I could cut without feeling any pain?
I lowered my $500 monthly food bill down to $475 but that reduction didn’t last very long. I like to eat, so that move was moot. I tried to cut back on restaurant meals but that didn’t work either. Eating out is a form of socialization for me, so I’m not skipping it. I was able to cut back on vehicle gas but not much. DH and I are already set with our clothing needs for the foreseeable future, so that was another moot point. I just discovered the beautiful benefits of the $40 haircut vs the factory $13 haircut I used to get. This item is non-negotiable. I’m not going back to factory cookie-cutter haircuts. I have a professional cutting my hair and it shows! Now that DH is home more, he’s back to doing all the maintenance, repairs and general property upkeep (this alone was an annual savings of nearly $1,000)
One of our biggest expense categories is TRAVEL. When you’re retired, this is what you do. Our retirement travel dream has always been to own an RV and travel throughout America. (during our working years we did Europe and the Caribbean) The last few RV trips we’ve taken however, astounded me as to how expensive they can be! We only RVed on the coastal shores of Maine for 8 days and that set us back $954 plus $32 in tolls! I calculated, at this rate, we were going to spend at least $5,000 a year on RV travel.
I recently discovered the wonders and the near zero rates national and state parks charge for RV sites and I was able to lower our travel budget line item from $5,000 to $1,932 per year! That’s a savings of $3,068 off our annual budget without any decline in our standard of living or travel expectations! This money goes into a savings account for now!
The other alternative I discovered regarding our travel requirements was the wonders of frequent-flyer miles on our charge cards. For years hubby and I had been acquiring non-expiring miles. We have enough points accumulated to go to Las Vegas this year (and rent a car and drive to The Grand Canyon), Bermuda next year and probably Aruba or Mexico the following year. Heck, we might even go to South America. We haven’t decided. All for free (we just have to pay the taxes on 2 round trip tickets at a total of $22.50. That’s it)
Lastly, let me emphasize the holistic benefits of sales, sales, sales. As long as you are buying whatever it is you would normally buy, but now you are buying it on a sale, you are saving actual money. Again, a good friend alerted me to an up and coming Italian Food Sale because she knew I was scheduled to cook several lasagnas for a holiday party. I was able to save 50% on the required ingredients (plus I bought a little extra to store in our freezer). I actually saved an authentic $39.50 off this required food purchase!
Personally, I’d say DH and I are doing better, despite inflation or any rise in our expense categories. The trick is to set up a budget, look over your expenses often and when you see a rise in one category, if you do not have the income to meet the increase, deduct something in another category to offset the rise. The other alternative would be to either work or sell an asset. The last alternative would be to do without the item but that’s a personal choice. I like the quality of my life right now, as it is. It took me a while to get to this standard of living and I’m not reducing it nor going without anything. I’m not giving up a thing. I’m just finding another route through the maze.
Live well and prosper, my friend. Live well and prosper.
And if you know of a bargain someone can benefit from, share! We’re all in this together!