Friday, July 24, 2015

Inspecting & Whittling Down the "Nut"...A Ramble

Since we are slated to retire in less than 3 years I am obsessed with figuring out what our "nut" or household/living expenses need to be compared to what we are spending now, pre-retirement.
I am trying to reduce our "nut" every year to try to get it as low as I can post retirement. 
I figure if we commence retirement with our expenses lowered  as much as possible and find we can in fact afford to spend more, it will be easier to expand our spending, rather than to head into retirement and find we are still spending more than our savings can handle.
Sounds like a plan, right? 8-)

Using my monthly spending/expense sheets from 2014, I have concluded that we spent $53,278.52 of our regular income that year. (This doesn't count the money I paid to buy my car in 2014 which came out of the Bonus money.)
That comes out to $4,439.87 spent per month on our "nut".

So far in 2015 we've spent $23,924.09 of our regular income to "live". (Again this doesn't count the money we paid to buy Hubs car in 2015 which also came out of the 2015 Bonus money.)
This averages out to $3,417.72 spent per month for the last 7 months. 

If we stay on this track we will have approximately a $41,012.72 nut for 2015. 
(Granted this isn't all the income we have spent as there was money taken out of the check before we got it for healthcare premiums, life insurance and long term care insurance.  These items will still need to be funded in retirement and will need to be accounted for in our "nut" spending.)

So far in 2015 we have spent about $1000 a month less than we did in 2014.
July has been out lowest month of living costs so far in 2015.  Our "nut" for July was $2200 out of our regular income.  February's spending was $2500+ change.
$2,200 in July.
Gosh I wish our monthly "nut" was this low every month......

Looking at the spending for 2014 compared to 2015 so far, here are a few of the categories where we have reduced the spending......

*  A lot less money spent on car repairs.  Buying a new car in 2014 meant no car repairs on 1 of the 2-3 cars we owned.  Buying another almost new car in 2015 meant even fewer car repairs compared to what we are use to spending on vehicles. We spent $2786.72 on car repairs in 2014.  So far in 2015 car repairs have run a mere $441.61. (Sssh, don't say that too loudly lest we offend the car gods.....)

*  Ditching cable tv.  Since getting rid of cable we are saving $70.80 per month or $849.60 per year.

*  Since putting in the mini-split heating/ac system Fall of 2013 we are shaving a bit off of the heating bill each month we use it.  It's more efficient than the system the house came with.  Yes, it cost a chunk of cash to install it/buy it but we are reaping the benefit of lower utility bills in winter and it will be an added asset when we go to sell this house.  We should recoup some of the expense of having this system put in with a higher selling price. 
It's difficult to quantify an exact figure for the savings in our heating bill since weather conditions vary from one year to the next plus the cost of electricity goes up every year here but we are trending toward lower heating bills.

*  We are no longer paying for private music lessons for College Boy out of our regular income.  He take lessons at college and that cost is included in the tuition/fees we pay for his education and that money comes from a college fund set aside years ago for that purpose.  We are saving approximately $1600 a year on this item.

*  We seem to be spending less on alcohol, clothing and "stuff" in 2015.   There has been little spending on replacing clothing, shoes, household goods and "wants" so far this year.  We just haven't felt the need to buy much "stuff" this year.
I'll have to wait until the year is over to run the numbers on adult beverage spending for 2015 but with how much we spent in 2014 on liquor I am SURE that number will be down. 8-)

*  We have no pet related expenses in 2015 since our last doggy died near the end of 2014.   We paid $450ish in vet bills and kennel fees for our dog in 2014.  There were more costs such as meds and food but I don't have a figure for this portion of pet expenses.  Let's just call that another $400 a year, so a savings in 2015 of $900+/-?

So with just these categories we are "saving" at least $6000 a year in 2015 over 2014's spending.(This is without taking into account any less spending on "stuff" and "wants" this year.)  $6K a year comes out to a $500 per month reduction in spending in 2015 over 2014.

Looking over our spending categories now there really isn't much more we can cut out of our fixed bill costs.  We have basic phone service(no fancy cell plans), basic internet/cable, have cut utility expenses, gas to get to work can't get cut, taxes are what they are, keeping medical co-pays low as possible by exercising/eating well/taking maintenance drugs/etc., and not performing "retail therapy".

Once College Boy is out on his own(hopefully in 3 years! Yes I am an optimist...lolz)there will be even less spending.  No paying for his food/drink, water and electricity use, clothing, no more paying for his glasses and healthcare, incidental monies, no fetching in back and forth to/from school and no third car to maintain and insure. 
Add in downsizing to a smaller house(less space to heat/cool and lower taxes)in a cheaper area once we move and there will be some more reductions in spending.

The only way to save more would be to cut out vacation trips and the costs associate with those.  This year we have/had taken a 2 week trip to Southern Virginia to see my brother in January, a 2 week road trip to Louisiana in May, a 2 day apartment hunting trip in July, a 3 day trip to move Eldest in July, a 3 day family reunion trip in September and a 4-5 day trip to Ocean City Maryland in October.
For a year of traveling that seems financially reasonable to me.  I would hate to have to cut out what little traveling we do per year.  Traveling, sightseeing and visiting family and the associated costs are my one "wants" spending vice other than a nice meal out now and again and buying adult beverages.  I don't spent much money on house "prettifying" or crafts or buying more fashionable clothes to cram into my closet or upgrading tvs, phones or doing entertainment or recreational things that cost lots of money.
Everybody needs to spend a little of their income on leisure and this is mine. ;-)

Even if you are trying to cut your living expenses what are the things you are reticent to give up?
What things do you spend on that are justified by helping you maintain your sanity?

To conclude this long ramble.......we seem to be bringing our expenses down slowly every year over the next.  I hope to get the "nut" down a little more over the next 3 years before we launch into that unknown territory called "retired".



  1. Our spending fluctulates a little year to year these days, but mostly we're focused on getting the mortgage paid off prior to retirement (goal is 8 years, worst case is 11, but still before I reach full retirement for social security). We would love to purchase a motor home at some point, but figuring out those costs has been almost impossible thus far. Our retirement dreams are very modest - maybe some travel (in aforementioned motor home), mostly the same lifestyle of hiking (me) hiking/running (DH), just more often that we manage now with me still working.

    1. Sounds like you have your priorities in order and are working your plan. Well done.

  2. I think you are doing great. I believe in paying cash for as much stuff possible to keep monthly expenses low. It seems like the last few years for us have been accumulating many of the things we need to live in the country like the tractor, lawnmower, tiller and other miscellaneous items that seem to add up. We knew we would have higher output for a few years while we get set up but we need to have our monthly living expenses low just in case. Without daycare, we could live in one income.

    Anyway, it's always a good idea to know how much one is spending monthly. You have a good grasp on that. I would not but out traveling if I were you.

    1. Yes, I need to keep a few things I spend on to keep my sanity.
      It's said that we spend half our lives accumulating "things" and the second half getting rid of those "things".
      We are well past the point of having to gather stuff we need to live our lives.
      Don't live a life of debt and live below your means, saving for that rainy day that will come are great ways to order your life.

  3. We downsized in 2001/2002. We went from spending $5600 a month in 2001 to about $2800 today. You can't do it overnight. We did it gradually. We went from a 9 room house to a 4 room house when we downsized in 2002. The real estate taxes however went from $700 a year in '02 to the $5400 a year we are paying now. Go figure. If we had stayed in our original home the mortgage was scheduled to be paid off in 2009. The taxes there today are only $3500.
    These are the things I didn't figure: that my kids would get married and have babies and everybody was all going to come over at the same time for Thanksgiving? Where to put everyone? Thus, we had to finish our 2nd floor and put in two more bedrooms and another bathroom ($20K and still counting). I should have just stayed where I started out originally. Duh?
    We only buy certified pre-owned cars now but take out the additional warranty. Cars today are so complex and so expensive to fix, it makes good financial sense to pay for the extra warranty. Our newish car has a life-time warranty @$2376, payable in 18 months interest free. Another thing we didn't plan for was the eventual replacement of all our appliances. After 13 years, we need everything to be new! Ka-ching. Thank goodness for zero interest from Lowe's or Home Depot. We'll need a new roof in 18 years. Calculate wear & tear also on furniture, carpeting etc. Have a budget line for that.
    Thanks to massive inflation, our $2800 a month is now costing us $3500 a month.....just for the basics. I'm tired of cutting back, Sluggy. DH has to work some part time gigs over the month so that we can live at the same level. I don't think anyone can save enough for retirement because you just don't know what will be in store for you. We were fine a few years ago, but again, inflation, inflation, inflation. We don't want to touch our savings yet, cause we're still youngish. So, DH works a bit.
    Good luck. Retirement is more than cutting expenses. It's finding different income revenues and managing from there. Try to hold off collecting Social Security for as long as possible. Ditto for pensions. DH is holding out till 66.

    1. That's the crux of it....none of us know what life holds in store/if we'll have enough $ and how long we'll live/how long the $ will hold out.
      It's all a crapshoot really so you just juggle the numbers and do the best you can.

      My big worry is the medical expenses. We have probably 6 years/5 years to cover medical fully until Medicare kicks in and from what I am reading Medicare hardly pays for it all(and if you can find a doc who accepts assignment). I just hope we don't have to use too much of our nest egg to bridge to Medicare. Things will loosens up monetarily once we get to 65 and then once we hit 66 8 months we are golden. ;-)

  4. Decreasing my expenses is how I manage in retirement...that and NO debt. I got rid of our home phone and cable and insurance is as low as I can get it I think. In Canada our pensions are higher the longer you wait which is a great strategy for increased income.

    1. In the US SS increases if you wait to collect. If you delay til 70 you get about 1/3rd more. Yet, I don't see me getting to 70 with my family history.
      Starting retirement debt free is key though to making it work and not having to live in a cardboard box.

  5. We just moved- which cut down our expenses by about $5000 a year. Of course it cost us about $10,000 to move….
    When kids moved out for good our expenses were much more manageable. We use the envelope system, mostly on line. We have a number of small savings accounts that get funded every month at the bank. Our only cash is our allowances.
    The one thing I will never go without is some type of allowance. Everyone needs to hop into a store occasionally and buy something on a whim. Our allowances allow no questioning by the spouse and no guilt on you!

    1. Whatever system works for someone I am all for it!
      I am not a "thing" whim buyer anymore but I do like a little splash out on food or an experience(travel).

  6. It's such a dilemma for us. We will still have a pretty hefty mortgage when my husband retires. But we've lived here 20 years and Did a very stupid refi around 7 years ago when california prices were at its peak. We are just now starting to break even if we were to sell, which we don't wants really. A lot of this is dependent on my health, as you know if you read my blog , I have an incurable cancer. But I'm doing well now. In the future who knows. I just lost my little job so, now I won't work again as its ,honestly too late for me and with my health issues. So we have a 5 year plan. My husband will retire with full SS. We will have a small 401 savings, but honestly I really don't know how it will play out. I've crunched numbers and it'll be tough. I'm a realist though and if we've got to sell and go live in a mobile, we will.
    It's not what we want but when the time comes it maybe necessary.
    I think your guys are in great shape and have enough money to do it all right.

    1. I hope you are right and we do have enough.
      It's tough going into retirement with a less than rosy financial picture.
      One of our strategies is to move out of the Northeast to an area that has a lower cost of living. I am not wedded to anywhere I have lived like some folks refuse to leave a certain area. You can make a happy life for yourself just about anywhere it you set your mind to it. Perhaps if you do get to a point where you can sell for a profit moving would help your plan AND you won't have to live in a trailer(tho I don't see anything wrong with trailer living as long as you own the land it sits on). 8-)

  7. I'm always trying to get the nut down. OUr water bill was $176 so I'm working on that. OUr electric was good at $76. We just need to get the house paid for and we will shave another $700 a month off. We are at about $2700. I'm just trying to get us at about $2000 a month. My goal is that by the time we get to retirement our SS will pay all the bills. Its a nice thought but we wont be able to retire for 20+ years but I will keep working on this plan.
    I think you are in great shape but moving by me seems to be cheaper.

    1. It's hard to work a plan and be excited by it when the dream is still 20 years out.
      Getting to a point with your nut where your SS will cover the bills is great and well worth striving for!

      Please tell me that your $176 water bill is NOT a month?!?
      Ours was always higher in the Summer when we had the pool but that seems ridiculously high!

  8. $176 is for 2 months. It is still gross and they are raping us.
    And yes, 20 years away is a long time to dream about. And it is hard to stay focused. With our luck we will kick off right before we get to retirement. I'm sure it will be something stupid too. LOL


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