* Just a post on my thoughts and ideas as we adjust to our new financial reality. *
So with Hubs retired and we are back from our grand road trip adventure, we have settled into our "new normal".
And so far, this new normal isn't too different from the old normal. 8-)
Especially until the 401K becomes available to us in October we needed to be seriously conscious of ALL our spending, especially the types that are discretionary to some degree.
Grocery spending and electricity and water usage have been scrutinized plus all "want" spending as well. I've made a concerted effort to only run energy hog appliances during off-peak hours(after 5 pm to 7 am). Not having to use heat or a/c has also gone a long way to keeping the energy bill down.
Hubs had a "light bulb" moment a week ago Friday. When he worked, he use to get $ out of the bank every other Friday, $200 a pop of WAM(walking around money). This is money he doesn't have to account for how and where it's spent. I gave up a long time ago with trying to get him to save me receipts so we could track all his cash spending.
When we had our retirement budget meeting back in June we agreed on $100 per person per month of WAM. Now that he doesn't need to buy coffee and/or lunch at work, plus he doesn't need to chip into office gifts, get as many haircuts and basically doesn't go anywhere, he really just needs a hundred a month for his wallet. If he needs to buy gas or something for the house, etc. or I send him to the grocery store for something he is suppose to use his credit card.
So he was telling me that Thursday that he was going to the bank tomorrow I just looked at him and asked why. Hubs said to get his WAM. I just looked at him and said, "You've already got your WAM. What? Are you out of money already?? I've still got my whole $100.".
He then went on to deny that he agreed to only getting $100 a month for WAM so I showed him the paper we wrote the retirement budget down on. I guess he thought I wouldn't remember or something. hahaha
I guess he finally realizes that his financial day-to-day has been impacted by retiring.
One thing I did when we got back from our trip was take an inventory of our canned/jarred/boxed food/toiletries/HBA/paper goods.
Here are the things we don't need to buy for the immediate future(I'd say we can safely hold off all this spending until 2018)---
* shampoo
* toothpaste
* tooth brushes
* mouthwash
* razors
* soap/body wash
* OTC meds
* hand soap
* dish soap
* dishwasher tabs
* laundry detergent
* bleach
* toilet paper
* facial tissues
* drinks
* cold cereal
* corn meal
* pasta
* canned tomatoes
* coffee
* olive oil
* peanut butter
* salad dressing
* croutons
And now includes tea bags after the Deal I gt on those on Friday.
Unless one of the items above is free, I am not buying them for the time being.
We've gotten quite a few projects completed or started around here since getting back from our trip. Other than having to purchase supplies for some of these projects it has been a low expense month in some ways. (Not counting paying school taxes and the healthcare insurance premium.) And speaking of premiums, we have also finally received 3 months of healthcare premium reimbursement. Yay!!! Going forward we will be submitting for reimbursement monthly so I don't have to use regular savings or monthly annuity income to cover this cost. 8-)
I am also staring a Sinking Fund for next year's irregular bills. In the old days, back when Hubs was earning a nice paycheck I could just cash flow all these bills without having to dip into savings. Now though we are living on half of what he use to bring home per month. In order to have enough saved up when each one comes due a Sinking Fund makes sense. It's sort of like your mortgage company requiring you to pay more than your actual mortgage each month so they can also pay the real estate taxes for you too.
Here's my list of irregular bills--
* home owner's insurance x 2(until the LA house sells)
* car insurance(semi-annual)
* garbage bill(quarterly)
* real estate taxes(annual)
* school taxes(annual)
* sewage(annual)
Presently this all accounts for $7654.77 worth of bills per year. Break that down monthly and I need to put aside at least $637.90 per month to cover these costs.
Starting in October I'll be putting $650 of our annuity into this Sinking Fund. I am figuring with deposits monthly and how our irregular bills flow month to month I'll be able to cash flow from this sinking fund through the end of 2018 if I start it in October which gives me a few extra months of putting cash aside(for a big bill due in March).
Here is how the Fund will play out(if no bills rise in 2018)......
October deposit $650-$84 irregular garbage bill=$566 carried forward to Nov.
November deposit $650+$566=$1216-car insurance $864.65=$351.35.
December deposit $650+$351.35=1001.35 with no irregular bills due.
January deposit $650+$1001.35=1651.35-garbage bill $84=$1567.35.
February deposit $650+$1567.35=$2217.35.
March deposit $650+$2217.35=$2867.35-$1371.85 real estate taxes + $430.68 sewage=$1064.82
April deposit $650+$1064.82=$1714.82-$84 garbage=$1630.82
May deposit $650+1630.82=$2280.82-$864.65 car insurance=$1416.17
June deposit $650+$1415.17=$2066.17-$1016.63 house insurance(if the house isn't sold yet)=$1049.54
July deposit $650+$1049.54=$1699.54-$84 garbage bill=$1615.54
August deposit $650+$1615.54=$2265.54-$668.00 house insurance=$1597.54
September deposit $650+$1597.54=$2247.54-$2102.31 school taxes=$145.23
October deposit $650+$145.23=$795.23-$84 garbage bill=$711.23
November deposit $650+$711.23=$1361.23-$864.65 car insurance=$496.58
December deposit $650+$496.58=$1146.58 with no irregular bills due.
I figure I'll be able to carry over $1146.58 of Sinking Funds into 2019 at which time we'll revisit paying the irregular bills that way.
February and December I have no irregular bills due. Not having any bills taken out of the December and then the February deposit helps me get ready to pay the real estate taxes in March.
Once we sell the LA house June will also not have any irregular bills due that month(and this will help a bit with paying the school taxes in September from then on).
Financially things are going ok for now. I suspect the electric bill will start it's inevitable climb in October once the heat goes on and won't let up until next April. Oh of the joys of living in the North East. ;-) We shouldn't have a problem though covering the high electric months of Winter.
I am hoping I may be able to keep our monthly spending down within our monthly annuity payment for normal expenses long term. This would mean just tapping the 401K monies for things like trips and the high deductible at the beginning of the year for the health insurance that we need to pay OOP before any benefits kick in. Thus the 401K monies would last even longer than we thought they would.
That's about all I can think of now on this subject. If other thoughts come up I'll address them.
Do you have Sinking Funds? Have they helped you stay on track with your money and bills?
Was there something that happened that made you realize the finances are different now once you retired?
Are you adjusting to retirement? What have been the challenges for you with it? What have been the unexpected benefits?
Sluggy
So with Hubs retired and we are back from our grand road trip adventure, we have settled into our "new normal".
And so far, this new normal isn't too different from the old normal. 8-)
Especially until the 401K becomes available to us in October we needed to be seriously conscious of ALL our spending, especially the types that are discretionary to some degree.
Grocery spending and electricity and water usage have been scrutinized plus all "want" spending as well. I've made a concerted effort to only run energy hog appliances during off-peak hours(after 5 pm to 7 am). Not having to use heat or a/c has also gone a long way to keeping the energy bill down.
Hubs had a "light bulb" moment a week ago Friday. When he worked, he use to get $ out of the bank every other Friday, $200 a pop of WAM(walking around money). This is money he doesn't have to account for how and where it's spent. I gave up a long time ago with trying to get him to save me receipts so we could track all his cash spending.
When we had our retirement budget meeting back in June we agreed on $100 per person per month of WAM. Now that he doesn't need to buy coffee and/or lunch at work, plus he doesn't need to chip into office gifts, get as many haircuts and basically doesn't go anywhere, he really just needs a hundred a month for his wallet. If he needs to buy gas or something for the house, etc. or I send him to the grocery store for something he is suppose to use his credit card.
So he was telling me that Thursday that he was going to the bank tomorrow I just looked at him and asked why. Hubs said to get his WAM. I just looked at him and said, "You've already got your WAM. What? Are you out of money already?? I've still got my whole $100.".
He then went on to deny that he agreed to only getting $100 a month for WAM so I showed him the paper we wrote the retirement budget down on. I guess he thought I wouldn't remember or something. hahaha
I guess he finally realizes that his financial day-to-day has been impacted by retiring.
One thing I did when we got back from our trip was take an inventory of our canned/jarred/boxed food/toiletries/HBA/paper goods.
Here are the things we don't need to buy for the immediate future(I'd say we can safely hold off all this spending until 2018)---
* shampoo
* toothpaste
* tooth brushes
* mouthwash
* razors
* soap/body wash
* OTC meds
* hand soap
* dish soap
* dishwasher tabs
* laundry detergent
* bleach
* toilet paper
* facial tissues
* drinks
* cold cereal
* corn meal
* pasta
* canned tomatoes
* coffee
* olive oil
* peanut butter
* salad dressing
* croutons
And now includes tea bags after the Deal I gt on those on Friday.
Unless one of the items above is free, I am not buying them for the time being.
We've gotten quite a few projects completed or started around here since getting back from our trip. Other than having to purchase supplies for some of these projects it has been a low expense month in some ways. (Not counting paying school taxes and the healthcare insurance premium.) And speaking of premiums, we have also finally received 3 months of healthcare premium reimbursement. Yay!!! Going forward we will be submitting for reimbursement monthly so I don't have to use regular savings or monthly annuity income to cover this cost. 8-)
I am also staring a Sinking Fund for next year's irregular bills. In the old days, back when Hubs was earning a nice paycheck I could just cash flow all these bills without having to dip into savings. Now though we are living on half of what he use to bring home per month. In order to have enough saved up when each one comes due a Sinking Fund makes sense. It's sort of like your mortgage company requiring you to pay more than your actual mortgage each month so they can also pay the real estate taxes for you too.
Here's my list of irregular bills--
* home owner's insurance x 2(until the LA house sells)
* car insurance(semi-annual)
* garbage bill(quarterly)
* real estate taxes(annual)
* school taxes(annual)
* sewage(annual)
Presently this all accounts for $7654.77 worth of bills per year. Break that down monthly and I need to put aside at least $637.90 per month to cover these costs.
Starting in October I'll be putting $650 of our annuity into this Sinking Fund. I am figuring with deposits monthly and how our irregular bills flow month to month I'll be able to cash flow from this sinking fund through the end of 2018 if I start it in October which gives me a few extra months of putting cash aside(for a big bill due in March).
Here is how the Fund will play out(if no bills rise in 2018)......
October deposit $650-$84 irregular garbage bill=$566 carried forward to Nov.
November deposit $650+$566=$1216-car insurance $864.65=$351.35.
December deposit $650+$351.35=1001.35 with no irregular bills due.
January deposit $650+$1001.35=1651.35-garbage bill $84=$1567.35.
February deposit $650+$1567.35=$2217.35.
March deposit $650+$2217.35=$2867.35-$1371.85 real estate taxes + $430.68 sewage=$1064.82
April deposit $650+$1064.82=$1714.82-$84 garbage=$1630.82
May deposit $650+1630.82=$2280.82-$864.65 car insurance=$1416.17
June deposit $650+$1415.17=$2066.17-$1016.63 house insurance(if the house isn't sold yet)=$1049.54
July deposit $650+$1049.54=$1699.54-$84 garbage bill=$1615.54
August deposit $650+$1615.54=$2265.54-$668.00 house insurance=$1597.54
September deposit $650+$1597.54=$2247.54-$2102.31 school taxes=$145.23
October deposit $650+$145.23=$795.23-$84 garbage bill=$711.23
November deposit $650+$711.23=$1361.23-$864.65 car insurance=$496.58
December deposit $650+$496.58=$1146.58 with no irregular bills due.
I figure I'll be able to carry over $1146.58 of Sinking Funds into 2019 at which time we'll revisit paying the irregular bills that way.
February and December I have no irregular bills due. Not having any bills taken out of the December and then the February deposit helps me get ready to pay the real estate taxes in March.
Once we sell the LA house June will also not have any irregular bills due that month(and this will help a bit with paying the school taxes in September from then on).
Financially things are going ok for now. I suspect the electric bill will start it's inevitable climb in October once the heat goes on and won't let up until next April. Oh of the joys of living in the North East. ;-) We shouldn't have a problem though covering the high electric months of Winter.
I am hoping I may be able to keep our monthly spending down within our monthly annuity payment for normal expenses long term. This would mean just tapping the 401K monies for things like trips and the high deductible at the beginning of the year for the health insurance that we need to pay OOP before any benefits kick in. Thus the 401K monies would last even longer than we thought they would.
That's about all I can think of now on this subject. If other thoughts come up I'll address them.
Do you have Sinking Funds? Have they helped you stay on track with your money and bills?
Was there something that happened that made you realize the finances are different now once you retired?
Are you adjusting to retirement? What have been the challenges for you with it? What have been the unexpected benefits?
Sluggy
Hi I was wondering if you plan on selling your Pennsylvania home at some point? Maybe buy a ranch or patio home in state or elsewhere ? Or do you envision staying put until you need to move for health reasons as you both age. Thanks sherri
ReplyDeleteThe plan was to move to LA when Daughter was located there but that plan has changed. We'll stay here for now until Daughter and College Boy are done with school and move out.
DeleteWe have a short list of places to retire to but nothing is definite yet. Staying here long timer is a possibility but not my preference.
Relocating to a ranch style home is preferable and will probably be what we opt for. thanks for asking Sherri.
Do you have homestead exemptions where you live? My car tag is an irregular bill.
ReplyDeleteYes, we get a discount on our real estate/school tax bill but it's only about $100 discount.
DeleteNo car/personal property taxes here.
WOW! That is amazing. I think my exemption is about $800. it pays to get old? Oh, the insurance is an irregular bill, too. So, I have three.
DeleteI have decided I am never going to let TheHub retire!
ReplyDeleteGood luck with that plan! lol
DeleteSinking funds have been one of my biggest challenges. I have come to realize that we have way more irregular bills than I originally thought! Wood, propane, various insurance premiums, tax prep, snow plowing, gifts (minimal at this point), chimney cleaning, HOA fees, lake dues, professional dues, auto tags, the list seems to go on and on! We currently escrow our property taxes and home owners insurance. At least that is one less thing to think about!
ReplyDeleteYes, I didn't realize how many irregular bills we also had until our income dropped. lolz
DeleteI have always kept an actual account ledger for the household bills. I have accounted for all known expenses, even the once or twice a year ones. I start with Shelter: mortgage (includes property tax), lawn service, plow service, trash service, septic cleaning, water treatment potassium, electric, cable/internet, propane annual service, propane, oil burner annual service, heating oil, A/C annual service, Netflix, cell phone, rug cleaning, home owners ins. Insurance: life ins. Personal care: clothing, hair care. Pet: vet, food/supplies. Food: grocery, restaurant/take out. Celebrations: Xmas, birthdays. Auto: insurance, gas, repair, tax/registration/emissions, car wash. Msc: newspaper, accountant, postage, household goods. Medical: savings for deductible, dental plan. So, I guess each line item represents shrinking funds. A few things I've noted in retirement: multiple income streams are best, home electric and heating/cooling costs increased as I am home more. I'm glad that I really didn't buy/replace a lot of my work clothes before retiring unexpectedly early. Moving frequently has allowed me to purge; the older I get the less "stuff" I want. I have put myself on a cleaning schedule. A little bit done everyday (outside of the usual laundry, kitchen stuff) helps me to quickly get through it, stuff gets done, the home is maintained to my standards. I continue to find ways to cut back on expenses. I have more time to do this. The kids are pretty much pulled off of my finances with the exception of the additional costs associated with 2 living with me. They contribute but it's not 100% reimbursement. I'm not yet eligible for medicare, COBRA was hideously expensive and only offered for 18 months. ACA ins premiums weren't much better. I lucked out in being able to get BC/BS thru a side gig. I'm paying premiums before taxes, so a benefit there but the premiums are higher than what I was paying previously. I am not able to have a HSA, so I've set up a separate savings account into which I dump $500/month to cover my $2500 deductible, followed by a $6600 cap after going to a 30% co-pay system. This directly impacts my monthly savings to be sure, but I am still lucky to have substantial savings monthly.
ReplyDeleteAs usual, you are on top of things. That's great. I wish we had off peak hours here. I've called and they do not do that here. I would use it for sure if they offered it. Nice savings for you. :)
ReplyDeleteThanks Belinda....I'll take anything I can find when it comes to saving on bills.
DeleteWe have two sinking funds. The one that has rent from Mom from living in our condo goes to pay all house and condo tax, all house and condo insurance and both vehicle insurances. The other I put in money every month holds the travel fund, household appliance fund, medical fund, and christmas fund. They all really live in one bank account together, all funds are separated on paper only. It's worked for us for several years since we moved here as our income went to half. It is much higher now after 5 years in business but we still use the funds as a way of making sure we have money for everything without affecting our immediate cashflow.
ReplyDeleteWe too have off peak hours and the funny thing is I notice that's when I've always done my laundry and other things that need electric. So that was a bonus to find out when my electric co. sent out the notice. Sinking funds are awesome but it does take a little figuring. Also we figure in stuff like car repairs and tires, plus the tags yearly and smog test for the car. We are lucky that we don't pay school taxes but unfortunately the schools are lucky in that respect. Take care.
ReplyDeleteNot sure if this would interest you, but DH installed two gas fireplaces in our house (one in basement and one in living room) to help keep our energy bill down. It gets really cold here in MI around Jan, so we only run the furnace when it's really needed. The fireplaces keeps us nice and toasty.
ReplyDeleteWe also have solar panels that has reduced our energy bill from $120 pm to $15 this past summer.
Vanessa
Hi Sluggy, this is Chris. Thanks for doing this post, I thought it was really good. I was very interested to see what you said about sinking funds, and also appreciate what CTMom wrote in the comments. For now, I have 2 sinking funds: one for our homeowners insurance and one for Christmas. I cash flow everything else. When we get the mortgage paid off, I will start a sinking fund for the property taxes (right now they are escrowed). I know when hubby retires that I will need to think about doing some of the other irregular expenses also. Right now I do the emergency fund/life happens fund that Michelle Singeltary talks about in the Washington Post for things like car repairs, medical, etc.
ReplyDeleteOther than daily living expenses we pretty much save up for everything. We have various sinking funds - college costs/emergency (they ain't going to college if we have an emergency), Home Improvement/Maintenance, Christmas, Car Maintenance/Replacement and Irregular Bills (like car insurance, vet bills, pool dues, life insurance). I created these savings funds back in 2006 and haven't changed a thing- works perfectly!
ReplyDeleteFive sinking funds here: taxes and insurance, gifts, house repairs, travel, and cars. We also take out a monthly allowance" for: take out food, small household items/clothing and our own allowance. We each get $300 a month. We found less then that (we can afford it) we each became a bit irritable about not being able to just get things. He buys tools and things for the house. I buy extra little things for the kids and do my hair. Going from $400 to $100 is.a pretty big jump.....
ReplyDelete