* 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
