Our Life Style Changes Russ Leonard 4-20-15
There have been hundreds of articles written on what percentage of your pre-retirement income do you need to maintain your life style throughout your retirement. I can not understand how you can come up with one number that would satisfy most situations. Besides, who says that you need or want to maintain your current lifestyle? As you age your priorities change. When you are 80, it is doubtful you will be enjoying the same activities that you did when you were 60. I am fortunate to have very few physical limitations considering my age. Even still, there are many things that I used to enjoy that I would no longer consider enjoyable. Laying on a cold garage floor underneath a car for 8 hours immediately comes to mind.
You may downsize from your current home. You may decide not to be a home owner at all and rent or buy a motor home and travel. Before you can calculate how much money you will need during your retirement, you need to give thought to what you will be doing during your retirement.
My ultimate goal is to move out west, own a very small home that will serve as a home base and travel in some sort of RV for about 1/2 of the time. My wife no longer gives me the evil eye when I mention this, so I am making some progress. I am hoping that she eventually gets tired of listening to me and agrees just to shut me up. In the mean time we have made some life style adjustments that have drastically reduced our already small budget. I would like to share them with you.
I now work out in my home gym. The gym that I had been going to was near work. Gym membership savings, $382.00 per year. Gasoline to commute to the gym, $1800.00 per year. Yes there are closer gyms, but that is what I am really saving. We used to go out to eat once a week for dinner. We now go out to eat 3 times a month with two of those times being lunch. I also no longer have any alcohol with my dinner. I have one bourbon a week on Saturday night at home. Even though we did not go out often our yearly savings are still at least $2000.00. We have eliminated our lawn service. I have plenty of time to fertilize my own lawn. Yearly savings, $500.00. We had 4 cars, we are down to 2 for now. We will never have more that 3 in the future. Current property tax and insurance savings, $1500.00 per year. We used to fly everywhere on vacation. Some of these trips were not cheap. We neglected travelling in our own backyard( New England). We are now doing more local travel by car. We will still go out West occasionally but in the meantime we are saving at least $7000.00 per year. I now pay attention to the price of our groceries. I am not a coupon clipper but I do shop on 5% senior Tuesdays. Annualized demonstrated savings, $600.00 per year. Those are some of the areas of the biggest savings. The quality of our life has not been reduced at all and we are saving more than $13,700.00 from our already low pre-retirement budget. Just to let you know, even if we maxed out our medical, we would still be living well on 35% of our pre-retirement income.
Your Spending Lifestyle Russ Leonard 4-19-15
Some people may refer to the way you spend money as your spending habits. I prefer to think of it as an aspect of your life stlye. Second only to how you treat your body through diet and exercise. We are not tight, cheap, miserly or even frugal. I would say we are thoughtful spenders. Being that we justify the want or need versus the expense. I can part with money easier than my wife can. In over 36 years of marriage I can not think of one occasion where my wife disapproved of something that I bought. We also have never had even one argument about money. I know that is very rare in a relationship.
We moved into our house right after our Honeymoon. We put down over 60% on our house. We did that because we could and to keep the payments to a level where the bank would approve us. Even with our large down payment we barely got approved because we did not make much money in the eyes of the lender. We lived from paycheck to paycheck for the first 2 years of our marriage. If I had $3.00 in my wallet and I found out that my wife only had $1.00, I would give her one so we could both have two.
When you live like that, every dollar that you decide to spend becomes an important decision. It was important to us because we had discipline and we would not spend a penny that we did not have. In other words we never had credit card balances. I do not understand how someone can think it is okay to charge an expensive dinner or trip and continue paying for it long after it is gone. To me that is a case where the "want" won out and the "need" lost. If I am to believe the statistics on the average credit card balance in this country it looks like the "wants' are on a winning streak. Something to think about.
Stop Bleeding Money Russ Leonard 4-17-15
You may have heard politicians joke about a Billion $ here and a Billion $ there and before you know it you are talking about some real money. Scale that back to your own spending habits and it might read a dollar here and a few dollars there and before you know it you have spent a lot of money. Small purchases rarely get the attention or thought that they deserve. It was only $6.00. If it was only $6.00 four times a week for 5 years it would be $6240.00. I could easily ignore $6.00, but not $6240.00.
I was never one to count all my money and analyze every cent I spent. The exception to that was prior to my retirement when I did just that to document my spending habits. I was always aware of the long term affects of continued small purchases. I would like to share some of the ways that I ended up spending far less than my peers with the same income. From the outside it may have appeared that I was making more money than they were. The reality was that I was not bleeding money all the time. When the time came for a big purchase like a car or trip, I had the money.
The daily coffee and donut. First I have never had a cup of coffee in my life and have not had a donut in over 30 years. For this example let's pretend I enjoy both on a regular basis. If I did I would buy the donuts in quantity and have an economical way to brew my coffee at home. There are at least 6 coffee and donut shops in our town. Every morning there are lines of cars in the drive through lane backing up to the main road. For the sake of argument let's say you spend $4.00 more per day than you would have if you enjoyed these items at home. Let's also say you do this 5 days per week. If someone walked up to you with a check for $15,600.00 and said that this could have been yours if you had your coffee and donuts at home for the last 15 years, how would you feel? If your answer is that it was worth every penny and made you happy, good for you. If it makes you take another look at your habits, even better for you.
The point is not to deprive you of the things that you enjoy. It is to associate a long term cost with a certain aspect of your daily life. I just picked coffee and donuts to help make a point. It just as easily could have been brown bagging it verses eating in the company cafeteria. I had the big cooler under my desk for years. I always brought my lunch and snacks to work. I did it for both economical and health reasons. Now that we are discussing eating at work, let's look at vending machines. I always looked at them as money grabbing monsters that charged a crazy amount of money. I admit there were rare occasions when I would feed the money grabbing monster my hard earned money. Very rare.
Four or five of these little examples combined could be a college education for one of your children in the future. In my case it helped me retire at 57.
Financial Compatibility and Saving Russ Leonard 6-8-15
If not for the fact that both my wife and I have similar ideas on spending and saving, I doubt if I would have been able to retire early. Maybe our marriage would not have lasted so long either. The fact that I ended up with a spouse that is so financially compatible is pure luck. Being 5'10" tall, with big blue eyes, hair down to her waist, wearing 3" heels and a mini dress, I am sure financial compatibility was the furthest thing from my mind when I first met my future wife. So I definitely lucked out in more than one way.
Considering that more than half of all marriages end in divorce and financial problems are one of the major causes, it is surprising how little attention financial compatibility receives. I first realized that we both had similar views on money, just before we got married. We were looking for apartments and Marilyn calmly said that we should just buy a house. I knew that I did not have enough money for a house. I had no idea if Marilyn had 20 cents or 20 thousand dollars. The topic had never come up. I was surprised to find out how much she had managed to save. It was far more than I had. I had also paid for 100% of my college so we will use that as my excuse. So I found out I was marrying a saver. By pooling our resources we were able to buy a house and move in at the end of our Honeymoon. On a side note, we payed for all of our own wedding.
I stated in another article that we have never even had one argument over money. It may be hard to believe but is totally true. I generally take care of the finances, only because Marilyn wants me to. I am better with numbers than she is. She could have been a Spelling Bee champ. Even though I take care of the finances there is 100% transparency. We never have and never will hide anything from each other with regards to money. We totally trust each others judgement and never question each others purchases. Any large purchases are always discussed before they are made. All of our accounts have always been joint accounts.
We also value the same things in life. We do not dress to impress. We never felt the need to keep up with the Joneses. The actions of others never have any influence on our own spending.
No matter what you read there is always a constant bombardment of investing advice from articles and adds. I do not want to diminish the importance of sound investing advice, but if you can not save to begin with there is obviously nothing to invest. I believe that anyone could double their savings rates if the effort was made. It would take discipline, cooperation, common goals and transparency between the spouses or partners. It might mean you buy the Honda instead of the Acura, etc. Spending and saving should be thoroughly discussed prior to marriage or moving in together. It should not be left to chance. We were lucky, many are not.
When both partners have the same definition of necessity and luxury it makes it much easier to save. If you look up the definition of luxury, words like sumptuous, grandeur and extravagance are used. I have never seen any of those words associated with prudent living. It seems that many young people today confuse luxury with necessity. There now seems to be some strange sense of entitlement that did not exist during my youth. A marriage or union where both parties chose extravagance over prudence will most likely result in serious problems down the road. If one of the parties is a saver and one is an extravagant spender, I am sure there will be some tense moments, if not all out battles.
Being open and honest at the start of a relationship with regards to finances, is critical to it's future success. Money may or may not be the root of all evil, but if you don't have enough because of poor spending and savings habits it will doom a relationship. Maybe in addition to a blood test, there needs to be a course in financial compatibility before a marriage license is issued?
$30.00 snow shoes. most fun per dollar of anything that I ever bought.
M42 Great Nebula in Orion. Taken with my Canon T3i camera body on a 6" reflector telescope. Celestron Advanced VX mount, auto guided. single 210 second exposure
Hose repair kit installed two days ago.
Dusting off yesterdays pollen.
No Need to Break the Bank to Enjoy Your Hobbies Russ Leonard 5-1-15
I happen to be the type of person that has a variety of interests and enjoys many hobbies. Some of my hobbies date back to when I was a young kid and some are relatively new. I have never been the type to rush out and buy the best camera or telescope or piece of sports equipment. There is no way to know if a new interest is going to develop into a hobby that you may enjoy for years. Some hobbies can generate cash flow, some can also be investments but for most people they provide a means of entertainment and enjoyment in life. To me thay are an integral part of my retirement. I would like to share some of the ways that I have approached my hobbies and how I have saved money in the process.
I have enjoyed hiking for most of my life. I really enjoy winter hiking. If you are going to be out in sub zero weather you have to be warm and safe. Do I have good gear? Yes, but surprisingly inexpensive gear. This past February was our coldest month on record. I was out every morning just before sunrise either walking, hiking or snow shoeing. I do not have an expensive North Face or similar jacket. I have an Old Navy, lined, down filled coat with detachable down filled hood. I have had this coat for about 8 years. I have used this in extreme weather conditions with air temperatures of -20 deg. F and wind chills of -40. I paid about $20.00 for it during an end of season clearance. Yes, it is heavier and bulkier than many of the top name coats. It is probably warmer too. My boots are a different story. Anyone that spends a lot of time outdoors in the cold, knows how important it is to keep your hands and feet warm. I can remember my feet getting cold years ago during many of my winter hikes and camping trips. In 1997 I broke down and bought a top of the line pair of Sorel Arctic lined boots. They were close to $100.00 18 years ago! I still have them and used them this past winter. For the amount of use they have given me, they were cheap. They were also necessary, while the expensive coat was not. I enjoyed snow shoeing this past winter on many cold mornings. Five years ago I bought two pairs of snow shoes and poles for $60.00 at a local surplus store. Five years later I am still using them. I made the mistake of taking my wife up a mountain in sub zero weather for her first snow shoeing experience. I now have a spare pair. The only modification was an extra pair of shoelaces to keep the back strap from slipping. For the amount that I use them they are fine. Would I use them on a two week trek in a remote area, of course not. Before you shell out the big cash, think about how much use the item will get.
With my astronomy and photography hobbies I started out slow and inexpensive. You need to see what level your interest will stabilize at. When things are new they are exciting and you may have they urge to go all out and spend large sums of money. What happens if your interest fades a few months later? I can see myself being involved with photography and astronomy for many years to come. I have combined the two and I am having a lot of fun in the process. I have intermediate level equipment. I will never get top of the line equipment. I would much rather develop my skills and get better results with what I have. I am never going to do either for a living.
In general I look for value and I do not rush into anything. I do my homework and gather the information that I need before making any substantial purchase. If the best is required I will buy it(my boots). I do not need to impress anyone with some flashy name brand. There is way too much of that these days. Shop smart for your toys. Look online and make sure you go to a surplus store for outside gear. I have seen quality name brand kayaks for less than half of their normal price at a local surplus store. There may be a kayak in my future. Satisfy your needs with affordable quality that is appropriate to your income level. I like cars and I Wanted a Nissan GTR. I could have bought one. I did not Need one. If I did buy it I would still be working. I would rather be retired, driving my Challenger RT than driving my GTR to work.
Simple but often Overlooked Russ Leonard 5-29-15
I consider myself to be practical and certainly not wasteful. These traits are common to all aspects of my life including the way I use resources. I like to conserve water when possible not only to save money but I also believe it is the right thing to do. I live in an area that generally gets plenty of rainfall. That does not give me a green light to waste it. We have city water and city sewer. We basically pay for our water twice, coming in and going out. The obvious flaw with this is that any water used outside does not flow into the sewer line but we are are charged as if it does.
I would like to share some ways in which we save water and money. There are no ground breaking revelations here. Maybe by reading this you will duplicate my efforts if you already have not.
I like to keep my cars clean. I am a car guy. A dirty car bothers me. I pay a lot for them. They are not investments and they deserve proper care so as to not depreciate in value any faster than they already do. Do I wash my cars often?, NO. I make sure they are waxed well and clean them regularly with a California Duster. For common road dust and pollen a Duster works great. Dusters have their limitations, they can not be used for caked on dirt or bird droppings. They work better as they age and last for many years. This time of year when my black car turns yellow every day from the pollen they are fantastic.
Most people will fix a faucet that is leaking inside their house but often ignore a large leak outside. Even a small outside leak can result in wasting hundreds of gallons of water per month. Many times these leaks are hardly noticeable because the water merely gets absorbed into the earth. Two days ago I fixed a leak where the female hose end was crimped on to the rubber. Simple replacement kits are available at any home improvement store for a couple of dollars.
Have you checked the float height in your toilets? Toilets with tanks all have an adjustable float. There is no reason to completely fill up the tank for each flush. Have you put water savers on your faucets? Do you have a water saving shower head? Do you take very long showers. They might feel good but they not only waste water but also dry out your skin as well. Do you size your washing machine loads appropriately or do you just leave it set on the largest setting all the time?
Do you water your lawn? I try to keep it to a minimum, but sometimes it must be done. Water in the morning, not in the heat of the day when evaporation will be an issue. In the morning I walk by several houses with sprinklers on timers. It annoys me when it is pouring rain out and their sprinklers are on. This can be easily fixed either manually or with a simple update to the system.
We used to have a pool. Pool leaks can waste thousands of gallons of water. They are not always easy to find but need to be addressed. Like I said, nothing new here, just food for thought. Save a few dollars and help the environment.