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For the 40-60 crowd: how do you spend/budget, etc?

9K views 77 replies 27 participants last post by  DustyDog 
#1 ·
I'm trying to get us simpler. Drives me crazy how much time my wife spends entering every single receipt into software...buys 5 things, returns 4 because the 5th one was from the cheaper store. All those returns are more entries into the software.

We have a guideline for our coming retirement, that sets an annual spending limit, let's call it $20,000. We picked the figure (that's not the real figure) because for years, we were under it, without really trying. The year we started setting up for retirement, I insisted we buy younger cars, so I don't spend my retirement fixing them. So, out with the 25 and 28 year old cars, in with a 3-year old for me, and showroom-new for her. But that meant we spent $50k on cars alone that year and she's freaked that "now that it's been done once, it'll be a habit."

When I talk to other 60-somethings about how they keep spending in check, not a single one says they have a budget, nor do any of them use any kind of software. Not one. Usually "our retirement guy says we can spend this much this year" and how much we spent last year. If we need to adjust, we eat out less and stuff like that, or we'll ask him if it's OK to replace a car this year. Nobody said anything about checking account balances monthly, or having software report what categories of spending hit the budget or not; nobody said "this much for house, that much for cars". I want to get there...where it's just working and we don't have to obsess and talk about it daily.

How do you do it? Know how much you can spend, and stay within it? Is it just a matter of knowing what lifestyle you've been leading and keep leading it with no changes?
 
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#56 ·
Nah, most of the students worked. Mine worked at Best Buy, and then at Lowes. Unfortunately, the $2000 or so she earned each year didn't even make a dent in the cost.

Our lovely governor slashed spending on schools, too - public as well as college, which didn't help. That one, I just don't get. You slash funding to public school, double the cost of college, and then blame all the people out of work since you can barely get a job without a degree, and slash welfare and benefits on top of it.
 
#64 ·
Our lovely governor slashed spending on schools, too - public as well as college, which didn't help. That one, I just don't get. You slash funding to public school, double the cost of college, and then blame all the people out of work since you can barely get a job without a degree, and slash welfare and benefits on top of it.

Sounds like you live in same state as me. Or, almost all states have done this.
 
#58 ·
I dunno about the rest of you, my Ex divorced me and all the budget and financial issues were solved, at least for me. I make as much money as I want, I buy what I want, when I want it. I decide if I want primo or regular. Now I have more money than I ever had at any other point in my life. I actually have a saving account - with real money it. In my married life, I felt that every time I had two dimes to rub together someone (guess who) was bumming a quarter off of me.
 
#63 ·
Budget? Ha, that's a good one. DW thinks that we have a bottomless pit of money - since we both work, she can spend what she likes. This is why I bring home a set amount each payday (2X month) and any excess stays in the business account - if she doesn't see it she can't spend it. My business partner and I track our capital balances on a spreadsheet so the cash is mine - I'm able to invest it through the business.

My mom wants to give my brother and I money (like $10K each) and I've told both of them not to let my wife know - if she knows, she'll have it spent or offer it to her idiot drama queen sister. I'll invest it through our business investment account where I can track it.
 
#68 ·
The more you write OP the more it sounds like you both have an unbalanced issue with money. You are both so wrapped up in money that it seems you are wasting the life you currently have in favour of a retirement that will possibly very lonely anyway.

We don't budget here, we simply live withing our means and have a balanced view of enjoying the here and now while the retirement funds are dealt with quietly in the background, no stress.

There is a saying "every 60 seconds of unhappiness is one less minute of happiness."
 
#73 ·
You are both so wrapped up in money that it seems you are wasting the life you currently have...
I politely disagree.

In my 20s, I just spent - whatever seemed normal, I did. "Normal", of course, doing what friends did, going out often, etc...saving nothing.

In my mid-30s, I split from my ex, and gave her everything. I believe in getting things done and over with.

But now I applied wisdom: In one's 30s, if one has zero net worth, retirement will be feasible only if one applies a little thinking.

It didn't take long. A quick study showed that as long as I put the max into 401k and IRA accounts, retirement would just happen and be wonderful.

One litmus test: Is your current spending at or below the annual amount you will be able to draw when you hit retirement? I discovered that for me, putting max into 401K and IRA would do just that.

Cutting spending was trivial. A tip from a magazine said to simply put 5% more into savings every month than you used to. After a year, bump it up to 10%. Then 15%. If you're not actually budgeting, you won't notice the 5 or 10% levels, and probably not the 15%.

I didn't cut myself off from anything.

Except in 1999-2001, when our household income plummeted 70% due to the high-tech crash in our area...and we chose to not move so that wife could continue working on her degree. Those are the 3 years when we really did shut things off - it was like a game, how low can we go and still be comfortable and happy.

I learned that what my generation used to say is true - money does not buy happiness, and the best things in life really are free.

Spending more does not beget happiness...so, the fact that a person saves doesn't, in any way, say that they are "wasting the life they could have had..." What life comes from spending?

Because my wife is so obsessed, I now discuss money WAY more often than would be my preference. She brings it up. Her views seem distorted, and I come on here to see how other people do things, to see whether she's closer to the norm, or I am. My preference would be to dump the software and go back to exactly how I used to do things, which is "don't worry about it".

We don't budget here, we simply live withing our means and have a balanced view of enjoying the here and now while the retirement funds are dealt with quietly in the background, no stress.
I gather that "enjoying the here and now" means spending money? I just don't think that way.

Once you have housing and transportation taken care of, life is relatively cheap. We have a paid-off house and never use loans to buy cars or anything else, so the burn rate stays low even if we "go out on the town" now and then.

There is a saying "every 60 seconds of unhappiness is one less minute of happiness."
Agreed. And every new item you purchase is more maintenance. Minimalist living's purpose isn't to save money - it's to increase the Joy / Stuff ratio.
 
#74 · (Edited)
To control spending, we developed an envelope system. We bought plastic envelopes at the office store, since paper ones wear out.(Dave Ramsey) Place a max amount that is allowed to be spent in each category, or saved in each category. (As time goes on, you will find you need to adjust the amounts that go into the different envelopes. However with what your wife has already been doing, she may have a pretty good idea of what you spend in the different categories.)

The main time consuming part is getting the cash from the bank, and filling the envelope each month. That takes only about 2 hours, and then you are finished for the month. No more hours on the computer as your wife is doing.

When you buy something, you put the receipt in the envelope the cash came out of. No need to enter anything on the computer, because at the end of the month, all the receipts in the envelope should not exceed the cash that was put in that envelope. At the beginning of the next month, when you are restocking the envelopes with cash, you take out the receipts and put them in another envelope labeled for that category, and you will fill those envelope all year. That way if you need a receipt, you know which envelope it is in.

At the beginning of each month, go to the bank and withdraw the necessary cash (in the denominations necessary) to fill the envelopes, move cash to the savings, etc.

With regard to the spending part, spend the $ directly out of the appropriate envelope. When the money is gone, there is no more spending done for that category that month!

If you forget the envelope and have to use a debit or charge card, write on the top of the receipt the name of the envelope the expenditure should have come out of. As soon as you get home, take that money out of the appropriate envelope, scribble out the note you made on the receipt, and put the receipt in the envelope. Put the cash you just took out into a separate envelope called, "Back to the Bank." You will deposit the money back into your account each month, so you don't overspend.

The "Back to the Bank" envelope is a huge boost to feeling good. It's awesome to deposit hundreds of dollars back into your bank account each month that otherwise would have been piddled away!!

Our main problem was overspending on food (eating out, imported cheeses, other luxury items, overstocking: things expired/went bad before we ate them, etc.) For our food now, we allow a certain amount per person per day. We then split the total into 4 envelopes, dated 1-7, 8-15, 16-23, and 24-end of month. The reason for the strange dating is that there are more than 28 days in a month. The way they are dated allows for enough money for the last week. Splitting the food $ into 4 envelopes keeps us from spending the whole month's budget in the first two weeks (which would be easy to do, the way we eat and used to stock up when items were on sale.)

In the past we would not have $ for big things that would come up and would go into the red to pay for them. Now we pre-save for those types of things.

Have a monthly "eating out" envelope that is separate from you weekly grocery envelopes. When it is empty, you don't go out again, until the next month's budget.

You each need your own "mad money" to spend (or save) the way you wish, without having to ask. Coffees, lunches with the guys, or girls, golf membership (if only one is into golf) makeup, clothes, motorcycles, ladies' spas, makeup, trips with the girls/guys, etc. are spent out of each person's personal mad money. You each have the same amount.

This has worked so well for us, that we have also managed to pay down $20K of debt in 1 1/2 years! Once the debt is paid, we will sock away more money for retirement, for a new car, and increase our food budget a bit.

We will forever live on a budget from now on. It is empowering! It feels like we have more money now, instead of less.

It helps to have something to start with. If you wish, I can PM you our spreadsheet. Then you can tailor it to your lifestyle/needs.
 
#75 ·
You want to know what all this saving money gets you? Some die at retirement, or get sick and end up in nursing care, or just age and one of you needing medical or nursing care. They take your money at a clip of 8k a month per person. You eat up all your savings in a few years then the state takes the rest of your assets, moves you to a sh1tty nursing home and your die out of boredom. Was it worth it? Live like Raymond Burr, spend every dollar you have, die with no money in your pocket. Enjoy your money while you are healthy enough too. Besides the govt wants us to work to 70 now, and I'm betting our country will go bankrupt before I ever get to retire or I will die from working so many years.
 
#76 · (Edited)
First of all "saving money" does not add time to your busy schedule. "Not spending" saves a lot of time. I haven't seen the inside of a mall in over ten years and don't miss them one bit. Once you stop viewing "shopping" as entertainment, the world gets happier.

Every time one of my pals has to fix the navigation system on a car, I'm glad my cars don't have them. Ditto the "eco" folks across the way who spent $20k on a central heat pump then $4200 in four years to repair it (3 year warranty). I rebuilt our entire electric furnace in two hours with $120 in parts...good for another 50 years.

I get way more entertainment out of riding 100 miles in a day on a bicycle, through the trails in the foothills, than I get out of the entire ownership of a $350 television set.

I'm not cheap, nor frugal. I just measure, very carefully, what complexities I put into my life. If they increase the amount of time I spend in nature or in community, then I consider them favorably. But if it takes me away from either, then I view very cautiously. I spend on certain tools - a riding mower slashes the time required to maintain my modest acreage, so I have one.

What did I gain from getting out of debt before turning 45? My employer knew that I did not need a job, therefore they didn't give me crap assignments. When I told them that my personal financial goals required me to consider looking elsewhere, they made sure I was rewarded for the successes I had given them in the past year. When I told them that it was important to me to have an impact on management decisions, they put me on the Mergers and Acquisitions team, and I influenced what other companies they bought. Not bad for a lowly undergrad.

And, when the company got bought and the acquiring company shut down 25% of our divisions, I had no problem walking away. The severance check was for only a few months, and I was only in my mid-50s. I looked at how much moolah we had, and realized that we could do just fine without any more income to age 70, so we could hold off SS payments until they were maximum. Mind you, that might not have been my choice...but my wife prefers it, and the spousal benefit, upon my death, will be contingent on how much I was receiving before death. To me, it doesn't matter, but to her it does, so I made this decision for her benefit.

No, the government does not want us working to age 70. The US government is in a constant struggle to defend the economy and if they can get people to retire sooner, it means more jobs - a lot more, since younger employees usually get paid less. That's why it's possible to draw SS at age 62 instead of 65 and that's why, if you get laid off at age 55, you can draw from your company 401k without penalty.

The variation in payout from SS is dependent upon your age, and they've worked out the formulas so that it doesn't matter to them, if you live to be the average age. For every $1 that you'd get by starting SS at age 62, you'd get $1.75 if you begin at age 70. You're also likely to not live as long if you begin at at 70 and to the gov't, it works out the same. So, they don't care. (figures valid for those born 1955 or later)

It takes little effort to learn to enjoy happiness, not materialism, and once you do, it takes very little to live. My wife and I live what we think is a modestly luxurious life - we go out to eat a couple times a month at local family-run places, we have a potluck at least once a week, we escape to the beach a couple weekends a year, we don't delay vehicle maintenance and so on. How much a year does this lifestyle cost us? Approximately two minimum wage jobs. Money isn't enjoyable to us...people are...exploring nature is....learning new things is...none of that is expensive.

You brought up two things that are very important to consider. First, how long will you live and how will your health be. Nobody can predict, but if you know your family history, then you can come surprisingly close. If you've taken care of yourself, you'll live 5-10 years longer than your relatives one generation older, and have the same number of, or fewer diseases. If, however, you've been less active and eaten badly, you may do just the same as them, your poorer lifestyle being compensated by more readily available medical help. Based on a study done by the life insurance actuarial study group (I forget their name), only one in 2500 people will live significantly less or more than this basic estimate.

To give two extreme examples:
My pal, call him Bill. His parents both died before 70. Being farmers, they were fairly physically active. Both smoked, although not heavily, both drank, again not heavily. Bill, although he enjoys the outdoors, had a desk job his whole life, and has been somewhat overweight - about 15 to 20%, on the verge of obese, but not there. Heavy smoker until 30 or so, then he decided to quit. Has a glass of wine once a week at the most. So...less physical activity (bad), overweight (bad), but didn't smoke all life long (good) and rarely drank (good). The things that went bad for his dad are going bad for him at the same ages. So, in his case, he's likely to make it to 70 but not much more. For him, it was a wise choice to take the early-out he was offered at age 58...they gave him two years pay, he only had to cover two more years, then he took SS at age 62.

This other guy, we'll call Carl. His grandparents smoked like chimneys and drank like fish. They never made it past 8th grade and worked very hard labor-intense jobs like coal-mining and timber, and they had classic diseases that come from those jobs. All four of them made it past 90, and one past 100. His parents had sit-down jobs, neither smoked nor drank, and were slightly active during the summers when they tended a small garden. Although they really didn't get much exercise, they did maintain their weight until recently. His dad is now 98, his mom 93, both with enough mental faculty to continue living in the home they've had for 35 years. While they have ceased doing maintenance like painting, they still mow the lawn and do typical dusting and cleaning and making their own meals. Carl's been much more physically active, having chosen to enjoy the heck out of hiking mountains, has a large social group (social group activity is a bigger indicator of longevity than diet, weight or smoking!), studies how to eat well and enjoys his own cooking, maintains his weight, has a very happy marriage. If someone is likely to live longer than his parents, it's Carl - and his dad is 98! So, Carl should probably be ready to break 100.

So, yes, understand you may die tomorrow - but pay attention to the odds...because if you don't die tomorrow...and you think you can't be happy without spending...you'll have a lot of unhappy years.

The second issue is cost of nursing homes. Statistically, the more you pay per month, the less time you spend in it. A full-care memory home (most expensive there is) is under $5,000/month in 45 states....if you're in a costly state and haven't planned to be old in a costly state, most people move. Average stay in a true "memory care" facility is only 6 months. There are exceptions, but again, the stats were something like less than one in 10,000 make it past a year. And if you do? You don't remember any of it! If I can't remember yesterday, I probably don't care if I slept the night in a box under a bridge.

My wife's folks are in a senior facility now. They're bitter angry people who've never taken care of themselves. Both had debilitating strokes in their late 70s and can't take care of themselves. They share a two-bedroom apartment in a facility where a nurse checks on on them twice a day. If they can't get in their scooters to make it to the cafe for meals, they'll be required to bump up to the next higher level of care, which costs more. Presently, they're paying $3200/month for the two of them. Sounds like a lot? Not so much, really - bear in mind, because they are in this care facility, they are not paying mortgage/rent (they hadn't been for decades anyway). Cable TV is provided, meals are provided, laundry is taken care of without them even buying detergent. They no longer have vehicle expenses.

We get freaked out at the cost of senior care because we think it is "in addition" to our present expenses - but when we finally need to go into that form of living, nearly all our current expenses are fully replaced by the monthly fee. Before the later strokes debilitated them to this level, they were paying $2600 or so...the $600 change is for the twice daily nurse visit and presence of 24 hour a day on-call medical staff.

So...things are as they are, and 99.9% of people do fine, and it's up to each of us to decide if we want to do the simple things that 99.9% of the people do, or freak out because we fear we'll be in the 0.1%. My wife chooses the 0.1%, but I don't....because...just because.

As to the gov't going bankrupt - it technically got there ten years ago. What I've noticed during every economic downturn is that the companies that remain work out ways to work on lower margin and lower cost stuff becomes available - companies don't want to die, so if everybody has less money, they figure out a way to make their products and services more affordable. Our system adapts...I've seen it with my own eyes over and over.
 
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