Nuts and Bolts...Laying it All Out There

Lately I've been getting a lot of requests for the nuts and bolts of my frugal fixed income retirement. So, I figure it's time to put it all out there. For the world to see, if you will. Now, I year after I downsized, somewhere in 2014, I wrote the article on the sidebar, about retired on $30,000 more or less. Now, things have changed. Not in terms of my living situation, but since then bills have changed, I've changed my medical situation and other things have come along. So, before I talk about how much I'm spending on groceries, or how much I spend on this bill or that bill-it's only fair that I put it all out there. And admit that I have a couple unique situations.

For those that haven't read the sidebar, or if I wasn't specific enough, these days I have a pension and social security, as opposed to an IRA or 401K. In 2019, my total income is 2850 each month, making my income closer to $34,000, than 30,000. A couple costs of living increases and moving to a no fee Medicare advantage plan from my previous insurance mainly made those increases. This is after Medicare part B is taken from my Social Security. I also add another $200 or so as income, depending on the time of year-because I pay all the bills which are in my name and I am re-reimbursed by the person I share my home with (my sister). It's easier to do the math that way than divide something in half.

It needs to be said here: When I talk about a fixed income or being the Frugal retiree, it is because I have this fixed income every month, not because I live in poverty or because I live only on Social Security. I know people who do live that way or who will, including the sister I live with, for reasons completely beyond their control. I have a regular monthly income coming in as opposed to a large pot of money to access in case of emergencies and so on. But I fully acknowledge that my monthly pot is possibly more than some pull each month, and am not personally equipped to talk much about social security or semi poverty living-except through the eyes of the person I live with, who still works at the moment, and the other seniors I socialize with.

So, counting my reimbursement, the money I have coming in is just over $3000 a month. Out of that, approximately $1600 is taken up by those regular monthly bills, knowing that that can vary depending on the time of year and specifically how much outside watering is being done.  This generally includes rent of $700 (****see below****), a water bill that is generally $50 monthly at the minimum (welcome to Colorado), a combined gas and electric bill, rental insurance, car insurance, a cell phone bill, a cable bill of $250,  and $100 in debt. Until recently it also included a $200 car par payment and medical insurance.

In theory, that leaves the frugal retiree with $1450 as an average when we add in the most temperate months. Summer air and watering and winter heat (I keep it at 72 in the day) can change that as much as $200 depending.

But of course that is all not the Frugal Retiree's monthly spending most months. Working with the $1450, on the good months $135 goes into a medical fund and $200 goes into a sinking fund (which should be bigger and is really dedicated to car issues and travel). That leaves the Frugal Retiree with $1150, and out of that she spends on the following categories:

• Groceries and eating out (the biggest category, obviously. I was not part of the eat out every night crew in my working life, so I enjoy dining out in retirement)
• Entertainment (lunch bunch, the occasional movie or concert or play, with everything else being free-library programs, free concerts and festivals, hobby get togethers)
• Hobbies (fabric, yarn and art supplies as needed. My next hobby needs to be one that needs no inventory.
• Clothes (I enjoy casual, colorful clothes, am art on clothes and vary in weight. Enough said)
• Personal care (monthly haircuts and pedicures at least every two months as I cannot reach my feet properly)
• Misc shopping (stuff for the house, kindle books, gifts, even Olli class payments-Im just not the type to break this down into ten categories)
• Adventure/Travel (cost of day trips, and such. What actually happens here is any spending left from the above categories goes into the sinking fund and gets pulled from that as needed and that is stored in cash or in a savings account)
• Subscriptioons-which vary and should be put in their own category and right now include Netflix, Amazon Prime and The Great Courses Unlimited. Sometimes it includes Ancestry.com or something else).

While I have annual spending goals in the above categories, I don't have specific monthly goals as such. My goal is somewhere around 1200 bucks a year on clothes or accessories, and yet I spent $250 last month on new spring clothes (because there was a fifty percent of everything in the store including sale items deal at my favorite store). In some places, about the same amount gets spent each month (haircut, pedicures and basic groceries), in other places I may not spend in once month and spend more the next month. Any money left over gets thrown into that so called sinking fund pot of cash. And so it will stay unless money market and saving account interest rates go much, much higher!!

I do this method of money management because I've been in retirement for awhile, know my average spending, my needs in general, and what is important to me. I would encourage early retirees to do the opposite, just as I did in the early days. Every category had an amount, including savings. I tracked and adjusted and reset priorities and tracked and adjusted again. Also, it has to be said that most retirees I know have changed their priorities and spending in retirement-I had a period of lots of travel, years of almost no travel and plan to return to the "lots" later this year, so nothing is written in stone.

And there you have it, the money, as it really is. Saturday, a fun post. Monday, what we spent and what we ate (more or less!)

******disclaimer***** Many people will have a larger housing cost. I made the conscious decision to downsize drastically, and and five years in I have no regrets. I share a decent sized, finished two level home. My sister has a bedroom, full bath, office and small living room. I have a full bath, three bedrooms (office, my room and son's room which eventually would be a guest room) and a small living area. We share a large kitchen with a full dining table, a TV room and a guest bathroom as well as an outdoor patio and yard. Someday I will downsize again to a one or two bedroom retirement apartment or condo with a patio or become a partial snowbird, and both those options could have MUCH higher housing costs. But this is my life now, by choice. And yes, renting is the right thing for me.*************