Almost all of the financial guru/wizards who tout their budget prowess never post their actual budget numbers. Oh, they’ll say things like housing is 25% of their income but never mention the income number nor state whether their income is net or gross. These little points of revelations DO matter when it comes to discussing budgets. In other words, unless a person reveals their actual budget numbers, their actual income vs expenses, they’re mostly blowing smoke up your butt IMHO.
Also, realistically, most people wouldn’t know how to handle or write-up a budget if it was handed down to them on a silver platter. Most people don’t truly understand what constitutes income nor do they fully understand what an expense is. Case in point, if you give a friend of yours $500 and that friend gives you back $500 next week, that $500 is NOT considered income. Duh! It zeros out in to nothingness.
I’ve been a Budget Administrator for most of my life. I’ve been long-term employed by top legal partnerships (i.e. attorney law firms) and at minimum, had to oversee annual budgets worth at least $25 million (amount updated for 2018 value) in revenue. It was my job to oversee income vs. expenditures and make sure the corporate conglomerates were running profitably. In other words, I ran the complete office, which at times had over 44 employees. Oh, yeah, I also did payroll.
I listened to a lot of heart wrenching sob stories over my working years. I met lots of my fellow employees who really struggled with money issues. I’ve helped most of them by simply showing them a few tricks I’ve learned over the years to streamline their expenditures in order to meet their income. I was also a BIG proponent on saving money. Not so much in the stock market because I lived through two horrific Wall Street downfalls (1985 and 2001 and the housing crisis of 2008) and I saw too many people wiped out because of it. I’m a careful (probably too careful) saver and believe much too much in FDIC investments.
I also witnessed the rise and downfall of many, many top-earning attorneys who whittled away their money by either spending it foolishly on their stupid wives, spoiled kids or by trying to impress their fellow partners. I laughed when senior partners paid upwards of $175,000 for a new kitchen only to eat out most every day. Or buy a $45,000 dining room table and yes, they also ate out most every day. Stooopid!
I’ve also been born into a wealthy family that prized money and all its glories over the common man. I watched my ruthless mother, slowly die in bed with a rare cancer, while noting all her money in this world could not give her one more day of life on this earth.
People think if they could just earn MORE money their lives would be brighter, happier, joyful. I’ve been rich (millionairess) and I’ve been poor (not knowing where my next meal was coming from poor). I’ve discovered that there comes a point in a person’s life when ‘ENOUGH’ will do them just fine. Once you find your ‘enough’ point, the happiness and joy just flows.
I also learned over my lifetime that carrying debt, even a mortgage can lead a person down a treacherous, endless rabbit hole. I do believe that debt, however, if handled correctly and affordably can improve your life (such as a reasonable student loan NOT IVY LEAGUE, an affordable mortgage NOT A McMANSION, a low cost car loan NOT A BMW) As long as you know, that should you lose your job or suffer any kind of loss, if you have a good Plan A, B or C in place and can handle that debt, then do it!
So, my lifelong journey to date has shown me that earning a lot of money is futile, carrying large amounts of debt is ridiculous. I set up my life goals very early in my life. The Number One thing I wanted to accomplish was to quit working for the ‘man’ as soon and as early in my life as possible. I also learned that money is a tool. I don’t work for money. I have my money work for me. Since I come from a wealthy family, I still wanted to live a luxurious lifestyle BUT (and it’s a very big ‘but) I wanted to accomplish my luxurious lifestyle on as little money as possible. It became a very enjoyable ‘game’ for me to always find a different route through the very expensive maze of life, for less.
And that, my dears, is the whole premise of my entire lifebeing: Live the best that I can for a lot less money AND laugh all the way to the bank!
So, here is our retirement budget. Now that Nick and I are finally 100% fully retired and all our hanky panky is over and done with, we are very happy to finally settle down. We’ve narrowed our living location down to one home vs two. We still have our RV which can take us to any other place we’d like. Since we both have heart conditions (Nick is worse than mine) it was imperative for us to retire and claim our social security benefits and pension way ahead of schedule. We both claimed our SS at age 62 and Nick claimed his pension at 55 vs 65. Yes, this means we will be getting a lot less money over our retirement years than many financial advisors (and I) would recommend. At 65, Medicare automatically deducts Part B medical coverage right out of our Social Security checks, so I have taken into account that income reduction. I only work with reality here. It is what it is. In retirement, your numbers are your numbers.
Now, that our second vacation home is sold, our investment income has gone up substantially. We won’t, however, be using our interest income ($7,625 a year which comes out to $635.42 a month). That money will only be used as travel money, emergency money and hopefully, as it accumulates, newish car buying money. Right now, we are still using (and paying) for two paid-off, newish vehicles. If I see in our future, us coming into rocky financial weather, one of the vehicles will be sold.
Also, we are still carrying two credit card debts: Lowe’s & Apple Computer. These are at zero percent and due in full October 2018. I could easily pay these off, but why should we use our money, which is earning us more money? We needed new appliances. I needed a new computer. In the future, however, now that we are 100% retired, I won’t be taking out any more zero interest loans. They really are a pain in the butt and hinder our monthly budget. Strike a point for Dave Ramsey!
Lastly, our RV loan. I gave paying this off in full at this time ($14,000 current value) a no-go. Why? Two reasons. First off, the value of the loan @4% vs the value of the interest I am earning off that money now invested @3% means that I am only paying @1% on my RV loan. Over 12 years, the life of the loan, I am only paying $1,680 in interest on the RV. Second reason, being that the RV was technically worth $20,000 and I only paid $15,000 wholesale, I am way ahead of this curve. Right now, the RV loan is slightly upside down BUT that will even out in a few years…….just in time for me to sell it and pay off the balance of the loan, in full, off the proceeds of that sale. As I said, money works for me. Not the other way around.
Our total net monthly income is $2,662.30. Our total monthly expenditures are $2,624.79 which gives us a slight fudge of $38 a month. After October 2018 we’ll have an additional $321.50 in our monthly fudge coffers. We’ll probably just put those funds back in our liquid savings account or use it towards RV traveling instead of touching our interest. In our retirement, Nick and I are quite content to be living on $32,000 a year. This is without taking into account the additional interest income of $7,625 we earn. And any financial advisor who tells you you must have at least $4,000,000.00 (four million dollars) in a savings account before you retire, should be your first indicator to keep on walking past their office.
And laugh all the way to the bank.
Live well and prosper, my friend. Live well and prosper.