Tuesday, July 27, 2010

Thinking about retirement

Cliff and I went and talked to our insurance man today.  We raised the deductible on both the old house and this trailer house to $1,000.  With a little apprehension, we took off some things that we had been insuring.  
I have told Cliff for some time that we would need to do this when he retires; we won't be able to afford the cost of that much insurance.  Today he said, "Let's just do it now."  
When we got home, for the first time ever, I wrote down a list of expenses we'll always have, even after retirement.  
I made another list of things we can reduce or cut out entirely:  Dish TV, for example; that's $40 a month.  I told my husband I'm not giving up Internet unless I'm starving; after all, it's my main form of entertainment.
We don't have a big retirement fund; we will have to try and live on our social security.  Scary, isn't it?  Cliff's 401K isn't a huge amount, and we'll put that in savings as our nest egg.  
It appears that we could manage to stay here on our place with proper budgeting, at least for a few years.  Unless Social Security goes the way of the dinosaur; in that case, we'll be on the streets with signs that say, "Will work for food."  
As I was doing all this figuring, something made me think of Dave Ramsey and his envelope system.   It's actually a plan to help you get out of debt, and except for our property, our debts are paid.  But it could help us stay on track.
I believe the idea is that you allot so much each pay period to groceries, clothing, medicine, and so forth; each of these has its own envelope.  When the envelope is empty, you do without.  Of course, this would not apply to medicines; you'l have to try and budget the proper amount for that, or a little extra.  Cliff pointed out the high cost of owning a pet, and I labeled an envelope for Iris' care and feeding.    
I decided to go ahead and use the envelope system right now for the things I can; this won't include utilities, house payments, insurance and so forth, because I pay those with checks.  But using the envelopes for what I can will help me fine-tune our budget so I'll have a realistic idea of how much we really need when we retire.  It might help me spend less, too.  
You can spend $19 plus shipping on some sort of fancy envelope holder and special envelopes from Dave Ramsey's website, but I'm using plain old business-sized envelopes.  What's the point of budgeting if you're going to pay $20 for envelopes?  
Wish me luck.  I'll keep you informed.


small farm girl said...

Sounds like a good plan! I do wish you luck. I'm horrible about budgeting.

I'm mostly known as 'MA' said...

I'm sure it will work for you...I've been there. I don't actually use envelopes, but in my mind and on a piece of paper it is all there just as if it were real. I'm living on Social Security and making it. Unlike you there is only me and I cannot afford a dog. I could feed a pet but those high vet bills are not in my budget. I pondered a long time about my budget before I finally retired. It is all planned out on what I spend and what I get and believe me when I say there is nothing left over. All ready my budget has been hit with changes as my supplemental health insurance increased over 40 dollars this year. That means that I cut out something else. Like you I won't cut the internet expense. I've cut back to the basics and doing fine so far.

madcobug said...

It is very hard to make ends meet just on Social Security and who knows when that will be gone. No raises this past year anyway. The cost of living is continually going up. Good luck with your system. Helen

Lori said...

I've been using the envelope system for a while now. It does help you to see where your money is going and helps you stay on target each month.

Nita said...

You're such a wise lady. I'm with you on the internet thing. That's my main source of entertainment and keeping in touch with the "world".

Years ago before my MIL retired she "practiced" for a year before she actually retired to see how it would be on "that" income. She was also a very wise woman.

I plan to do the same when it's my DH's time to retire. He figures he'll have to work until he dies but I'm sure hoping he won't have to.

Dave Ramsey has done wonders for my son and his wife. They are working AGAIN on their emergency fund (used it up when he was laid off last year). Thank God and Dave that they had it to begin with!

If SS goes up in smoke we'll all be holding up that sign. Our 401k wouldn't last long either so will also go in savings of some sort. Might turn it in to "post hole" money. lol

Ride safe