November 13, 2016

Of Bare Bones & Bottom Lines

Have you ever tried to figure out your absolute bottom line in terms of needs and income? Most of you who read my blog lean toward self-sufficiency, self-reliance, and preparedness, so I'm curious if anyone has tried to reckon a truly simple existence for themselves; the very least amount of income that you'd need if it came to that. Have ever thought about it or tried to figure it out?

The closer Dan and I get to what most folks consider retirement age, the more I think about it. We've had a few warm-ups in this arena, times when Dan hasn't had a job and we lived on our own food and savings. We've made steps in that direction--growing much of what we eat and learning how to live without air conditioning, for example--but there has always been a long to-do list of the things we want to accomplish before we get to the minimal income stage.

They are all needful things, things we consider important: fencing, outbuildings, greenhouse, energy upgrades on the house (replacing windows and adding insulation), also the ability to grow, harvest, process, and store field crops and hay.

In our desire to "get established," we've had a sort of tunnel vision in our attempt to accomplish these things. We've felt time-pressured because of our age, and often overwhelmed with how much there is to do. We've been here long enough now that daily chores (critters, garden, cleaning), seasonal jobs (ground prep, planting, harvest, preservation), plus maintenance and repairs (fences, machinery) are almost more than a full time job in themselves. Add building projects to the mix and there's barely time to go to work and earn money.

As much as we'd like to get away from the need for money, we all know that's impossible. Even if one owns their property outright, there are still taxes to pay. Dan and I have a house payment so a minimal income would have to include that plus utilities, vehicles to feed and maintain, and mandatory insurance. Even if we were able to feed ourselves and our critters from the land, there are other ordinary things that we can't make for ourselves like salt, minerals for the goats, fuel, replacement parts for the tractor, plastic to cover the hoop house, etc.

In answer to my own question, have we tried to calculate the very least amount of income we'd need, the answer is no. I'm working on it, but I hover around questions such as, "how essential are internet and phones?" And then I think, well, if we had a small solar cell and battery to power the computer, then they wouldn't be an additional expense. But then we'd have to buy something to make that happen, and there's the rub. There is always something else that would be helpful and beneficial. The list only gets added to, it never gets finished.

I'm guessing most folks pin their hopes on their retirement savings and insurance policies, but Dan and I have never had a significant enough income for investments of any kind. We've always lived paycheck to paycheck and invested what we do have in our land and lifestyle. I have more confidence in these things than in our current economic system anyway.

Do you have a bottom line in terms of needs and income? Have you even thought about it? Is it a goal you are working toward or not significant enough to worry about? Leave a comment and let us hear what you think.

40 comments:

  1. Oh, I've thought about. However, I lived 'hand-to-mouth' most for my life, so 'Use it up, wear it out, make it do or do without' is a way of life for me. I do not see me ever having a six month living expense cushion. I'd just like to see all the old debt payed off and Hubby's ashes interned. At this point in time I'm just nickeling-n-diming the debt to death as best I can.

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    1. We're in the same boat and I feel the same way. Still, I think chipping away at our debt is better than saying "oh well," and doing nothing. At least you're in good company! (At least I think myself good company. :)

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  2. I thought something similar, as we were arranging to buy our second rainwater tank recently. The tank cost X and the plumber cost Y, but the total amount would have paid off the second loan we took on the house, about nine years ago.

    At least we paid in cash though, so we're not going into debt for things we need any more. When I actually look at our income though, it's a bit like tunnel vision. It's all about the numbers. If I evaluate how we've made ends meet however, it didn't always come from wages.

    We were gifted a few things that we really needed. While we couldn't bank on them, or plan for them as a way to make do, it goes to show there are still ways beyond wages. Which is why I give things I no longer need, to others who need them too.

    I like having money, but it's a lot of others things, which help us get by too. These can't really be budgeted for in a plan, because they're spontaneous and relatively insignificant amounts. I'm sure it must effect the bottom line somehow though.

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    1. That's so true that it's not all about numbers, at least for those of us with some ability to live off the land. Learning that we don't really need all the "stuff" the world tells us we need helps too.

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  3. Yes we have given it a lot of thought, like you we are still in the stages of getting things set up, we are only a couple of years into doing this, we know the basic figure we need for annual expenses, tax and services, we have reduced the monthly shopping bill by raising meat and growing vegetables, I keep records on all the animal outgoings and what comes in from selling meat and eggs, at the moment we are just in the black in that area, the lambs we did the other week one lamb is paying for four piglets, what I earn on my monthly craft stall is paying for things we need, bits of fencing, feed troughs etc, Martin is still working we still have our business and his money we are diverting to larger projects like animal shelters, attachments and tools for the tractor,we have just purchased another 15 acres and bought it cash, this now gives us the opportunity to expand on livestock for an income as well as growing animal feed. I have another 10 years until I reach retirement I will have a small private pension as well as a state pension, Martin will reach retirement age in 15 years he too will have a bigger private pension and state pension, we have worked out we should be able to live comfortably with our pensions.

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    1. You've done well to garner a little income from your land. So far this year, all the feed I've purchased has come from sales of surplus animals, which is truly a blessing. I've always used my book sales money for our larger projects. That income isn't set or predictable, so I'm glad we haven't been counting on it to pay ordinary bills and living expenses. Sounds like you've planned out a future and a strategy for getting there. Well done.

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  4. Leigh - I think as you get older your game plan changes - and thus your "expenses".

    Like you, we do not have retirement policies so see us through our later years. We did have, until the day that RMan discovered that our total contributions paid had exceeded what we would be paid out when the time came. That was 10 years ago. So he cashed them in and we purchased our smallholding with the payout. I wonder how many can afford to have a retirement policy (or two or three) now - mainly the well off, methinks.

    S'funny, based on the "normal" annual increase we are charged, last weekend I did a spreadsheet on what our medical aid will cost us in 20 years time. The result is R39 258.83 - per MONTH!!! There is NO way one can ever plan for that - not save towards it. We are going to have to investigate other options - and the sooner the better. Seems wacko though, because once your children are grown and have left home, the amount of medical aid claims drops - until you reach late 60's - 70's - which is when you need medical aid most of all.

    Not easy to plan on what will be required later on in life - the cost of living is spiralling so hectically it seems.

    I do think though, that if one knows how, and is able to feed oneself from your land, you will be in a better situation than town dwellers.

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    1. I agree. I think it's partly because as we get older we are better able to think things through to a logical conclusion - like your retirement policy! That seems to be a trend in life insurance policies, but of course the companies are in business to make money.

      Medical insurance is really a problem here too. Dan's and my premiums have tripled since health insurance became mandatory (with decreased services and higher deductibles). That would take up half of our disposable income and all under the guise of "affordable," LOL.

      I so agree that being able to at least feed oneself is a huge step in a better direction. I think the same is true of alternate energy and medicine.

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    2. I am glad that here in UK we have the NHS for all medical care, under 16 years of age all prescriptions are free then paid for until you reach state pension age when they are free again along with eye care and dental care, all hospital treatment is free and visits to doctors and specialists are free for everyone, well not strictly free as we pay national insurance if we are in work but it is just a small payment, in Wales were I am all prescriptions are free for everyone.

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    3. sorry meant to add as well everyone gets a state pension without exception and if you dont own your property when you reach state pension age your rent is paid for you as well as payouts towards heating regardless of home ownership.

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    4. So sorry Dawn, but the state pension without exception isn't true anymore: if you haven't paid in, you don't get out! Therefore, women who perhaps moved with their husbands working abroad, don't get a pension if they haven't worked and paid in. Husbands don't count. Also, to get a full pension, you have to have paid in 35 years minimum. Everything is changing and there are no guarantees anymore...

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    5. Interesting conversation. Sounds like the UK is converting to a system like the US.

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    6. We are nearly as broke as everywhere else. State Pension in the UK changed massively over the last few years with my entitlement age being moved from 60 to 66. This has happened in the last decade and has left thousands of women with a gaping hole between when they thought they could retire, and when their pension will start to pay out.
      Some worrying facts here https://www.ft.com/content/fda8675a-e82d-11e4-894a-00144feab7de
      Our NHS is crippled and not just with elderly care, thanks to (often) avoidable diseases like diabetes a horrifying proportion of the working-age population is considered either chronically sick, morbidly obese, or both.

      We have some retirement savings but whether they will yield enough to give us a decent quality of life is an entirely different matter.

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    7. There has been so much irresponsibility with the handling of public monies (not just the government but the investment companies) that I find it difficult to trust any of them. We're at a point where debt is considered normal and good. How can I be confident in that? It's hard to see the system sustaining itself much longer with the current mindset.

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  5. Like you and Dan, any extra money we have is put into our place here. Being as self-sufficient as possible is, in our minds, the only possible way to go. Sure there will always be the need for money for what we can't provide ourselves but we've lived before at a pretty bare bones level and know we could do it again. (Wouldn't be a choice, but at least we know how. And there is bartering, if that's an option.) We have a retirement income at present, but talk frequently about what we would do should that stop. We feel all we can do in the here and now is to keep building our (fairly modest by a lot of standards) secure base. And hope for the best!

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    1. I think learning how to be content with a more bare bones living is key. One of the reasons I'm glad we don't have a television service is that we don't get bombarded with all the commercials trying to entice and convince us for things we "need." Simplicity it truly the more beneficial way to live.

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  6. I apologize for the length of this comment but this is just the tip of the iceberg. There are many more ways of living frugal. I have looked into becoming extremely frugal many times just in case I simply run out of money due to government recklessness. If it weren’t for them, life would be a tropical breeze.

    I’ve been retired for just over three years and so far it’s going well, so I’d like to offer my thoughts on this subject because I live it. Someday everyone will be faced with tough financial decisions unless you’re a retired government employee who receive COL increases far greater than we tax paying grunts will ever see.

    1. You must have a place to live and must be paid for. I recommend you have your home paid for by age 50, this will give you 15-20 years to hard core save and build your retirement funds. Be it an RV, Mobile Home or typical stick built home, own it and the land it’s on. Renting or paying a mortgage of $800-$1,000 a month will become money in your pocket to live on for the rest of your life!

    2. Do not live in a city if possible or a city that hints at or already has a football, baseball, hockey or any other sport stadium or has generous welfare programs. Your tax dollars will continually increase to pay for them and the never ending maintenance and government employee staffing.
    You will also be free from city utilities, water, sewer, garbage etc where the minimum rates go up year after year.

    3. Insurance. It’s painfully expensive and in most cases the government or banks mandate we have it on everything, home, flood, car, RV, boat, health, life etc. You need to seriously shop all the small independent insurers as they will always be cheaper than Flo or the Lizard.
    As for health insurance, get healthy and get your weight within the Body Mass Index limits. Eat only healthy foods in correct amounts, this may also lead to you getting off some maintenance prescriptions. If you smoke stop. If you drink alcohol stop, just look at the money those two alone will save, not to mention a dramatic health improvement!

    4. Vehicles. Most of us have two, either for convenience or both are working. When you’re retire you need only one that fits the needs of your lifestyle, such as a correctly sized pick-up if country living or a small high gas mileage car for city life. This will eliminate two vehicle maintenance costs and added insurance costs.

    5. Cell Phones. Truly a great convenience but use your head and not pay $200 or more a month for them? There for communication not banking etc. We will be hacked at anytime and your bank and investment accounts will be someday compromised, money stolen, and you will be broke! Currently, I pay $60 a month total for two phones (MetroPCS) and I see the day when we will go down to just one phone. Don’t forget the old land line to replace the cell phone.

    6. Internet. This is a tough one today as it is just about the only way to search or mail order anything. Doing without? Sure you can if you have a coffee shop or some other free WiFi source very near by, otherwise it would be terribly inconvenient.

    7. Satellite TV and Satellite Radio. For me this would be easy, cut the cord! Today it is full of worthless garbage including the worthless news they force on us. Use the old free broadcast signals. If you keep your internet then try “ROKU” it’s free with a mountain of movies and specialty programming. I use it and think it’s great!

    8. Credit Cards. So many peoples lives are ruined by these and their lack of self-restraint. In today’s society they are a must have but must be used cautiously. If you carry a balance for more than two months, stop using them until caught up. Also shop for the free cards with cash back programs.

    9. In closing look at your checkbook! Look at every month for the reoccurring payouts then review to see if you can or should live without that expense.

    There are endless ways to live well while living frugally. Enjoy life, not consumerism!

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    1. Very relevant points Mike. People are so accustomed to a particular lifestyle that it's difficult to think outside of what is considered normal. Even harder to learn to live without. But I agree, the things we think we need don't always contribute to our enjoyment of life as much as we think they do.

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  7. We know our "baseline." Those are the basic utilities, taxes etc as you mentioned. The part that really varies for us is the unforeseen. Auto repairs, new boots (a necessity here,) a new well pump and so forth. We try to keep an emergency fund but about the time we think we might be able to take a breath, there it goes again. For the most part, "projects" we are pretty good about saving for - not always but usually. We too are working at being mortgage free so we just plan on change and try to be flexible within reason. That creates a grey number so in answer to your question (finally:) I think for us it's more of a range than a hard number.

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    1. Yes, those uncertainties keep things unpredictable, sometimes uncomfortably so. I sometimes wonder what would happen, say, if my old washing machine died. I'd consider replacing it with a nonelectric one, but those aren't cheap either. We're considering simply buying and storing materials to finish some of our projects such as the house. That way when there's time and no money, we'd already have some things that we need.

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  8. We are totting up all our income versus outgoings, ready for OH retiring next summer. We will be able to just, and I do mean just, scrape by on his UK state pension, then I retire in four years time on a slightly lower state pension as I have only paid in 31 years instead of 35. We have been very frugal for the last 15 years, so I see no problem there, we will just continue as before. We do have a little private pension which we can utilise, but that really is just for emergencies.

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    1. Learning how to live on a smaller income is always wise!

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  9. I lost my full time job 7 months ago. I have a CLEAR number on how much I need to pay my monthly expenses

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    1. That's learning the hard way and I can very much relate. I am discovering that each time we are jobless, I learn to be content with a little less. Here's hoping for a good full time job for you soon.

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  10. Being an avid saver and retirement investor, I guess from reading this post, I think those traits makes it easier for me to calculate. I pretty much just assume that our expenses will remain the same as they are now. Inflation will make them increase but as my age increases, my needs for expensive things decreases. I also know being inclined to reduce my footprint, if I over estimated, I know I can live on a lot less than what I have saved/invested for and can trim things off easily to get back to a stable level. I admit I have more expenses than I need to have but do so for the enjoyment they bring me now.

    Probably the hardest thing for me to calculate is what health insurance will cost between now and when I qualify for medicare. So although we have enough saved up for retirement, my wife is still working simply for the healthcare benefits and the fact that she enjoys her job for now. Eventually we will reach the point where she is had enough and we will have to make the decision if what we have saved up for healthcare is enough to get up to Medicare.

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    1. Ed, that's a very logical way to look at it! Healthcare seems to be the big unknown for most people.

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  11. There was an article here in the paper just the other day about, in part, how much they estimate would be required for what they termed a 'retirement with air-conditioning'. The problem is though that the goal posts keep shifting as to what that amount actually is. And people's ideas of what a comfortable retirement is are different too. One of the things we are concentrating on is paying off mortgage (our only debt), affording health insurance and staying healthy so that we don't have the added burden of preventable illnesses. I'm developing skills like growing some of our food in our suburban garden, sewing, knitting and the like. I think it's those skills that are really valuable because they reduce the need for money and could also bring in a little income if one can do them well enough. Meg

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    1. Meg I think you're hitting a nail on the head when it comes to what people assume a retirement lifestyle ought to be. I also think you are very wise to get your one debt paid off and learn those life skills!

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  12. My wife and I live a pretty simple retired life. We don't have debts, and we don't feel compelled to buy anything like a new car to keep up with the Jones. But you do like to get out, and do this and that. We have found that an income of $4000 a month is enough to pay bills like the satellite tv, the power bill, the propane bill, etc, and still be able to buy what you want from the grocery store, etc.

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    1. Not having debts is key, I think. Our mortgage in our only debt and we've been chipping away at it, but I doubt we'll be able to discharge it by the time Dan retires. It's good that you have a fair idea of what your needs we'll be.

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    2. The biggest variable is doctor and hospital bills. Those can really soak you good and you can't anticipate them like you can almost everything else.

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  13. Good question.. and one I have been pondering. Mister retired last year; he was fortunate with his pension and hasn't started social insecurity yet. I carry him on my insurance and we get a stipend for a part of that from his retirement plan. We pay the rest. Still, it is cheaper than if we had to purchase insurance outright. As many, we have a mortgage that will be paid off by the time I am ready for Medicare... or before if we are careful and wise. We both have skills people will pay for, so that will always supplement our income and pay taxes and insurance for the farm. However, the farm must generate enough income to support itself, so we sell pork, honey, goat milk soap, and blueberries. These are things we can continue as we age.We raise most of what we eat, but not all; however, I keep my shopping to the usual staples we don't have. And don't even ask me how many meals we can get from a hen... As for a cash amount we will need every month, I think that will be a moving target. We can estimate, but expenses will change. I guess my hope is that we will stay warm, eat well, and have a safe home....

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    1. That's great about your mortgage. We started too late and won't have ours paid off by then, unless we get a financial miracle! Learning how to live with what you've got is a skill too, and an invaluable one.

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  14. WOW. What a great conversation! So many wonderful ideas. It really is about learning to live well on less and less. Yes we have a set amount, the poverty line for two people in the US about 16,000. We've almost downsized to this point, perhaps another year. We recently decided to drop all our health insurance as we'll be making too little to be fined for not having it. Now you've given me a great idea for my next post. Thanks Leigh!

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    1. I look forward to reading it Donna!

      Have you ever tried to figure out health insurance versus the penalty. I have. Insurance premiums are about $1200 per month, but the penalty (if we added it to our budget) for our income bracket comes to $120 per month.

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  15. Well interesting conversations. We did this backwards. We have always been a no debt except a mortgage. That includes four homes in 45 years of marriage and one was owned outright when sold. All on one income for the most part. Were we wealthy or are we, heck no. But Geoffrey made a good wage at his job was and is good with budgets. The backwards part comes in now. We started in 1971 living in a small city well it was then moved with two children and a dog to 2 acres in the country in 1985. Added the dairy goats there but gardening and home baking , preserving etc followed us from town. Then came retirement early as an insurance plan until "death do you part" was offered. Thank God for it and that we decided to accept it. Fast forward to now. We finally ended up five years ago on our 42 acres of paradise totally off the grid. Then 8 months into it , right as the last barn was finished, Geoffrey became critically ill with a rare form of leukemia and an auto immune disease. Both tried to kill him but now almost five years later he is here. That kinda put a kink in our plans. But the silver lining is the retirement insurance plan that has left us with almost nothing out of pocket with this dance. But this is chronic and it kind of put a damper on what could be done from that point on. So the goats are here as are the chickens. The garden is decent and a green house is going up via MEN plans for using an old dog kennel. We still have no debt except for the existing mortgage. And we still pretty much do everything from scratch. Will we ever be to where we expected when we got here? Probably not but we make our own electric, have our own pump and heat with wood and cool with a simple fan and occasional swamp cooler. Our phone's are all cell including one from Verizon called Home Connect which you can use your own phone and answering machine to the cost of $24 a month . It includes calling anywhere in the country 24/7 for that price. Love it! The TV, used for mostly DIY and RFD channels is along with the internet on satellite. My computer is a lap top that is 5 years old almost and I am still charging as needed the original battery and that last 3 hours at the most. If I need more I can just plug in and it takes surprising little energy. Yes I guess I am cheap but a new battery is around a hundred bucks. And that would bring 10 bales of premium alfalfa at 125 pounds per bale from my long time hay guy. So that is about it. Life is good and we are blessed.

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    1. Something like Geoffrey's illness is the most difficult, and I'm so glad you didn't give up on your lifestyle. Sounds like you've taken it in stride and made important mental adjustments. I think so much depends on attitude, and I suspect that very few of us will ever truly accomplish what we'd like.

      Great price on the alfalfa! It doesn't grow around here so alfalfa is imported and therefore through-the-roof expensive.

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    2. Leigh I agree attitude is everything! Thanks for your words. I wouldn't know how to live any other way it is a way of life after all these years. The going price up here is between 16-18 dollars a bale. The quality is nowhere near what my hay guy grows so I figure that even factoring in 3 dollars a bale for transportation I am any where from 3- 5 dollars a bale to the good. And bonus I get to see my children, grands and friends in the valley. Win win!

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  16. Dh and I had a good plan. Then Dh became disabled in 2001 and plans went out the window. I ended up working to age 70 and when I retired became caregiver for dh who passed away last year.

    I have a strict budget. I've keep records of all spending/expenses for years so I can look back to see what we spent in each category thru those years. This helps in planning the next year's budget. This is the first year without dh's income and expenses so it was a bit of a challenge coming up with a budget for 2016. So far my planned budget is working.

    Some of the things we did in preparing for retirement was to live on one income (dh's Social Security) and used my earnings to build savings. I started drawing social security at 66 but worked to 70. During those years we replaced our roof, furnace, water heater, air conditioner, refrigerator, freezer, stove, washer and vehicle under the assumption this would ease expenses after I retired. Since we do not have basement drains and depend on a sump pump we purchased a whole house generator as insurance against a flooded basement ruining furnace, water heater, freezer and food storage.

    While I was working my employer gave me a $100 Target gift certificate each year and my mom gave us $100. I used those funds to stock up on sheets, towels, underwear, socks and other things of that nature and buy each of us new coats. Nothing out of pocket and hopefully a life time supply of sheets and towels. Clothing is from thrift shops and I also stocked up during those 4 years since I was in town 5 days a week.

    The good to stocking up is budget savings now. The bad is I donated a LOT of clothing and other items purchased for dh after he passed. Last year's medical expenses (including insurance premiums but not Medicare premiums) were around $2,000 per month. This year $170 per month. This difference is the reason this year's budget is working.

    I took a close look at all utilities and was able to reduce Dish. I may eliminate it altogether at some point. Internet is something I hope to be able to keep come what may, but I could go to the library and use the internet for free. Since I spend 99.9% of my time alone, I really appreciate Dish and Internet.

    I think living on your projected retirement income for a year or more before you retire is a good way to decide if/when you can retire. If you use the extra income to build savings and/or infrastructure you'll be ahead of the game when you do retire. One major thing to consider when doing retirement planning is health insurance and the fact premiums increase each year. The older you get the higher the premiums. I know several people who took early retirement that were sunk by not factoring in health insurance costs especially in the years before they were eligible for Medicare.

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    1. Wonderful advice LeeAnn. It makes me happy to read your story because I would consider it a success story. You went through some tough times but made wise adjustments. Thank you for taking the time to share.

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