Well, I was about to say “I amaze me with my frugality,” but the truth is, I haven’t been pinching pennies any more rigorously than usual. That notwithstanding, despite almost $1,000 in “extraordinary” (read “not in the budget”) expenses, I’m only going to have to pull about $245 out of savings to cover this month’s charges.
Yes. This month I ran amok with the extraordinary expenses. To kick off the budget cycle, a Talbot’s junket racked up an $86 debit when I succumbed to the lure of the Sale! tag. Got a cute little top at B’Gauze, also allegedly on sale at the bargain price of $47. Then we chose this month for Mrs. Micah to migrate Funny to BlueHost, which was quite the project. Her fee was amazingly reasonable, but it also could be viewed as outside the realm of ordinary costs. Next, nothing would do but what I had to harden the security on my office right this minute, in light of the swarm of burglaries the neighborhood has seen: $295 for purchase, delivery, and installation of a solid-core door plus $281 for purchase and installation of a pick-proof, drill-proof lock and metal door guard. (Gulp!) Moving on, the locksmith profited further when Bila the Painter couldn’t figure out how to remove the (very involved!) antique Baldwin lock from the front door at the downtown house: $150 for two visits, one to get it off the door and one to put it back on. All these added up to an astonishing $969.67 in extraordinary expenses.
My de jure budget now has me spending $1,200 on ordinary, day-to-day expenses, such as gasoline, food, household goods, and whatnot. That amount should cover one or two out-of-the-ordinary costs, such as a visit from the plumber or a trip to the veterinarian’s office. Against the desired $1,200 limit, I’m actually $396 in the red. But the de facto amount that goes into the credit-card piggy bank (a money market checking account earning a little interest) is $1,500; anything that doesn’t get spent out of that sits in the account and serves as emergency back-up. Against the $1,500, I’m “only” about $245 in the red. As a practical matter, the accrued cushion in that piggy-bank account will cover it, so I really won’t have to transfer a dime from savings to pay for this month’s spending extravaganza.
Could I have exercised some restraint?
Well…yeah. I needed some summer clothes, but you know, there’s no law that says just because a store is advertising a sale you have to run right in and buy stuff. The clothing purchases could have been deferred to the end of the month, at which time I would have been out of money and so wouldn’t have bought the shirts at all. Staying out of Talbot’s and B’Gauze would have cut the deficit by $133, leaving me a modest $112 in the red.
But some of these things really needed to be done now: I wanted to install the door and lock while I still have an income from the Great Desert University. And theoretically the locksmith’s work on the downtown house could be included in the cost of the paint job, which is coming from a different piggy bank. The project to monetize Funny needed to start soon, so I would have some time to learn how all that works and possibly to improve earnings from the site before I’m out of work. Eight or nine months seems like a pretty short lead time, really: that was a sooner-the-better proposition.
So, I don’t feel too bad about all this. Riding the train (and taking two weeks of vacation time, eliminating a bunch of endless gas-guzzling commutes) eliminated one gas fill-up. Thanks to the stash in the freezer, I haven’t had to buy much food. And the stockpiling strategy allowed me to put off purchase of a few household items into the next budget cycle.
Once I’m retired, of course, $1,200 will have to be the real maximum expenditure limit, and not a pretend “can I really live on this” figure. As a practical matter, I’ll have to come in well under $1,200 in most months to get by. That will be a challenge as inflation rises. But right now I’m spending significantly less than that in ordinary, day-to-day expenditures. If I spent about $970 in extraordinary expenses and overdrew the $1,200 budget by only $400, that means regular, routine costs consumed about $570 less than budgeted ordinary expenses. (I think: arithmetic is not a science that serves me well.)
Whether that figure is right or wrong, it’s pretty clear I can eat, drink, and make merry on less than $1,200 a month. Meanwhile, with the Renovation Loan now paid off, recurring monthly bills drop from $840 to $670, a figure that will drop another $30 when I cash in a whole life policy in January (because I have to pay taxes on the proceeds, I’ll need to put that off till I have no earned income to speak of).
So let’s say I can expect to spend maybe $1,000 a month on routine living expenses. That plus the remaining $640 in recurring bills comes to $1,640 a month, or $19,680 a year. Think of that: a retired person can (in theory) live on less than 20 grand! For me, investment income alone will almost cover that.
Of course, we still have my share of the downtown house’s mortgage: $9,600/year. The net on $13,944 in Social Security benefits should cover that, but if not, I’ll earn more than $9,600 teaching at the community college. So, even after taxes, any freelance income will be pure gravy.
Although some observers might regard my lifestyle as ascetic (I refrain from spending on cable TV or a cell phone, for example, and I rarely go out to eat), I don’t think of myself as extremely frugal. I never clip coupons, I don’t pursue freebies from CVS, I buy my clothes new, and any day I’d rather own a book than borrow it from the library. I eat like the Queen of Sheba and do not stint on wine and beer purchases.
The trick is to get out of debt, including mortgage debt. Once the house and the car are paid for (and you’re not trapped under a load of revolving debt), you’re home free—given decent retirement savings. Without a huge cost for the roof over your head, a very moderate level of frugality will allow you to live quite comfortably.