Monday marked the end of the last budget cycle of my employed life. My budgets run from the 20th to the 20th, timed to follow American Express’s billing cycle, since I charge everything other than recurring monthly bills and then pay it in full each month. This provides a nice annual kickback, usually around $250 of “free” money that goes direct to savings.
Knowing that my base net income of Social Security and part-time teaching will come to about 57 percent of my current net—and that from net I’ll have to pay eleven times for Medicare what I’m now paying from gross for comparable healthcare coverage—I’ve been cutting the discretionary budget a little at a time. It’s gone from $1,500 a month to $1,200, then to $1,000, and it now stands at $800, about as low as I can manage and still eat.
(And as I write this, I realize the figures I posted yesterday were bizarrely wrong! If you believe what I wrote then, you’d come up with a net unemployment income of 70 percent of my present net salary, which is dead wrong. Where on earth did I come up with a figure of $32,900 for my present net income?)
So, back to the budget: I’m reducing discretionary spending by 53 percent, which, because there’s not a thing I can do about regular monthly costs such as utilities (cut as low as they’ll go right now), taxes, and insurance, will cut my living standard significantly but still not cut the mustard. Oh well…
This month being Christmastime, as usual I’m over budget, though not as seriously as it looks.
Not realizing that M’hijito was taking two days of vacation time this week, I went with him to Costco on Sunday, by way of stocking up for the big bash we’re throwing on Christmas day. As a result, I charged up $133 at Costco and another $35 at Costco’s gas pumps, pushing me way over budget. If I’d waited until yesterday, I would’ve finished the November/December budget cycle $10 in the black. Instead, I’m $158 in the red, against the $800 “practice” budget:
Fortunately, I didn’t change the credit union’s automatic transfers of $1,500 a month into my credit-card budget piggy-bank, and so the truth is that account holds not $800, not $1,000, nay not even $1,200 but a whole $1,500. This means that in spite of the extra cost of the glasses I also purchased this month, I’ll have plenty to cover the total amount charged up on the American Express card.
But next month… Next month the New Regime starts in earnest. And given the revelation that my figures for net income were way too optimistic, obviously I’m going to have to stay within the $800 budget, and probably well within it.
Given the costs of running the house and owning a dog, that’s an unreasonably constrained budget. It looks likely that, unless a miracle happens, within the year I will have to sell my house and move out to Sun City, where taxes are 50 percent lower and insurance is about 30 percent lower. May have to find a new home for the dog, too.
{sigh} Ain’t the golden years golden?
Is your home paid for? Have you thought about taking in a roommate? Do you have room in your house for that? I see lots of roommate listings on Craigslist and if you’re living on $800 a month, an extra $4-500 a month would be huge for you and might keep you in your home. Just a thought.
I think I’d lose my mind if I had a stranger living in here with me. For heavensake, I almost wrang SDXB’s neck, and I was in love with the man!
LOL, well there’s that!
It’s good that you’re preparing for all this, but so far you have miraculously stayed within budget–or even under budget. If you really have to sell your house….maybe you should rent it out. Rather than live in Sun City, which idea you hate, have you thought about living closer to “town” (whatever that is where you live). Even renting there…should be lots of little places for rent since it’s hard to sell.
I’m in town: as smack in the middle of the city as you can get without living in an office building.
That’s part of the issue: I live in one of the only affordable middle-class neighborhoods in the city. There ARE cheaper areas, but a woman living alone might not want to live there. My son’s neighborhood is one: for a hundred grand less than my house would fetch, I could buy a comparable house there. It would take about $40,000 to clean it up and make it into a place a person would want to live in for the rest of her life, leaving me with about $45,000 in my pocket (after Realtors’ fees and associated gouges). He’s strongly opposed to my doing that, though: he doesn’t think the surrounding area is safe (he’s right), and he says they have even more cop flyovers than we do.
Tax rates in Arizona are low compared to other parts of the country, but because incomes are also very low, they represent a substantial burden to most homeowners. The older areas of Sun City have very low tax rates grandfathered in, because at the time the first tracts were built, they were out in the middle of cotton and onion fields and there were few or no schools and, because of the zoning, none were built in the retirement developments. Del Webb sold Sun City on the premise that buyers wouldn’t have to pay school taxes. Subsequently, after the authorities realized what a vast number of people were moving there, this was overridden, but out of a passing sense of fairness they kept the school taxes out of the older sections. Thus if you buy an older house in one of the first few phases of Sun City, you pay no school tax.
Auto insurance rates are also much lower, because retirees are slightly less homicidal than those in the rest of the Valley, and so accident rates are lower. By the same token, the much lower crime rates in the Sun Cities keeps homeowner’s insurance down.
Most of the yards are covered with gravel; water bills are almost nil.
Thus with the exception of the power bills (there’s no natural gas, and the houses are poorly insulated, having been built when electricity was very, very cheap), the base cost of running a house in Sun City is much lower than it is anywhere else.
The issue is less the day-to-day cost of utilities (though that IS an issue) than it is the cost of taxes and insurance, for which I have to set aside $325 a month.
Isn’t there some sweet little low-cost town that you could move to after selling your house? You know, kinda like where I live, but in AZ, where you’d still be close to family and friends.
I’ve been retired for 20 years, and haven’t starved yet! The thing that bothers me
is, how can Medicare be so much more than what you pay for insurance now?
When I retired I didn’t yet qualify for Medicare, and couldn’t possibly afford to keep the excellent insurance my school district so kindly provided, so dropped to a lower level with higher deductible, and was delighted when I reached Medicare age.
I think you will be pleasantly surprised at how much more disposable income you will have when retired. My friends and I have never figured out just why, but it is true for all of us. Thank goodness!! I really enjoy your blog.
@ Karen: I’d love to live in Yarnell, though there are no services of any kind there: no doctors, no firefighters, no cops, no sewer service…. Most AZ small towns are dusty, grungy little burgs, make you wonder why anyone would ever stop there longer than it takes to pee in a gas-station restroom. Prescott, really, is the only place I’d want to live in Arizona…and the cost of living there is actually higher than in the city, because everything has to be trucked up the hill. Besides, I do like having my son stop by occasionally on his way home from work. I figure that won’t last forever–sooner or later he’ll find a way to get himself back to San Francisco. Till then, though, I crave to enjoy him.
@ Ellen: This is what I’m told. Actually, my figures are based on our previous healthcare premiums. The state was self-insuring, and they had an EPO that covered EVERYTHING for less than $12 a pay period–about $22 a month. It’s gone up to $18 a pay period, so to get the coverage I want, as far as I can figure out (it’s not easy–no one will give you a straight story), will cost about 7 times the new premium.
It’s true that if I were willing to go into a Medicare Advantage plan, I could get much lower premiums. However, having watched my mother die hideously at the hands of self-interested HMO doctors with no choice as to who would treat her, you couldn’t herd me into one of those things on a bet. I’d rather go hungry to pay the full freight for traditional Medicare parts A & B plus Medigap plus Part D, so that I can at least have a shot at finding a doctor who cares whether I live or die.
Costco is so dangerous! I always end up spending more money than I planned there!
If you do decide to sell your house, I know a wonderful woman who could help you and she’s honest and ethical. Very nice woman. FYI.
Good luck with your juggling. I’ll tell you what, when this recession is finally over won’t we be the smarter for it? You know the whole thing about being grateful? That’s what I have gratitude for. That we can all see a little better (when someone is trying to bamboozle us) and maybe, hopefully a little smarter about what we do with what we got.
Fingers crossed. 🙂