So the Budget:
Not as bad as I feared, but not good. It’s the 27th, I probably won’t spend any more cash between now and the 31st, and I’m “only” $234.81 in the red.
Heh.
That wouldn’t have happened if I hadn’t signed up for that drawing class, to the tune of $175, and then spent another $15 for a few art supplies to refresh the collection.
Also got a whopping bill from the accountant — but it covers several months of bookkeeping. And of course the utility bills are out of sight this month: over $400.
Essentially what it all means is that the budget is so tight, there is exactly zero (0.00) room for entertainment that costs anything at all. Ditto clothing, eating out, or any other indulgences.
There’s a slightly different way of looking at it, though, that leaves me in the black: I prorated the annual amounts due for insurance and taxes, subtracting the monthly figure from the monthly budget. Of course, nothing left the checking account for these amounts: they’re paid once a year. Monthly, those figures come to $543.
So…if you don’t add those in to the amount I actually live on, I’m in the black.
But if you regard it as money that’s out the door…then I’m in the red.
I figure the taxes and insurance have to be paid in any event. I get a set amount per year, not per month, to live on. So it’s a wash: if I subtract $543 x 12 ($6516!!!) from the annual amount available, then I would just end up with a monthly budget that’s $543 less than what I’ve figured.
So it’s the same: I’m $235 in the hole: in the red in six out of 20 categories.
Only $40 over budget for groceries; that’s not bad, since I cut $100 off the average amount I found I’d been spending over the past six months.
Managed to stay out of Costco all month.
Spent $160 at Amazon — that would include the composter, which undoubtedly comes under the heading of “unnecessary.”
But think of that: one small indulgence, to say nothing of two, and I’m underwater.
Oh, well. Life is short. Eternity is long.
This IS troubling….I have heard a similar theme when talking to tenants, neighbors and my “Dear Mom”. All have basically said they are “up against it” with little margin for error….DM lives anything but an extravagant life style and because of “the times” refuses to turn on her air conditioners despite my offering to pay for them. Many seem to live one emergency from financial downfall…. As for the composter….one COULD consider it “entertainment” or an “investment”….Have you noticed any drop in trash?
It does seem kind of disturbing, doesn’t it? Especially when you consider that as elderly Americans go, I’m fairly affluent. I’m among the few who CAN come up with $400 for an emergency on short notice.
In fact, if push comes to shove, I can cover the cost of budget overruns with savings. However, my innate Bag Lady Syndrome reminds me that if any such thing becomes a habit, I’ll run out of money before I run out of life. And that scares the bedoodles out of me.
It kinda looks to me like if you’re a youngish person starting out or moving upward in your career, you should figure you need to save about twice what you and the current prevailing wisdom think you need. Because that will be the effect of inflation.
We have here a government that tells us there is no inflation to speak of. Yet clearly costs are rising fast enough and high enough to defeat any normal plans for retirement. At the time I was laid off my job, $2,100 net would have been plenty for me to to live on — with the house and the car paid for, that is. Obviously car and house payments would push that up.
And I’m brought back to the thought that it was a damn good thing I paid off the house when I could. Even though, yeah, I would have had an extra $80,000 in savings, a 4% return on 80 grand would be $3200/year (pre-tax!): a far cry from the $9,960 the house was costing me.
Of course, if $80,000 had sat in Fidelity for 20 years, it would be worth a lot more. Hmmm… If it stayed invested till I was laid off, let’s say, 15 years, it would be worth $144,075 at about a 4% return (though by 2009, it would not have been earning that much and might have been losing…but for the sake of argument, let’s figure an average 4%).
So if I had that $144,075 in retirement savings today and used a 4% drawdown to pay the mortgage, it would give me all of $5,763 toward the annual $9,960 cost of the mortgage.
So. Yeah. If I hadn’t paid off the house when I did, I would have lost it when I lost my job. Yup.
So there’s your assignment, O ye of the under-40 set: Pay off ALL debt and stash at least twice as much as you think you’ll need to support yourself in retirement.
Zowie! What a world.
WHICH assumes the government will meet their obligations to Social Security….A big IF…. IMHO….My biggest fear/prediction is that all these “tax advantaged” IRA’s and 401k’s will suddenly become taxable WITH the stroke of a pen. And the reasoning will be….We/the government need the money. Remember back when SS income was tax exempt?…….No more….