Coffee heat rising

Budget off the Rails


Okay, I admit it: I have neglected the budget. Yea verily, I have lost the art of penny-pinching.

Result: I’m running out of money, two months before the start of my next “personal fiscal year,” which starts in September. In 2017, that’s when I took the last Required Minimum Drawdown from the 401K, which was supposed to last a year.


So next year I have to figure out how to live on 21 grand plus a pittance from Social Security. Since running this house and feeding me and the dogs consume about 2 grand a month, that’s a challenge.

Just now I’m as close to broke as I can get, budget-wise, considering that I have enough cash in the bank to cover about six weeks of expenses, and it’s eight weeks before the start of September.

The other day I mentioned the “envelope method” plan I’d cooked up: fill a Costco cash card with a budgeted amount to spend there during a month, and when it runs out, stop buying. This makes some sense, though nothing is to stop me from streaking out of the Costco over to the nearest Safeway and filling out the shopping list…probably at more expense than just buying everything at whatever CC would cost. Hmmm….

Whilst staring blankly at an unfriendly spreadsheet, a little INSIGHT dawned… Don’t budget by the month. Budget by the year. And instead of using cash cards as “envelopes,” use bank accounts. I already have a checking account, which juggles cash flow; an emergency savings account (containing $4.61); and an account to hold payments from Medigap and Medicare B, preparatory to forwarding that money to the Mayo.

[The Mayo does not “take Medicare assignment.” This is a bureaucratic way of saying they don’t accept direct deposit from Medicare or your Medigap insurer. So, every goddamn time you go to the doctor or an ER or whatEVER, you have to field a blitz of ditzy little annoying checks, deposit them in your bank account, and then pay the Mayo. Right now one has been sitting on my desk for awhile, waiting for me to get around to the hassle of scanning and uploading it: $24.17. The Mayo’s outstanding bill is several hundred dollars… It is, in a word or two, a fuckin’ nuisance.]

Where were we? Yes, staring blankly, dreaming up a fresh scheme…

A little calculation showed that if I were to get a freaking grip on spending, in theory this year’s drawdown should just about cover 2018/19 expenditures, if nothing happens. By “nothing,” we mean no major car repair bills, no appliances having to be replaced, no giant vet bills, no dental work…a very big “nothing,” indeed. But let’s pretend a person could get through 12 months without having to confront any of those.


What if I kept the drawdown that just hit my checking account in my checking account, but did not keep Social Security income in checking? What if I auto-transferred each Social Security deposit over to the Emergency Savings account…. Said E.S. account is empty just now, putting me at considerable risk of future misery. Twelve hundred a month would, in theory, load that account with some 14 grand over the next year, allowing me not to have to spend crazily to keep up with routine month-to-month costs.

And instead of keeping the entire drawdown in checking, what if I transferred the $8,408 a year demanded by taxes and insurance (!!!!!!) over to the present tax & insurance savings account, now empty because the 2018 T&I bills have all been paid. What if?

What would then remain in checking would be the amount I could spend on living expenses. This would be much truncated by setting all the net Social Security income aside for emergencies. But since I now have approximately $0.00 set aside in emergency savings, the truncation would be very much worth it. And, according to my English-major calculations, if I could cut the Costco bills down from $300 a month to $200 a month, this scheme would be eminently do-able.

Why do I think it would work?

Because the AMEX billing cycle closed yesterday. I charge everything on American Express, mostly including Costco but also racking up bills at various grocery stores and other retailers. This month the tab was only $775. Basically, an AMEX bill reflects all living expenses except utilities, taxes, and insurance.

It’s usually more like $1200. That means I spent some $425 less this month than I usually do.

Well, if I can spend $425 less than normal in June, I can do it all the time, no?

Yeah: probably “no.” But what’s to stop one from trying?

So the money from Fidelity hit the credit union this morning. Here’s what we now have:

$16,644 to live on for the next year (stashed in checking)
$8,408 for taxes & insurance (stashed in T&I savings)
$14,532 incoming from Social Security over the next 12 months (routed to Emergency savings)

So even though Social security will bring the year’s total cash available to something over 31 grand, the plan is to try to live on just $16,644.

That works out to $1,387 a month. So far in the current year, the one that is driving me to the metaphorical poorhouse, I’ve spent an average of $1,750 a month, a difference of $363.

So to live on this proposed new budget, I’ll have to cut spending by about $365 a month.

However, a backup fund will be growing at the rate of about $1200+ a month. If need be, I can draw down from Emergency Savings to make up the difference. So even if I regularly went over budget by some $363 every month, the red ink would only amount to about $4355. That would still leave something like 10 grand in Emergency Savings at the end of a year.

How to cut $363 a month out of normal spending?

Well, obviously:

Don’t go to dentists.
Don’t go to vets.
Don’t drive the car any more than absolutely necessary (so as not to run up repair bills).
Don’t buy clothes.
Don’t buy shoes.
Don’t go out to eat.
Don’t go to shows or movies or musical events.
Cling to every goddamn red penny.

It’s going to be a mighty dull year, I’m afraid. But I can’t be running out of cash two months before the end of every 12-month cycle. Something has to be done to get caught up with the spending

4 thoughts on “Budget off the Rails”

  1. WOW….This is scary…Suppose you did not have the “401K dough” to draw from? Scares me because you don’t seem to live a lavish life style, seem to be on top of things and still come up short. What the heck does some poor Senior do living on Social Security and a small pension do? Sadly, I remember when a person bringing in $35K a year in retirement…was set…and many considered comfortable financially…

    • I can’t even imagine how people get by. My father was in a much worse situation in the 1970s: he retired on what he thought was more than enough to support him and my mother for the rest of their lives — a grandiose $100,000. Then came the 1970s inflation and suddenly he didn’t have enough to get by. He did get into a life-care community by selling everything he had except one aged car and forking it all over to the Baptist church. But he had nothing left to do anything but just sit there and wait to die. He had about $40,000 left when he died, which he set up in a trust for his wife.

      This year I’m short because I paid off the loan on the stupid car: a moment of stupidity engendered by the fact that I just HATE having monthly payments. But even if I hadn’t: the payments were about $300 a month. That’s $3600 a year. We took out enough from Fidelity for the down payment, and then I was making the monthly payments out of my bank account: almost $4,000/year! I would have come up short every year until the hateful loan was paid off. So…

      a) I may catch up next year…except that the pool now has to be replastered, a job that will cost $6,000 to $10,000, depending on what they find under the cracked tilework; and

      b) I wanted to take that money out before the next recession, but the market is already falling. TheTrump recession is on its way: and

      Don’t now what I’m gonna do about that pool. It can’t go another year without maintenance and repair, to say nothing of another five or six years…or more. One guy at Marketwatch is predicting July 2 will be the strongest day of 2018 (Marketwatch not exactly being the clearest crystal ball on earth…). If he’s right, I may pull the money out in early July and just set it aside until the job can be done…it’s something they have to do when the weather is cool, for a variety of reasons. Waiting till October or November, though, could mean having to do the job after the market tanks…

      The expensive side costs aside, I’m probably spending too much on day-to-day purchases simply because I quit watching every damn penny as it passed through my fingers, and because I shop at Impulse Buy Hell twice a month — you can’t get out of there for less than $200. If I stay out of the place, it should save money to make up the two-month shortfall. Also it will help if I just stop driving as much. In a city that’s larger than Los Angeles County, it is ay-mazing how many miles you put on your car. The other option is to sell the house and move to Sun City, where taxes and insurance are much lower and the houses don’t have pools.

      Because of the teachers’ strike here, taxes are going to go through the roof. The politicians agreed to the 20% pay increase, and people are also demanding money be put into the crumbling school infrastructure. There’s only one place for that money to come from: property taxes. The two original plats of Sun City are grandfathered in with a deal Del Webb cut when he started building the place; no school taxes. As a result, SDXB pays a third as much property tax as I do, and half as much car and house insurance. I don’t wanna live in SC — been there and didn’t much like it. But if it’s a choice between that and life-care, I’ll take Sun City. I guess.

  2. Thank you for sharing a dilemma it seems so many have.
    We set in motion a plan many years ago to have a “Cost of Susistenenace” and small emergency fund to be covered by Social Security.
    And have a little left over each month.
    However, income continues to flow from business ventures and that allows the opportunity to splurge occasionally and “live a little”.
    It looks like our FIXED expenses are lower than yours.
    We chose to live in a reasonable cost rural area 40+ years ago, so it probably was easier

    • Though Phoenix is far from the most expensive major city in the land, costs are rising here. The locals imagine we’ll soak the rich — those in the top 3% income bracket — for the proposed teacher raises and school infrastructure support. Hah! We’ll believe that when we see it. Ultimately the only way to pay for those will be through increased property and sales taxes…and our sales taxes are already hovering at 10%.

      If my son and my entire social life were not here, I surely would move to a smaller, quieter town — preferably one whose city hall can’t afford a cop helicopter. Right here in exotic Arizona, Prescott is a lovely little burg, one of the prime retirement destinations in the country. Yarnell, of course, always beckons. But that would mean abandoning quite a lot that gives my life meaning, and having to build an entire new social infrastructure. How can I count the ways I don’t wanna?

      If things get a lot worse politically — and one strains to find clues that it will not happen — I surely would move out of the country if my son were not here. But as long as this is where he lives, I probably will lurk nearby. If he could be persuaded to look for work in Argentina, however… Canada? Belgium????

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