Where Does the Money Go?

As I face retirement, I continue to be concerned about money. My rational mind says I'll be fine, though not wealthy, and I've got contingency plans to keep me afloat if bad things happen. (As in: live on small boat, deliver food on Vespa. Also less drastic approaches.)

The recent government "lapse in funding" (aka shutdown) caused me to attempt to be more frugal. It didn't go well. I managed to spend nearly $9,000 in 35 days! When I was trying to be frugal! When I retire, I can't afford to routinely spend that much every month. So I needed a deep dive.

I track my spending on-line, automatically, as I am virtually cash-free. I use Mint as my collector of data. I down-loaded my 35 days of the shutdown and went over the transactions carefully. (I'm quite sure the only cash I spent during those days was for tips at the hair salon, so this is a complete record.)

First, because the shutdown started on December 21, my spending included Christmas gifts and food, and year-end giving to charities. It also included a check written much earlier for basement renovations, and paying bills for my knee surgery. (Despite what I consider excellent health insurance, my out-of-pocket for the surgery and associated visits is over $600, just during this period. Some bills take longer.) So if I back out Christmas, charity, and surgery, I'm still left with over $4,500 as "routine". I know I'll still have healthcare, home improvement, Christmas, and charity in retirement, but it won't be in those amounts monthly. This is one reason I need to set up my budget tracking to account for annual totals and year-to-date towards those totals, versus the regular "monthly" amounts most automatic programs look for.

Further on the deep dive, I can back out about $900 as being purely expenses driven by work. These include parking in my building, daily dog-walking, and lunch out every day. (I actually fairly often carry my lunch to work, but during the shutdown I deliberately went out to the local small businesses taking a huge hit and spent money and wished them well. It was a perverse way of thumbing my nose at the whole sordid situation. Convoluted logic.)  Of the remaining less scary sum, I would characterize more than half of it as required, and the rest as discretionary. This is arbitrary and fuzzy. For example, I have "food" as necessary, but since most of my food shopping is at Whole Foods, there are ways of cutting that down. During the shutdown, I continued to shop there, but I was much more conscious of food waste, and much more likely to eat from my freezer or my cupboards than to run out and get something fresh, so maybe it is representative.

So with trying to cut back on things, what did I still spend about $1700 on in 35 days?

Clothes. I've written about how my pants don't fit. While we were pretty casual all during the shutdown, I still need decent clothes for work (and for life, for that matter). From my many years of enjoying "What Not to Wear" on TV, I decided the single best factor in how you look is to have clothes that fit properly. The fact I can zip up my pants with a quick inward gasp does not mean that I should leave the house with stretch and strain obviously showing. So I bought a dress that I wear weekly, and two pairs of on-sale black pants that are also appearing weekly. Then, completely unnecessarily, I bought a dress I saw on the internet because it had airplanes and I like it.

My category called "entertainment" is the second biggest category here. I continued to buy books, movies, and apps, including subscriptions. I consider all of these discretionary, though I don't think I would ever want to cut it down to zero. I do use the library for a lot of kindle books, but not for all my reading. I have Netflix, extra streaming services through Amazon prime, high speed internet and cable TV. My cable TV bill was totally out of control, and I called Verizon to turn off TV while keeping internet. As is not unusual, the able salesperson on the line talked me into keeping TV, while cutting my bill more than in half. (Conventional wisdom around here is that one should call Verizon every year or so to re-negotiate.) So with that bill going down, I still need to review all the add-on subscriptions I've got from Amazon and from various iphone apps, and lower it.

My single biggest expense in the discretionary column is personal training and my gym membership. I struggle with what I want to do with this. I adore my trainer, and I am continually reminded why this works for me. I show up more often and work harder for her than for me. I have converted the new small bedroom in the basement to a workout room at minimal expense, since I already had a treadmill and weights. It's lovely, but I need to show up there more often. I probably could cut my training bill in half, switching to once-a-week or maybe cutting down the duration. I have skipped months completely (like in December because of the knee) but not tried to cut back. It might be like Verizon - just re-negotiating might lead to a better deal. And, my trainer is in great demand, I don't have to feel any guilt for her.

The best thing on this expense review? NO MORTGAGE PAYMENT!!!!! This is the first month since I paid it off!!!!  I will need to set aside money for the not-inconsiderable property taxes and for insurance, which is relatively smaller. I need to sit down with my insurance agent (or find a new one) and review my coverage. My bill might actually go up, because I believe I'm under-insured for total catastrophe, but it will be manageable.

I think, after this review, I'm much more comfortable that I will have enough money in retirement. When will that be? It seems elusive, and much less concrete than I thought a month ago, due to issues at work and my feelings of obligation to certain people. But, it'll happen.