When people hear that I have retired, they often wish they too could join me. In deciding to retire early there were some considerations to be made. This blog explores the financial aspects of retiring early and my approach to living a more frugal life.
My decision to retire was not something I had planned years for. It actually surprised me when the idea popped into my head after a trip to India and it would not leave. When you retire early you get less. My present pension is 15% of what I was making. This is one and a half times the 2013 poverty level for the US. Had I waited until I was 65, I would have received 40% of my annual income. The one thing I kept thinking about retiring early was that I would get the money for 10 more years and that this is during a time in which I am healthy and can do other things. I also felt like the stress at work was having it’s own toll on my health. One that hadn’t yet registered as disease, but I knew in time it might.
The whole formula for retirement requires one to try to guess when they might die. If I were to die at age 70, I will be very glad I retired at 55 versus 65, but if I live to be 95 I might wish I worked until I was 65. So on one hand it is a formula and on the other hand it is a crap shoot as to what is the better plan.
When I announced I was retiring everyone wanted to know what I would do next. I decided to take a full year to not even answer that question, but rather to explore my interests and “re-find” myself and then from that one-year mark to consider what might be next. If I am able to be very frugal, I may not need to work.
I am taking my 15% pension and adding in investment money to make my current budget 33% of what it used to be. One of the biggest things I wish I could say I had done prior to retiring was to have paid off my house, as that would make a significant difference in my monthly expenses.
The first thing I did was to purchase Quicken so I could create a budget and monitor my spending. I monitored it for a couple of months while living as I wanted, then I used that to create a budget and look for ways to cut costs. It is always good to have real data versus your impressions, Quicken allows me to have that real data. It was new for me to have to think about my purchases and to say “no” to things, which was probably the hardest change. Most days it feels like a game in which to win, I need to end up at a neutral versus negative number. Some days it does feel like a restriction, but then I am quickly reminded that it is a choice. I can return to the work world when I desire.
Here are some of the ways I have cut costs:
- Canceled cable TV saving $120 a month. I now use Hulu Plus for most TV and movies and Apple TV for a few TV shows and movies for about $10 a month total. I also use YouTube for short commercials or shows that people are talking about.
- Went from fresh cat food to dry bulk food for Karma (Going from $60 a month to $7 a month). I originally was excited to go from wet to dry and then I found they had the same brand I bought in bulk for even less.
- Changed trash pick up to every 4 weeks (versus every 2) resulting in a $5 a month savings.
- Cashed in coins sitting around my house and car at Coinstar located in the grocery store near me.
- Use Chinook Book coupons for discounts on groceries, dining, events and local items. To save even more, skip the book and just get the Chinook App. It costs about half and is always in my possession when I need the coupons. They are available in 5 different cities, so check to see if one is near you.
- Use my local library versus buy books, CDs and movies.
- Download free Kindle books off of Amazon. I see posts on Facebook for free Kindle books about 2-3 times a month and those that appeal to me can be downloaded for free. You don’t even need to own a Kindle to read a Kindle book, you can use a computer or Smartphone for reading them.
- Use less make-up as discussed in my past blog on Simple Beauty.
- Reduced magazine subscriptions to my favorite two as noted below. Magazines are real inexpensive, but I feel I am getting more than I can keep up with and so simplifying makes sense.
- Aim to pay $10 or less for meals eaten out at a restaurant. I will be honest, this one is still a work in progress. One tip for this is to drink water when eating out and to use Chinook or NW Veg discounts. I am real lucky that AND Cafe near me is one of the NW Veg discounts as I eat there often. I just need to get better at remembering to ask for the discount.
- Join a Community Supported Agriculture (CSA) to save on food bills. I signed up for Wintergreen Farm CSA as they deliver to the Hollywood Farmers Market within walking distance from my home. It costs me $525 for 19 deliveries of the bounty from their farms each week. On one hand, you can’t pick and choose what you will get, but it is by far the best price and the CSA helps you get to know about new produce too.
- Shop at local Farmers Markets to get extra fresh, healthy and less expensive food.
- Forage for edible plants that grow wild and are free. One good example is dandelion greens. They cost close to $4 a bunch but are growing in my yard in an area away from dogs and pesticides. I took a great class in Portland called Urban Foraging 101 lead by Rebecca Lerner to help me identify edible and medicinal plants. She is a great teacher and knows her stuff, plus it was fun!
- Grow my own sprouts for a quick return on investment. Sprouts have lots of phytonutrients and enzymes and it only takes 5-7 days until you can eat them. I like to get mung beans, lentils and fenugreek at my local co-op bulk bins and just a tablespoon each reaped this large amount below. You can also get seeds online via the link up above. Put them in salads, wraps, tacos and on top of other veggies.
- Make more foods from scratch, such as beans, grains, nut butters, flours and more.
- Walk, take public transit and carpool more.
- Make my home as energy efficient as possible.
- Have a garden versus a lawn.
- Buy less by considering if I really need it. Make myself “sleep on it” if I am unsure if I need versus just want something and consider ways to get an item such as borrow it, rent it, etc. prior to buying.
- Thrift and resale store shopping versus buying new. I am very new to this, but starting to check it out. I welcome input on your favorite places to get nice items at a good price.
- Go green! Buying in bulk, DIY cleaners and personal care products are not only good for the earth, but good for your pocket as well.
- Stock up during sales such as the Food Front 10% off bulk sale.
- Use my kitchen scraps and organic items to make compost. This takes the nutrients and puts them back into my own soil and garden.
- Cook based on what you have on hand versus a recipe that requires you to go buy things. Here is a blog about eating on the cheap and a blog about living on a food stamp budget. I am sure there are more tips in these blogs I could apply to reduce my budget even more.
- Make hand made gifts versus store bought when I can.
The above savings adds up to about $3,860 a year.
Other resources I have yet to try:
- Tool libraries offer low fee or free use of tools for the yard, repairs and even kitchen items to borrow (versus buy).
- Portland Fruit Tree Project allows you to pick ripe fruits from trees that people cannot harvest themselves. Half goes to the Food Bank and half is given to the pickers. How is that for a great community project!
- Our Community Pantry has bulk items at discount prices.
- Car Sharing offers ways to share a vehicle that are more creative then just using your own car.
- Get a bike.
- Find a roommate.
- Couch surfing or Air BNB offer places to stay or to open up your own room to others who travel.
- Explore ways to save on and for travel.
- Barter by sharing my skills in exchange for others skills, services or items.
- Craigslist (barter or free sections). I used this when I was redoing my yard, by posting my plants and river rocks for free to those who wanted to come get them. Within minutes of posting, my phone was ringing and within about an hour, the items were gone and I was able to pull my ad. Great way to give and get items.
- Freecycle is a community based sharing program. The Freecycle Network™ is made up of 5,093 groups with 9,309,532 members around the world. It’s a grassroots and entirely nonprofit movement of people who are giving (and getting) stuff for free in their own towns. It’s all about reuse and keeping good stuff out of landfills.
Each month I monitor my budget to see how I am doing on my spending. People who know me, are aware that I spend a lot on groceries and eating out. And since this is very important to me, I then need to pull funds lower in another area to cover my food expenses. By tracking my actual spending each month, I can evaluate where I am on or off target and why. I can then make adjustments if needed for the next month. So far for 2013 I have been very close to my budget each month with February a bit under and March a bit over. It feels as if my whole life is an experiment and this is just another aspect of seeing how much I can learn and try new things. To me “frugal” is not a bad word. It actually combines quite well with being ecology minded, health minded and voluntary simplicity. In fact, I can hear Santanna singing “You’ve got to Change your Frugal Ways, Baby!” if I listen hard enough. And I am dancing versus running the other direction!