Monday, November 28, 2011

Retirement budgeting. How to save big bucks.

Staying on a budget is no small task especially with those cyber bargains are just a couple of clicks away. But year-round budgeting and cost cutting are the only ways to improve our financial profiles in the face of a fixed retirement income. For me it's about "finding" more money for travel, for enjoying my kids and grandson. It's about more money to do the things I want to do. I accept the need to cut back on certain expenses in order to have more money to spend elsewhere.
This won't be easy since I have always been what I call "careful." There's not a lot of wiggle room in my budget for more household cost-savings. But here's what I've done this year:
- Refinanced my mortgage loan from 6.1 percent to 3.7 percent for a monthly savings of $300.
- Signed up for Medicare and bought a supplemental coverage plan that cut my health insurance costs from nearly $400 a month to about $200 a month. This happens at age 65.
- Cut back on credit card spending related to clothing and eating out. Everything gets paid off, monthly.
- Negotiated for free barn siding through Washington state's Heritage Barn preservation program for a rehab project on our old 1920s barn where we store hay for the horses. I have applied for a grant for more work on the barn in the coming year.
- Consolidated home and car insurance coverage through a new brokerage firm with higher deductibles and other savings. Costs went down by several hundred dollars a year.
- Continued to work part-time rather than tap my "nest egg" IRA rollover savings. So far, so good.
- Shopped discount clothing stores and recycle stores such as Goodwill and a great Seattle store called Gather for real bargains. My best score was a clever, like-new vest with faux fur lining.
- Looked for cheaper entertainment options at smaller theaters in the Portland-Vancouver urban area where tickets are $15 to $25 per person rather than $75 and up. My toughest decision was deciding $100 tickets to attend a "Journey" concert in October were too expensive. Cheaper venues include the Alberta Rose Theater and the Aladdin Theater in Portland and the Old Liberty Theater in Ridgefield, Wash.
- PS: I dumped my satellite TV hook-up a few years ago. Cost savings: $600 a year.

There are still danger zones. I can spontaneously go off budget on clothing, eating out, my kids and gifts. But I am determined in the coming year to make more progress on cost-cutting.
Brett Arends, writing at Fidelity.com and the Wall Street Journal has come up with a list of great ways to save money. Here are a few of his ideas along with my editing and embellishments.
- Use loyalty programs aggressively to get discounts on car rental, air travel and other deals. Credit cards sometimes offer huge bonuses like a free airline ticket to new customers.
- Switch banks and credit-card companies for less expensive services. Drop cards that charge fees.
- Cut the frequency of services such as pedi-cures and house cleaners.
- Leave the car in the garage, ride a bike.
- Axe the landline and switch to a new Internet and phone provider.
- Refinance the mortgage home. (see above).
- Team with trusted friends or neighbors to make purchases through warehouse clubs.
- Don't pay someone else to do what you can do yourself. Your federal taxes, for instance. Home maintenance, for another.
- Use eBay and Craigslist more.
- Cut back on new books. Download classics from Gutenberg.org for free. Sell books back to Powell's Book Store in Portland or to Amazon.com.
- Use last minute websites such as vacationstogo.com to find savings on vacation deals. Swap your house instead of paying for a hotel.
- Go green. Stop wasting hot water and cut your heating bill by purchasing new lower-flow aerator showerheads and using cold water to wash clothes. Slowly move to LED and CFL lighting in your home. By a "smart strip" to turn off peripheral electronics when not in use.
- Volunteer to get in to music events for free.
- Go to happy hour for lower prices on drinks and food plates.
- "Return sanity to the holidays," say  Arends. Set a budget, swap oraments instead of spending big bucks on gifts people may not need or want.
Good luck, Julia.

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