Case Study: Making some headway

[DollarBill]

I thank everyone for giving me insight to improve my life. I made a lot of changes in the little time I've been here. I'd like to see were I can make further cuts.

Income: $4740 a Month
to make it easy my budget it $2000, this is what I plan to receive after I retire from the Military. I will save $2800 a month until Nov 1st for retirement.

Budget:
$2000 a month (This is after retirement)

Expense:
Taxes & Insurance: $440 (House paid off, Taxes $333, House Ins $60, Car Ins $50)
Food $300
Gas for Vehicle: $100 (Just bought a car for the first time, doubled my MPG's)
Phone: $75 (Verizon, contract for the next 1.5 yrs) I will consider I different provider after.
Electric: $85 (I just unplugged everything that's not in use but I pay an average for the yr so it will take time to see if it lowers)
Heating (Nat Gas): $70 (I lowered the water temp by two notches but again I pay an average for the yr so it will take time to see if  it lowers)
Water: $40
Net & Cable: $110 (After I retire I'll drop the cable to save $60 a month)
Travel fund: $100 a month
Emergency Fund: $150 a month
Fun Money: $530 (Normally only spend about $350)
Total: $1820 (W/$180 left over)

I have about $23K to invest, just waiting for a drop and should have about $40K once I retire. In the past 4 months of tracking I haven't had to dip into my travel or emergency funds. Plus, I'm building award points on my credit cards that I pay off each month (so far $260 worth). In the next year I plan to sell a lot of stuff and the house to save on taxes and utilities. I don't know if I will buy a smaller house (use the extra money to invest...$30Kish) or rent (use most of the money to invest...$170Kish) or buy truck/RV (use the extra money to invest...$140Kish). Any tips where I could cut next or words of wisdom??

[Silvie]

Food seems high for a single person, or do you have a family?

Why would you budget 530 fun money when you only spend about 350 each month? What exactly does this include? This number seems a little high.

[NewStachian]

DollarBill,

As someone who only spent about 7 years active duty, congratulations on retirement and thank you for your service. You are a stronger man than I to put up with it for 20 years.

Your budget could use a little tuning here and there, but you look to be on track for what you'll be getting from retirement income. I think the bigger question is what do you want to do with all your new free time? Going from full speed ahead to all stop can't be an easy transition. If you're retiring at 20 I'm assuming you're late 30's or early 40's? Do you see your future activities adding to or subtracting from your income? In other words, are there hobbies you want to pick up that will cost you money, or is there a second career you're looking to jump into, even at a volunteer or part-time level?

[DollarBill]

I just started tracking all my spending 4 months ago and the numbers are an average. I set up extra savings accounts and titled them w/ name and dollar figure. Such as Taxes/$220, Travel/$50...so when I get my bi-weekly check I transfer the amount to those accounts. My goal is to have a little cushion left over at the end of each month in case I have an unexpected purchase or if prices go up.

The food might be a little high because I did have Family over in January. My food fund also includes: Dog food (two Med size dogs), personal hygiene, toiletries, kitchen supplies but does not include eating out (That's comes from fun money). I do try to not waste food but as a single person sometimes I find it difficult with planning. Toward the end of the week I might throw out a few items or if I don't feel like cooking. I also like to splurge on occasion like King crab (But only when it's on sale).

As for the fun money, I made this a separate account because last year when I was paying off my house I became a bit of a loner. I decided it was too painful to keep that going. So I decided to try to convince myself to spend the fun money anyway I see fit. I also use this account for some items that are unexpected. For example over the last 4 months of tracking I use the car wash 4 times at $7 a pop; Vet bill $28; target $128; Autozone $42; trash bill $48; and surprise tax bill for $87. I take out about $200 for cash a month and about $100 for going out to eat or out with friends. Some months I'm sure I'll go over but once I get settle into my budget I'll tweak it a little.