New Expenses Replace Old Ones

New Expenses Replace Old Ones


With retirement, there are going to be some new expenses to replace some that you had before. If you have paid off your house, then you are going to be needing to set aside 1/12th of the amount needed to pay for the taxes and homeowners insurance each month to cover those bills when they become due. No longer do you have an escrow fund in your house note which covers those items. Now is the time to think about living very frugal and thrifty. Learn to cut costs now so you are ready when the time comes! There is a really easy way to pay your house note off early, if you will do it every single month. First get an amortization schedule from your mortgage company so you know exactly how much goes to the principal and to the interest on your payment. Every month, make your normal mortgage payment. Then make out a second check for the principal amount of the upcoming month's payment only. Make sure that you mark the check and send them a note to apply this payment to principal only. Do this each and every month until you have your note paid off. What you are doing is "paying it forward" when you are applying that little bit of extra each month to the principal amount of the note. Your interest is calculated on the amount of the outstanding principal of your note. So if the principal is being reduced, you will be paying less interest each month. Many people do not realize that the interest on your home mortgage is not calculated the same way that it is on your automobile loan. Also, don't make the mistake of thinking you can make several full payments each month and then be able to skip a month if need be because you are paid ahead. They don't figure it that way! So always always whatever amount you pay ahead be sure to mark it as "apply to principal only" and remember you can't skip a payment. By doing this, just the extra upcoming principal amount each month, you will shorten your note by roughly three years, if you began with the very first payment on your note.

Perhaps instead of paying your car insurance quarterly, you will now find you have to pay it monthly so be sure to make allowance for that also, along with the car renewal tags and your driver’s license renewal cost.

Since you are no longer employed, you will need to be setting aside money to cover any additional health insurance payments if you wish a supplemental policy besides your Medicare coverage. You may also want to have long term care insurance, burial insurance or life insurance so be sure to make allowances for those expenses also.

Get Good Financial Advice!

You may want to get with your financial advisor to restructure your retirement funds in such a way as to be able to withdraw a certain amount each month or switch funds into a money market account.

I plan to have a couple of guest bloggers on here who can help you with some ideas about how to handle your retirement money and lower your car insurance and homeowner’s insurance. I wish I had had someone to advise me before I retired.

If I had it to do over again! Boy would I do it differently!

Hindsight is so wonderful. We can look back and say, I wish I had done things differently! I would have definitely planned to have my house paid off. If I had, I actually could get by, even though it would be a tight struggle, on just my Social Security funds.
Now that means living on less than $800 (with the $98 out for Part B Medicare)

Cutting Back on Unnecessary Expenses

*Get rid of Extras on your Phone Service
Many people do not realize that once they retire, they can qualify or what is known as life support phone service. This is offered to Seniors on very low incomes for $1.00 a month. Contact your phone company to see if you qualify.
Otherwise get rid of all the fancy features on your phone, the call waiting, call forwarding, caller id and call waiting id. These all add up to expenses you really don’t need. I was able to drop my phone bill down to under $18 a month by doing that. It's just too bad that all the taxes that are added on actually comprise about half of our bill!

* Cable TV or Dish TV
Reduce your service down to the Basic service you don’t need all those extra channels. My guess is you have never even watched half of what you presently have available and are paying for.

Better yet, get a converter box and use it for your new digital service. Invest in a new UHF/VHF antenna to improve your reception if necessary. I am amazed at the beautiful picture I am now getting on my TV using the converter box!

* Fill up your car with gas two weeks before major holidays or after the holidays. Gas always goes up just before holidays and comes down afterwards. Play the gas game, fill up two weeks before to same some money. Try to fill up in the cool of the morning or in the evenings and not during the heat of the day, you will actually get more gas!

* Use coupons when you grocery shop, but use them for items that you normally purchase or items you wish to stock up on for holiday or special meals. Don’t just buy items because they are on sale or use coupons for items that you won’t ever use.

If you begin to live well within your reduced budget now, when the time comes, you will have already made the adjustment to living on less and you won't feel so deprived and like you have lowered your standard of living. You will be very thankful that you have taken the time to get back to the basics of life where you realize that "having things" aren't the measure of a person's true wealth!

Wills, Living Trusts and Medical Directives

I know, this isn't a subject that is easy to discuss, no one wants to talk about death and dying. But hey, we aren't going to leave this world alive. Two things are inevitable.... death and taxes. The only one you really have any control over is the tax part.

Wills:
You need to make out a will, be it with the assistance of an attorney, one that you pick up at the stationery store and fill in the blanks or a handwritten one. You also need to keep it updated. Now some states do not accept handwritten wills, so be sure to check what the laws are in your state. I do not know if you can avoid your estate going into Probate or not if you have a will in place. That may also vary by state so be sure to check. You will want to stipulate whether you wish to be buried or cremated as well as who gets what from your estate.
Living Wills:
There are both revocable and non-revocable trusts.
I do not feel comfortable even trying to explain this to anyone other than to say that you do set this up and it is in effect while you are alive whereas a will only goes into effect upon your death.
I am going to attempt to get a guest blogger to come do a special post here to enlighten everyone, including me.

Medical Directives:

The Medical Directive records the medical treatments you wish to have or not have if you become unable to express your wishes. ... Only if you become mentally incompetent and unable to make medical decisions on your own. You may stipulate to what degree you wish to have life saving measures performed and at what point you only wish to have comfort only measures.
Some people may wish to put provisions in for donation of organs or their bodies donated to science upon their demise.

Your retirement years are supposed to be your "golden years" where you can relax and enjoy life and the fruits of your labors. When Social Security was first set up, all monies collected were to be placed in a special fund and used only for those who paid into it. Somewhere along the way, one of our President's decided that there was "too much surplus" in the Social Security/Medicare fund and transferred those funds to the General Fund of the government, where it still stays today. IF that money had not been moved to the General Fund, Social Security and Medicare would not be in the current state that it is in....... going broke. Also when that fund was established, the life expectancy of the person receiving those funds was not projected into being alive at 75, 85 or 100 years of age either. If I remember correctly, they thought if you retired at 65 you would only live and receive the benefits for about 4-5 years at the most. With our great advances in medicine and people living longer, the average age is now much higher and funds are being paid much longer.

At the present time, anyone born in1960 or later, the full retirement age is now 67 years of age. You can go to http://socialsecurity.gov to look at the current regulations and percentage of money that you will receive under Social Security under full retirement age and early retirement age.