December 19, 2012

How I Start The New Year

For more years than I'd like to count, I tend to start the new year the same way. It is a five step process (I'm very organized!) that has worked for me before and during my satisfying retirement. See how closely this matches your approach.





Develop a budget

This is always first. Without knowing what my income and outgo is likely to be I can't make any plans for vacations, home repairs and new furnishings, charity donations, and all the things that keep the Lowry household functioning. Usually I draw up a rough budget based on the current year's situation by early December. After we get the dreaded health insurance new rate letter for Betty's policy with a 12-17% increase, I start to get serious.

For most years I plan on an overall increase in our total budget of 3-5% and that seems to work well. I know how much I want to withdraw from savings and investments so I simply work backward from that figure. If I reach zero before all categories are taken care of, out comes the red pencil until expenses are slightly below income. Betty and I will get together on New Year's Eve and decide the final look of the new budget...not very exciting but we avoid the craziness of that night.

2013 will have a new wrinkle: starting in May I will receive Social Security checks. That will be a tremendous help to our monthly cash needs and means the outflow from our IRA will slow dramatically. That is a good thing.

Clean out my office

All old receipts and files are boxed up and moved to the backyard storage shed. Since I handle my dad's finances, his stuff must also be sorted and stored. New files and envelopes are begun for 2013. My computer to-do list program has the previous year's information archived and a fresh slate is started.

As one year's worth of receipts and papers go into storage, the oldest box of similar stuff gets taken to a shredder. Everything that is older than 5 years except tax returns, paid up mortgages or other important papers, is destroyed.

I look for books and other items that can be given away or go into recycling so the office is as clean and empty of clutter as I can make it.

Put Away holiday decorations

If I had my way the Christmas stuff would be boxed up and back in the storage shed on December 26th. But, the family likes seeing everything all festive until New Year's Day. So, sometime on January 1st or 2nd we'll take down the lights, decorations, angle tree, and garlands and put the holidays behind us.

Since we had the whole family at our house for both Thanksgiving and Christmas this year there is more than the normal amount of things to clear out. It will take the better part of a day to arrange it all properly in the backyard shed before 2012 will be officially over.


Develop our vacation calendar

Betty and I usually discuss the next year's vacation the previous fall. We have a general idea of our budget and where we'd like to go. This year, the new RV has given us an entirely different focus on our travels.

Betty has a major commitment at church that will keep her close to home through late March so the first part of the year will probably have to be short getaways. We are going to Oregon for most of the month of August and want to take a two week trip to California next fall. But, otherwise, plans for R.T. the RV will be discussed on New Year's Day. For this first full year we hope to be on the road for a total of two months in the RV. That will be quite a shift for us.


Purge the house & backyard area

Betty and I are happiest with minimal clutter. I am also am tired of trying to maintain so many flowering plants around our yard so I plan to downsize the number of pots I have in the backyard. With us hoping to be traveling for a few months this year, the fewer plants to water the better.

There are nooks and crannies in the garage and in several closets that need to be thinned out. Before moving decorations back into the house after the Christmas stuff is put away we will decide how much we want bring back inside.

I'll go through the books in my office and bedroom that are no longer needed and donate them to a charity.  Usually at the beginning of the year I review my clothing situation. I get rid of things that are worn out or haven't been used for at least a year and make of list of what I'm likely to need in the coming year. Already I know several of my sports coats are heading for Goodwill.


That is my approach to starting a new year. But, I am always looking for new ideas and suggestions. What do you do to kick off the new year? How do you organize and prepare yourself, your home, and your mind for a fresh start?

 

36 comments:

  1. Winter is our repair season. After the budget, which I lay out and hubby glances at, we begin to discuss the repairs or reconditioning planned for the year.
    Otherwise we do almost the same think you do --- except we have a huge barn to haul stuff to. :>)

    ReplyDelete
    Replies
    1. There are times when I would like a big barn for stuff!

      Delete
  2. I bet that your RV venture has helped with all the organizational modes. For me, it really helps define what is most essential and what is not really necessary.

    ReplyDelete
    Replies
    1. The RV has changed our vacation planning quite dramatically. With full warranty coverage I don't have to set aside a lot for repairs. But at 9 miles to the gallon, I do have to be very well aware of gas expenses.

      The RV is also a good lesson in minimalism. There isn't much room so you learn how little you really need to function and be happy.

      Delete
  3. Bob, most of what you do I can count on as well, except for the budget. We have a good handle on that aspect of our lives, and while I am working the need is lessened somewhat. When I retire I am sure I will take a much bigger interest in doing one.

    Since I do all taxes myself, and have for years, my record-keeping process for that is year-round. No rushing at the end of year or beginning of the next; I just wait for the onslaught of required documents to finish my taxes, many of which do not arrive until late March or early April (largely MLP forms and the like, which always run late).

    We largely keep up with things throughout the year so there is not much to do at the end. I seem to prefer that approach.

    Continued Merry Christmas wishes to you, Betty, and all your readers!

    ReplyDelete
    Replies
    1. Merry Christmas to you and your family, Chuck, Enjoy your Tennessee winter.

      I always finish about 90% of my tax returns and my dad's and then wait for those late K-1's and other pieces of paper that tend to arrive within 3 weeks or so of when the taxes are due. It is too bad the January 31st deadline for W-2s and so forth doesn't apply to investment info.

      Delete
  4. I do my big cleaning in the fall and in the late spring so no purging for me. Christmas is left up through the feast of the Epiphany or the last day of Christmas. After all, Christmas doesnt begin begin until 25 December. For whatever reason, I do most of my paperwork stuff fiscal year mode rather than calendar-partly because after so many years of having kids in school it's still my habit to becoem organized after summer is over and the house is quiet. I may have to look at changing that. This year of course, im donsizing in a major way so I am listing all the things that I know will not move to a smaller place like my gigantic china cabinet.

    ReplyDelete
    Replies
    1. With Thankagiving and Christmas always involving so many decorations and meals we would only get frustrated if we attempted a major cleanup and thining out until it is all over.

      I look forward to early January. It is about as clean and neat as we will be for the next 364 days!

      Delete
  5. The only thing I would add to your list is to make sure you have an updated list of all accounts and contact info. That is for investments, insurance, health care, etc. I have a list that I update at the beginning of each year and send to the executor's of our estate just in case.

    ReplyDelete
    Replies
    1. Very important point, Juhli. I do review my emergency contact information on an annual basis. i also update a master list of passwords that is kept in a locked hidden place that family members know about. With so much of our lives on-line, a lost password can become a real problem during times of emergency.

      Delete
  6. Hmmmm, we don't do any of that, except develop our vacation calendar. You're makin' me feel guilty!

    ReplyDelete
  7. Christmas time is when I purge my house of all the stuff I didn't use over the past year. That means refrigerator, medicine cabinets, closets, draws....all get sorted and tossed. I will admit I have been a little lax lately. I actually found vitamins and aspirins in my cabinet that expired in 2003! LOL! Once I purge, I re-buy. All fresh and new. This year it was also time to buy new pillows, sheets and towels. After 19 years, my TV finally died. Bless her little heart. 2012 was THEE year for replacements. New 47" Smart TV, iPhone, iPad, digital SLR camera. How very nice to be back in the 21st Century! Plus, if there is any money left over at the end of the year, I buy myself whatever I did without over the year according to a priority list. This year, it was a cast iron skillet. I wanted one very much.

    I also do my budget around this time, before January 1st. Our budget of just the basics (really, do you need anything more?) runs around $33K per year. Throw in the fact that we may be hit with the 10% Fiscal Cliff tax plus expense increases and in order for us to make ends meet, we'd have to drop expenses down to $29K to be successful. Can NOT be done. And still eat. Like you, starting in January, I'll be collecting Social Security for the first time. I can not tell you how happy I am about that! It will certainly come in handy PLUS I will be able to put some money aside. DH doesn't retire for another 6 years.

    ReplyDelete
    Replies
    1. You are a busy and determined lady. We buy new sheets when we can see through the old ones, usually 4 years!

      The SS checks will be very nice as will Medicare starting in 2014. Betty and I have over $13,000 a year in health related expenses. Medicare should allow us to knock that down by several thousands of dollars each year.

      Delete
  8. Hmm, I'm like Tom above. I don't do much of that list at a given time. I wait for the urge to hit me and that can happen just about any time of year. I gave away all my suits and suit coats except for one of each several years ago. I have not worn the ones I kept in several years but I guess I will keep them just in case.
    All of my clothes now fit in about a 3 foot wide closet.

    My study, well that's a different story. Although I have purged many books from the shelves behind me in recent years it seems that they are only replaced by e-books on my Kindle. At last count I have 134 there!!

    ReplyDelete
    Replies
    1. That's another example of a slippery slope, RJ. One Kindle book and where does it stop?

      Good post about guns on your blog.

      Delete
  9. I like how you organize. This year we are leaving on January 1 and won't be back until March 5 or so. That means my budgeting will either have to wait, or I'll need to do it from Tucson via a program called GotomyPC. If the speed is too slow I may have to wait until we get back.

    We have been going through files this month, for the first time in ages. I brought all the folders with warranties and manuals upstairs and Art and I went through them. Many, many of them are for things we no longer own, so our recycling bins are extra full. I'd love to be a minimalist, but my spouse is not so inclined, so we do what we can do.

    ReplyDelete
    Replies
    1. We have one drawer for various instruction manuals, warranties, and so forth. Like you, I find paperwork for things we haven't owned for years, usually because they broke and were replaced.

      Maybe Art and I can have a chat if I can visit you two in Tucson this winter! I used to save everything, too, but have seen the light.

      Delete
  10. Wow...lots to think about for me. I have not planned much in the past, but I can see as a retiree (& not a gazillionaire retiree!) I'm gonna have to plan.

    I'll take your tips.....& lay out a budget to start with......I've had a better one the last few months, but more fine tuning needed.

    Thanks for jogging my mental processes!

    pam

    ReplyDelete
    Replies
    1. Let me know how your budget building goes. It is quite important.

      Delete
  11. Here are 3 things that I do, not on your list:

    1 - Every year on January 1, I rebalance my portfolio; and

    2 - This may sound morbid, but I maintain a 12 page list of all my important data, including accounts, passwords, contact info, key family info, etc. I learned this lesson after my dad died. Our estate lawyer gave me, the executor, a 12 page checklist of information to fill out. I even needed the family tree information. It took months of digging and searching to find everything that was needed. So I actually maintain that checklist on myself now. All my wife would have to do is pull the file from the SD Box and she's done. It gives me surprising piece of mind; and

    3 - I have a game that I play that goes like this: I make 2 sets of predictions - one 12 months out and 1 goes 5 years out. I make predictions on what I think will happen in politics, science, personal fulfilment and goals, economy and investments. Each year I look at last year's predictions plus the one from 5 years ago. It's pretty interesting how difficult it is to predict even the near future.

    ReplyDelete
    Replies
    1. The 5 year projection would be an interesting project.

      As the executor of my dad's estate, I'm hoping that because everything is in a trust the process will be easier when he passes.

      Delete
  12. My end of the year ritual is more introspective and less practical. I could use a bit of your approach, but instead I go up to the cabin for a few days of reflection. However, since the girls moved out, I'm definitely doing some year end cleaning and purging. Not sure I'd be up for it every year. I'll also be focused more on budget this coming year since this year has set me back a bit plus my severance package is over now and I'm on my own. I'll be looking for advice!

    ReplyDelete
    Replies
    1. A big year coming up for you, young lady. The new real estate purchase, an empty nest (finally), and budgeting. Of course, your cabin in the woods is the perfect place to accomplish a lot.

      Advice? Ask away!

      Delete
  13. During our 40 years of marriage, we have never had a formal budget. We can either afford something or not. I do periodically review some expenses like car insurance or cable to see if the bill could be reduced. When my husband retires, our loosey-goosey money methods may need to change as my healthcare insurance will be pricey.

    Even vacations tend to be spur of the moment, but with the purchase of the condo in Surprise, we will be more organized on that front. We are looking forward to exploring the area.

    ReplyDelete
    Replies
    1. Not operating with a budget would be way out of my comfort zone. We aren't so strict that we write down every dime. Sometimes we have a "don't ask, don't tell" minor expense that we simply ignore, but that is the exception.

      I hope you really enjoy your new Arizona second home. Surprise is a nice part of the Valley.

      Delete
  14. Bob,
    What are your thoughts on taking SSI at 62? I'm 59, retiring next year, and have planned for a long time to start social security at 62 in '15. I'm wondering if I'd be better off waiting until later, even if I don't make any more contributions to it.
    My dad and mother both took it at 62; my dad's philosophy was that if he lived long enough- he did, I think; he died at 88- that he would more than make up the amount he lost by taking it early.
    Thanks for your great blog!
    Jeff in OK

    ReplyDelete
    Replies
    1. The advice is generally to wait as long as you can. Each year you start early you lose about 7% for the rest of your life. If you don't need the money then I'd wait at least a few more years.

      I am starting at 64. I could easily make it on my own resources until my full retirement age of 66. But, the extra two years of waiting adds only a few hundred dollars a month that I don't need to make the numbers work. Starting at 62 would have meant losing almost $600 a month for the rest of my life, which didn't make sense since I don't need the money .

      It comes down to: do you need the money to maintain a decent quality of life? Then, take it when you can. Will SS be a nice addition to what you have already saved? Then wait.

      Delete
  15. We are much more 'seat of the pants' than you are in some respects. After all our well laid plans blew up in our face with kmart we've been a little more about living in the moment.

    I'm all about the purging but I usually do it spur of the moment...like when I can't fit something into a drawer and decide to dump it all out and throw most of what's in there out. I'm spontaneous like that. ;)

    So much is changing with us at the moment I can't even think about a master plan for 2013, except I feel in my bones it will ultimately be a better year than this one.
    Have a great Christmas with your family!
    b

    ReplyDelete
    Replies
    1. Thanks for the wishes, Barb. I hope you have a year that allows you to feel comfortable and with less stress. The crappy way your husband was treated by kmart is a pain that won't ever go away, but I bet you will overcome all the hurdles in good shape.

      If I see something that needs to be cleaned out I am so organized that I'll write it on my to-do list so when it is done I can cross it off. Actually I think that makes me a little OCD.

      Delete
  16. Last year I did a one day silent retreat at the end of the year and it was so peaceful that I plan to do it again this year. I will review my finances, but I don't really use a budget. I like your idea of purging and getting rid of things. That is a good way to start the new year.

    ReplyDelete
    Replies
    1. That is something my good friend, Galen Pearl, would relate to. She goes to her cabin in the woods for a few days of relection and calm. I may just hide in the RV on the side yard to have the same effect.

      Have a great holiday season, Donna.

      Delete
  17. The thing I love to do at the end of the year is read my journal of the last year. It's like reading a book about someone I can totally relate to. I love reading about the year's ups, and even the downs, because they are always things that have since resolved. And usually there's a little tidbit of wisdom I can carry to the next year.

    ReplyDelete
    Replies
    1. We do something like that with Betty's photos. They bring back great memories from the year just past. Things always have a slightly different interpretation and perspective after some time has passed.

      Have a great holiday season, Syd.

      Delete
  18. I'm like you with regard to holiday decorations - come December 26 I'm ready to put it all away. Christmas for me is about everything leading up to and through December 25. December 26 is the beginning of getting ready for the new year, and I like to kick it off with a clean, no-longer-decorated home.

    Similar to Retired Syd, I enjoy looking back through our calendar to see where we went, and what we enjoyed doing. I'll compile the high points into a blog post, forming a permanent record for Mike and I to look back on in future years.

    Our immediate #1 goal in early retirement was to travel 50% of the year. Currently I have 160 days planned out for 2013, so I think we'll achieve that goal without problem. About 100 of those days will be in our RV.

    What I'm actually most pleased about is that we will not need to increase our budget at all in 2013. We contained all fixed expenses, and extracted enough value from our variable expenses, that we will not need to make any increases. Even our medical insurance increase, a pretty modest 3%, will be offset by having already set aside our deductible amounts in 2012. Since these went unused, they will simply roll to 2013. We're expecting to actually hold the budget as is through 2015, based on how 2012 went. I'm looking forward to giving this information to our financial planner to see how this will effect the projected lifespan of our portfolio.

    ReplyDelete
    Replies
    1. Half the year on the road...that is an ambitious goal. It will make your blog posts a very interesting travelogue.

      Because of previous commitments Betty and I will manage just over 2 months away from home next year with a goal of 3 or 4 months for 2014.

      No budget increase is quite an accomplishmentment, too. Our medical insurance rates go up 15-17% a year so we caescapecape some overall increase. But that SS check starting in May will feel like I won the lottery!

      I look forward to your year end recap post. You and Mike remain an inspiration to many of us.



      Delete

Inappropriate comments will be deleted