September 23, 2011

Living Well on Less - Couples tell Their Stories

The article in Money Magazine that featured my family was interesting to me for more than just the obvious reason. I had the chance to see what other folks are doing to cut expenses and make their retirement lifestyle fit their circumstances. Importantly, many of the examples given were steps I have taken, or written about.

One couple underwent a major downsizing of their home. From a 5,000 square foot house, they are now living in a one bedroom loft condo. I thought downsizing from 3300 sq. ft to 1750 sq ft was tough, but these folks did some serious pruning. Home association and maintenance fees are nowhere near what they used to pay in property taxes and upkeep. This steep reduction allows them to vacation in Europe and dine out often.

One topic I have yet to address in a post is the place of automobiles in the satisfying retirement lifestyle. One of the retirees in the magazine article has eliminated her car completely. She has found the $5,000 a year savings in insurance, gas, and maintenance is much more than what public transportation or simply walking where she needs to go costs. Living in a densely populated urban area with decent public transportation would probably be required for being car-less to be practical. I could never pull it off where I live in the suburbs of Phoenix. But, there is a certain attraction.

In a few cities a car-sharing option is available. Like a short term rental but much cheaper, autos are available for running errands or appointments. Then, they are dropped off at a certain location where the next person picks it up. And, of course, if you don't own a car but want to drive somewhere, there are plenty of companies that would love to rent you a car for that purpose.

We own two cars. One is used for less than 5,000 miles a year, while the other goes about 10,000 a year. I think we could make due with one car and save several thousand a year. But, for the time being Betty and I have enough separate appointments and schedules than one car would be a problem. When the 8 year old car dies, it probably won't be replaced. But, in the meantime two cars stay.

Paying off the mortgage and becoming debt free was the path to retirement happiness for at least one of the couples profiled in the article. While not everyone can do this prior to retirement, it should be a goal to accomplish as soon as you can. There will be some financial advisers who will tell you I'm wrong; you should use the mortgage deduction and invest the saved money. In some circumstances they are probably right. But, from personal experience I can tell you having no mortgage, no credit card debt, and no auto loans to worry about is a tremendously liberating feeling. You feel much more secure knowing there isn't a giant sword hanging over your head.

One couple has made it their business to maximize the power of discount coupons, 2 for 1 offers, and finding ways to cut travel expenses. This isn't the extreme couponing you may have read about. That involves getting food almost free by buying only items with coupons in situations where they can be tripled or trigger rebates or free products. It means stocking up when something is available in this way. While there is nothing wrong with this approach, the time commitment is beyond what I would be willing to make.

The couple's use of dining and other discount coupons is a way of life for us, too. Places like Groupon, Deal Chicken, and Living Social fill my inbox every morning with offers for every conceivable service and restaurant, all at least 50% lower than retail. Usually our dining out decision will be determined by which half off coupons we have available.

"I have less money than when I worked but I enjoy my life even more." That quote from one of the folks in the article seems to sum up the attitude of everyone interviewed. I couldn't agree more. Living well on less is doable and enjoyable. I urge you to take the steps that will allow you to find out for yourself.

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  1. We have two cars, both paid for. My husband's is quite old but in excellent condition. Mine is only a few years old and we use it most of the time when we travel together to the bay area. Our house is paid for so we only have insurance and taxes. Pretty cheap rent. I would really like to not have a car, but we live in a car-centric city. Even walking is prohibitive due to poor planning. We lived in SF for 15 months and walked and took public transportation. It was perfect.

  2. Dkzody,

    Cars have the disturbing habit of needing expensive repairs just when the budget is stretched thin. But, like you, we live in a city that is almost impossible to navigate with one. A 30 minute trip can easily take 3 times that long if using the bus system (which is about to go on strike!).

  3. We own three vehicles- two cars and a truck. One carnis for my long hauls to Phoenix from Kansas. My husband has determined this is the last time I do it alone and that car needs to be sold or donated before the end of the year. Second car is a new Honda. Third is an old truck. We need the truck because of our mini farm.
    We hope to live in a walking community when we are really old.otherwise I do not think, as long as there is a we, a second vehicle will disappear.
    I am looking forward to buying the magazine when I escape today! Happy vacation!

  4. Janette,

    You make that drive from Kansas to Phoenix and back alone? Wow!

    We will be a two car family for the foreseeable future, probably until we move to another home/condo in 5-7 years. If that is in a more urban setting then one car will do. But, not here in the great American suburbs.

    I hope your mom is doing well and drive safely home!

  5. For us,having two cars is a statement that we still are each competent capable people who are not wholelly dependent upon our partner. We have a smaller car that gets 90% of the drive time. We also have a beast of a 4-wheel drive 1997 Suburban that logs about 2,000 miles a year as the family RV, dog hauler, Tandem hauler, Kayak hauler,lumber hauler, move our son's apartment hauler, and gets driven on my 2 mile daily commute when I don't bike. The old truck is inexpensive to insure and register. It only has 60,000 miles on it,so lousy gas mileage is not a huge factor.
    Sure, we could save a few bucks, but giving up independence on a daily basis has its costs too. I don't want to be stuck while my wife is at a meeting, and she needs to have wheels if I take the truck camping for 4 days. I can run errands for myself and the family while she is taking care of her mom in a city an hour away.
    Consider that emergencies occur too...getting to the doctor or evacuating the house ( we live near flood, fire and earthquake areas) can be priceless when the spouse has the only car and is hours away.
    In our own case, needs and resources make it sensible for each of us to have a vehicle. Our solution is to eschew fancy wheels, and keep each car a minimum of 10 years. We buy new, because most used cars come with 4 years or more of our own mileage usage, and although we pay more, we keep the cars much longer.
    More than anything though, we treasure our independent mobility. Until one of uf cannot drive, we'll have 2 vehicles....a smaller everyday car, and a truck of some type for recreational use.

  6. Dr Keith,

    The independent mobility argument is the one we use to maintain two cars. We know one couple who have only one and must go through a rather involved scheduling dance to make everything work. Even something as mundane as getting a car fixed becomes a hassle for them.

    The lady in the article who went to no car must live in a highly urbanized environment. She is single which helps.

    Two cars will remain our SOP for the foreseeable future.

  7. Friend of mine who lives in NYC recently sold his car (an old, old Toyota) and now relies exclusively on Zip cars. He's lovin' the whole process -- but it's new for him. It may get to be annoying after a while. There are restrictions -- like you do have to get the car back at a predetermined time. Also seems rather expensive to me; but I guess it IS less expensive than paying for a car, esp. in NYC where parking is so expensive.

    As for paying off the mortgage -- good idea. Yeah, some people want to take out a mortgage and invest the money; others want to start taking SS early and invest their checks. But do you really want to gamble with your retirement money?

  8. Sightings,

    Zip cars...I knew the service had a name but I couldn't remember it. Thanks for filling in that blank.

    Buying our present house for cash felt great. No matter All I have to concern myself with is the $2,500 a year in taxes and insurance.

  9. Living on less for me couldn't be done all at once. It was a gradual decline over 10 years. I started off at $5600 worth of expenses per month down to the current $1200 to $1900.

    It is not easy to give up going out to restaurants, forgoing Broadway shows, travel, buying the latest gadget etc. etc. But I was able to do it gradually by eliminating just one thing at a time and finding a substitute. For example, off Broadway shows, free concerts etc. lieu of a $150 NYC Broadway ticket. I still to this day am still using my 42 inch large screen TV that I purchased in 1994. No, it's not a flat screen and I would LOVE a flat screen but my current TV (and it's accompanying sound system) works fantastic.I really don't want to trash it and turn it into landfill.

    I still have a few more tidbits to do with downsizing. No rush.

    I'll get there.

  10. I live in NYC-so it is really easy to get around without a car-still so many people feel they need to have a car. I think if you are a couple and live in area without a good public transit system you need two cars.
    What about taking SS early? I will be 62-I decided to postpone taking it-since I don't need the money now. How are other people making this decision?

  11. Donna,

    Thanks for shifting away from the car debate! When to take Social Security is a question that does not have an easy answer. Everything I have read seems to agree on 2 points: take it as soon as possible if you need it to live a decent life or 2) Delay taking it if you don't need the monthly check since taking it early means a permanent deduction in your payments.

    But, equally persuasive are those that say I don't need it so that extra check each month will make my life more pleasant and allow me to afford some of the extras. Also in that camp are the folks that say we have no idea what the government is going to do in the future. So, if there is money on the table I'm taking it.

    Personally, I'm planning on starting at 64.

  12. Morrison,

    The cut of about 70% from your living expenses is a remarkable feat. Your approach to reduce slowly is probably the only way for most people to do so as they adjust to the new reality.

    For those who don't read Morrison's blog on a regular basis, she and her husband have undergone a series of serious setbacks that have kept them constantly readjusting.

    The most recent slap in the face just occurred a few days ago. Her husband was injured on the job and had to undergo surgery. The day after the surgery he was fired. One hopes that company burns in a very hot place.

  13. Bob,
    Another lesson to be learned by baby boomers and the generations to follow: make and save your money for retirement BEFORE you turn 50. Something awful happens to us after we hit 50. Discrimination sets in. DH and I became debt free at the age of 50 and 44, and if it weren't for that one accomplishment (no mortgage, car loans, credit cards, loans of any kind) we'd never be able to make it. Living well on less or not.

  14. Morrison,

    An excellent point. Betty and I had the retirement ready to go at 52 and 47. When my business folded we were able to pull the plug on the corporate world. Trying to get a job after 50, even in a good economy, is difficult, if not impossible.

    I hope DH is recovering from surgery and not letting his heartless employer get him down.

  15. George Orwell was right. Less is more. Mainly in the freedom one achieves after down-sizing or living more modestly, but not less richly.

  16. I found the article very interesting, too, with all the different ideas. And a wonderful photo of you with your lovely wife and family.

    I am having in interesting entry into retirement because of the retirement package I got. I'm getting a year's salary, and because there is no withholding for retirement or health care (only for taxes), I'm actually depositing much more than I was when I was working. But it will only be for one year, so the reality of less money will hit hard next year. I'm trying to live on much less this year, treating the retirement package as a bonus to put away for special things, like paying the last semesters of college tuition for my daughters, and setting up an education account for my new grandson.

    As you have pointed out before, it really comes down to some choices, all of which should lead us to live within our means.

  17. Hansi,

    George Orwell was right about many things, though he was a bit off on the 1984 thing. More is usually less once you achieve it. It is less than you though it would be.


    Treating part of the year's salary as extra savings is a great way to get your retirement off on the right foot. Plus, it give you this year to start serious pruning of expenses and figure out your true needs versus wants.

    Thanks for the compliment. We were given 100 of the photos they took but didn't use. Several were much better at showing the family, but I wasn't give the chance to choose.

  18. Aloha Bob. Say jello to the islands for me. I miss the scents!

  19. Oh I am am going to look for Money Mag. when I go to the library. I am looking for new ideas for my husband and I so that next time he is out of a job we can do a bit better than we did in 2010 when he was not working. There is so much to think of and I know that year with out work for us was a test to get us to think of how things may be when it happens again. Especially since we know how true it is that no one is hiring anyone over the age of 50. I hope to get a job for the holidays and make a good impression so I can keep it or at least be called back. As far as cars go we have been learning to use public transportation so that when we are much older and can't drive we can use it. But the savings sounds so good if my daily life was here in the City I live in I might give up my car now. But since we spend most of our time in another city/county (would love to move but that's a whole different story.) I just can't give up my car. You all sound like you are doing so good. God Bless you all.

  20. Sue,

    Thanks for all the positive comments. You are approaching things well by 1) learning from past experiences and 2) taking the time figure out how all the pieces fit.

    No one approach is right for everyone. It is a unique mix that will turn out to be right for you and hubby.

    Aloha from Maui


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