Retirement Math: Making Room for Peace on $1,871 a Month

[00:00:01]My 1871 spending [music] plan does more than just cover my bills. In May, I had two graduations to attend, [music] extra fuel to buy, grass seed and insecticide for the yard, and Ruby needed a new flea collar. I also paid [music] for three takeout meals, and with 1 week left before my next Social Security check, I still [music] had $170 in the bank.

[00:00:25]Today I'm showing you how I build that kind of breathing room into my spending plan because unexpected expenses [music] are going to happen.

[00:00:34]The goal isn't to pretend they won't.

[00:00:37]The goal is to handle them without losing your peace.

[00:00:42]I'm using [music] May because I explained the actual numbers in my video, my 1871 in real life, every dollar I spent this [music] month.

[00:00:52]So, this isn't just an idea I'm talking about. It's a real month that already happened.

[00:00:59]My Social Security check is $1,602, >> [music] >> and it arrives on the fourth Wednesday.

[00:01:06]My retirement check is $269, [music] and it arrives on the first day of the month.

[00:01:12]Together, these checks total $1,871.

[00:01:17]Even though my retirement check arrives on the first, I start my monthly spending plan on the day my Social Security check arrives. That's when I start the month with the full amount, 1871.

[00:01:31]If there is any money left over from the previous month, I move that money into savings. I don't add it to the new month's [music] spending amount.

[00:01:41]For my spending plan, [music] the number is always $1,871.

[00:01:48]No changing [music] it, no rounding it up, and no counting on money that isn't there.

[00:01:54]That gives me a clean starting point. I know [music] exactly what I have to work with, and I know the size of the window I'm working inside.

[00:02:02]May tested whether this plan could handle real life.

[00:02:06]Those expenses I mentioned at the beginning were not part of my regular monthly bills.

[00:02:11]They were the kind [music] of expenses that can make a fixed income month feel uncomfortable very quickly.

[00:02:18]There was extra driving for the graduations. There were things I needed for the yard. [music] Ruby needed something important. And I had a few meals that I didn't want to cook myself. [music] None of these things were part of some perfect predictable month.

[00:02:34]They were simply part of the month I was living.

[00:02:37]But the month didn't fall apart because those expenses came [music] up.

[00:02:42]After I take care of my regular monthly expenses, I usually have a little over $400 left as [music] breathing room.

[00:02:51]That isn't an extra check or [music] a surprise bonus. It's simply the part of my $1,871 that I have not assigned to regular bills and expenses.

[00:03:03]That breathing room is what allows me to handle the things that don't happen every month.

[00:03:09]With 1 week left before my next Social Security check, [music] I still had $170 in the bank. That doesn't mean I will have exactly $170 left at the end of every month. That isn't the point.

[00:03:23]The point is [music] that my spending plan held up during a busy imperfect month.

[00:03:29]A spending plan >> [music] >> gives me a place to put less predictable expenses before they become a crisis.

[00:03:36]And that doesn't mean that I know exactly the amount [music] of every expense ahead of time. I don't.

[00:03:43]It means I understand that life is [music] going to bring expenses outside of my regular bills.

[00:03:50]I don't treat that as some shocking failure when [music] it happens.

[00:03:54]Because real life doesn't stay inside a perfect list. There may be extra driving, >> [music] >> something Ruby needs, a household expense, a family event, or maybe I just don't want to cook every single meal.

[00:04:08]I don't want a spending plan that only works when nothing unexpected happens.

[00:04:14]I need a plan that gives me room to live my actual life. Sometimes people think a spending plan [music] has to be extremely restrictive to work.

[00:04:24]They think peace comes from saying no to everything.

[00:04:27]>> [music] >> That isn't how I see it.

[00:04:29]I think peace comes from making decisions ahead of time, so I'm not making every decision in a panic.

[00:04:37]There are things I choose not to [music] spend money on because they aren't important to me.

[00:04:42]But that leaves the room for the things that are important.

[00:04:47]That feels [music] very different from being deprived. I also don't want you to think my spending plan works because I refuse myself everything.

[00:04:55]A plan that only works if you never [music] enjoy anything would feel restrictive to me.

[00:05:00]I eat to live. I don't live [music] to eat.

[00:05:03]But I still enjoy food. And sometimes I just don't want to cook.

[00:05:08]That's part of my real life.

[00:05:11]I enjoy watching YouTube and Gunsmoke.

[00:05:13][music] I crochet. I play video games. I have simple things that make my days comfortable.

[00:05:19]When you narrow your spending down to the things that really matter to you, >> [music] >> and you learn what those things actually cost, it becomes much easier to cut out something else >> [music] >> and make room for the peace you want or sometimes need.

[00:05:33]I can tell you the cost of most of the groceries I buy within 25 or 50 cents.

[00:05:39]When prices change [music] drastically, most people will notice.

[00:05:44]But when you buy the same things over and over, you notice the smaller increases, too.

[00:05:50]The 20 cent increase here, >> [music] >> the $1 increase there, especially on soft drinks.

[00:05:56]And that's why I stopped buying Mountain Dew.

[00:05:59]I noticed the price kept going up.

[00:06:02]Cut my consumption down to one a day, [music] and the price still kept increasing.

[00:06:08]Eventually, I found that I could buy Diet Mountain Lightning for about half the price.

[00:06:12]>> [music] >> And you know what?

[00:06:14]Diet Mountain Dew isn't that important to me.

[00:06:17]Now, Diet Mountain Lightning is a good substitute. It tastes basically the same, and it [music] lets me keep something I enjoy without paying more than I think it's worth.

[00:06:29]That isn't deprivation. That's paying [music] attention, making a choice, and keeping my peace.

[00:06:36]That is what the spending plan does for me.

[00:06:39]It helps me make decisions before I'm under pressure.

[00:06:43]I know my monthly income is $1,871.

[00:06:48]>> [music] >> I know my regular expenses. I know I usually have a little over $400 of breathing room.

[00:06:55]And I know that breathing room needs to cover more than one kind of expense. It needs to leave a little room >> [music] >> for real life.

[00:07:04]It needs to leave room for enjoyment, and it needs to leave room [music] for the unexpected things that happen from time to time.

[00:07:13]Peace doesn't mean nothing [music] unexpected will happen.

[00:07:18]Peace means an unexpected expense [music] doesn't automatically convince me that everything is falling apart.

[00:07:26]It means I can look at the month, decide what needs to be done, [music] and keep moving.

[00:07:32]This spending plan isn't about what I can't do.

[00:07:35]>> [music] >> It gives me a clear picture of what I can do.

[00:07:39]Some people think [music] retirement peace comes from having more money and having more money can certainly make things a lot easier.

[00:07:47]But I don't have unlimited money.

[00:07:50]I know what my money needs to do. That gives me [music] peace.

[00:07:54]My life doesn't feel smaller because I'm paying attention to my spending.

[00:07:59]In many [music] ways, it feels calmer because I'm not constantly worrying whether [music] I can afford the next thing.

[00:08:06]I know what comes in and I know what needs to go out and I leave room for the life in between.

[00:08:14]That's what happened in May.

[00:08:16]The month wasn't perfect.

[00:08:18]Extra expenses came up, but the plan had room [music] for them.

[00:08:23]And I still had $170 left with a week to go.

[00:08:27]This spending [music] plan isn't a promise that every month will look the same. It's a framework >> [music] >> that helps me handle the month I'm actually living.

[00:08:37]Let me know in the comments. [music] Do you try to leave breathing room for unexpected expenses and enjoyment? Or is that still difficult >> [music] >> with you for your with your fixed income?

[00:08:48]I'd love to hear your thoughts in the comments. Thanks for stopping by. I'll see you in the next video. [music]