How to Live Within Your Means

     After we retire, we no longer get a paycheck. We knew it was going to happen, but knowing it and experiencing it are two different things.

     If you are struggling to live within your budget I've got a few suggestions that might help bring your retirement expenses into line with a more modest retirement income. (And if you have any other ideas, I'd love to hear them.)

     The most important thing, I believe, is to economize on legacy goods and services -- things you're paying for that you don't really care about anymore. For example, maybe you're still paying for a membership to a swim-and-tennis club that your kids used to use, or a gym membership that you intended to use but never did. Or, if you're like me and have remarried, you can consolidate a lot of bills -- like insurance, phone, AAA membership -- to help your monthly budget.

     Maybe you don't go to the big box store anymore, where you drop $250, and now that the kids are gone you end up throwing away half of your "bargain" purchases. And, do you really need life insurance if you don't have any dependents anymore?

     If all this seems like small potatoes, remember, one small change may not make much of a difference, but add them all up and you might be talking real money.

     I know from my own experience that if you downsize, you can sell some of the things you no longer use. Before we moved, I made about $200 when I carted several boxes of "leftovers" from our basement to the local picker's store. I could have made more if we had thought ahead and joined the neighborhood tag sale.

     Other people may have bigger fish to fry. Do you still have that old boat you bought when your kids were teenagers? Do you have an extra car that's rusting away in the driveway, or a vacation condo or time share you hardly ever use anymore? Even if your unwanted items have greatly depreciated, it's still better to have the money now rather than the headache of getting rid of it later on.

     Also, as we enter retirement we should be paying down debt not taking out more loans. There will be no more salary increases to cover those additional monthly payments. The credit card is the worst (do we all pay off in full at the end of the month?) since interest rates are high and penalties lurk around every corner. If you are running a balance, don't hesitate to call your credit company to try to negotiate a better rate. Sometimes it works!

     But we shouldn't worry too much if we're carrying a mortgage into retirement. That is the last debt to pay off. But trust me, there's no better feeling of security than living in a home that's free and clear of the bank.

     I'm not going to try to tell you how to save money when you're traveling, because I'm no expert. I don't travel that much. (But come to think of it, it's certainly one way to afford retirement -- cut down on the travel budget!)

     But I will mention something else. It's something I see all the time: Retired people still buying things for their grownup kids, or sending them a check a couple of times a year. But there's no law that says you have to subsidize their rent or pony up a down payment on a car or house. Remember the old saying about roots and wings. You gave your kids roots. Now it's time to give them wings, and let them fly on their own.

     I got this last idea at a retirement seminar I attended -- not a practical tip, but more of an attitude adjustment. One fellow stood up and told us that he retired from IBM about three years ago. He used to run a department and have people reporting to him, and he had a pretty good salary and some stock options and he wasn't shy about spending his money on a big house and three cars and a yearly trip to Europe.

     After he retired he felt like he had no purpose in life. Then he realized he had defined himself by his job -- he was an IBMer -- and in some sense he "kept score" of his life by how much money he made and how many people reported to him. Now he didn't have that anymore. He had to come up with a different way to define himself and a different way to keep score.

     Now he volunteers with Habitat for Humanity and also at the local senior center. He sold his house and moved into a condominium, and he doesn't travel much anymore. Why? Because now he defines himself as a volunteer rather than an IBMer, and he keeps score not by how much money he makes, or by how much stuff he buys, but by how many people he has helped.

     He doesn't make nearly as much money, and doesn't spend as much either. But he enjoys a closer relationship with his community. And he feels less stressed, more relaxed, and in his heart he is much happier.