Category Archives: Budgeting

4 Simple Ways To Turn Your Early Retirement Dream Into A Reality

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We all ache to quit the rat race. The daily grind of the commute, dark winters, a stressful office environment and performance reviews can lead us to wonder why we put ourselves through it. Surely, there must be more to life? The thought of retiring at 65 fills you with dread – that’s another 30 or 40 years with your nose to the grindstone. It doesn’t have to be this way.

You see stories popping up every now and again, complete with pictures of relaxed, smiling faces. People who have managed to retire at the age of 40, 45 or 50. With more than just a touch of the green-eyed monster you eagerly read their stories. Then only to discover that they sold their houses, bought a van and camped in their all too kind neighbors garden for a decade or more. This isn’t something that you’d entertain. Isn’t there an easier more appealing way to achieve the dream of early retirement? There is indeed.

I was age 40 when I made the decision to do whatever it took to retire young. Retiring early doesn’t necessarily mean living like a peasant for your remaining working life, eating gruel and never switching on your heating (although this is an option!) Early retirement means planning, planning and more planning! You need to know what you will be doing financially every day for the rest of your working life. Whether this is ten or twenty years.

You need to decide when you want to retire. It pays to not be too ambitious. It’s best to settle on an age that realistically gives you enough time to save enough and pay off all of your debt. If you’re in your twenties, you may be able to choose an age beginning with a four. If, like most people reading this post, you are a disillusioned thirty-something, fifty is the ideal age to shoot for.

Pay off all debt to reach Early Retirement Dream

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Debt

Before you do anything else financially, you must get your debt paid off as swiftly as possible. This means getting all of your monetary ducks lined up in a row. You need to be aggressive and utilize any spare cash to pay off credit cards and high-interest loans before you take on your mortgage.

Make a budget and stick to it. Your list of incomings and outgoings needs to be as accurate as possible. Include everything from the blueberry muffin that you pick up as a treat from a well-known coffee chain every Friday to the gourmet trail mix you love to snack on at work. This way, you’ll be able to spot the items that you can forego immediately. You’ll be surprised at just how much this will save you over time.

Any disposable income that you have after paying your bills, food, mortgage and fuel costs must be used to pay off debt. Other than maxing out your company’s retirement 401K match amount, forget the retirement savings for a little while. It’s no good managing to retire at 50 with $500,000 in the bank if you still have $200,000 in debt. Get to work aggressively paying off a large chunk of your high-interest debt every month.

As you see the debt figure decrease, you will be even more motivated to continue. When the higher interest loans and debts have been repaid, you can then think about paying off your mortgage and having an asset in your name. Owning your humble abode outright will be a huge benefit to you come retirement day.

Mortgage free helps turn Early Retirement Dream to reality

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Home Loan

The joy of a home loan is that it tends to be repaid at a much lower interest rate than store cards or secured personal loans. Even so, you need to pay back your mortgage early saving you money on interest and leaving you with some bricks and mortar. Check the small print of your home loan agreement. The chances are that you can pay back ten percent of the remaining balance of your mortgage in over-payments every year. Utilize every penny of this allowance and ensure you don’t go overboard otherwise you’ll be hit with any penalties there may be. By doing this, you could pay off your mortgage in less than half the time of the original term.

If there are no early payoff penalties in your loan agreement then you can pay any extra amount you can without restriction. Being mortgage free at retirement will bring both peace of mind and a much lower retirement lifestyle cost.

Saving money to Turn Early Retirement Dream into reality

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Savings

While you are beginning to shift the mortgage debt, you can start to think about reinvigorating your savings plan. Saving can be hard with the wants and needs of modern life. Here, you’ll have to make some very tough decisions. If you love traveling and take three or four holidays/vacations a year to exotic, far-flung destinations, then this obviously has to stop or be considerably tailed back. Cut back to one annual vacation but make it a good one. Take a couple of weeks overseas being a little bit more financially aware when you are booking your flights and accommodation. Perhaps even cutting back to every other year and travel to great destinations closer to home in the between years.

First class isn’t a realm you should be setting foot in if you want to retire at fifty. Remember, wanting to retire early shouldn’t be to the detriment of your quality of life. It’s all about financial awareness. Finding a sustainable balance between your having purposeful spending discipline while still living a full life.

If you enjoy a busy social calendar, you may need to cut this back a little or adapt the way you meet up with friends. Dinner parties are a great way of cutting the cost of informal meets. Eating out can soon see your savings pot dwindle so save the restaurants for special occasions.

If you have a commute to work every day and need a car, don’t buy straight off the new car lot. Utilize a company discounted car policy if the business you work for has one. If not, buy second-hand and realize that you are using a vehicle to get from A – B, not as a status symbol. If all goes well financially you can leave that for when you are in the joyous throes of early retirement.

Early Retirement Dream needs investments

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Investing

As you build up a little more capital, you may find that you have spare cash burning a hole in your pocket that could work for you more lucratively than if you placed it in a savings account. Consider venturing into the world of real estate. If there’s a new house for sale in your local area or in an emerging overseas market, take a look and consider its potential as a rental. By investing your money in bricks and mortar and seeing a second income from it, you’re making your money work for you more aggressively. Do the math and make sure that any rent you receive covers the mortgage. Real estate generally holds its value, and you could see a high return on your investment when it’s time to sell.

You could go down the stock market or Forex trading route. While lucrative, these forms of active trading investment also carry a greater risk. You can set up dummy accounts with agents and try your hand at the stocks before having a go for real. If you have a good decade before you hit fifty, it might be worth having a flutter on the markets. However, it pays to seek professional advice before launching yourself into the trading world.

The key to sound investing is not putting all of your eggs in one basket and spreading the risk. A varied range of high, medium and low-risk investments can ensure a well-rounded portfolio that should produce fruitful rewards. Most successful early retirees will find investment success in low-cost stock and bond funds.

Last Words

Retiring early is the dream of many yet realized by only a select few. The path to early retirement is bumpy and not for the fainthearted. You need to be proactive and aggressive, and it does involve some personal sacrifice. However, you need to weigh up the pros and cons of altering your lifestyle for the betterment of your early twilight years. It is a major life changing commitment. But by heeding this advice, you’ll be well on your way to a prosperous early retirement.

Reduced Cost Living Doesn’t Have to Be Frugal

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When you retire, you don’t have to live an extremely frugal life. If you plan your retirement well, you can still enjoy a comfortable lifestyle. However, there are certain things you should do so that you’re not forced to live frugally.

Ensuring you have plenty of money is one of them, but you should also think about reducing your retirement expenses. The less you have to spend on necessities, the more you can spend on the things you enjoy. As you plan your retirement, think of how you can cut your costs, so you have more disposable income.

Aim to Be Debt-free

Struggling with debt isn’t something you want to be doing when you retire. Even a healthy level of debt could be an inconvenience. If you retire early, you could be more likely to still be paying off your mortgage or other debts. Aiming to be free of all debts by the time you retire will mean you don’t have the money you owe draining your resources. When it comes to loans and credit cards, debtconsolidation.loans or something similar could be a good choice. Consolidating your debts makes them easier to manage. You can concentrate on one payment instead of several. If you want to be debt-free, you should create a plan you can follow to pay off your debts.

 

extremely frugal

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Downsizing: Yes or No?

Downsizing is often recommended for retirement. When people retire, they often have a home big enough for their whole family, but the family has long since moved out. If your home is already empty of kids, you might consider downsizing before you retire so that you’re able to reduce your living costs. Downsizing helps you to bolster your savings too. Some people might be wary of downsizing, though. They like the home they have and will miss it if they sell it. Perhaps you might make use of the extra space you have instead. You could rent it out or use it to run a business.

Take a New Approach to Transportation

When you retire, being able to get around is still important. In fact, later on, isolation is a risk, so transportation becomes even more important. However, you can still change the ways that you get around and reduce your transportation costs while still meeting all of your transportation needs. For example, if you no longer have two people going to two different jobs, you probably don’t need two cars anymore. You might feel more comfortable downsizing your car as you did with your house, so you have something more efficient. Find the most efficient vehicles at consumerreports.org.

Stay Healthy for Lower Medical Costs

You can’t have complete control of your health as you get older. However, there are some things you can do to avoid various health problems. Staying healthy can help you to reduce medical and insurance costs so that you have more money to spend on other things. As you plan your early retirement, include a healthy lifestyle now and in the future in your plans.

In Closing

Reducing your costs for retirement doesn’t have to mean extremely frugal living. You can be comfortable and still spend less than before.

What To Do If Retiring With a Mortgage

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It’s hard enough to save for retirement let alone pay off the mortgage too. Most of us end up retiring with a mortgage. I sure did, our parents did, and frankly almost everyone I knew did. At the time of my first early retirement we had been in our home 14 years. The mortgage was paid down 40% from when we bought the home. Here is the strategy I used and considered to help us manage our housing costs in retirement.  

Four Strategies To Consider When Retiring With a Mortgage

#1- Refinance to Lower Your Monthly Payments

Obviously if someone is considering retiring with a mortgage the numbers have got to line up.  Simply running our budget numbers including the monthly mortgage payment through a retirement calculator like FIRECalc can provide some assurance.  I retired early and certainly made sure that I could afford to retire with my mortgage payment.

My strategy was to reduce my monthly mortgage payment to allow for more cushion in my retirement budget. I prefer 30 year mortgage loans with a lower monthly obligation and then making extra payments when I can.

We bought our home in 1995 with an 8% interest rate and a $1185 monthly payment. We did refinance a couple of times to take advantage of lower rates over the years. Each refinance was for the existing mortgage balance and pushing it out again for 30 years with the lower interest rate. This always resulted in a reduced monthly payment.

I used this same strategy the month before I retired to lower the payment again. With our last mortgage refinance our interest rate was 3.75% with a monthly payment of $744. This made retiring with a mortgage much easier on my retirement budget.

By refinancing your mortgage before retiring the refinancing process is smoother. The bank was able to easily perform my employment verification and verify my income. I did not mention my intention to soon retire, nor did they ask.

#2- Downsize to Reduce Housing Costs

Retiring With a MortgageOur plan was that we stay in our existing 2 story empty nest for several years and then later sell and downsize. Retiring with a mortgage doesn’t mean it has to be with us the rest of our lives. The plan was to later buy something with our equity for a mortgage free or almost mortgage free final home. A smaller home should also provide lower utility costs, taxes, insurance, etc., to give even more retirement budget cushion.

For some with a large mortgage payment, completing this move would be highly considered before retiring. In our case we still enjoyed where we lived and could manage the mortgage payment in retirement. That is why this is part of our delayed strategic moves and I am glad we waited.

We have recognized that our views on housing have changed. I believe they will change even more as time goes by with our aging. When I retired the only thing we considered was buying a smaller ranch home. Now we are opening up to RV, Condo, and even just renting. It is important to have a long term view and plan. But recognize that things may change over time. I keep our options open.

#3- Move to a Less Costly State, City, or Town

This strategic step is also part of our delayed retiring with a mortgage housing strategy. We will consider relocating somewhere less expensive if and when the time comes to sell our existing home. The town we live in is beautiful and with lots to do. Because of that it is sought after and has become a higher cost area.

Not knowing the future, we keep this as a strategic consideration. A lot will depend on the cost of living and our budget at the time. We keep an open mind to moving  to a State that has no or lower income tax, a different town, or even a different retiree welcoming country.

#4- Pay Off the Mortgage with Retirement Job Income

I had always planned on retiring early and often.  Meaning I would always remain open to opportunities that I had passion for or was interested in learning and doing in my retirement. My retiring with a mortgage allowed for my retirement funding to cover it in my budget. That means that any income I earn is extra. With this strategy I am able to divert all my retirement job income to the mortgage.

I did put this strategy into action after landing a sweet retirement gig. I paid off the mortgage within 18 months. Even if a retirement job didn’t pay enough to clear the mortgage, all money paid towards the mortgage would be like an investment. Where it enhances the benefits provided in our delayed retirement housing strategy moves of downsizing and/or relocation later on.

Last Words

Now that I am in my 2nd early retirement it is nice to be mortgage free. However, our strategies for downsizing and relocation are still fully in play.

The strategic goal is having a plan that manages our retirement housing by offering us financial flexibility. It’s all about looking for ways to stretch our retirement dollars in the best way possible in a place we WANT to call home.

I Fought My Way Out of Debt Misery

Budgeting, Managing Debt, Student Debt, ,

How I Repaid Credit Card Debt Equal to 44% of My Yearly Salary.

When I talk to people about early retirement I hear from many about the same obstacle. They are unable to save more for retirement because of their debt. I totally get it. I spent many years in debt misery myself where most if not all my paycheck went out to settle monthly bills. Of which the biggest part was to pay monthly debt payments. Mortgage, 2nd mortgage, and the worst of all were credit cards.

People think that early retirement is only for the rich and lucky. That certainly helps but it’s also for the money-wise. That wisdom includes saving and investing. But more importantly it includes figuring out how to pay off debt and living a debt free life going forward.

Paying off debt and living debt free is the first step towards financial independence. It is certainly the first taste we get of it. Debt liberation brought me a feeling of freedom second only to the day I ditched the corporate rat race with my first early retirement.

If anything, my story shows that being in debt misery doesn’t have to mean a lifetime of employment servitude. Setting into motion a plan to become debt free results in a win-win outcome and the sooner we start the better.

How I Ended Up in Debt Misery

Credit Card Debt = 44% of My Yearly Salary

My story isn’t too different from many people who start out to make it on their own. My debt misery was caused by Bandits.

Yep, little bandits. Those tiny blessings that come and take all of our love, time, and money to give them the life we want them to have. We gladly gave to 3 of them. But the cost of childcare turned us into a single income family beginning with child number 2. Besides the loss of my wife’s wages, my full-time income did not keep up with inflation. Even after adding a part-time job, especially once our 3rd little surprise came.

Easy Credit to Solve Everyone’s Problems

I admit I rationalized our poor debt decision. During this time all interest paid including credit card interest was tax-deductible. The credit industry makes using them for any financial solution easy. We were getting credit card offers with large balance limits in the mail daily.

We didn’t go on a spending spree and remained as frugal as we could. But life happens and things change.

We fell for the mental trap of “tax deductible” as a rationalization that debt is always OK. The tax code was changed in 1986 to what it is today removing that credit card debt perk. It happened a year after our third child’s birth which was 3 years into our poorly rationalized debt plan.

Our debt was the result of charging and using the handy checks the credit card company supplied to cover expenses above my income.

Our Plan to Repay Our Crushing Credit Card Debt

Increase Income – Our plan was simple. Use debt to help support us during our “Mom at home with the kids time” as necessary. But once our first and second child began school my wife would return to part-time work. Then when our 3rd child entered school my wife would return to full-time work. All of her income would then be devoted to paying off debt.

Our increasing income plan was a mistaken delayed strategy. There was a constantly growing debt misery to live with during the 6 years before that strategy could start.

Our costs increased beyond what my 2 jobs could cover. I was leaving the house at 7 AM and returning home at 10 PM. I was bringing in less than our bills. That’s even when only paying minimum credit card payments.

I was at times just moving credit card amounts from one card to another. I did this using their free credit transfer checks. Although we were considered current on payments our credit card debt grew. When financially desperate we can do financially dumb things.

Getting Serious About Debt Repayment

 

I was miserable seeing every penny I earned go out and watching credit card balances growing beyond amounts I never thought possible.

I decided that I needed to get fighting mad and seriously go after a repayment strategy to climb out of our debt misery hole.

I was juggling 5 credit cards. My income had slowly increased over the past 5 years to where I could just make minimum credit card payments without adding to the debt.

We swore off using any additional credit to carry us through this phase of our young family’s life except for an extreme emergency.

Prioritizing Credit Cards-

First I identified the lowest to highest interest charging credit cards. I balanced transferred as much as I could from the highest interest card balances to the lowest interest cards.

We created a strict budget that would make sure we could cover at least the minimum payments. When my paychecks came up short because of something unexpected we either sold something or I did side-jobs for cash. I hauled trash, delivered firewood; I did whatever I could do to avoid using credit cards.

When our middle blessing started school my bride got a part-time job. We stayed on the strict budget. By this time the credit card balances were equal to 44% of my yearly salary. Ouch!

Much more psychologically daunting was our credit card balance was as much as 50% of our first mortgage. It was an embarrassing secret. Repaying this debt was my only thought so that nobody else had to know about my financial mistakes.

The Delayed Repayment Phase Begins

As we had always planned, we devoted all of my wife’s income minus part-time childcare costs to credit card repayment. We targeted our highest interest rate card first for the extra payments. Because we shifted balances to the lower interest rate cards the high interest rate cards also had the lowest balances.

All of my increased income from raises also went toward the highest interest card. We worked our way through the credit cards one by one.

Two years later our youngest entered school and my bride was able to work full-time where she worked. We were then able to really ramp-up our debt repayment.

Once I finally got a promotion and a decent raise our income to credit ratio was acceptable to refinance our 2nd mortgage at our Credit Union. That refinance included enough to cover the last of the credit card payoff.  This greatly reduced the interest rate we had to pay. We then focused our debt repayment plan to the one 2nd mortgage loan.

It took 6 years to dig our debt misery hole and 3 years of concentrated effort to win the fight out of it.

We have never carried a credit card balance since then. We now win financially with our credit card use.

Debt Repayment Strategy

I didn’t know it then but my repayment plan is a hybrid Avalanche + Snowball Method. There are other strategies. Until my wife started working to add some income I was truly in debt hell.

My debt misery occurred 1983 to 1990, back in ancient times. No internet or cell phones, high inflation, and limited employment opportunities. Yes, we did have an easily accessible library but I didn’t think to search there for help on this subject. I should have. Any debt repayment strategy should begin by researching solutions and ideas.

I winged-it and made many mistakes. Fortunately we have much more easily found information available to help us escape debt misery.

For a great “How To” for getting out of debt I recommend checking out the Power Over Life website’s Create a Debt Destruction Plan. It lays out the different debt repayment strategies and gives the information necessary to get anyone started on their debt liberation journey.

Final Words

There are many reasons that can cause us to enter into a life of debt misery. At some point debt will eat your finances and get in the way of living a free life. It certainly makes retirement harder to achieve.

The best thing that came out of my debt misery experience is I learned that we can take control of our own finances. We can learn from and reverse mistakes. The lessons learned will help us to reach our Financial Independence – Retire Early goals.

As I mentioned above, my debt repayment brought a feeling of liberation and independence second only to my first early retirement.

When you experience the freedom from debt misery then use that liberating feeling to carry you through financial independence and an earlier retirement. FIRE! There is nothing better.

Is it worth it? 5 keys to budget for happiness

Budgeting

Where do you spend your money? According to the United States Department of Labor, Americans spend approximately 12.5% of their yearly income on food, with almost half of that spent on eating out, and another 5% on entertainment.

Despite this figure, we still all spend differently. There are obviously the required expenses like housing, healthcare, and education, but what about the added expenses for the things that make you happy? One person could spend money on going to the movies, while another person may love going out with their friends. The key to happiness is to create a budget that not only fits the required expenses, but making it fit the way you live your life. Here are some tips on how to save and spend, while ensuring happiness.

 

Saving

Saving is like making a big meal on Thanksgiving; it takes a while to see the results of all the work you’re putting in, but the end result makes it all worth it. When you set up your budget, try separating your savings into four different categories: 401k, home, education, and emergency fund.

If you’re renting, it’s important to save for when you want to buy a home. If you have a home already, investing in it will not only lead to a better place to live, but limit problems and possibly lead to a return on investment.  For your 401k, take a look at your policy and if your employer offers contribution matching, try to max out the benefit each year.

As far as education, it’s important to continue to invest in it, even if you still have student loans to pay off. Continuing your education could be anything that helps you in your job or even learning more about photography to pick up a side gig and earn some extra cash. There’s also an option to refinance those student loans to better fit your lifestyle. Companies like Earnest can give you a better rate, let you skip a payment if you need to, or customize how much you can pay each month.

Finally, an emergency fund is crucial to have in case something serious occurs. There are so many little surprises in life that we don’t see coming. Therefore, it’s crucial to have money set aside that can turn a major financial setback into a minor headache.

Fitness

Gym memberships can range from $10 to over $300 a month. The key is to find a program that works for you. Lay out your options and weigh the pros and cons. If you go with a cheaper option, but end up never using your membership, is it really worth it? If you go with a more expensive option, it may provide you with more incentive to get to the gym as much as you can.

Food

An average cup of coffee is $2.70, multiply that to account for getting coffee every morning before work, and you’re spending over $700 a year. Of course, many people need coffee, but there are simple ways to manage your food expenses to save and still gett what you want. Try reducing your budget for special occasions, like buying coffee or eating out, and you’ll be surprised how quickly saving money on food will add up!

DIY

The term “do-it-yourself” may sound intimidating, and only an option for people who have an endless amount of time, but it’s very simple to make or do things you currently pay for. Similar to a company that moves from outsourcing work, to bringing it in house, you can save a ton by putting work into doing things yourself. For example, try starting your own garden. Not only would you save on groceries, but it could even become a hobby!

Balance Experiences with Investment

If you love to travel and experience new things, it’s important to invest in that. However, you need to do it in a smart way. Using your emergency fund to book a last minute trip through a Groupon you see online could be a huge let down, and could negatively affect you financially. You never want to end up thinking it wasn’t worth it. It’s important to set aside the same amount of time you spend researching ways to save, and use it toward weighing the cost vs. experience of a big trip or event.

Conclusion:

Obviously, budgeting for happiness will differentiate from person to person, but the key is being smart with your money. If you haven’t yet, set a budget and use these tips to make sure you’re still living your life!

The above is a contribution to Leisure Freak by Jamie Wharton

Jamie is a freelance writer dedicated to all things finance, most commonly covering education costs and post-college budgeting. 

Tips for Smart Holiday Credit Card Use

Budgeting, Frugal Living, Managing Debt,

Tips for Smart Holiday Credit Card Use couldn’t come at a better time.

Tips for Smart Holiday Credit Card UseThere is a right way and wrong way to use credit cards. For many of us the holiday season is the one time of the year where temptation may have us reaching for our credit card beyond what we planned for. It’s a wonderful time of year and all the sales, social activities, and celebrations may cause us to lower our spending guard.

Nobody wants to have financial regrets after the last of the eggnog and candy canes are long gone. Here are some Tips for Smart Holiday Credit Card Use.

7 Tips for Smart Holiday Credit Card Use

#1- Create a Budget Plan.

Set a holiday budget and stick to it. If possible always make this a part of your yearly budget so that you have the money saved or will have available when your credit card bill comes. As an example I have a yearly $1500 Christmas budget to cover everything from the grand-kid’s gifts to the Christmas cards.

This budget plan should also break down your budgeted spending by type: Gifts, Decorations, Party Supplies, Events, Spontaneous Fun, etc. Everything that you plan on doing and buying during the holidays that requires funding from your holiday budget.

#2- Keep a Shopping/Spending List.

Make a list of every planned holiday expenditure based on your budget plan. List names of people you wish to buy a gift for, any gift details, and the budgeted amount. List all of your budget planned spending types and stick to it. Aside from staying on my spending plan, I use my lists to keep me on track while shopping and to get in and get out as quickly as I can.

#3-Take Advantage of Credit Card Rewards.

Use the best reward credit card that you have. This is Smart Holiday Credit Card Use bringing you financial benefit by getting credit card reward’s cash or travel points back for buying what you budgeted for. I pile as much as possible (within my budget) on my best rewards card that pays me back 2%.

#4- In-Store Credit Cards.

Some stores offer their own credit cards with super promotions and discounts for using them. The savings can surpass what your rewards credit card can offer. We have received phenomenal discounts using our Kohl’s card during their sales promotions.

#5- Track What You Spend.

Tracking all your charges is key to staying on budget. Log all of your spending and track against your budgeted amount so that you can stay on plan. If you are using more than one credit card, like using your reward card and an in-store card then also track by card so there are no surprises and nothing is over looked.

I am totally old school. I have a small notebook and I list and total everything with a pencil. Use an Excel spreadsheet, Quicken, or whatever your preference is but just do it.

#6- Evaluate and Adjust.

If you find you overspent somewhere then adjust your budget by shifting amounts from something else in the budget to cover it. You may have even come in under budget on some items by getting a better sales price than planned. In any case the point is to not have any surprises and come within your planned holiday budget when it is all said and done. I still try to beat my Christmas budget. Anything I come in under budget is a head start on next year.

#7- Have a Payoff Strategy.

The absolute best strategy is to pay off the credit card bill as soon as you get it before the due date so that you pay no interest. Paying credit card interest is not Smart Holiday Credit Card Use. IF you have to carry a balance then be sure to have a payoff strategy. The strategy to have if you know going into the holidays that you will be carrying a balance is about your credit card choice.

Instead of using your rewards credit card use one that offers zero interest on purchases for a set period of time. You may even purposely get a new credit card for the holiday season that offers no interests for the first few months. I know many people whose payoff strategy is to use their tax refund in February or their yearly bonus from work. Those are only valid strategies if you do get a tax refund or bonus.

Final Comments about Smart Holiday Credit Card Use

The holiday season can be a wonderful time where we can spend time with friends and loved ones. For many it is a time of worship and reflection. It should be a time without financial regrets or distress and hopefully by using some of these Tips for Smart Holiday Credit Card Use we all will avoid that.

Do you have a Smart Holiday Credit Card Use strategy?

Pet Care and Budget Collision

Budgeting

If you own and love your pets there may be a time when there is a Pet Care and Budget Collision on your journey to financial independence or once you retire.  We pet owners love our pets like they are part of the family. Our first dog lived with us 17 years. Our second dog lived 15.5 years. This was during the same period that we were raising our children and beyond. They both had long, happy, and healthy lives. It is definitely a shared life so there are strong attachments.

Being financially responsible means including in the budget their pet care. That goes beyond food, vaccinations, and checkups. For us the pet food is included in our grocery budget. Vaccinations and checkups are part of our Misc. budget where our own out-of-pocket medical expense is tracked. However sometimes things happen to pets and it can be very expensive, sudden, and unforeseen. Just like it can medically for us humans. All of which can challenge years of budget tracking and cost projections.

Our Current Household Family Member.

Pet Care and Budget Collision- Budgeting for pets in retirementWe now have a 10.5 year old Black Labrador mix. We started sharing our life with him two years ago. But he has been in our family his whole life. Starting as a puppy with our youngest daughter’s family. When she moved and couldn’t keep him he went to live with our other daughter’s family. My granddaughter loved him and once she could walk would grab and hug him.

Because of his older age he has some arthritis in his shoulders and he would growl a bit. It was decided for safety reasons that he should come live with us. He is a large dog at 93 pounds and this week he has ended up in emergency care.

We Thought We Were Done With Dogs

We had been a couple of years without a pet before he came to live with us and we had thought we were done having pets so our budget didn’t include pet care. It did take our making budget adjustments for things to be fine until now. But so far this week we have spent $928 and it does collide with my Misc. budget. After all the medical testing it turns out he has advanced heart disease and a bad heart valve so he is basically dying. He may have 2 months or 2 years but we are told to expect something very sudden someday.

Going forward we will have to budget for three new medications to help him live more comfortably and give him the best quality of life he can have. We will find out the medication cost tomorrow when we get his prescriptions filled at Costco.  Fortunately I have enough wiggle room to handle this without too much disruption for however long this goes. We are assured he is not suffering but this will make him feel better and help with his occasional light-headedness.

Pet Care and Budget Collision list of the budgetary considerations when sharing your life with Pets:

Commitment.

Owning any pet is a long-term commitment. Puppies, bunnies, and kittens are cute and cuddly. We should always be sure we are ready to love and care for them both emotionally and financially through their old age.

Food.

This should be a no-brainer but I swear people sometimes pick a large dog without considering how much they eat. It seems people with tightest budgets like owning the biggest dogs. It is not healthy to feed a dog table scraps. I assume the same to be true for Cats. We should always factor in the proper food costs. We always find out after the fact that our pet requires a special diet. Making sure we can adjust our budget for any dietary issues that may come up is important to consider.

Spay and Neuter.

Unless the new family member is a pure-bred heading to breed/stud activity, we should be responsible and include in our budget the one-time cost to have our dog, cat, Llama, etc.  reproductive chances fixed.

Waste.

Not so much a budget issue unless it is necessary to have to pay someone to take care of it. News flash, pets poop and it can build up and take over a yard or patio. Even a fish owner will have to be able to deal with this to keep the tank or pond clean. We must consider whether we are capable of handling pet waste and if not include the cost to have someone else do it in our budget.

Vaccinations and Checkups.

We must always Include in our budget the cost for yearly vaccinations and checkups. This will end up saving money so that anything that needs medical attention can be corrected before it becomes an expensive surgery or worse.

Love, Time and Physical Interaction.

Again, not so much a budget issue unless we have to pay someone to walk or pay physical attention (when appropriate) to our pets. Example, budget for dog walkers.

Boarding.

Hopefully everyone has in their budget some travel or vacation time. We need to budget the cost to board or have house pet sitters take care of our pet when we are away. If our plan is taking our pet with us on every vacation then we must factor any additional travel costs into our budget.

Catastrophic Medical.

Someday our pets will grow old and reach end of life which may bring medical costs as I just went through. Or our pets can become ill, get a tumor, be in an accident, etc. and there can be expensive medical bills to either save their life or make better the remaining life of our pet.  These costs are unknown and unplanned. Just like with us this week, we have to either have enough in our emergency account to cover this or sit down with family and have some hard financial guidelines set about what can and will be paid for our pets which is a delicate subject. I know some who cut off life-saving efforts at $1000 or $2000. Some set their limit less, some more. It obviously depends on our financial capabilities and how we personally view these sad situations.

Controlling Pet medical Costs.

One thing we can decide to do is buy pet medical insurance. When we got our Lab 2 years ago his age and condition would have probably made the cost too high but to tell the truth we never checked. I think if my finances were tight I would consider looking into a pet insurance plan.

An insurance company that people I know highly recommend is VPI (Veterinary Pet Insurance) (I have no affiliation with VPI) and it would be a good place to start if you are looking to investigate a pet insurance policy. You can get various levels of coverage: Emergency, Every Day Care, and Comprehensive. Rates depend on the level of insurance you buy and the age of your pet.

There may also be other considerations that impact your rate.  The recommending pet owner friend of mine pays $40 a month to cover her dog for a comprehensive plan.  Here is their url if you are interested. http://www.petinsurance.com/

You pay for your pet’s medical bills and then submit your covered expenses (depending on the plan you buy) to VPI for reimbursement. As I said this VPI recommendation is by a pet owner whose pet has had a couple of surgeries in his life and swears by them. Do a web search or ask around to find the insurance company you think is best for you.

Conclusion.

Owning a pet doesn’t have to cause a damaging Pet Care and Budget Collision if we plan ahead and go into pet ownership with our eyes wide open. When accepting the responsibility of a pet, we should make sure that we are fully able to give the best care and love for them without crushing the budget. For us, we will be finished owning a pet in the near future but we will still be animal lovers. We plan on getting our pet-fix by loving the pets of our daughter’s and friends. This is a great option if there is no room in the budget to own a pet. We can also volunteer at the Dumb Friends league or other places where stray pets are held to fulfill our love for animals.

Have you had high unexpected pet care costs and how did you offset the budget hit?

Do you just budget for Catastrophic Medical or do you use pet medical insurance?