Wednesday, March 21, 2012

I Need Your Help-How Do I Get Some Savings?

When I share the joys of fixed income retirement, most of what I talk about are the good things.  Overall I have an extremely rich (if unwelcome) early retirement. I enjoy holidays, festivals, have friends and church. I travel, and enjoy my home and dogs.  Life is not perfect however and I am not Pollyanna. It's only fair to share some of the wrinkles as well.  In this case, not only am I willing to share, I want your opinion.  All I ask is that you be kind.

Recently I've been hitting a few bumps in my fixed income retirement road. Manageable in the long term, these bumps have created a temporary short fall in my frugal yet rich retirement. This is because although my monthly income is between $2200 and $2450, I have no savings. This lack of savings or emergency fund is where my previous financial missteps come to hit me the hardest.

Had I managed to put even a tiny part of my life insurance aside in liquid cash, life would be a different situation. While most of the time I can have a philosophical attitude towards my depression spending, this one area truly affects both my quality of life (and security). This is the area where I hope others learn from my emotionally made mistakes. Had I even a few thousand dollars in liquid savings, life would be much more advantageous.  That wiggle room would allow me much more freedom. I could invest, have an emergency fund-you get my drift.

My monthly pension covers ALL of my basic month to month bills and needs from my  mortgage to groceries to personal care. What it's not covering are the month to month issues that "pop up" and that can be more than minor. I've assigned all the money I make from my income streams to those other expenses and that's a small but growing amount. When I need to fix the air conditioner, get a last minute offer to do a craft show, or want to take an unplanned day trip however, all those things are impacted by my lack of savings. when I'm doing my tax return and it suggests investing in an IRA (I have no idea if this even makes sense at age sixty), I have to say no.

While one obvious solution might be lifestyle shrinkage, at the moment that's neither easy nor desirable.  I live in an unusual area-home prices have not dropped, but houses are not selling. If I moved to a condo with two or three bedrooms or even an apartment, my monthly bite would not drop that much. Either way, that solution will be a year or so in the making, if I choose that option.  Aside from the logistics of selling, I'm a woman with part time adult kids at home, two very large dogs................that movement process is not instantaneous.  And I love my house. I don't mind being house poor-within reason.

Meanwhile I have three needs-some additional income (growing every day), a so called emergency or house fund, and some savings. To that end, I've been looking at some solutions.I don't want to take out a home equity line of credit. This is not my forever retirement home, I don't want a monthly payment added to my budget, and I don't want my monthly mortgage payment to increase. I'm in the unique situation of having a zero on my tax return. It may never happen again, I'm not sure how I got to that point this year (I do not have taxes taken out of my income, and I do pay my medical premiums outright) but the old "tax return as savings" is not an option, even at my low income. I can be putting some of my income from quilting and working online aside. I do this now, but that amount is not increasing in the way I would wish. I really need a one time quick cash infusion.  I can cut some more expenses without pain (getting rid of my security system, eliminating cable, downsizing my cell phone back to a non smart phone model-all possibilities). I still need that cash infusion.

One solution that has come up on my radar is to sell my good condition paid for car and purchase an older model and bank the rest.  My car would get between thirteen and fifteen thousand on the open market, and I would then purchase an early two thousand model-say a Honda CRV or a Subaru Forrester.

This is an extreme solution that would have it's plusses and minuses. I would have an immediate infusion of cash, which would be divided between savings, and so called emergency fund.  Some of it might even be used to start an IRA (is it wise to start an IRA at sixty?? Does it even make sense?).  Those are all ups. On the other hand, I would have an older car with more repair needs (the only thing ever done to my RAV4 were the oil changes and factory recommended checks).  I do some regular cross country driving. How will that be impacted by an older car. I know some of you have 2000-2005 era cars and do this kind of driving. Does it impact you in any way?  I have no mechanical ability.  Would it make sense to have a monthly car repair category that if unused could go towards buying a new car with cash?

Finally, is there a short term solution I'm missing that does not include increasing debt? Obviously I've not included "selling my stuff" as an alternative solution.  I continually downsize, but parting with the good stuff is not a solution I want at this point.  My income is continually increasing while my expenses are shrinking, so my long term outlook is good. It's the short term that has become an issue.

What do you think?  Would you make such a drastic decision?  Would you take on short term debt?  Ignore the situation and plow on trying to add small savings here and there?  Is there a reasonable solution to this problem?  Throw it at me. Quickly.

30 comments:

  1. Reread what you have written. Your cash flow is very low and yet you desire to keep everything as it is. From my view, you can seriously downsize (including helping your kids see they can do it on their own) or take a real job.
    If you go for a job...one I have seen lately is to help the elderly transitioning to care centers. When helping mom, it would have been big to have someone else who could help sell and donate stuff.
    Personally, I wouldn't move. Maybe you could consider a housemate- another widow? I know you love all of your stuff- but what amount of the stuff is worth the house you live in or future travel?
    Unemployment is down, it could be time to let your chicks fly. Even if your son stays with you...you might ask him to start paying half. I know your son has to be bright...is it time for the ground floor- even if it is in fast foods?(which is a surprisingly well paid industry in management!)
    I don't know if you are going to bristle at either suggestion. Going into your sixties with little savings is one thing. Going into your eighties will be the panic time...and then getting extra money will be even more difficult.

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  2. Tough question since you don't have anything to sell except your car.

    Can you find a short term housemate? My son's girlfriend has done this and usually ended up with people from other countries who had short term work or educational programs in her area. They all really helped her take in money.

    A temporary job - project based or replacing someone on maternity or other leave? House or pet sitting?

    I wouldn't sell your car unless you are totally sure the one you are buying is low mileage and in wonderful condition. Do you have a specific need eg. home repair? If so how about a no interest loan from a family member?

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  3. One thing that screams out to me is don't get rid of your security system. You are a single woman and you need it for your safety and peace of mind.

    In my opinion, you have a good working car that is loan free. I think you should keep it and not take a chance on another one. That car will last you for years to come.

    If moving to a condo will not make a huge difference in your budget, I see no reason to move from the home you love. Plus, most condos have restrictions on the size of dogs you can have and you should always be able to have and keep your pets.

    I personally think you are doing a great job at living frugally. I read your blog to get tips for myself. I think if you just evaulate the things you can live without (smart phone, cable, etc) and continue on with your frugal habits, it will eventually work itself out.

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  4. His Way... As a long term solution, moving is certainly a possiblity. I need a short term solution as well. Houses on this street have been for sale for six months, and I simply cannot afford to walk away when I made a fifty thousand dollar downpayment. In the long term downsizing has always been a solution. But if im looking at a year before my house sells....you get my drift.

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  5. Juhli I am also loath to sell the car. I am considering renting the last bedroom to a college student but it makes me VERY nervous, as I said. Thats still in the picture.

    As I will explain to Janette, I have been looking for ajob since 2006, temporary or othewise. Have not found one, adn cannot physically do the mcdonalds or retail thing.

    I have considered having my daughter pay a single mortage payment, which would free up enough to start a small savings account, to which I could add. Can I tell you how much I hate that idea?

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  6. Janette, thanks for your thoughts. While I will not bristle, I have been apllying to jobs every day since 2006. My retirment is forced, not by choice. I would happily take a real job if I could find one. I have two businesss, one which is errands and organization, and one which is selling quilts. both are growing exponentially.

    As for my son, he is unemployed and has also started his own business. He has applied towarehouses, fast food, and even to summer lawnmowing businesses. He makes about 500 a month from his business. He is returning to community college to look at either a certificate in accounting or one in computer support which is more useful than golf course administration.

    Again, I do plan to downsize and I am making money (more every month) by being self employed. I do not plan to be without savings in the long run.

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  7. I think you are brave to put this out there. Please do consider seriously having a renter in the last bedroom and having your daughter contribute. I am surprised your daughter hasn't offered. Have you been honest with her about your situation? You need to create more security for yourself.

    To find a renter ask everyone you know and trust if they know someone trustworthy and reliable who has the desire to rent a room for a while. Then write the rental agreement carefully including providing yourself with an out if you end up not being comfortable with the person.

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  8. Honestly Juhli, shes a hard working ultra responsible thirty something who has changed her own career field (this is not the child living with me) and should not have to help her mom. As for my son, he pays his own bills, buys groceires, buys stuff for the yard and so on.

    I will consider renting the bedroom in the future although imnot at all sure anyone would WANT to live here. We are casual night owls with two large dogs and it is just one room with a single bed.......but for the long term down the road when son is gone, I can see getting a renter and giving him or her two rooms (a bed and sitting room if you will) and exclusive use of that bathroom.

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  9. I misunderstood and thought you daughter lived with you part time. Don't underestimate what living conditions are ok with a student - think shared dorm rooms and common bathrooms.

    Another thought - you have mentioned going to church and to school. Have you and your son met with the pastor to ask who in the congregation might be willing to help with his job search - introducing him to people, knowledge of the local market, coaching on how to search. Have you taken full advantage of your school's employment center?

    If you want to change you financial situation you have to be willing to do things that make you uncomfortable.

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  10. I came across poorly. I am sorry. Most of all, know that you are doing great! You are strong in building up your businesses. They take time.

    I would not sell your house or car. Your stability in your area seems key to your overall happiness. I read that every time you write something about your church or family.
    Cannot see you working full time for someone else. You seem quite independent and creative. I was thinking that helping others move and sort would be right up your alley.

    The other thing I am beginning to see is people "opening up" other people's summer homes. (or closing down winter ones). These people are bonded. They stock the fridge, wipe down glasses and get the gardens ready. It might be something both you and your son could do together. Summer is coming FAST and I am pretty sure you live near some lakes???

    Maybe you could see the money for a mortgage payment as a loan from your daughter- even if she does not see it that way. Sometimes the hardest things for a mom to do is let someone else help. I'm right there with you on that one. I am betting it would give her peace of mind!

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  11. Well, this is where I will be honest and say I dont want to get a job. That is not my goal. My goal is to establish a business and honestly I believe that is the way to change my financial situation (which I do not consider to be that poor over the long run) Im blessed to have health insurance without employment and a regular set income which is in no way unacceptable. I plan to change my income in the long term through my business and expense cutting, not through regular employment.

    As for my son, he has paid to go to networking groups and done some very uncomfortable things. The one thing he really needs which he does not have is a male mentor (but thats not related to income per se). He has a mom and an older sister and lives in a place where he did not grow up and knows no one.

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  12. oh His, one thing I forgot to mention. I do have another security system. I have to extremely vocal dogs, one of which is large. They are actually my first early warning systems. the dogs I will never be without, in part because of this.

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  13. Barb, you say you are 60 years old, right? If so, I believe you are eligible to collect on your husbands Social Security benefits as a widow at 60. Have you thought of doing this? It might be worth a call to Social Security to find out. And you may be able to switch it to what would be a larger amount at 65...not sure.
    I have found them very helpful on the phone...maybe easier than online. Just a thought.

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  14. Jane, I do collect hubbys social security benefits-those are part of the equation. I collect those, along with an eight hundred dollar government pension. I receive six hundred in social security. The low to high differential is because of an ongoing dispute with an agency.

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  15. And now everyone, Im off to photgraph things to sell and go to a book sale to increase that income.

    I wont be back this evening so all of your posts will be on hold until then, but I promise they will appear this evening.

    Barb

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  16. Great comment section..I like all of the suggestions. Unfortunately I have nothing to add. I was originally going to say perhaps an online job making some extra cash. Saving is difficult even when you are working. It's a sacrifice, for sure as so many things are competing for your money.

    Good luck with this, I'm sure you will figure something out!!

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  17. Is your son willing to talk to your pastor about getting help finding a mentor to help him connect to the community and job opportunities where you are? Paid networking sessions usually don't produce any results unfortunately but personal connections do even in a difficult job market.

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  18. Hi Barb,

    Thanks for sharing. If I were in your shoes, I would get a renter and give them their own bedroom and bathroom. Yes, that would mean that you and your son would have to share a bathroom, but so be it. If he hasn't looked hard enough for employment, then maybe this will give him the push that he needs? Maybe you could get a renter for one year, so you have a light at the end of the tunnel re the bathroom sharing.

    I would not have a smart phone, (don't now), and would cancel cable

    If I think of anything else, I'll let you know. (Definitely don't do the home equity line of credit). Good luck. Sandy

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  19. Barb,

    I was going to immediately suggest renting out a room in your home, but see that many others have beat me to it. My father rented out three rooms in his house for years, moving into the smallest one on the ground floor. Would switching rooms be an option in this equation? Renting out your master bedroom could bring in more revenue, particularly if it has an attached bath.

    And if you have two lovely, large loud dogs, I would likewise support letting the security service go. Put a lock on your bedroom door and keep your cell phone with you when you go to bed at night . . . that's actually what my husband and I do.

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  20. Barb, I have been reading your blog for awhile and enjoy your outlook on life and retirement. We are actually close neighbors, and I understand about the houses not selling! I would not sell either your house or your car at this point, they are both assets you don't need to change. I know you don't want to get a 'job' but might I suggest merchandising? It's a part time income, flexible scheduling, and I know for a fact companies are looking for people in our area. Are you close to Collin County College? You could check with them and see about renting a room to a student. Since we are neighbors, I'd love to chat with you offline, I have several irons in the fire myself and could give you some ideas/leads.

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  21. See if you can chip away at building savings slowly out of your monthly income. Look into mystery shopping-there are some companies that will reimburse you for meals (even some very nice ones). Check the Volition website for ideas. It is something that you can do on a flexible schedule. Are there any blogging groups in your area? I belong to one in the northeast where I live-sometimes they have low cost networking events. I also have learned a fair amount reading other frugal or deal blogs. Could you put a few ads up?

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  22. So Janette, did you give up the blogging again?

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  23. Lol- I was so busy with my mother and then my kids. Life, sometimes gets in the way of thinking. It just got to be too much. Maybe next month. :) I still love to read your blog though.

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  24. Jane and all, I jsut realized the typo. social security is sixteen hundred and pension will now be nine hundred (gotta love that cost of living raise).

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  25. somehow I missed this post! I'm in a pretty negative mood right now but I'm trying not to sound that way(and nope it's nto about your post lOL!)
    I was taking Dave Ramsey's class(dropped out when my mom got sick and passed a year ago) but his step 1 is to build a $1000 emergency fund. suggestions were to work overtime(in your case you could look for a job even parttimea and save all that $)or sell things. I'm currently needing to curb myself big-time because I emotional eat and emotional spend. start wtih all the extras if you have any such as travel, eating out. I know you don't do much in these areas but gas adds up. I dropped cable years ago - painlessly- on another frugal forum I advised someone else to keep it because it was basicaly their only fun activity other than reading and they aren't physically able to exercise or do much else - so since she was ablet o make ends meet I didnt' see her giving up something that's her main pleaure. you already buy meat and stuff on sale and coupon but I went a few weeks buying only produce and used some of the frozen meats an froze leftovers into individual meals. just saving a couple of dollars here and there add up over time. I would keep the car - a reliable car is important and I'd rather keep mine 10 yrs or longer and make needed repairs so long as they're worth it. the only exceptions Ic an think of is if the vehicle guzzles gas and I drove a lot or I had an expensive car that was overkill(like a jaguar instead of my civic)as a single woman that security is important to me.
    at work so gotta go for now
    Susanna

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  26. Susannah, we are alll allowed to feel negative sometime. while I appreciate your input, if you know anything about me, you know that I am a frugal person, and have elminated the things I feel are important to me. I am NOT willing to give up certain things in my life, including travel, ever. My post today will actually be on travel. At this point in my life there is nothing else I am willing to give up. LIfe is to be lived. I plan on doing so, every day. Honestly, this post was not about cutting expenses or curbing my life, it was about a way to start an emergency fund with a big jump. Lets just say that I have done so.

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  27. Susannah, we are alll allowed to feel negative sometime. while I appreciate your input, if you know anything about me, you know that I am a frugal person, and have elminated the things I feel are important to me. I am NOT willing to give up certain things in my life, including travel, ever. My post today will actually be on travel. At this point in my life there is nothing else I am willing to give up. LIfe is to be lived. I plan on doing so, every day. Honestly, this post was not about cutting expenses or curbing my life, it was about a way to start an emergency fund with a big jump. Lets just say that I have done so.

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  28. Cari , if you live near me I would love to check in together at some point.

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  29. Barb, you can find me on Facebook - just send me a private message. I'd enjoy meeting you!

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  30. I forgot to tell you - my full name is Cari Cook, from Plano. :-)

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