By Bob Lowry
|Making budget decisions can be quite complex|
The New Year is a little over a month away, so it is certainly not too early for me to review how how well my 2014 budget held up to our actual expenses and make adjustments for next year. I have lived with a budget for the last 40 some years. 2015 will be no different.
This was a year of some significant changes: it was the first year I had Medicare coverage for about half the year and Betty purchased health insurance through the government healthcare marketplace. It was the first time we were away from Phoenix for part of the summer. We bought a new car to serve as my primary vehicle and to tow behind our RV.
So, how did things work out? Pretty well, it appears. I am on track to be about 7% under budget for this year. A quick disclaimer: RV and vacation expenses are part of a separate budget. As I have noted in an earlier post the cost of gas during our 2 month RV adventure and a much higher than expected bill for repairs and maintenance knocked that budget for a loop (29% over). But, the main household budget did well.
What came in under budget:
1) Home Maintenance and repairs – usually there is a few things that go wrong with a 30 year old house. This year everything held together.
2) Medical lab tests – three of the tests Betty and I usually get and pay for are now covered by ACA or Medicare.
3) Pet Expenses – 2013 was not a good year for Bailey: a doggie chiropractor and several x-rays for a troublesome back problem. This year, she has been much, much better.
4) Dining out and entertainment – we found that we are spending more time with family and in-laws, which besides being more satisfying is much cheaper.
5) Betty’s car’s registration and gas expenses – an 11 year old car doesn’t cost much to register, plus it is only driven about 5,000 miles a year. We are putting no more repair money into it but will drive it until it quits, then donate it to a charity.
6) Change in RV insurance – this one part of ownership I keep under an insurance heading in the household budget. By switching companies I was able to pay for only when I expect to be on the road next year, thereby saving $250.
And on the not so good side:
1) Real Estate taxes – even though real estate assessments lag by two years, our home’s market value has rebounded strongly from the 2008-2009 disaster, making for a larger tax bill than I had planned for.
2) Yard work – while we were gone for July and August, I paid our yard service several hundred dollars above budget to do the trimming that I normally handle.
3) New set of eyeglasses: I thought I could make it until next year with my old lenses, but the change in my eyesight made a new pair important.
So, for 2015, with our income remaining unchanged, I will:
A) Trim the pet budget by 20%
B) Set aside enough to handle one or two major home fix ups, but not three.
C) Budget more for medical premiums. Betty’s ACA plan will be about $37 more each month than this year, with somewhat higher copays and a much bigger deductible.
D) Trim the dining out amount a bit to reflect more family time.
E) Budget more for the real estate tax since it is bound to go up again.
All of this should allow us to stay at a 3% (or less) withdrawal rate from our retirement account and still be prepared for most of what 2015 may decide to throw at us.
How about your expenses for next year…anything lurking in the shadows?