Our first year on an early retiree budget

We did pretty darn good living on a budget

Assuming our budgeting positions!

I had never really been on a budget before we started thinking about retiring early.  On the other hand, Carter was a budgeting guru.  He actually liked tracking expenses, balancing the books, and looking at trends.  Thank goodness! 

We’ve also realized we’re both naturally frugal, which helps a lot.  If either one of use was a big-time spender, I’m not sure early retirement would even be possible.

With all of the apps and software programs out there now, it’s really easy to manage a budget.  Carter still has to sit down every couple days and look at expenses to ensure we have everything categorized correctly.  At the end of each month we run through the numbers and talk about where we are, big expenses coming up, and over/underages from last month.  The good news is that we’re almost always under budget and ready for the next month.

With all of that said, there are definitely times when we start to feel sorry for ourselves that we have to buy a 2002 golf cart vs a 2020 one.  Or, when a condo in Hawaii is advertised for rent and we just can’t swing it.  Then, we look at each other and shake our heads.  Seriously…we can’t complain.  We retired at 45 and 50 and we live a darn good life! There are much worse things than being on an early retiree budget!

Living on a retirement budget for a year before we retired was brilliant!

Are we allowed to say that??? 😊 But, it’s true…it turned out to be a brilliant move! 

We lived on a retirement budget for a year before we actually retired.  What does that mean?  We worked with our financial advisor to determine what a conservative distribution strategy would be for our investments.  Once we knew how much we had to work with, we started developing a budget that could fit into the annual income we’d have from our investments.  We created a detailed budget by category, tracked our expenses for a year, and adjusted based on actual vs planned spending. 

Little things we had to give up to retire early.

When we first started working on our budget, we had to trim our spending in every category and remove some categories of spending altogether.  Then, once we thought we had the littlest budget possible, we had to cut it by another 25% pretty much across the board.  No more weekly trips to the nail salon.  No more going out to eat half of the time.  No more memberships to 2 gyms.  No more expensive fresh flowers sitting on the table every week.

Sounds terrible, right?  It kinda was, but it was also very eye-opening to see what we spent our money on.  We had to realign our thinking and ask ourselves “would I rather have that new car or retire a year earlier?” You guessed it… retiring early won out 99% of the time.

With a year of tight budgeting under our belt, 2019 was easy.  Um, easier!  We wouldn’t say it was easy all the time, but it definitely helped us not panic and stay focused on our goal of staying retired.

Healthcare is a big concern for us

We rely on the state healthcare exchange to obtain medical insurance coverage.  Depending on the plan and coverage, the monthly cost can be $1,000+ per month.  Plus, we have a $6,000 deductible and $16,000 out of pocket maximum.  That means we could pay $28,000+ just for medical care each year.  And, that doesn’t even include dental or vision coverage.

Carter’s tennis accident cost several hundred dollars!

To offset costs, we use part of our health savings account to pay for bigger medical expenses.  We also have a budget line to cover our deductible.  Thankfully, we only had about $2,000 in medical bills last year, so we are carrying some of our 2019 healthcare budget forward into 2020.

We’ll also be traveling to Mexico again for prescriptions and basic dental care.  Check out our earlier blog post for a few more details about last year’s trip.  It is truly amazing how much you can save on basic prescriptions, dental care, and eye exams in Mexico.  For now, we plan on making an annual trip to Mexico each winter.  It’s only a 4 hour drive each way for us, so we can go there and back in a day.

We liked having a couple side hustles to make extra money

Holly, working a side hustle.

No, we don’t need to work, but we like having little side hustles.  Side hustles serve 2 purposes – extra money in our pockets and keeping boredom at bay. 

In 2019, we used our extra side hustle earnings to buy a golf cart, extra Christmas goodies, and a new sofa.  Not bad, right?  We could have paid for all of these from our regular budget, but it’s nice to know we didn’t have to.

Side hustles also help when we’re a little bored.  We don’t really have much time to get bored while we’re in Arizona, but the boredom is real when we’re away for the summer.  We’re usually by ourselves much of the time and we don’t have a ton of extra money to keep us occupied.  Yes, we do all the free stuff like bike rides, hikes, local history, street fairs, etc.  But, it’s still nice to have a little side hustle to keep our minds and hands active.

For 2020, we’re keeping our budget the same as last year. We didn’t have any big variances except for vehicle expenses, so there’s really no reason to change what’s working. Hopefully, we can come in under budget this year, too!


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