Thanks to gamecock for the idea, I used ChartTool to get a "visual" of our monthly expenses. Taxes are not included in this graph because it reflects how we spend our net income.

The "Misc." category includes:
~ spending allowance
~ clothing
~ prescriptions
~ entertainment
~ personal care
~ house cleaner
~ gifts
~ incidentals
~ anything and everything not accounted for elsewhere

The "Housing" and "Utilities" categories include expenses for both our CA condo and second home in ID. The "Travel Savings" category includes timeshare dues, prorated expenses for planned trips, airfare to ID, etc. Eating out about once or twice a week is included in "Groceries."

Funds needed for emergencies, home maintenance, eventual replacement of cars or appliances, repairs to rentals, etc., are taken from the "Savings" category. I like to keep this account padded because emergencies are as sure to come up as the daffodils in spring.

When I decided to retire a year ago, I knew we could live more frugally in some ways but I also knew that travel would be a bigger expense, given that we'd have more time for it. And, after years of working hard and looking forward to retirement, it would be disappointing to have to limit travel due to lack of funds. So, to what extent would we be able to afford retirement travel? To figure this out, prior to retiring I analyzed our projected monthly expenses in relation to our retirement income. I included "travel" as a monthly expense.

For us, travel planning begins with reviewing our calendar and discussing where we'd like to go in the coming year. We take into account visits with family, work/volunteer schedules, other financial obligations, and timeshare options. In 2009, our travel plans have included Carmel, San Antonio, an Alaskan cruise, and a trip to Payette Lake in McCall, ID. Once we know when and where, I estimate expenses for airfare, hotels, meals, and excursions. That amount is prorated and I deposit a monthly amount to the savings account that holds travel funds.

Then I challenge myself to reduce the cost of our planned travel as much as possible. For example, our hotels in Carmel, San Antonio, and McCall were reserved through our timeshare, so aside from the annual dues, there was no hotel expense. The airfare for San Antonio was purchased with miles, so we paid only the airport taxes (~$20). The airfare to Seattle (departure port for cruise) was 50% off because I used my mileage card rewards.

For the Alaskan cruise, we received a "military discount" available to anyone who has ever served in the military, no matter when. We were eligible for the discount due to dh's service during the Vietnam War and this saved ~$500. A few days before the final payment was due, I called the cruise line and negotiated an additional savings of $240 plus $100 onboard credit. A few days before departure the cruise line called to see if we were interested in upgrading to a suite for a reasonable price and we did.

The effort to systematically save and reduce travel costs pays off because the travel fund is growing. I usually deposit any "windfalls" into this account. In 2010, we want to go to Machu Picchu and take a Hawaiian cruise, so I'm starting to plan and save for those already. Retirement travel is possible because we live a simple life with no debt (except for a small mortgage) and we carefully plan and save for each trip. We've always said travel would be a priority in our retirement and we definitely want to make hay while the sun shines.

April is always a taxing month for us, budget-wise (pun intended, hehe). Our CA property taxes are due, we usually have some additional state or federal income taxes to pay, along with a hefty fee to our accountant, and our annual auto and house homeowner's premiums are due in April. Although no one is happy about paying taxes, at least I don't stress about it because we are ready for these extra expenses.

Each month I set aside a predetermined amount that is deposited in a "reserve" account where the funds earn interest until they are withdrawn. At 1.5%, these funds earn ~$300 in the course of the year. Whenever possible, I put expenses on my rewards credit card first, then pay off the balance when it's due with reserve account funds, further leveraging funds to earn interest a little longer and provide miles used for travel savings.

Some folks let the bank impound tax and insurance payments, but I prefer to earn the interest in exchange for the responsibility of managing it myself. The reserve fund pays bills that are due several times during the year (e.g., taxes, auto/HO insurance, HOA dues, timeshare dues, accountant, etc.). However, it's critical to stay on top of due dates to avoid late penalties.

Today dh and I went to Costco, even though I swore I'd never again go on a weekend once I retired... so I had to eat my words! Actually, we had not been in over a month and our Am Ex rebate check for $294.41 was in the mail yesterday when we got home from a business trip. And, since the frig was pretty bare, we stocked up... now the pantry and freezer are full, and we have cleaning supplies and paper products to last at least 6 months.

Our cart totaled $354.80 but we paid only $60.39. This was on top of getting $38 off for products that had coupons (e.g., Brita filters, Skinny Cow, vitamins, etc.). I found out Costco now automatically deducts the coupon amount when the cashier rings up, so I wasted a lot of time cutting coupons this morning. But I really can't complain... the savings are nice no matter how you get them.

I usually budget ~$200 a month for Costco where I buy our meat, soy milk, organic cereal, cheese, coffee, tea, canned tomatoes, Skinny Cow, pasta, cat litter, vitamins, dried blueberries, Romaine, some fruits/vegetables, and cleaning and paper products (some items are bought every few months). I always pay with the Am Ex card and then pay the balance in full each month. I like the tiered rebates: 3% for gas and restaurants, 2% for travel, and 1% everywhere else... and the card has no fees, other than the Costco membership that is required.

Dh and I have eaten out every day since last Thursday when I got back in town. This is unusual for us, because we have actually been eating out less now that I'm retired. But, dh wanted to go out, and it was fine with me because we used a couple of the entertainment.com coupons by going to new restaurants (new to us).

Thursday dinner ~ at our favorite Mexican place: $20.19
Friday dinner ~ at local "fast food" Mongolian grill at food court (we were going to a movie): $16.57
Saturday lunch ~ new restaurant, used coupon (saved $10): $12.75
Sunday breakfast ~ new restaurant, used coupon (saved $8): $18.29

Total spent: $67.80. This took a bite from our February "dining out" budget and it's only the 8th. We did take home some leftovers, enough for 2 lunches, so that was nice.

We'll be eating at home for the rest of the week, or at least dh will. I'll be going out of town again in a few days for a family visit, and this will mean more dining out for me, at least some of the time.

But for tonight I made wild mushroom penne with EV olive oil, garlic, red pepper, and pine nuts, served with asparagus and whole wheat French bread. I also made a split pea soup that will be part of tomorrow's dinner and then some.

Happy New Year everyone! We arrived home late yesterday afternoon from our trip to El Salvador... I will post highlights and pictures at a later date. While we thoroughly enjoyed our time there, it is great to be back home.

We brought in the new year quietly... just dh and I, and TC the cat who is delighted to have us home. Today has been a day to catch up on the snail mail, email, and my favorites blogs while I recover from a slight case of jet lag.

Later today I will spend some time on finances, particularly on calculating our net worth. One of my financial goals for 2009 is to increase our net worth by 5%. I plan to carefully review the monthly budget to identify some ways to achieve this. More on this later.

Today I calculated that since retiring in late August, my grocery bill is averaging between $100 and $115 a week, not including household items such as paper towels, soap, etc. It also does not include dining out. Before I retired, our average grocery bill was at around $575-600 a month plus we spent about $200 dining out. While I am definitely spending less than when I worked, I don't know if my spending is high, average, or low for two people.

What have I done differently that has resulted in savings? To start with, in September, I took an inventory of the pantry and freezer. Unfortunately, I had to throw out a few expired cans and some items in the freezer that were freezer burned. I used some food before it expired, so this was a savings, but then I replaced them and stocked up on staples.

Another money saver is that I now make weekly menus. The impact? We are not only saving money, we are also eating healthier. I am buying more fresh vegetables and fruits and have reduced our consumption of red meat. At least once a week, I try to make a hearty soup and this provides leftovers for lunch, too. It helps that I like to cook and have fun creating menus, using some items already in my pantry.

My shopping trips are now far more efficient than when I worked. I go to the store less frequently and I always take a list. So far, I am keeping Costco runs to about once a month and trips to the grocery store to about every 10 days. When I worked, I'd hit the store on the way home and buy things I already had at home (but didn't know it). I also frequently shopped when I was hungry or tired... not a good idea.

When I worked, we ate out about 3 times a week, mostly because I was too tired to cook at the end of a hectic day. It was about convenience. Now we might dine out once a week, if that. Since I have time to cook, and I enjoy it, I am only too happy to do so. Lately, it seems dining out is mostly brunch or lunch on weekends, either before or after we go to the movies or some other activity.

My next challenge is to learn how to get better at using coupons to save money, much like Retire@50 does. I definitely can improve in this area, and I think I can still reduce our grocery bill some. But I am very happy with my savings so far. I am curious... what do you spend on groceries and for how many people?

Yesterday afternoon I took care of September transfers and bills. The way I manage our monthly finances might seem odd to some people, but it works for me. The interesting thing is that I didn’t write a single check and the entire process online took about 30 minutes. September’s budget total is $12,152 and includes:

Payments Scheduled:
• CC1 payment ($4882.27) due 9/10
• CC2 payment ($1266.15) due 9/12

CC1 and CC2 are paid in full each month.
CC1 was higher than usual due to a homeowner’s insurance payment for the ID house and my new laptop.
CC2 included gas and expenses for our Sedona road trip in late July and all groceries.


Transfers Scheduled:
• $500 to CA Household Reserve account
• $500 to ID Household Reserve account
• $100 to Rental Reserve account
• $1,500 to regular savings (cache fund)
• $1,000 to Schwab Account (investment)

The reserve accounts collect funds to be used for periodic expenses as they come up (e.g., taxes, insurance, etc.). Not included here is DH's contribution to his 403b since it is $$ deducted by his employer and I do not have to manage the payments. (I am no longer able to contribute to my 403b/457 since I have retired.)


Other:
Mortgage payment for CA home, water bill, Direct TV, and HOA fees are on auto payment, so I don’t have to schedule payments but these expenses are part of the monthly budget of $12,152 spent. Utilities for the ID house are on auto payment and are taken from the ID Household Reserve account.


Also scheduled but not payable until October:
• utility bill payment for CA house ($99.57) on CC1;
• phone bill payment (Internet, cell, and land-line = $244.08) on CC1 and it includes DH’s iPhone charges.


Extra Deposits to Checking Account to offset expenses:
From household reserve account:
• $543 for HO insurance
• $114 for timeshare dues

From my savings account:
• $2491 for my new laptop

Whew! That's a lot of money to move around… but I love the ease of managing everything online and using the CCs to earn miles. Best of all, the mortgage for the CA house is our only debt.

Because of family commitments and out-of-town visitors since last Thursday, I had not paid my August bills until this morning. I love the ease of using my computer while enjoying a good cup of coffee. I did the following online in less than 30 minutes:

~ scheduled utility bill payment ($83.42) on CC1, next cycle
~ scheduled phone bill payment (Internet, cell, and land-line, $183.45) on CC1, next cycle
~ paid CC1 ($2459.11) due 8/10
~ paid CC2 ($2286.57) due 8/12
~ paid auto license renewal for my car ($258) due 8/20
~ purchased two air fare tickets for March ’09 San Antonio trip ($20, using partner miles)
~ transferred $500 to Household Reserve account
~ transferred $100 to Rental Reserve account
~ transferred $500 to ID Household Reserve account
~ transferred $50 to ING
~ transferred $1,100 to regular savings

Both CC1 and CC2 are always paid in full each month, but were higher than usual.
CC1 had a large auto insurance payment on it, and also the last of the vet bills for MC, who passed away in late June and was cremated. I also had purchased gifts for several events (a graduation, 2 birthdays).

Extra expenses on CC2 included gas for a 1400 miles road trip to ID, and NYC vacation expenses. This is also the CC I use for groceries.

The reserve accounts collect funds to be used for period expenses as they come up (e.g., taxes, insurance, etc.).

The mortgage payment, water bill, Direct TV, and HOA fees are on auto payment, so I don’t have to schedule payments for them.

It is great to be able to do most of my household business online. The only check I write on a regular monthly basis is the one for the house cleaner who comes twice a month. At $150, it is my favorite splurge and worth it because I am very allergic to dust.

This afternoon, we went to see The Mummy... it was just OK; I liked the first two better. Well, now I guess I'll go catch up on the laundry.

As I look back on June, it’s been atypical in the amount of money I’ve spent on “extras.” Most of this has been on gifts for staff I’ve worked with for the past 8 years. I always give them a small “thank you” gift at the end of the school year, but since I am retiring before the start of the new school year, I did spend more than usual. When the CC bill arrives, I will take this out of my personal “Fudge Factor” reserve account.

Gifts:
Thank you gifts for my office staff (3): $198
Thank you gift for my Assistant Principal (gift card): $75
Birthday gift for my secretary: $47
Birthday gift for my assistant: $47
Graduation gift for friend’s daughter (Macy’s gift card): $50
SIL2 Birthday (gift card): $100

Misc. expenses:
Potluck lunch contribution (from favorite restaurant): $53
Vet bills: $477
Pet sitter (includes tip): $179