Comments on: Large Purchases and Retirement http://blog.canadian-dream-free-at-45.com/2010/07/20/large-purchases-and-retirement/ Wed, 08 Feb 2012 17:31:40 +0000 hourly 1 http://wordpress.org/?v=3.1 By: Dave http://blog.canadian-dream-free-at-45.com/2010/07/20/large-purchases-and-retirement/comment-page-1/#comment-45285 Dave Tue, 27 Jul 2010 02:18:49 +0000 http://blog.canadian-dream-free-at-45.com/?p=1915#comment-45285 Because my retirement fund will be based more on cash-flows (dividends) vs. capital, the cash flow method will work better for me than significant withdrawals once in a while. Right now we are budgeting for a car that we need to buy in the spring (I was going to drive my car into the ground, but my wife is learning how to drive and is just not comfortable driving my 5-speed). It would have been easier to save for a decade+ for this purchase rather than over a 10-month period. I'm not sure I will specifically segregate the funds, but there will be a portion going to savings for large "asset" purchases. Because my retirement fund will be based more on cash-flows (dividends) vs. capital, the cash flow method will work better for me than significant withdrawals once in a while.

Right now we are budgeting for a car that we need to buy in the spring (I was going to drive my car into the ground, but my wife is learning how to drive and is just not comfortable driving my 5-speed). It would have been easier to save for a decade+ for this purchase rather than over a 10-month period.

I’m not sure I will specifically segregate the funds, but there will be a portion going to savings for large “asset” purchases.

]]> By: Financial Ramblings http://blog.canadian-dream-free-at-45.com/2010/07/20/large-purchases-and-retirement/comment-page-1/#comment-45219 Financial Ramblings Fri, 23 Jul 2010 09:48:58 +0000 http://blog.canadian-dream-free-at-45.com/?p=1915#comment-45219 [...] the most out of part-time or seasonal work. 5. Planning retirement ahead of time will help a lot. Large Purchases and Retirement is posted by Dave of Canadian Dream to help you manage your cash flow in early retirement, or even [...] [...] the most out of part-time or seasonal work. 5. Planning retirement ahead of time will help a lot. Large Purchases and Retirement is posted by Dave of Canadian Dream to help you manage your cash flow in early retirement, or even [...]

]]> By: George http://blog.canadian-dream-free-at-45.com/2010/07/20/large-purchases-and-retirement/comment-page-1/#comment-45193 George Wed, 21 Jul 2010 19:18:52 +0000 http://blog.canadian-dream-free-at-45.com/?p=1915#comment-45193 Heading towards ER, I'll be doing as deegee... take care of potentially large expenses while employed and then just take my lumps if something really unexpected happens. One exception is computer upgrades, which are just in the overall budget. Even if I were doing ERE, I wouldn't set up specific accounts unless it's something very important for me (e.g. like the computer upgrades). Instead, I'd plan to take my lumps in the form of returning to work for a short while. Heading towards ER, I’ll be doing as deegee… take care of potentially large expenses while employed and then just take my lumps if something really unexpected happens. One exception is computer upgrades, which are just in the overall budget.

Even if I were doing ERE, I wouldn’t set up specific accounts unless it’s something very important for me (e.g. like the computer upgrades). Instead, I’d plan to take my lumps in the form of returning to work for a short while.

]]> By: deegee http://blog.canadian-dream-free-at-45.com/2010/07/20/large-purchases-and-retirement/comment-page-1/#comment-45171 deegee Tue, 20 Jul 2010 19:57:08 +0000 http://blog.canadian-dream-free-at-45.com/?p=1915#comment-45171 I made sure to buy a new car back in 2007 (while I was still working) so I would be set for many years into the early retirement I took in 2008 at age 45. I drive only about 3,000 miles per year, so it is not unreasonable for it to last at least 15 years like the car it replaced. Similarly, I made sure to have some costly dental work done in 2007 and 2008 while I still had dental insurance coverage. So I am set there, too. I do not use all of my mutual funds to supply me with the dividend income I use to pay my bills, so I consider the excess funds to be like my own personal "slush funds" to cover any large and/or unforseen expenses until I can have full access to my IRA. If the car doesn't need to be replaced until I can tap into the IRA that would great (and within reason). As for my large co-op apartment complex, we just underwent extensive interior and exterior renovations in the last 5 years, so it is not likely we will be having any assessments to pay for large expenditures. My share in the complex is only 0.3%, so even a $1M expense will cost me only $3,000, hardly one which would bust my budget. I made sure to buy a new car back in 2007 (while I was still working) so I would be set for many years into the early retirement I took in 2008 at age 45. I drive only about 3,000 miles per year, so it is not unreasonable for it to last at least 15 years like the car it replaced. Similarly, I made sure to have some costly dental work done in 2007 and 2008 while I still had dental insurance coverage. So I am set there, too.

I do not use all of my mutual funds to supply me with the dividend income I use to pay my bills, so I consider the excess funds to be like my own personal “slush funds” to cover any large and/or unforseen expenses until I can have full access to my IRA. If the car doesn’t need to be replaced until I can tap into the IRA that would great (and within reason).

As for my large co-op apartment complex, we just underwent extensive interior and exterior renovations in the last 5 years, so it is not likely we will be having any assessments to pay for large expenditures. My share in the complex is only 0.3%, so even a $1M expense will cost me only $3,000, hardly one which would bust my budget.

]]> By: Jacq @ Single Mom Rich Mom http://blog.canadian-dream-free-at-45.com/2010/07/20/large-purchases-and-retirement/comment-page-1/#comment-45165 Jacq @ Single Mom Rich Mom Tue, 20 Jul 2010 14:50:47 +0000 http://blog.canadian-dream-free-at-45.com/?p=1915#comment-45165 I don't know Dave, there's lots of people that do this "pots of money" thing - kind of like the envelope system I guess. I've got by fine over the years with the one pot for normal spending and one big pot for the "everything else". When I was saving up for retirement, that's what I did - live off one paycheck, giving myself a fixed income and the other paycheck plus all consulting income, bonuses etc. going into another account. Then I only used that other account for home renovations and one major trip a year. If my furnace blew (and it did), I just cut back on my monthly spending that month. Right now if something happened, I'd just work for a bit to pay for it. In retirement, one year it might be a roof, one year a car, nothing for a couple of years... I'm not sure how I'm going to do it, but I seriously doubt I'll be segregating money into different funds. But maybe just having ~$100k in a secure mutual fund earmarked for stuff like that would be a good plan. Hopefully by the time I'm 85 it will be spent down and I probably shouldn't be on the road and probably won't be living in a situation where I'd have high maintenance costs. I don’t know Dave, there’s lots of people that do this “pots of money” thing – kind of like the envelope system I guess. I’ve got by fine over the years with the one pot for normal spending and one big pot for the “everything else”. When I was saving up for retirement, that’s what I did – live off one paycheck, giving myself a fixed income and the other paycheck plus all consulting income, bonuses etc. going into another account. Then I only used that other account for home renovations and one major trip a year. If my furnace blew (and it did), I just cut back on my monthly spending that month. Right now if something happened, I’d just work for a bit to pay for it.

In retirement, one year it might be a roof, one year a car, nothing for a couple of years… I’m not sure how I’m going to do it, but I seriously doubt I’ll be segregating money into different funds. But maybe just having ~$100k in a secure mutual fund earmarked for stuff like that would be a good plan. Hopefully by the time I’m 85 it will be spent down and I probably shouldn’t be on the road and probably won’t be living in a situation where I’d have high maintenance costs.

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