It’s tough to make ends meet on a fixed income. To do it, you have to squeeze the spending hard, says ‘Maturing Loans’ columnist Alan Klayman.
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Dear Maturing Loans,
I am a 67-year-old retired nurse. I make too much for any state aid. I draw $1,045 a month from Social Security. I never have much — if any — money left over after my bills are paid. I’m unable to work due to a severe back injury. Yes, I could pare down some of my bills, such as my Internet provider, my cable and cell phone, but then what? Sit and look at the four walls each month? That’s the only entertainment I have. I seldom eat out, don’t go to movies and buy little personal items for myself, yet I’m lucky to have $50 left after bills, gas and groceries. What’s the answer for me? — Donna
I’m sorry to learn about your back injury. That can be painful and debilitating. Let’s see if we can do some things to help your situation out a bit.
It seems that your income is just enough to cover your bills, and we really are trying to find ways to get more bang for your buck. So let’s get to work.
1) Internet, cable, phone. You brought up that you could “bring these down.” Some cable companies and phone companies offer a package that costs less when you subscribe to all three services at once than if you took each service individually. This could save you $25-$50 every month. I’m not talking about getting rid of your service, but bundling them. Just be careful that your bundled package discount doesn’t expire after a period of time. If it does, you will have to set a reminder for yourself and cancel any unneeded promotions and re-evaluate your provider choices. The good news is that now we have choices.
2) Investments and income. If you are removing assets from your 403(b) (a hospital retirement plan), make sure you are not using a method that fluctuates with the market. It’s better to have an income strategy (a plan on how turn your savings and investments into spendable cash) that can guarantee income instead of being dependent on a fluctuating unpredictable market to meet your fixed monthly expenses. This can cause you to take out more when your investments go down and leave less for the future. Talk to a financial adviser about how to set this up.
3) Cut gasoline expenses. Change your oil and filters to manufacturer’s specifications — this is typically every 3,000 to 5,000 miles. Keep your tires properly inflated. Your tire inflation guide is inside your door panel and should also be listed in your owner’s manual. With gas prices rising, fill your tank up; next time it might cost more. Use the grade of gasoline recommended. The octane number is marked on the pump. If your car does not call for premium gasoline, use the low-octane 87. Some cars (like my wife’s) calls for premium grade gas, but perhaps not the top grade, often 93. It could get by on the midgrade level. Using the proper grade of gas will bring down your repair costs in the future and your gas costs today. Keep your car as light as possible. Remove unnecessary items, like shovels and ice scrapers for the winter during the summer. The lighter your car, the less work it has to do.
4) Shopping trips. Group your shopping trips together. Buy all your dry goods at once (such as detergent, napkins, paper towels). Buy all your perishable goods (such as food) at once. If you have an appointment at the doctor and are passing the store, stop and get your shopping done. This will help save another trip and more gas. Be careful: Some grocery stores are inexpensive on some items and very expensive on others. You need to be a smart shopper.
5) Unit pricing. Consider buying some items in bulk. Look at the cost per unit and buy at the lowest unit price. Typically, the price is lower per unit for more goods. For example, the cost of each paper towel roll in a 24-count package is typically lower than the cost of buying one roll at a time.
6) Generic goods. Some of your most common items in the stores can be purchased with a store brand or generic equivalent. If you can buy generic for a portion of your shopping bill, then you could be saving big — sometimes up to 20 percent off your bill.
7) Use your coupons. The cost of the Sunday newspaper is covered by the coupons you can clip. Did you know that more than 90 percent of the coupons distributed are never used? That is a lot of money that we are leaving on the kitchen table.
8) Work from home. If you need more income, there are many jobs that computer literate people can do. Some of them are consulting jobs, some are per diem. There are many positions that require you to be on the phone, and the employers will only hire folks who work from home. For example, there are companies that pick up the phone when you call an 800 number on TV. A lot of these companies use people who work exclusively from home. That can help put some extra dollars in your pocket, and a lot of times you get to set the hours.
Good luck. Write back and let me know what’s working for you.
See you back here next week answering more of your questions.
Alan Klayman is creator of MyIncomeStrategy.com and CEO of Klayman Financial LLC. Klayman specializes in retirement income planning, business management and planning, estate planning, tax-advantaged investing, trust investment management, professional money management, insurance and annuities, mutual funds, fixed income securities, and institutional and personal retirement plan administration.