Posted by: johnhourihan | January 4, 2014

Retirement 101: Chapter 3


Transportation

The next thing you will need is reliable transportation.
You won’t be living in a city because any decent place to live in the city is going to cost more than you can buy cash, so, there won’t be a lot of public transportation available..
What I’m saying is you have to get a reliable car and not have car payments. Don’t forget, the average car payments in the United States are between $400 and $500. It is essential that that isn’t coming out of a $2,500 Social Security check. The most reliable  cars lately are Honda, Toyota and Subaru. If you feel you have to buy American, Ford has put out some decent cars in the past 5 years.
I suggested Lin go out and look at Subarus because we live in a snow belt and Subarus have four wheel drive and are known for longevity and safety.
She bought a WRX, a rally car in disguise. I guess if you are saving $400 a month on a car payment you can pay for 27 mpg in gasoline.
Whatever money you get from selling a house or a 401(k) or any other lump sum of cash should go to buying your home and the most reliable car you can.
Once you have it, take care of it better than you ever did. Change the oil, do the scheduled maintenance. Your car is almost as important as your house, unless you intend to stay inside your house forever.
A lot of senior centers have some public transportation to malls and doctors’ offices and the like. It may be worth while to find out what they have in your area. Treat your car as if you are tying to make it last for the rest of your life.
You pretty much are.
So, now what you have accomplished is you have done away with your mortgage payment ($600 to $1,000), your water and sewer bill ($102) you have cut your heating bill (since propane is the cheapest for a small house – one gas log stove heats our whole house -and propane is the only one to actually go down in price in the past few years) Your electricity bill will dive since you only have one or two rooms to light, to heat etc.
This will cut your monthly bills by $1,500 to about $2,100. And you can now add to what you won’t be paying out a $400 car payment.
When they tell you that you won’t be able to retire it isn’t quite true. You just can’t retire and live the way you have been living. If you start getting ready a few years before you want to retire to get ready you most likely can do it.

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Responses

  1. Starting to look good!

    • thank you neil

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  2. Thank you John. Is there a reason that you do not mention renting?
    At my age I cannot imagine owning a house, even a very small one
    and taking care of it. However, at the moment, our rental house has no
    water. However, again, we do not have to fix it or pay for it. It is being
    taken care of. Hmmm…

    • Pat, the reason I don’t mention renting is that rent is a constant amount of money that has to be spent on a fixed income. I believe that a small house (in my case 300 square feet) brings small bills. It isn’t just owning the house that is good , it is owning a small house. In order to fix those pipes it is probably going to cost your landlord under $1,000.I’m willing to be you pay more than that in one month. I don’t take care of my own house. I hire people to do it. HOwever , renting is an option if it fits into your income.

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