Insomnia and the Back of an Envelope

I cannot think of a better cure for my occasional insomnia than to stare at my electronic 2024 checkbook and analyze our spending for the prior year.

I’m looking for how much money came in, and how much came out to pay bills and buy stuff, and how much went back into savings and investments.

Social Security and two dinky pensions are what I refer to as our spending benchmark. In an ideal world our spending will never exceed the benchmark. The last couple years have been benchmark busters, with 2023 being so bad that I didn’t bother doing the math. I described 2023 in a prior article, Our Spending Spree. That year we built a house and bought lots of new doodads to go into it.

2024 was better but we still missed the mark due to things like landscaping and some really cool additions to my man cave/garage.

Here’s our income stats, expressed as percentages.

Our guaranteed Benchmark income is 67% of total incomeOur 3% IRA distributions are 27% of total income.Other income represented 6% of total income.

Our total spending for the year equaled 107% of benchmark income, requiring us to use about half of our IRA distribution to make the ends meet. The unused portion of the IRA distribution went back into a non-qualified money market and brokerage account.

If I were a teacher assigning a grade to last year’s spending, I think I’d give it an A-. We may have missed our benchmark, but the extra spending only equaled 1.5% of our IRAs. I anticipate this year’s spending will come in at less than 100% of the benchmark. At age 73 I am very comfortable with that.

This is as close as I will come to using what Webster’s Dictionary and HumbleDollar’s own grumpy old man would call a budget. As long as our spending requires such a modest IRA withdrawal I don’t see any reason to rock the spreadsheet by preparing a real budget.

The post Insomnia and the Back of an Envelope appeared first on HumbleDollar.