While I’m going to share some of my personal budgeting details with you, you can take my experience for what it’s worth. I’ve been living in the Philippines for several years, so my monthly budget is fairly stable. The biggest reason is that I don’t owe anything to anyone — I have no credit payments whatsoever.
Military Retirement Pension
I get a monthly pension, courtesy of the US government, for my 20 years of active military service plus 10 years of reserve military service. I’ve been receiving it since 1998, when I was released from active duty. While I was living in the US, it paid my mortgage and that’s about it. As high as some mortgage payments are now, even for modest homes, it probably wouldn’t be enough.
The Luck of the Draw
I was extremely lucky when I sold my house in 2006, while the housing prices were still inflated. I feel sorry for the people who got hosed when the prices went back down to where they should have been in the first place. Nevertheless, I considered it a windfall.
You see, I bought my house in 1994 for a little over $100,000 including all of the fees, taxes and other miscellaneous closing costs. The base price was a mere $89,000 and even with upgrades up front, it still didn’t reach $95,000. The closing costs nickel and dimed me to death. Somewhere along the line, I refinanced the house to change it from a variable rate mortgage to a fixed rate mortgage, but I didn’t extract any cash from the equity.
Towards the end of 2005, I did a quick refinance again (with zero percent interest good for three years, I might add) for the specific purpose of extracting equity. I and my wife had already planned to move to the Philippines, so we needed to make sure all of our credit loans were paid off and the house was spruced up. It turned out that we used all of the money because some of our appliances decided to quit on us at about the same time. We painted the interior and exterior, replaced the wall-to-wall carpeting, replaced linoleum with ceramic tile (even in the three bathrooms) and other miscellaneous chores.
When we sold the house, we owed about $142,000, which included the equity extraction (which was obviously more than we started out owing). The sale of the house was for an incredible amount of $288,000. Do the math. Even after the realtor got his cut, we still had over $100,000 remaining. When we moved to the Philippines in 2006, we built our house and bought a new car with that money. We still have the 2006 Toyota Corolla Altis sitting in the driveway, bought and paid for, with only automotive registration renewal and insurance to worry about (and it only has about 21K kilometers on the odometer, by the way, because I don’t have to commute to work anymore.)
The Monthly Budget
You’d be surprised at how little you need to live on when you don’t have to make house or rent payments, when you don’t have one or more car payments to deal with, and live day to day without using credit. The amount I receive for my pension every month is more than enough.
My monthly bills (utilities, cable and Internet) normally add up to less than $400 — I have three split-type air conditioners in the house (usually only two running) and a Whirlpool washer and dryer set (made in the USA). The most I usually spend on groceries is about $300.
I also help support three different families in the Philippines, all relatives (some of the children of which me and my wife plan to adopt). That support amount usually comes from the money I make from this website and my other websites and only a real emergency will cause me to spend more than I budget for.
So… I have money in savings most of the time, taking it out only when needed for home improvements or repairs and whenever I pay for something outside of my budget, which rarely happens. If I had to pay rent or make a monthly car payment, I might never have any money in savings.
If you are already living beyond your means, then you may not be able to do anything remotely like what I’ve done. I’m not talking about moving. I’m talking about keeping a budget and sticking to it so you can live without credit. I know it’s hard to do, but I’m living proof that it can be done. The best advice I can give you is to get into the same kind of position any way you can. If you do, you’ll understand what living without stress is all about as well.
[Originally published in September, 2009]