One of the biggest challenges in planning for retirement or FIRE is estimating and saving for rising expenses. In particular, individuals planning for early retirement will need to adequality plan for multiple decades of inflation and expense creep. Sufficiently forecasting costs will help, but controlling them may be even more beneficial.
So, how do you control your expenses heading into retirement?
Try moving to a different school district.
I get that your kids grew up there, and you have great memories. However, if you live in an area with a good school district, chances are school taxes represent a significant portion of your property taxes. When the school board has their meetings, they’re discussing among other things, how to spend YOUR money.
Chances are the decision makers don’t care about the frugal sacrifices you did to achieve FIRE (Financial Independence Early Retirement), and if you don’t get involved, they won’t think twice to raise taxes to pay for a silly football stadium.
Join the school board
Moving might not always be an option. You hear lots of bloggers and journalist talks about moving to lower cost areas when you retire. However, moving may not be feasible, you may already live in an area with low housing costs. Additionally, you may choose to remain where you are for family, what good is retiring if you can spend time with your loved ones.
Joining the local school board is a great retirement practice. You get to help control rising taxes, impart your frugal wisdom on others, and give back to the community. Additionally, many times school board potions pay money so it can be some extra spending money.
You may be thinking, thinking, “Michael, I’m a DINK (Dual Income No Kids) or children free, why should I get involved?”
Everyone in the community benefits when schools are providing excellent education and balanced budgets. Yes, even renters benefit, increases in taxes can get passed on to the renter.
Own your land
Do you own your land? You may want to reevaluate purchasing your property if you don’t. It’s not likely that your landlord will “eat” the cost of your property increase over the next 20 years. An additional benefit of owning your own land and home is you can use your property to make additional income. Check Out: 5 Ways To Make Extra Money At Home
Get involved in local police/EMS/fire department.
Just like the school board, your local township has a plan for your money. And it’s probably not aligned with your money plan. By becoming involved with your local police, fire or EMS department, you can understand what is coming and have a voice for your community.
I live I in rural PA. Here, thankfully, crime is minimal. Our local police department has a military Hummer!!!
Why do we need a military hummer?
Well, I asked, and the response I got was the Feds we’re selling them for 5k to police departments. Famous last words right, it’s just 5k. Last I checked vehicles need maintenance, batteries, oil, etc. Then there’s insurance, inspections, tires. Do you know what happens to tires over time on cars that are not driven? They still degrade, so do hoses, clamps, and seals.
Understand what’s going on in your local government.
Small governments are notorious for developing well-intended schemes to raise revenue (taxes) than end up falling short. Don’t believe me? Ask Harrisburg how the trash incinerator worked out? Whenever a government says, “we are going to do this and it will raise that”, just vote no.
All across America there are small towns that conceded to lure in some local employer. Maybe the town foot the cost for an on-ramp, traffic light, or some other endeavor believing the revenue generated from the employer should pay for the cost over time. Not surprisingly, something frequently goes wrong, and the town is stuck with a “bridge to nowhere.”
Get involved with your HOA.
Do you belong to a homeowners association or condominium association? If so, you need to get involved. I have seen HOAs neglect small repairs until they become huge problems. Maybe you think, “Well, Michael, if my HOA fees triple, I’ll sell and move.” Well, I hope that works out. What do you think happens to the value of a property if HOA fees triple? Do you think people will be interested in purchasing your property? Most likely, it will be a bit of a challenge to sell.
(Side Note: In some areas, a special assessment once announced becomes the responsibility of the seller. The sell it strategy does not always work out without some cost consequences.)
Challenge your property taxes.
Research similar homes in your neighborhood and see what they are paying. Find out how your local taxes are calculated. if your township taxes decks but not patios, pour a patio instead of building a deck. If your area taxes garages but not movable sheds or shipping containers, then you guessed it… Buy a shipping container instead of a garage.
If you need more space in your home, try going underground. Finish a basement instead of building an addition. When we built our garage, we put in storage rafters and a basement, because it was less expensive than building a bigger building and the basement and attic are not taxed. We got 800 sq. ft of an additional building with no additional property taxes.
(Side Note: Remember to obtain your permits and do your renovations the right way. Without those permits, you could lose more than just the tax costs.)
Also, don’t let your home assessor walk around alone. Most home assessors only look at the positive attributes of your home. You need to point out the positives as well as where your home may fall short. You can also appeal your property taxes at the appraiser’s office. Be sure to understand the rules and regulations for appealing your property taxes.
Some areas also have a municipal company that is responsible for setting the value of your property. A third party will assess the neighborhood, and set what the values are for that neighborhood. The township or city will set the rates for taxes based on the values. Sometimes it’s more frugal to have the nicest house in the neighborhood then an average home in a nicer neighborhood.
The bottom line
It’s important that you try to minimize your expenses and taxes before moving into retirement. You can never be too sure of what the future has in store. Preparation and strategy is key to thriving in your retirement!
If you would like to discuss this further please feel free to contact me here