FREE NEWSLETTER
THE END OF ONE YEAR and the beginning of the next is always a time to look back, and to think about the successes and failures of the year past.
It was a good year in many ways. My wife and I enjoyed excellent health, we’re surrounded by happy, talented and nearly perfect grandchildren, and we had an outstanding corn crop.
Financially, though, it was the pits.
Although I’ve retired from one job, both Julie and I work every day at our farm and small business. We also have income from some non-farm investments. It was our plan that these various enterprises would pay our expenses until we completely retired. We’d allow our retirement accounts to continue to grow, with one exception: Depending on our expected tax bracket, I’ve been doing Roth conversions each year, both to provide funds for investments in farmland and to lessen the eventual tax hit from required minimum distributions.
In 2023, we ended up using money from our Roth to make ends meet. Not a catastrophe by any means, but certainly a hiccup.
This past summer was our first sightseeing trip to Europe, and we had a wonderful time in London and Scotland. But it was considerably more expensive than our normal driving trips to Wyoming or Montana. No regrets, but we decided that overseas trips would not be an annual expense, but rather something we did every other year or so.
We haven’t ever done a formal budget for our living expenses, but a quick glance at our financials statement made it clear that the year’s travel expenses were higher than normal. No problem—we made memories that’ll last the rest of our lives.
The next major financial event was a problem. There’s a point of no return in the life of every vehicle—that day when, if you don’t trade in the vehicle, its value will have depreciated to the point where the only logical financial decision is to drive it until it has no value at all.
In mid-summer 2023, our car had 186,000 miles on the odometer. Julie and I had a discussion about trading in the vehicle, but decided the resale value was almost nothing, and another year or two driving the car would cost us very little in depreciation.
Shortly after this discussion, we were taking our oldest grandson to a Cardinals game on a Friday. About four-and-a-half hours from home, and two hours from St. Louis, our car gasped, sputtered and died. I rolled to the side of the road, waited a minute, and was able to get the car started again. We Googled the nearest Ford dealer and headed in that direction. The car died for a second time as we pulled into the parking lot, and we literally rolled to a stop in front of the shop door.
Two hours later, the mechanic let us know that parts wouldn’t be available until Monday or maybe Tuesday. We were 60 miles from the nearest rental car, 250 miles from home and our grandson had to be home by Monday. We were stranded.
As it turned out, the dealer just happened to have a slightly used car on the lot, one that wasn’t exactly what we wanted, but had the advantage of being… drivable. We traded cars on the spot, and made it to St. Louis in time for the first pitch. I know what you’re thinking. Yes, I’m sure we didn’t make a great trade.
Not only that, but our cash flow was a flood. In the wrong direction. Even worse, our year of living beyond our means wasn’t over.
We were gone for a couple of days in early December. When we returned, Julie noticed that the basement had a funny smell. Which was coming from our 60-year-old boiler. The next day, the HVAC guy sent a young man to our house with a carbon monoxide meter. It measured 200 parts per million in the vicinity of the boiler. That’s a level that, if it were present throughout the house, would mean that we could go to bed, but waking up might be a problem.
Our new boiler cost $15,000, but it’s very efficient, and has the even more important advantage of being nonlethal.
Some lessons learned, I guess. Even though it might have been a less-than-ideal financial decision, it was good to be able to buy a car and write a check for the purchase. It’s okay to have cash on hand, even if it isn’t earning a very good return. Cash made our life better, and the convenience of being mobile was well worth whatever our lousy negotiating position cost us.
Plans and budgets are nice, but sometimes life interferes. It’s good to prepare for the worst. We’ll rebuild our cash reserves. We’ll also install a carbon monoxide alarm. Julie’s nose is a wonderful instrument, but it’s good to have a backup plan.
Blake Hurst farms and grows flowers with his family in northwest Missouri. He and his wife Julie have three children. Their oldest daughter and both sons-in-law are involved in the family business, growing corn and soybeans, and shipping flowers to four states. Their middle daughter is the chief operating officer for a small hospital. Their youngest, a son, is a lawyer for the Department of Justice. Blake and Julie have six grandchildren. Blake is the former president of the Missouri Farm Bureau and a freelance writer. Check out his earlier articles.
Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
I don’t recall the author of the article I read here on HD, but one pearl of wisdom he offered I’ve made good use of in reframing the problem of “unfortunate expenses”. When we experience singular large hits or what seems to be a never ending accumulation of this and that expenses, a good perspective to remember is that this is part of the purpose of the money we have stored up. We don’t like the expenses but having the savings sure beats the heck out of not having the funds to cover these costs. (I’m not doing his article justice here).
Indeed, you had an extremely fortunate outcome regarding your defective boiler as CO is colorless and odorless. Glad all are OK!
My favorite line: “we could go to bed, but waking up might be a problem.”
Hi Blake,
Reading how last year went for you, you seemed to be reviewing our year. Two weeks in Greece in the late spring (consider visiting, it is quite inexpensive compared to other European countries), then in the fall mower repairs $750 (replacement would cost 2k), washer and dryer 2K, on demand water heater 2K, leaky sink 2K, snow blower which had a tuneup in the spring so it was ready in the fall $50, then the dashboard warning lights of our ‘13 Subaru lit up like a Christmas tree estimated $2,500 (looked at new cars but decided to wait until this year, but warning lights went off and it passed inspection).
Luckily though last year was very kind to our portfolio, so that plus the fact that despite the aggravation we can afford to pay the costs, we feel fortunate.
Hoping ‘24 is less exciting though!
The Cardinals gasped, sputtered, and died this season as well. Hopefully next season is better for them and financially for you!
Non-lethal HVAC is a beautiful thing. Hope your luck changes in 2024!
The Europe trip is one thing, and I’m glad you got to do it. The other two items seem like the cost of doing business if you’re going to drive an older car and live in an older home. I’m glad nothing awful happened in either case.
All in all I’d say you were lucky in 2023. No carbon monoxide detector ❓❓
Been there done that money wise so to speak.
Cash is paying about 5% these days, not bad.
For all the reasons you demonstrated we isolate funds and add to them regularly. Once money is in the vacation/travel fund or the emergency bill fund for example, it is there to stay for that purpose alone. If travel comes along there is no stress where the money comes from. If we need AC or water heater replaced as happened last year, that bill fund is tapped.
No budgeting as such, just a way to relieve stress when stuff comes along. To build up cash I occasionally turn off the reinvestment of interest and dividends in our brokerage account.
Thanks for sharing this, Dick. We’re in our first year after full time work so still ironing the kinks. My initial cash and savings buckets are similar to yours.
I’ve been playing with a spending and budgeting feature our bank created for the web version of their site. I don’t feel a need to budget but in this first year the spending analysis feature is helpful to find savings opportunities which were flying under the radar.
Your method of ‘budgeting’ is like ours.
We do keep track of income and expenses. But NOT by category. Most months expenses are below income.
And when we had to replace our entire HVAC stack it came from our emergency fund.
Hey … we’re retired and want to spoil our grandkiddies. And not think – too much – about money.
I agree. I don’t keep track, but I know what’s left in the accounts at the end of the month – after saving something and contributing to the grandchildren’s 529 accounts.
You’ve mentioned before continuing to have an emergency fund once retired. I hadn’t thought of it before, but now I think you’re right. Yes, you’re just taking money out of one fund rather than another, but it reduces stress to know that it’s there for the water heater/boiler/AC moments that are sure to happen.
Yes, it can be comforting. We contribute to the fund each month. That is one reason we have never paid a penny in credit card interest the 55 years we have been married. Of course, it’s a factor in current available spending money, but I think that’s ok.