Reply to Is it ok not to have a financial plan?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]We don’t have a budget or track expenses either, but you need more in retirement than an employer 401k and a paid off house.[/quote]

Why?  We'll retire in a few years with about $3 million in our combined 401k's and about $1 million home equity.  How exactly will that not be enough???[/quote]

Is this OP?  If you're almost about to retire with $3 million and $1M he, yeah, that's probably enough.

For us with 25+ years to go, there's more uncertainty with inflation, social security, and healthcare. [/quote]

No, I'm not the OP.

Even with 25+ years to go, the equation is simple.  Max your tax deferred retirement savings and live within your means, and you'll be fine.  I always saved at least 10% of salary from my first professional job at around 23, and moved up to max contributions around 20 years ago when the employee contribution limit was around $10k and increased it as the limit was increased.  That formula is good enough for most.

We don't have a budget and consider it a somewhat meaningless exercise if you are simply living within your means.   Most household expenses are somewhat fixed and/or uncontrollable.  You can't exactly cut back on your mortgage payment or how much you spend on electricity, or even gasoline or auto repair.  If you save off the top, and most of your expenses are somewhat fixed, just spend what's left like drunken sailors!  Who cares?  :)[/quote]

I sort of agree with this but I do think it is worthwhile to draw up a loose framework of a budget before you buy a house and include any significant upcoming expenses (i.e. we factored in that we would have one daycare payment soon and eventually two daycare payments).  I think using a ratio or some quick metric for what you can afford in a home is a mistake since people have such variability with spending.  At this point we don't have a budget per se as we're fairly minimal spenders.[/quote]

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