Hi Ben,
I stopped using variable budgets simply because it was a timedrain to keep updating them when my regular budget changed and that reflected a change I needed to make in three other budgets each time too. I now just have a single personal budget and one for FIRE.
My budget is comfortable, rather than bare bones or luxury. It is essentially the same as now, sans mortgage, more for medical (drugs and long term care insurance) and less for clothing. Everything else is roughly the same.
Within the budget I know that I would have the flexibility during FIRE to cut out vacations, put off redecorating the home, replacing applianced etc if I needed to reduce the budget because the market was down for an extended period of time. I plan to have a sizable cash buffer to avoid selling shares when they are below their intrinsic value, but I would still want to adopt some of gummy's approach in reducing spending during bad periods just for peace of mind.
One variable on that could be accounting for that possibility just after FIRE and putting aside an extra amount of cash to privately fund travel over the first five years whether you've hit a bad spot or not. Keeping it completely seperate. This would of course require that you have more for retirement but might avoid the need to cut travel to nothing just at the point where you've quit work with grand plans. Of course, on the other hand, you would have to work extra years to build up such a fund in the first place, so it is a bit of a crap shoot!
Petey
ben wrote: Some of you are already retired, and some of us are on our way to FIRE.
No matter what it would be interesting to see have you are planning to implement your decided SWR/your best guess (no formulas needed!) on RANGE(no specifics!
) of same.
Personally I believe I will use 3 budgets (basic 2-3% w/r, good 4%, very good 5%) being very flexible as to adjusting same for actual market results on my nest egg. Maybe in line with Gummy's Sensible w/r method, and for sure directly related to the market results/w. upper limits.
I am currently practicing LBYM (live below your means) fairly well, and at FIRE I believe I will be able to adjust up/down with in a resonable range without affecting my happiness too much. As I and Ken have mentioned before; I actually feel BETTER spending less when markets are down, than just blindly pulling a set % + inflation every year.
LBYM is easier than I first expected - the main thing for me is to stop thinking in "wants" and instead in "needs". Added benefit is less "stuff" cluttering my life/needing maintenance Etc. Big expenses are re-considered more than before (do I have something covering my need already? old 25 Inch TV OK rather than new flat screen?/will the new purchase make me happier?).
Naturally the above implies that one would need room to maneuvre spending down to 2% - and further I will have to re-calculate size of nest egg should family/children suddenly appear
but that is a different story.
As to the inflation adjustment I also believe that on a personal basis it is easier to keep same low as long as willing to compromise a bit (E.g. to stay on the basic budget). Orange Juice to expensive; get Tang instead, new Pocket PC double price? buy last year model, beef price gone through the roof?, make chicken steaks instead. You get the picture...
As discussed before I could also move to another country to ensure lower cost of living - extreme me!