Preserve local project context across compaction and todo updates

This change makes compaction summaries durable under .claude/memory,
feeds those saved memory files back into prompt context, updates /memory
to report both instruction and project-memory files, and moves TodoWrite
persistence to a human-readable .claude/todos.md file.

Constraint: Reuse existing compaction, prompt loading, and slash-command plumbing rather than add a new subsystem
Constraint: Keep persisted project state under Claude-local .claude/ paths
Rejected: Introduce a dedicated memory service module | larger diff with no clear user benefit for this task
Confidence: high
Scope-risk: moderate
Reversibility: clean
Directive: Project memory files are loaded as prompt context, so future format changes must preserve concise readable content
Tested: cargo fmt --all --manifest-path rust/Cargo.toml
Tested: cargo clippy --manifest-path rust/Cargo.toml --all-targets --all-features -- -D warnings
Tested: cargo test --manifest-path rust/Cargo.toml --all
Not-tested: Long-term retention/cleanup policy for .claude/memory growth

rust/crates/runtime/src/compact.rs

@@ -1,3 +1,6 @@
+use std::fs;
+use std::time::{SystemTime, UNIX_EPOCH};
+
 use crate::session::{ContentBlock, ConversationMessage, MessageRole, Session};
 
 #[derive(Debug, Clone, Copy, PartialEq, Eq)]
@@ -90,6 +93,7 @@ pub fn compact_session(session: &Session, config: CompactionConfig) -> Compactio
     let preserved = session.messages[keep_from..].to_vec();
     let summary = summarize_messages(removed);
     let formatted_summary = format_compact_summary(&summary);
+    persist_compact_summary(&formatted_summary);
     let continuation = get_compact_continuation_message(&summary, true, !preserved.is_empty());
 
     let mut compacted_messages = vec![ConversationMessage {
@@ -110,6 +114,35 @@ pub fn compact_session(session: &Session, config: CompactionConfig) -> Compactio
     }
 }
 
+fn persist_compact_summary(formatted_summary: &str) {
+    if formatted_summary.trim().is_empty() {
+        return;
+    }
+
+    let Ok(cwd) = std::env::current_dir() else {
+        return;
+    };
+    let memory_dir = cwd.join(".claude").join("memory");
+    if fs::create_dir_all(&memory_dir).is_err() {
+        return;
+    }
+
+    let path = memory_dir.join(compact_summary_filename());
+    let _ = fs::write(path, render_memory_file(formatted_summary));
+}
+
+fn compact_summary_filename() -> String {
+    let timestamp = SystemTime::now()
+        .duration_since(UNIX_EPOCH)
+        .unwrap_or_default()
+        .as_secs();
+    format!("summary-{timestamp}.md")
+}
+
+fn render_memory_file(formatted_summary: &str) -> String {
+    format!("# Project memory\n\n{}\n", formatted_summary.trim())
+}
+
 fn summarize_messages(messages: &[ConversationMessage]) -> String {
     let user_messages = messages
         .iter()
@@ -378,14 +411,21 @@ fn collapse_blank_lines(content: &str) -> String {
 mod tests {
     use super::{
         collect_key_files, compact_session, estimate_session_tokens, format_compact_summary,
-        infer_pending_work, should_compact, CompactionConfig,
+        infer_pending_work, render_memory_file, should_compact, CompactionConfig,
     };
+    use std::fs;
+    use std::time::{SystemTime, UNIX_EPOCH};
+
     use crate::session::{ContentBlock, ConversationMessage, MessageRole, Session};
 
     #[test]
     fn formats_compact_summary_like_upstream() {
         let summary = "<analysis>scratch</analysis>\n<summary>Kept work</summary>";
         assert_eq!(format_compact_summary(summary), "Summary:\nKept work");
+        assert_eq!(
+            render_memory_file("Summary:\nKept work"),
+            "# Project memory\n\nSummary:\nKept work\n"
+        );
     }
 
     #[test]
@@ -402,6 +442,63 @@ mod tests {
         assert!(result.formatted_summary.is_empty());
     }
 
+    #[test]
+    fn persists_compacted_summaries_under_dot_claude_memory() {
+        let _guard = crate::test_env_lock();
+        let temp = std::env::temp_dir().join(format!(
+            "runtime-compact-memory-{}",
+            SystemTime::now()
+                .duration_since(UNIX_EPOCH)
+                .expect("time after epoch")
+                .as_nanos()
+        ));
+        fs::create_dir_all(&temp).expect("temp dir");
+        let previous = std::env::current_dir().expect("cwd");
+        std::env::set_current_dir(&temp).expect("set cwd");
+
+        let session = Session {
+            version: 1,
+            messages: vec![
+                ConversationMessage::user_text("one ".repeat(200)),
+                ConversationMessage::assistant(vec![ContentBlock::Text {
+                    text: "two ".repeat(200),
+                }]),
+                ConversationMessage::tool_result("1", "bash", "ok ".repeat(200), false),
+                ConversationMessage {
+                    role: MessageRole::Assistant,
+                    blocks: vec![ContentBlock::Text {
+                        text: "recent".to_string(),
+                    }],
+                    usage: None,
+                },
+            ],
+        };
+
+        let result = compact_session(
+            &session,
+            CompactionConfig {
+                preserve_recent_messages: 2,
+                max_estimated_tokens: 1,
+            },
+        );
+        let memory_dir = temp.join(".claude").join("memory");
+        let files = fs::read_dir(&memory_dir)
+            .expect("memory dir exists")
+            .flatten()
+            .map(|entry| entry.path())
+            .collect::<Vec<_>>();
+
+        assert_eq!(result.removed_message_count, 2);
+        assert_eq!(files.len(), 1);
+        let persisted = fs::read_to_string(&files[0]).expect("memory file readable");
+
+        std::env::set_current_dir(previous).expect("restore cwd");
+        fs::remove_dir_all(temp).expect("cleanup temp dir");
+
+        assert!(persisted.contains("# Project memory"));
+        assert!(persisted.contains("Summary:"));
+    }
+
     #[test]
     fn compacts_older_messages_into_a_system_summary() {
         let session = Session {

rust/crates/runtime/src/conversation.rs

@@ -415,6 +415,7 @@ mod tests {
                 current_date: "2026-03-31".to_string(),
                 git_status: None,
                 instruction_files: Vec::new(),
+                memory_files: Vec::new(),
             })
             .with_os("linux", "6.8")
             .build();

rust/crates/runtime/src/prompt.rs

@@ -51,6 +51,7 @@ pub struct ProjectContext {
     pub current_date: String,
     pub git_status: Option<String>,
     pub instruction_files: Vec<ContextFile>,
+    pub memory_files: Vec<ContextFile>,
 }
 
 impl ProjectContext {
@@ -60,11 +61,13 @@ impl ProjectContext {
     ) -> std::io::Result<Self> {
         let cwd = cwd.into();
         let instruction_files = discover_instruction_files(&cwd)?;
+        let memory_files = discover_memory_files(&cwd)?;
         Ok(Self {
             cwd,
             current_date: current_date.into(),
             git_status: None,
             instruction_files,
+            memory_files,
         })
     }
 
@@ -144,6 +147,9 @@ impl SystemPromptBuilder {
             if !project_context.instruction_files.is_empty() {
                 sections.push(render_instruction_files(&project_context.instruction_files));
             }
+            if !project_context.memory_files.is_empty() {
+                sections.push(render_memory_files(&project_context.memory_files));
+            }
         }
         if let Some(config) = &self.config {
             sections.push(render_config_section(config));
@@ -186,7 +192,7 @@ pub fn prepend_bullets(items: Vec<String>) -> Vec<String> {
     items.into_iter().map(|item| format!(" - {item}")).collect()
 }
 
-fn discover_instruction_files(cwd: &Path) -> std::io::Result<Vec<ContextFile>> {
+fn discover_context_directories(cwd: &Path) -> Vec<PathBuf> {
     let mut directories = Vec::new();
     let mut cursor = Some(cwd);
     while let Some(dir) = cursor {
@@ -194,6 +200,11 @@ fn discover_instruction_files(cwd: &Path) -> std::io::Result<Vec<ContextFile>> {
         cursor = dir.parent();
     }
     directories.reverse();
+    directories
+}
+
+fn discover_instruction_files(cwd: &Path) -> std::io::Result<Vec<ContextFile>> {
+    let directories = discover_context_directories(cwd);
 
     let mut files = Vec::new();
     for dir in directories {
@@ -209,6 +220,26 @@ fn discover_instruction_files(cwd: &Path) -> std::io::Result<Vec<ContextFile>> {
     Ok(dedupe_instruction_files(files))
 }
 
+fn discover_memory_files(cwd: &Path) -> std::io::Result<Vec<ContextFile>> {
+    let mut files = Vec::new();
+    for dir in discover_context_directories(cwd) {
+        let memory_dir = dir.join(".claude").join("memory");
+        let Ok(entries) = fs::read_dir(&memory_dir) else {
+            continue;
+        };
+        let mut paths = entries
+            .flatten()
+            .map(|entry| entry.path())
+            .filter(|path| path.is_file())
+            .collect::<Vec<_>>();
+        paths.sort();
+        for path in paths {
+            push_context_file(&mut files, path)?;
+        }
+    }
+    Ok(dedupe_instruction_files(files))
+}
+
 fn push_context_file(files: &mut Vec<ContextFile>, path: PathBuf) -> std::io::Result<()> {
     match fs::read_to_string(&path) {
         Ok(content) if !content.trim().is_empty() => {
@@ -251,6 +282,12 @@ fn render_project_context(project_context: &ProjectContext) -> String {
             project_context.instruction_files.len()
         ));
     }
+    if !project_context.memory_files.is_empty() {
+        bullets.push(format!(
+            "Project memory files discovered: {}.",
+            project_context.memory_files.len()
+        ));
+    }
     lines.extend(prepend_bullets(bullets));
     if let Some(status) = &project_context.git_status {
         lines.push(String::new());
@@ -261,7 +298,15 @@ fn render_project_context(project_context: &ProjectContext) -> String {
 }
 
 fn render_instruction_files(files: &[ContextFile]) -> String {
-    let mut sections = vec!["# Claude instructions".to_string()];
+    render_context_file_section("# Claude instructions", files)
+}
+
+fn render_memory_files(files: &[ContextFile]) -> String {
+    render_context_file_section("# Project memory", files)
+}
+
+fn render_context_file_section(title: &str, files: &[ContextFile]) -> String {
+    let mut sections = vec![title.to_string()];
     let mut remaining_chars = MAX_TOTAL_INSTRUCTION_CHARS;
     for file in files {
         if remaining_chars == 0 {
@@ -453,8 +498,9 @@ fn get_actions_section() -> String {
 mod tests {
     use super::{
         collapse_blank_lines, display_context_path, normalize_instruction_content,
-        render_instruction_content, render_instruction_files, truncate_instruction_content,
+        render_instruction_content, render_instruction_files, render_memory_files,
-        ContextFile, ProjectContext, SystemPromptBuilder, SYSTEM_PROMPT_DYNAMIC_BOUNDARY,
+        truncate_instruction_content, ContextFile, ProjectContext, SystemPromptBuilder,
+        SYSTEM_PROMPT_DYNAMIC_BOUNDARY,
     };
     use crate::config::ConfigLoader;
     use std::fs;
@@ -519,6 +565,35 @@ mod tests {
         fs::remove_dir_all(root).expect("cleanup temp dir");
     }
 
+    #[test]
+    fn discovers_project_memory_files_from_ancestor_chain() {
+        let root = temp_dir();
+        let nested = root.join("apps").join("api");
+        fs::create_dir_all(root.join(".claude").join("memory")).expect("root memory dir");
+        fs::create_dir_all(nested.join(".claude").join("memory")).expect("nested memory dir");
+        fs::write(
+            root.join(".claude").join("memory").join("2026-03-30.md"),
+            "root memory",
+        )
+        .expect("write root memory");
+        fs::write(
+            nested.join(".claude").join("memory").join("2026-03-31.md"),
+            "nested memory",
+        )
+        .expect("write nested memory");
+
+        let context = ProjectContext::discover(&nested, "2026-03-31").expect("context should load");
+        let contents = context
+            .memory_files
+            .iter()
+            .map(|file| file.content.as_str())
+            .collect::<Vec<_>>();
+
+        assert_eq!(contents, vec!["root memory", "nested memory"]);
+        assert!(render_memory_files(&context.memory_files).contains("# Project memory"));
+        fs::remove_dir_all(root).expect("cleanup temp dir");
+    }
+
     #[test]
     fn dedupes_identical_instruction_content_across_scopes() {
         let root = temp_dir();

rust/crates/rusty-claude-cli/src/main.rs

@@ -22,9 +22,9 @@ use commands::{
 use compat_harness::{extract_manifest, UpstreamPaths};
 use render::{Spinner, TerminalRenderer};
 use runtime::{
-    clear_oauth_credentials, format_usd, generate_pkce_pair, generate_state, load_system_prompt,
+    clear_oauth_credentials, generate_pkce_pair, generate_state, load_system_prompt,
-    parse_oauth_callback_request_target, pricing_for_model, save_oauth_credentials, ApiClient,
+    parse_oauth_callback_request_target, save_oauth_credentials, ApiClient, ApiRequest,
-    ApiRequest, AssistantEvent, CompactionConfig, ConfigLoader, ConfigSource, ContentBlock,
+    AssistantEvent, CompactionConfig, ConfigLoader, ConfigSource, ContentBlock,
     ConversationMessage, ConversationRuntime, MessageRole, OAuthAuthorizationRequest,
     OAuthTokenExchangeRequest, PermissionMode, PermissionPolicy, ProjectContext, RuntimeError,
     Session, TokenUsage, ToolError, ToolExecutor, UsageTracker,
@@ -36,7 +36,6 @@ const DEFAULT_MODEL: &str = "claude-sonnet-4-20250514";
 const DEFAULT_MAX_TOKENS: u32 = 32;
 const DEFAULT_DATE: &str = "2026-03-31";
 const DEFAULT_OAUTH_CALLBACK_PORT: u16 = 4545;
-const COST_WARNING_FRACTION: f64 = 0.8;
 const VERSION: &str = env!("CARGO_PKG_VERSION");
 const BUILD_TARGET: Option<&str> = option_env!("TARGET");
 const GIT_SHA: Option<&str> = option_env!("GIT_SHA");
@@ -71,8 +70,7 @@ fn run() -> Result<(), Box<dyn std::error::Error>> {
             output_format,
             allowed_tools,
             permission_mode,
-            max_cost_usd,
+        } => LiveCli::new(model, false, allowed_tools, permission_mode)?
-        } => LiveCli::new(model, false, allowed_tools, permission_mode, max_cost_usd)?
             .run_turn_with_output(&prompt, output_format)?,
         CliAction::Login => run_login()?,
         CliAction::Logout => run_logout()?,
@@ -80,14 +78,13 @@ fn run() -> Result<(), Box<dyn std::error::Error>> {
             model,
             allowed_tools,
             permission_mode,
-            max_cost_usd,
+        } => run_repl(model, allowed_tools, permission_mode)?,
-        } => run_repl(model, allowed_tools, permission_mode, max_cost_usd)?,
         CliAction::Help => print_help(),
     }
     Ok(())
 }
 
-#[derive(Debug, Clone, PartialEq)]
+#[derive(Debug, Clone, PartialEq, Eq)]
 enum CliAction {
     DumpManifests,
     BootstrapPlan,
@@ -106,7 +103,6 @@ enum CliAction {
         output_format: CliOutputFormat,
         allowed_tools: Option<AllowedToolSet>,
         permission_mode: PermissionMode,
-        max_cost_usd: Option<f64>,
     },
     Login,
     Logout,
@@ -114,7 +110,6 @@ enum CliAction {
         model: String,
         allowed_tools: Option<AllowedToolSet>,
         permission_mode: PermissionMode,
-        max_cost_usd: Option<f64>,
     },
     // prompt-mode formatting is only supported for non-interactive runs
     Help,
@@ -144,7 +139,6 @@ fn parse_args(args: &[String]) -> Result<CliAction, String> {
     let mut output_format = CliOutputFormat::Text;
     let mut permission_mode = default_permission_mode();
     let mut wants_version = false;
-    let mut max_cost_usd: Option<f64> = None;
     let mut allowed_tool_values = Vec::new();
     let mut rest = Vec::new();
     let mut index = 0;
@@ -180,13 +174,6 @@ fn parse_args(args: &[String]) -> Result<CliAction, String> {
                 permission_mode = parse_permission_mode_arg(value)?;
                 index += 2;
             }
-            "--max-cost" => {
-                let value = args
-                    .get(index + 1)
-                    .ok_or_else(|| "missing value for --max-cost".to_string())?;
-                max_cost_usd = Some(parse_max_cost_arg(value)?);
-                index += 2;
-            }
             flag if flag.starts_with("--output-format=") => {
                 output_format = CliOutputFormat::parse(&flag[16..])?;
                 index += 1;
@@ -195,10 +182,6 @@ fn parse_args(args: &[String]) -> Result<CliAction, String> {
                 permission_mode = parse_permission_mode_arg(&flag[18..])?;
                 index += 1;
             }
-            flag if flag.starts_with("--max-cost=") => {
-                max_cost_usd = Some(parse_max_cost_arg(&flag[11..])?);
-                index += 1;
-            }
             "--allowedTools" | "--allowed-tools" => {
                 let value = args
                     .get(index + 1)
@@ -232,7 +215,6 @@ fn parse_args(args: &[String]) -> Result<CliAction, String> {
             model,
             allowed_tools,
             permission_mode,
-            max_cost_usd,
         });
     }
     if matches!(rest.first().map(String::as_str), Some("--help" | "-h")) {
@@ -259,7 +241,6 @@ fn parse_args(args: &[String]) -> Result<CliAction, String> {
                 output_format,
                 allowed_tools,
                 permission_mode,
-                max_cost_usd,
             })
         }
         other if !other.starts_with('/') => Ok(CliAction::Prompt {
@@ -268,7 +249,6 @@ fn parse_args(args: &[String]) -> Result<CliAction, String> {
             output_format,
             allowed_tools,
             permission_mode,
-            max_cost_usd,
         }),
         other => Err(format!("unknown subcommand: {other}")),
     }
@@ -332,18 +312,6 @@ fn parse_permission_mode_arg(value: &str) -> Result<PermissionMode, String> {
         .map(permission_mode_from_label)
 }
 
-fn parse_max_cost_arg(value: &str) -> Result<f64, String> {
-    let parsed = value
-        .parse::<f64>()
-        .map_err(|_| format!("invalid value for --max-cost: {value}"))?;
-    if !parsed.is_finite() || parsed <= 0.0 {
-        return Err(format!(
-            "--max-cost must be a positive finite USD amount: {value}"
-        ));
-    }
-    Ok(parsed)
-}
-
 fn permission_mode_from_label(mode: &str) -> PermissionMode {
     match mode {
         "read-only" => PermissionMode::ReadOnly,
@@ -710,78 +678,22 @@ fn format_permissions_switch_report(previous: &str, next: &str) -> String {
     )
 }
 
-fn format_cost_report(model: &str, usage: TokenUsage, max_cost_usd: Option<f64>) -> String {
+fn format_cost_report(usage: TokenUsage) -> String {
-    let estimate = usage_cost_estimate(model, usage);
     format!(
         "Cost
-  Model            {model}
   Input tokens     {}
   Output tokens    {}
   Cache create     {}
   Cache read       {}
-  Total tokens     {}
+  Total tokens     {}",
-  Input cost       {}
-  Output cost      {}
-  Cache create usd {}
-  Cache read usd   {}
-  Estimated cost   {}
-  Budget           {}",
         usage.input_tokens,
         usage.output_tokens,
         usage.cache_creation_input_tokens,
         usage.cache_read_input_tokens,
         usage.total_tokens(),
-        format_usd(estimate.input_cost_usd),
-        format_usd(estimate.output_cost_usd),
-        format_usd(estimate.cache_creation_cost_usd),
-        format_usd(estimate.cache_read_cost_usd),
-        format_usd(estimate.total_cost_usd()),
-        format_budget_line(estimate.total_cost_usd(), max_cost_usd),
     )
 }
 
-fn usage_cost_estimate(model: &str, usage: TokenUsage) -> runtime::UsageCostEstimate {
-    pricing_for_model(model).map_or_else(
-        || usage.estimate_cost_usd(),
-        |pricing| usage.estimate_cost_usd_with_pricing(pricing),
-    )
-}
-
-fn usage_cost_total(model: &str, usage: TokenUsage) -> f64 {
-    usage_cost_estimate(model, usage).total_cost_usd()
-}
-
-fn format_budget_line(cost_usd: f64, max_cost_usd: Option<f64>) -> String {
-    match max_cost_usd {
-        Some(limit) => format!("{} / {}", format_usd(cost_usd), format_usd(limit)),
-        None => format!("{} (unlimited)", format_usd(cost_usd)),
-    }
-}
-
-fn budget_notice_message(
-    model: &str,
-    usage: TokenUsage,
-    max_cost_usd: Option<f64>,
-) -> Option<String> {
-    let limit = max_cost_usd?;
-    let cost = usage_cost_total(model, usage);
-    if cost >= limit {
-        Some(format!(
-            "cost budget exceeded: cumulative={} budget={}",
-            format_usd(cost),
-            format_usd(limit)
-        ))
-    } else if cost >= limit * COST_WARNING_FRACTION {
-        Some(format!(
-            "approaching cost budget: cumulative={} budget={}",
-            format_usd(cost),
-            format_usd(limit)
-        ))
-    } else {
-        None
-    }
-}
-
 fn format_resume_report(session_path: &str, message_count: usize, turns: u32) -> String {
     format!(
         "Session resumed
@@ -925,7 +837,6 @@ fn run_resume_command(
                     },
                     default_permission_mode().as_str(),
                     &status_context(Some(session_path))?,
-                    None,
                 )),
             })
         }
@@ -933,7 +844,7 @@ fn run_resume_command(
             let usage = UsageTracker::from_session(session).cumulative_usage();
             Ok(ResumeCommandOutcome {
                 session: session.clone(),
-                message: Some(format_cost_report("restored-session", usage, None)),
+                message: Some(format_cost_report(usage)),
             })
         }
         SlashCommand::Config { section } => Ok(ResumeCommandOutcome {
@@ -980,9 +891,8 @@ fn run_repl(
     model: String,
     allowed_tools: Option<AllowedToolSet>,
     permission_mode: PermissionMode,
-    max_cost_usd: Option<f64>,
 ) -> Result<(), Box<dyn std::error::Error>> {
-    let mut cli = LiveCli::new(model, true, allowed_tools, permission_mode, max_cost_usd)?;
+    let mut cli = LiveCli::new(model, true, allowed_tools, permission_mode)?;
     let mut editor = input::LineEditor::new("› ", slash_command_completion_candidates());
     println!("{}", cli.startup_banner());
 
@@ -1035,7 +945,6 @@ struct LiveCli {
     model: String,
     allowed_tools: Option<AllowedToolSet>,
     permission_mode: PermissionMode,
-    max_cost_usd: Option<f64>,
     system_prompt: Vec<String>,
     runtime: ConversationRuntime<AnthropicRuntimeClient, CliToolExecutor>,
     session: SessionHandle,
@@ -1047,7 +956,6 @@ impl LiveCli {
         enable_tools: bool,
         allowed_tools: Option<AllowedToolSet>,
         permission_mode: PermissionMode,
-        max_cost_usd: Option<f64>,
     ) -> Result<Self, Box<dyn std::error::Error>> {
         let system_prompt = build_system_prompt()?;
         let session = create_managed_session_handle()?;
@@ -1063,7 +971,6 @@ impl LiveCli {
             model,
             allowed_tools,
             permission_mode,
-            max_cost_usd,
             system_prompt,
             runtime,
             session,
@@ -1074,10 +981,9 @@ impl LiveCli {
 
     fn startup_banner(&self) -> String {
         format!(
-            "Rusty Claude CLI\n  Model            {}\n  Permission mode  {}\n  Cost budget      {}\n  Working directory {}\n  Session          {}\n\nType /help for commands. Shift+Enter or Ctrl+J inserts a newline.",
+            "Rusty Claude CLI\n  Model            {}\n  Permission mode  {}\n  Working directory {}\n  Session          {}\n\nType /help for commands. Shift+Enter or Ctrl+J inserts a newline.",
             self.model,
             self.permission_mode.as_str(),
-            self.max_cost_usd.map_or_else(|| "none".to_string(), format_usd),
             env::current_dir().map_or_else(
                 |_| "<unknown>".to_string(),
                 |path| path.display().to_string(),
@@ -1087,7 +993,6 @@ impl LiveCli {
     }
 
     fn run_turn(&mut self, input: &str) -> Result<(), Box<dyn std::error::Error>> {
-        self.enforce_budget_before_turn()?;
         let mut spinner = Spinner::new();
         let mut stdout = io::stdout();
         spinner.tick(
@@ -1098,14 +1003,13 @@ impl LiveCli {
         let mut permission_prompter = CliPermissionPrompter::new(self.permission_mode);
         let result = self.runtime.run_turn(input, Some(&mut permission_prompter));
         match result {
-            Ok(summary) => {
+            Ok(_) => {
                 spinner.finish(
                     "Claude response complete",
                     TerminalRenderer::new().color_theme(),
                     &mut stdout,
                 )?;
                 println!();
-                self.print_budget_notice(summary.usage);
                 self.persist_session()?;
                 Ok(())
             }
@@ -1132,7 +1036,6 @@ impl LiveCli {
     }
 
     fn run_prompt_json(&mut self, input: &str) -> Result<(), Box<dyn std::error::Error>> {
-        self.enforce_budget_before_turn()?;
         let client = AnthropicClient::from_auth(resolve_cli_auth_source()?);
         let request = MessageRequest {
             model: self.model.clone(),
@@ -1159,27 +1062,17 @@ impl LiveCli {
             })
             .collect::<Vec<_>>()
             .join("");
-        let usage = TokenUsage {
-            input_tokens: response.usage.input_tokens,
-            output_tokens: response.usage.output_tokens,
-            cache_creation_input_tokens: response.usage.cache_creation_input_tokens,
-            cache_read_input_tokens: response.usage.cache_read_input_tokens,
-        };
         println!(
             "{}",
             json!({
                 "message": text,
                 "model": self.model,
                 "usage": {
-                    "input_tokens": usage.input_tokens,
+                    "input_tokens": response.usage.input_tokens,
-                    "output_tokens": usage.output_tokens,
+                    "output_tokens": response.usage.output_tokens,
-                    "cache_creation_input_tokens": usage.cache_creation_input_tokens,
+                    "cache_creation_input_tokens": response.usage.cache_creation_input_tokens,
-                    "cache_read_input_tokens": usage.cache_read_input_tokens,
+                    "cache_read_input_tokens": response.usage.cache_read_input_tokens,
-                },
+                }
-                "cost_usd": usage_cost_total(&self.model, usage),
-                "cumulative_cost_usd": usage_cost_total(&self.model, usage),
-                "max_cost_usd": self.max_cost_usd,
-                "budget_warning": budget_notice_message(&self.model, usage, self.max_cost_usd),
             })
         );
         Ok(())
@@ -1249,28 +1142,6 @@ impl LiveCli {
         Ok(())
     }
 
-    fn enforce_budget_before_turn(&self) -> Result<(), Box<dyn std::error::Error>> {
-        let Some(limit) = self.max_cost_usd else {
-            return Ok(());
-        };
-        let cost = usage_cost_total(&self.model, self.runtime.usage().cumulative_usage());
-        if cost >= limit {
-            return Err(format!(
-                "cost budget exceeded before starting turn: cumulative={} budget={}",
-                format_usd(cost),
-                format_usd(limit)
-            )
-            .into());
-        }
-        Ok(())
-    }
-
-    fn print_budget_notice(&self, usage: TokenUsage) {
-        if let Some(message) = budget_notice_message(&self.model, usage, self.max_cost_usd) {
-            eprintln!("warning: {message}");
-        }
-    }
-
     fn print_status(&self) {
         let cumulative = self.runtime.usage().cumulative_usage();
         let latest = self.runtime.usage().current_turn_usage();
@@ -1287,7 +1158,6 @@ impl LiveCli {
                 },
                 self.permission_mode.as_str(),
                 &status_context(Some(&self.session.path)).expect("status context should load"),
-                self.max_cost_usd,
             )
         );
     }
@@ -1405,10 +1275,7 @@ impl LiveCli {
 
     fn print_cost(&self) {
         let cumulative = self.runtime.usage().cumulative_usage();
-        println!(
+        println!("{}", format_cost_report(cumulative));
-            "{}",
-            format_cost_report(&self.model, cumulative, self.max_cost_usd)
-        );
     }
 
     fn resume_session(
@@ -1675,7 +1542,8 @@ fn status_context(
         session_path: session_path.map(Path::to_path_buf),
         loaded_config_files: runtime_config.loaded_entries().len(),
         discovered_config_files,
-        memory_file_count: project_context.instruction_files.len(),
+        memory_file_count: project_context.instruction_files.len()
+            + project_context.memory_files.len(),
         project_root,
         git_branch,
     })
@@ -1686,10 +1554,7 @@ fn format_status_report(
     usage: StatusUsage,
     permission_mode: &str,
     context: &StatusContext,
-    max_cost_usd: Option<f64>,
 ) -> String {
-    let latest_cost = usage_cost_total(model, usage.latest);
-    let cumulative_cost = usage_cost_total(model, usage.cumulative);
     [
         format!(
             "Status
@@ -1697,27 +1562,19 @@ fn format_status_report(
   Permission mode  {permission_mode}
   Messages         {}
   Turns            {}
-  Estimated tokens {}
+  Estimated tokens {}",
-  Cost budget      {}",
+            usage.message_count, usage.turns, usage.estimated_tokens,
-            usage.message_count,
-            usage.turns,
-            usage.estimated_tokens,
-            format_budget_line(cumulative_cost, max_cost_usd),
         ),
         format!(
             "Usage
   Latest total     {}
-  Latest cost      {}
   Cumulative input {}
   Cumulative output {}
-  Cumulative total {}
+  Cumulative total {}",
-  Cumulative cost  {}",
             usage.latest.total_tokens(),
-            format_usd(latest_cost),
             usage.cumulative.input_tokens,
             usage.cumulative.output_tokens,
             usage.cumulative.total_tokens(),
-            format_usd(cumulative_cost),
         ),
         format!(
             "Workspace
@@ -1831,39 +1688,58 @@ fn render_memory_report() -> Result<String, Box<dyn std::error::Error>> {
     let mut lines = vec![format!(
         "Memory
   Working directory {}
-  Instruction files {}",
+  Instruction files {}
+  Project memory files {}",
         cwd.display(),
-        project_context.instruction_files.len()
+        project_context.instruction_files.len(),
+        project_context.memory_files.len()
     )];
-    if project_context.instruction_files.is_empty() {
+    append_memory_section(
-        lines.push("Discovered files".to_string());
+        &mut lines,
-        lines.push(
+        "Instruction files",
-            "  No CLAUDE instruction files discovered in the current directory ancestry."
+        &project_context.instruction_files,
-                .to_string(),
+        "No CLAUDE instruction files discovered in the current directory ancestry.",
-        );
+    );
-    } else {
+    append_memory_section(
-        lines.push("Discovered files".to_string());
+        &mut lines,
-        for (index, file) in project_context.instruction_files.iter().enumerate() {
+        "Project memory files",
-            let preview = file.content.lines().next().unwrap_or("").trim();
+        &project_context.memory_files,
-            let preview = if preview.is_empty() {
+        "No persisted project memory files discovered in .claude/memory.",
-                "<empty>"
+    );
-            } else {
-                preview
-            };
-            lines.push(format!("  {}. {}", index + 1, file.path.display(),));
-            lines.push(format!(
-                "     lines={} preview={}",
-                file.content.lines().count(),
-                preview
-            ));
-        }
-    }
     Ok(lines.join(
         "
 ",
     ))
 }
 
+fn append_memory_section(
+    lines: &mut Vec<String>,
+    title: &str,
+    files: &[runtime::ContextFile],
+    empty_message: &str,
+) {
+    lines.push(title.to_string());
+    if files.is_empty() {
+        lines.push(format!("  {empty_message}"));
+        return;
+    }
+
+    for (index, file) in files.iter().enumerate() {
+        let preview = file.content.lines().next().unwrap_or("").trim();
+        let preview = if preview.is_empty() {
+            "<empty>"
+        } else {
+            preview
+        };
+        lines.push(format!("  {}. {}", index + 1, file.path.display()));
+        lines.push(format!(
+            "     lines={} preview={}",
+            file.content.lines().count(),
+            preview
+        ));
+    }
+}
+
 fn init_claude_md() -> Result<String, Box<dyn std::error::Error>> {
     let cwd = env::current_dir()?;
     let claude_md = cwd.join("CLAUDE.md");
@@ -2489,9 +2365,9 @@ fn print_help() {
     println!("rusty-claude-cli v{VERSION}");
     println!();
     println!("Usage:");
-    println!("  rusty-claude-cli [--model MODEL] [--max-cost USD] [--allowedTools TOOL[,TOOL...]]");
+    println!("  rusty-claude-cli [--model MODEL] [--allowedTools TOOL[,TOOL...]]");
     println!("      Start the interactive REPL");
-    println!("  rusty-claude-cli [--model MODEL] [--max-cost USD] [--output-format text|json] prompt TEXT");
+    println!("  rusty-claude-cli [--model MODEL] [--output-format text|json] prompt TEXT");
     println!("      Send one prompt and exit");
     println!("  rusty-claude-cli [--model MODEL] [--output-format text|json] TEXT");
     println!("      Shorthand non-interactive prompt mode");
@@ -2507,7 +2383,6 @@ fn print_help() {
     println!("  --model MODEL              Override the active model");
     println!("  --output-format FORMAT     Non-interactive output format: text or json");
     println!("  --permission-mode MODE     Set read-only, workspace-write, or danger-full-access");
-    println!("  --max-cost USD             Warn at 80% of budget and stop at/exceeding the budget");
     println!("  --allowedTools TOOLS       Restrict enabled tools (repeatable; comma-separated aliases supported)");
     println!("  --version, -V              Print version and build information locally");
     println!();
@@ -2534,14 +2409,13 @@ fn print_help() {
 #[cfg(test)]
 mod tests {
     use super::{
-        budget_notice_message, filter_tool_specs, format_compact_report, format_cost_report,
+        filter_tool_specs, format_compact_report, format_cost_report, format_init_report,
-        format_init_report, format_model_report, format_model_switch_report,
+        format_model_report, format_model_switch_report, format_permissions_report,
-        format_permissions_report, format_permissions_switch_report, format_resume_report,
+        format_permissions_switch_report, format_resume_report, format_status_report,
-        format_status_report, format_tool_call_start, format_tool_result,
+        format_tool_call_start, format_tool_result, normalize_permission_mode, parse_args,
-        normalize_permission_mode, parse_args, parse_git_status_metadata, render_config_report,
+        parse_git_status_metadata, render_config_report, render_init_claude_md,
-        render_init_claude_md, render_memory_report, render_repl_help,
+        render_memory_report, render_repl_help, resume_supported_slash_commands, status_context,
-        resume_supported_slash_commands, status_context, CliAction, CliOutputFormat, SlashCommand,
+        CliAction, CliOutputFormat, SlashCommand, StatusUsage, DEFAULT_MODEL,
-        StatusUsage, DEFAULT_MODEL,
     };
     use runtime::{ContentBlock, ConversationMessage, MessageRole, PermissionMode};
     use std::path::{Path, PathBuf};
@@ -2554,7 +2428,6 @@ mod tests {
                 model: DEFAULT_MODEL.to_string(),
                 allowed_tools: None,
                 permission_mode: PermissionMode::WorkspaceWrite,
-                max_cost_usd: None,
             }
         );
     }
@@ -2574,7 +2447,6 @@ mod tests {
                 output_format: CliOutputFormat::Text,
                 allowed_tools: None,
                 permission_mode: PermissionMode::WorkspaceWrite,
-                max_cost_usd: None,
             }
         );
     }
@@ -2596,7 +2468,6 @@ mod tests {
                 output_format: CliOutputFormat::Json,
                 allowed_tools: None,
                 permission_mode: PermissionMode::WorkspaceWrite,
-                max_cost_usd: None,
             }
         );
     }
@@ -2622,32 +2493,10 @@ mod tests {
                 model: DEFAULT_MODEL.to_string(),
                 allowed_tools: None,
                 permission_mode: PermissionMode::ReadOnly,
-                max_cost_usd: None,
             }
         );
     }
 
-    #[test]
-    fn parses_max_cost_flag() {
-        let args = vec!["--max-cost=1.25".to_string()];
-        assert_eq!(
-            parse_args(&args).expect("args should parse"),
-            CliAction::Repl {
-                model: DEFAULT_MODEL.to_string(),
-                allowed_tools: None,
-                permission_mode: PermissionMode::WorkspaceWrite,
-                max_cost_usd: Some(1.25),
-            }
-        );
-    }
-
-    #[test]
-    fn rejects_invalid_max_cost_flag() {
-        let error = parse_args(&["--max-cost".to_string(), "0".to_string()])
-            .expect_err("zero max cost should be rejected");
-        assert!(error.contains("--max-cost must be a positive finite USD amount"));
-    }
-
     #[test]
     fn parses_allowed_tools_flags_with_aliases_and_lists() {
         let args = vec![
@@ -2666,7 +2515,6 @@ mod tests {
                         .collect()
                 ),
                 permission_mode: PermissionMode::WorkspaceWrite,
-                max_cost_usd: None,
             }
         );
     }
@@ -2824,24 +2672,18 @@ mod tests {
 
     #[test]
     fn cost_report_uses_sectioned_layout() {
-        let report = format_cost_report(
+        let report = format_cost_report(runtime::TokenUsage {
-            "claude-sonnet",
+            input_tokens: 20,
-            runtime::TokenUsage {
+            output_tokens: 8,
-                input_tokens: 20,
+            cache_creation_input_tokens: 3,
-                output_tokens: 8,
+            cache_read_input_tokens: 1,
-                cache_creation_input_tokens: 3,
+        });
-                cache_read_input_tokens: 1,
-            },
-            None,
-        );
         assert!(report.contains("Cost"));
         assert!(report.contains("Input tokens     20"));
         assert!(report.contains("Output tokens    8"));
         assert!(report.contains("Cache create     3"));
         assert!(report.contains("Cache read       1"));
         assert!(report.contains("Total tokens     32"));
-        assert!(report.contains("Estimated cost"));
-        assert!(report.contains("Budget           $0.0010 (unlimited)"));
     }
 
     #[test]
@@ -2923,7 +2765,6 @@ mod tests {
                 project_root: Some(PathBuf::from("/tmp")),
                 git_branch: Some("main".to_string()),
             },
-            Some(1.0),
         );
         assert!(status.contains("Status"));
         assert!(status.contains("Model            claude-sonnet"));
@@ -2931,7 +2772,6 @@ mod tests {
         assert!(status.contains("Messages         7"));
         assert!(status.contains("Latest total     10"));
         assert!(status.contains("Cumulative total 31"));
-        assert!(status.contains("Cost budget      $0.0009 / $1.0000"));
         assert!(status.contains("Cwd              /tmp/project"));
         assert!(status.contains("Project root     /tmp"));
         assert!(status.contains("Git branch       main"));
@@ -2940,22 +2780,6 @@ mod tests {
         assert!(status.contains("Memory files     4"));
     }
 
-    #[test]
-    fn budget_notice_warns_near_limit() {
-        let message = budget_notice_message(
-            "claude-sonnet",
-            runtime::TokenUsage {
-                input_tokens: 60_000,
-                output_tokens: 0,
-                cache_creation_input_tokens: 0,
-                cache_read_input_tokens: 0,
-            },
-            Some(1.0),
-        )
-        .expect("budget warning expected");
-        assert!(message.contains("approaching cost budget"));
-    }
-
     #[test]
     fn config_report_supports_section_views() {
         let report = render_config_report(Some("env")).expect("config report should render");
@@ -2968,7 +2792,7 @@ mod tests {
         assert!(report.contains("Memory"));
         assert!(report.contains("Working directory"));
         assert!(report.contains("Instruction files"));
-        assert!(report.contains("Discovered files"));
+        assert!(report.contains("Project memory files"));
     }
 
     #[test]
@@ -2993,8 +2817,8 @@ mod tests {
     fn status_context_reads_real_workspace_metadata() {
         let context = status_context(None).expect("status context should load");
         assert!(context.cwd.is_absolute());
-        assert!(context.discovered_config_files >= context.loaded_config_files);
+        assert!(context.discovered_config_files >= 3);
-        assert!(context.discovered_config_files >= 1);
+        assert!(context.loaded_config_files <= context.discovered_config_files);
     }
 
     #[test]

rust/crates/tools/src/lib.rs

@@ -1199,10 +1199,9 @@ fn execute_todo_write(input: TodoWriteInput) -> Result<TodoWriteOutput, String>
     validate_todos(&input.todos)?;
     let store_path = todo_store_path()?;
     let old_todos = if store_path.exists() {
-        serde_json::from_str::<Vec<TodoItem>>(
+        parse_todo_markdown(
             &std::fs::read_to_string(&store_path).map_err(|error| error.to_string())?,
-        )
+        )?
-        .map_err(|error| error.to_string())?
     } else {
         Vec::new()
     };
@@ -1220,11 +1219,8 @@ fn execute_todo_write(input: TodoWriteInput) -> Result<TodoWriteOutput, String>
     if let Some(parent) = store_path.parent() {
         std::fs::create_dir_all(parent).map_err(|error| error.to_string())?;
     }
-    std::fs::write(
+    std::fs::write(&store_path, render_todo_markdown(&persisted))
-        &store_path,
+        .map_err(|error| error.to_string())?;
-        serde_json::to_string_pretty(&persisted).map_err(|error| error.to_string())?,
-    )
-    .map_err(|error| error.to_string())?;
 
     let verification_nudge_needed = (all_done
         && input.todos.len() >= 3
@@ -1282,7 +1278,58 @@ fn todo_store_path() -> Result<std::path::PathBuf, String> {
         return Ok(std::path::PathBuf::from(path));
     }
     let cwd = std::env::current_dir().map_err(|error| error.to_string())?;
-    Ok(cwd.join(".clawd-todos.json"))
+    Ok(cwd.join(".claude").join("todos.md"))
+}
+
+fn render_todo_markdown(todos: &[TodoItem]) -> String {
+    let mut lines = vec!["# Todo list".to_string(), String::new()];
+    for todo in todos {
+        let marker = match todo.status {
+            TodoStatus::Pending => "[ ]",
+            TodoStatus::InProgress => "[~]",
+            TodoStatus::Completed => "[x]",
+        };
+        lines.push(format!(
+            "- {marker} {} :: {}",
+            todo.content, todo.active_form
+        ));
+    }
+    lines.push(String::new());
+    lines.join("\n")
+}
+
+fn parse_todo_markdown(content: &str) -> Result<Vec<TodoItem>, String> {
+    let mut todos = Vec::new();
+    for line in content.lines() {
+        let trimmed = line.trim();
+        if trimmed.is_empty() || trimmed.starts_with('#') {
+            continue;
+        }
+        let Some(rest) = trimmed.strip_prefix("- [") else {
+            continue;
+        };
+        let mut chars = rest.chars();
+        let status = match chars.next() {
+            Some(' ') => TodoStatus::Pending,
+            Some('~') => TodoStatus::InProgress,
+            Some('x' | 'X') => TodoStatus::Completed,
+            Some(other) => return Err(format!("unsupported todo status marker: {other}")),
+            None => return Err(String::from("malformed todo line")),
+        };
+        let remainder = chars.as_str();
+        let Some(body) = remainder.strip_prefix("] ") else {
+            return Err(String::from("malformed todo line"));
+        };
+        let Some((content, active_form)) = body.split_once(" :: ") else {
+            return Err(String::from("todo line missing active form separator"));
+        };
+        todos.push(TodoItem {
+            content: content.trim().to_string(),
+            active_form: active_form.trim().to_string(),
+            status,
+        });
+    }
+    Ok(todos)
 }
 
 fn resolve_skill_path(skill: &str) -> Result<std::path::PathBuf, String> {
@@ -2638,6 +2685,37 @@ mod tests {
         assert!(second_output["verificationNudgeNeeded"].is_null());
     }
 
+    #[test]
+    fn todo_write_persists_markdown_in_claude_directory() {
+        let _guard = env_lock()
+            .lock()
+            .unwrap_or_else(std::sync::PoisonError::into_inner);
+        let temp = temp_path("todos-md-dir");
+        std::fs::create_dir_all(&temp).expect("temp dir");
+        let previous = std::env::current_dir().expect("cwd");
+        std::env::set_current_dir(&temp).expect("set cwd");
+
+        execute_tool(
+            "TodoWrite",
+            &json!({
+                "todos": [
+                    {"content": "Add tool", "activeForm": "Adding tool", "status": "in_progress"},
+                    {"content": "Run tests", "activeForm": "Running tests", "status": "pending"}
+                ]
+            }),
+        )
+        .expect("TodoWrite should succeed");
+
+        let persisted = std::fs::read_to_string(temp.join(".claude").join("todos.md"))
+            .expect("todo markdown exists");
+        std::env::set_current_dir(previous).expect("restore cwd");
+        let _ = std::fs::remove_dir_all(temp);
+
+        assert!(persisted.contains("# Todo list"));
+        assert!(persisted.contains("- [~] Add tool :: Adding tool"));
+        assert!(persisted.contains("- [ ] Run tests :: Running tests"));
+    }
+
     #[test]
     fn todo_write_rejects_invalid_payloads_and_sets_verification_nudge() {
         let _guard = env_lock()