A pick up on living on $30,000 a year.

[hnzw_rui]

Tangent - not sure if we can "engineer" our MAGI when pension income by itself will put us well over 250% of FPL, before even considering other sources of income. Something else to study. If we can work it out it will certainly help, but for now we are planning for the "worst case".

Ah, if there's pension income, then not really much choice unless you've got tons of capital losses (not exactly something I'd want to have).

 

[NW-Bound]

... what kills is big purchases, not piss-ant stuff like a couple of burritos.

... Unless you have debt that you must get paid off, hobbies, cars, houses and expensive travel is what kills, not the stuff that costs<$100.

... go hog-wild in whatever grocery store turns you on, it really won't matter.

When looking to cut expenses, whether for real or hypothetical as my earlier exercise, it helps to have a list showing where your money goes. In my case, for doing no work other than to click "Update all accounts" in Quicken, I have a complete summary table of expenses to contemplate.

Once one has identified the big items, he can quickly determine what to do to reduce the expenses dramatically. But a person with a lower budget would not have the extraneous expenses that I had to start out with.

In my case, I have convinced myself I could go down to $33K with no hardship, but what would I have do to go down further? It is going to be much harder to squeeze out another $5K from a $33K budget than cutting out the top $65K from a bloated $98K one.

Our average livings expenses over the last 10 years (after subtracting all taxes, charitable contributions, and kids college expenses) are around $77K. I don't know if we could easily get to $33K. Beyond the above expenses, the top categories:

Medical - this would be the wild card
Food - probably scrimp some and cut that in half. Also some of that cost wa buying food for others.
Auto - share a single car if forced to, would cut costs down 40%.
Home supplies/repairs/improvements: maybe cut that by half, repairs only and minimal improvements.
Gifts to others - we tend to be generous now because we can, so could cut this by 90%.
Mortgage - would be tough to get it any lower, we have a 2.875% interest rate.
Utilities - this has been on a downward trend, so likely by payng more attention we could reduce another 10%.
Vacation - stick to day or non-plane trips and use bargain hotels/points programs to cut by 50%.

Hmmm... that would knock things down to $55K. Drop spending on computers, electronics, golf only at the $8 course , etc... I think we could squeeze down to $45K. Tough to go beyond that, but if we had no choice, we could figure out a way. Medical, of course, would be the biggest uncontrollable expense that would impact us.

We are empty nesters, and have no debts. We spend a bit of money on our homes, gifts and charity, travel, and little else. We are also healthy (other than my unexpected health problem which should be behind me now), so our $10K healthcare expense last year was mostly for insurance. Our auto expenses last year were $4200, and $2300 of that was for insurance for 3 cars and the RV (the RV operating and maintenance cost is listed under Travel).

But I would be fooling myself that my hypothetical $33K budget is sustainable. As noted, it allows for no home repair, nor auto replacement. I spent only $1200 on dental care last year, but our chompers could easily cost us more than 10X that suddenly.

So, in order to live on $33K, I would need further lifestyle changes in order to have room for non-recurrent expenses. I would move to a smaller home for lower operating and maintenance costs. I would not be able to host parties for my extended family, etc...

 

[Music Lover]

I can easily live on $30k a year...I'm doing it now. In fact, I never even made $30k until 15 years ago. My house is paid off and I'm an avid DIYer, so save big there. I also was lucky enough to choose an inexpensive hobby that outside of the one-time cost for music gear ($3000), costs me less than $100 a year.

 

[NW-Bound]

Yes, my mother's income is in the low $30K, and she lives quite well in a modern paid-for 1700 sq.ft. home by herself. She goes on a cruise each year, drives herself to the mall to look for clothes all the time (she likes to dress up), and buys more food than she can eat, so has to throw away quite a bit.

My mother just does not have some of the recurrent expenses that I have, even in the hypothetical $33K budget which allows me no travel. Why, her Medicare cost is a lot less than my $10K. For cell phone, my brother lets her piggyback on his plan (probably does not even charge her the $10), while I am paying $125/month, etc...

 

[daylatedollarshort]

$100/month for 2, with booze? Is that sustainable even without booze, meaning, is it the monthly average for the entire year?

I thought we were frugal, but Quicken said my grocery bills were $5665.16 for 2015. Now, that also includes sundries household items like laundry detergent and toiletries, etc..., but I am sure we eat and drink much more than $100/month. The above amount was the total that we spent in grocery stores. I do not break out non-food items because it would take too much manual work.

Sorry I should have been more clear - my main grocery shopping so far for the month was $100 when I made that post. That was for half the month. I will spend more than that before the month is out. We also usually eat out a fair bit, so that lowers the grocery bill. But I do price shop plus we have many warehouse, discount, outlet and ethnic stores in our area, so there is a lot of price competition.

 

[NW-Bound]

Thanks for clarifying. That makes more sense, as I cannot imagine myself being able to live on $100/month grocery for 2.