If you had to...?

[Dreaming of Freedom]

We could barely live on $35,000 for a couple in a larger, average cost city in the midwest without altering our budget too much. Add in medical & dental expenses plus extra taxes and large purchases like cars, vans, and travel trailers, and we need more like $50,000. We currently live on about $28,000 with a paid off house not including medical expenses, income taxes, or large purchases (but does include small & large house repair expenses).

 

[W2R]

Since there is only one of me, I would not have to change much of anything in order to stay below $30K as defined by the rules given, although I would have to change one thing as dictated by this rule:

3. Assume that you would be starting fresh... no home, no other income.

Therefore I would have to add the costs of a nice two bedroom apartment that is currently for rent in my favorite nearby complex, instead of the property tax and other costs of living in my paid off dream home.

[-]I don't see any dental expenses in your overview, Imoldernu.[/-](oops, I see them now)

Otherwise I could spend as always and it would come to about $29K total including the apartment.

I WOULD NOT LIKE THAT!!! I love my dream house! But I could easily continue my present life just as it is, other than that (sigh, oh boo-hoo!).

 

[Gotadimple]

OP here:

Costs for two:
Car $1800
(Registration $120, Insurance $780, Gas $500, Repairs/Depreciation $800)
House $14,000
Rent or own/ incl. Taxes/Insurance/Utilities
Food $6,000
In and out
Phone, Internet, TV, Subscriptions $2600
Misc all else $100/wk. $5200

Total $29,700/yr

Add another $9,400 for our share of medicare, medicare supplement, dental, glasses and out of pocket expenses.

So you really need $40,000. Car Insurance, Utilities, and Food are different geographically. Someone else might need more than $40,000.

 

[Big_Hitter]

OP here:

When I posed the question, I hadn't figured my own actual expenses, so this was an exercise for me too. Below are my numbers "If I had to..." The actual current expenses that I would have if we did not still have our Florida and Woodhaven homes. Since we have Medicare, only the out of pocket expenses are counted (supplement and uncovered costs).

Costs for two:
Car $1800
(Registration $120, Insurance $780, Gas $500, Repairs/Depreciation $800)
House $14,000
Rent or own/ incl. Taxes/Insurance/Utilities
Food $6,000
In and out
Phone, Internet, TV, Subscriptions $2600
Misc all else $100/wk. $5200

Total $29,700/yr

Add another $9,400 for our share of medicare, medicare supplement, dental, glasses and out of pocket expenses.

where is the golf/beer budget?

 

[hnzw_rui]

So you really need $40,000. Car Insurance, Utilities, and Food are different geographically. Someone else might need more than $40,000.

Honestly, the biggest difference is likely housing and taxes. I expect compared to those two categories, the impact of cost difference for car insurance, utilities and food would be fairly minor.

Here's an interesting calculator for comparing cost of living:
http://www.bankrate.com/calculators/savings/moving-cost-of-living-calculator.aspx

 

[imoldernu]

It probably sounds odd that health costs were not included in the original "If I had to..." but between age, (Medicare) and employer paid, as in some government or private company benefits, and expensive private plans, it would be hard to make reasonable comparisons.

In any case, it was interesting to see how close most posts were in dollar calculations. Never hurts to consider fallback positions.

Honestly, the biggest difference is likely housing and taxes. I expect compared to those two categories, the impact of cost difference for car insurance, utilities and food would be fairly minor.

Here's an interesting calculator for comparing cost of living:
http://www.bankrate.com/calculators/...alculator.aspx

Yeah.. great website.... using the$50,000 cited in the calculator as the basis, the difference between Naperville IL and our equivalent town Rockford Il, is a difference of $11,000.

So yes... location, location, location.

 

[W2R]

If anyone is having problems figuring out how to live in a certain location for less than $30K, also Imoldernu's original post said,

4. Assume that [...] you have already made any necessary move to a new location.

So, there's an option.

 

[W2R]

It probably sounds odd that health costs were not included in the original "If I had to..." but between age, (Medicare) and employer paid, as in some government or private company benefits, and expensive private plans, it would be hard to make reasonable comparisons.

Yes, thanks. I didn't quite get it at first, but now I realize what you are doing. It's logical to just omit medical and income tax expenses because they vary so much from household to household.

In any case, it was interesting to see how close most posts were in dollar calculations. Never hurts to consider fallback positions.

Frank and I love to consider fallback positions like this. We often talk about how we could cut our budgets severely in case we had to for some reason. You never know what life can bring, and we worry less when we have thought through these things.

 

[Meadbh]

$30,000 US = $41,576.0 CDN today.

In 2015, my lifestyle expenses, excluding income tax, were $46,211 CDN, or $33,384.33 US. That included health insurance premiums ($864 CDN) and travel ($7,275). If I truly had an income < $38,000 CDN, I could avoid paying most income tax. So yes, I could do it. I wouldn't be too happy about it, though!

 

[Gumby]

I have in the past and I could again, but I don't want to.

 

[hnzw_rui]

It probably sounds odd that health costs were not included in the original "If I had to..." but between age, (Medicare) and employer paid, as in some government or private company benefits, and expensive private plans, it would be hard to make reasonable comparisons.

In any case, it was interesting to see how close most posts were in dollar calculations. Never hurts to consider fallback positions.

If not counting healthcare and income taxes, my individual expenses/personal support is already less than $30K then. For family of 4, mom and I provide $2500/mo each for household expenses. The budget actually has room for quite a bit of fat due to economies of shared living. I can afford to live on my own but it'll significantly cut into my savings. However, it'll likely be pretty hard for mom to support 3 people on just $2500/mo.

Yeah.. great website.... using the$50,000 cited in the calculator as the basis, the difference between Naperville IL and our equivalent town Rockford Il, is a difference of $11,000.

So yes... location, location, location.

And from Rockford IL to Los Angeles Metro CA is this:

Equivalent income in the city you are moving to: $77699.78.
Percent increase to maintain standard of living: 55.40%.


Read more: Cost of Living Calculator | Comparison Tool
Follow us: @Bankrate on Twitter | Bankrate on Facebook

 

[cyber888]

Yeah sure $30,000 is very do-able.

Right now, me and DW can survive easily with $40,000 per year and that includes a monthly mortgage payment of $1,360. My house is my only debt. If we downsize to a smaller house and paid cash for a smaller home, we could live on $28,000 (of course that includes realty taxes and homeowners insurance). I live in a southern state, which is way cheaper than say Los Angeles or New York.

 

[Stevewc]

BTW, The median per capita annual income from 2009-2013 in New Orleans was $26,500.

Orleans Parish QuickFacts from the US Census Bureau

Looks to me like it's perfectly possible for a single person to live on less than $30K.

Well that settles it... I can do it too but I'll have to move in with W2R

 

[W2R]

Well that settles it... I can do it too but I'll have to move in with W2R

I'll check with Frank on that and get back to you. Just kidding!

 

[scrabbler1]

My annual expenses are only $24k now so the answer is surely "Yes." My expenses did spike to $31k last year because of some unexpected medical expenses I do not expect to be repeated any time soon. I live in a paid-off apartment which keeps my housing costs low.

 

[Tom52]

We could do it for a couple of years, but a 10 year old car does not last forever and will need replaced, then you said nothing about the $30,000 being inflation adjusted, so, long term no.

 

[ejman]

The median household income in the community nearest where I live is $33,000 so I would think that $30-$35k is very doable since 1/2 of the community gets by on less.

 

[Fermion]

I could do it in our RV pretty easy. Casinos and BLM land are usually free to camp. No property tax, no utility payments. ACA paying pretty much all your healthcare costs. Food, Fuel, Vehicle insurance/registration.. On $30k I could eat steak three times a week, buy a few bottles of decent wine, and still have about $10,000 left over to blow on a two month trip each year to Costa Rica. Makes me wonder what we are going to spend our $45k budget on...

edit:

As an example, this past Sunday we saw the weather on the Washington Coast was gong to be 65 and sunny. We put the motorcycles in the rear pod on our home built RV and headed to the coast. We parked at the Quinalt Beach casino, which has a huge RV lot right on the beach for free. We stayed 4 nights and just came back. Diesel at Costco was $1.85/gal and we used about 30 gallons on the round trip. We bought some pork tenderloin, salad, and other stuff at Costco for $30 and cooked it during the trip. The 1100 watts of solar kept our battery at full charge with no generator use. The whole trip to the beach was under $100 for five days.

 

[ShokWaveRider]

I do not think this is as hard as some folk make out, at least ball park. If I go to my spreadsheet for last year and take what we spent It breaks down like this:

We Own our own house (Value about $800k) and have no debt, we lease a car every 3 years (need to or not).

Mandatory Expenses, Insurance, Utilities, RE Taxes, etc.: $14,470.93

Car Lease: $7,000

Discretionary Expenses: Includes Food (I know but we pay for that with Credit cards for convenience), Credit Cards: ~$15k

There is probably a lot in Discretionary that is waste and not really accounted for.

That is ~$36k

Not that much more and we really do not cut back on anything.

 

[rbmrtn]

I live on less than that now. House is paid for, so no mortgage or rent, starting over having to pay housing would add some to the total.

 

[ShokWaveRider]

I see some folk saying they are retired, but home is not paid for yet. This does not seem to make sense (to us), unless your retirement plan includes not owning but renting permanently.

If our home was mortgaged I would still need to work to afford it. When we chose to retire early, the first thing on the to do list was to pay the house off.

I guess some mortgages are sort of like rent. But it seems like any form of loan (in retirement) is like throwing money down the toilet. I know money is cheap at the moment, but still........

Although, I can talk, we lease cars which is sort of like renting I suppose. Although I will argue forever that if you change cars every 3 years or so, it is hand down cheaper than owning these days, not to mention worry free driving.

We are not in such a tax bracket where a mortgage even makes sense, that does influence our opinions.

 

[dand76]

Months 1 - 6: $35k - DW and I could survive.
Months 7 and beyond: $30k (now single) No problem.

 

[hnzw_rui]

I see some folk saying they are retired, but home is not paid for yet. This does not seem to make sense (to us), unless your retirement plan includes not owning but renting permanently.

If our home was mortgaged I would still need to work to afford it. When we chose to retire early, the first thing on the to do list was to pay the house off.

I guess some mortgages are sort of like rent. But it seems like any form of loan (in retirement) is like throwing money down the toilet. I know money is cheap at the moment, but still........

Given condos and townhomes in our current area are $450K+ and single family homes are $600K minimum, we're just renting now (got lucky that we found a place with cheap rent before prices bubbled up). Unless we get another real estate bust, I expect we'll continue renting while working.

I'll probably just buy property in a cheaper area maybe 5 years prior to retiring so I'll likely be one of those who carry a mortgage in retirement. I've played a little bit with the math between paying cash (will likely have to come from tax deferred accounts) vs carrying a mortgage and the nominal cost is around the same. If paying cash, then I'll have to pay a ton in taxes upfront for the distribution. If getting a mortgage, then I pay mortgage interest but at least the hurt is spread over several years.

 

[Katsmeow]

I see some folk saying they are retired, but home is not paid for yet. This does not seem to make sense (to us), unless your retirement plan includes not owning but renting permanently.

.....

Although, I can talk, we lease cars which is sort of like renting I suppose. Although I will argue forever that if you change cars every 3 years or so, it is hand down cheaper than owning these days, not to mention worry free driving.
.

I guess it just depends on your situation and how you look at things. I can't imagine a situation where I would think it made economic sense to lease a car (I've looked at it, but it seemed to be very costly). But, we don't change cars every 3 years either.

As for a mortgage, we actually did get a mortgage a few years ago when rates were at 3.49%. I figured that we wouldn't see that kind of rate for long and it gave us a lot of flexibility. We didn't have to have to mortgage and we have equity that is more than 50% the value of the home. In a few years we may downsize some more and at that time I would expect to sell this house, pay off its mortgage and use the proceeds (since we do have a lot of equity) and pay cash.

 

[marko]

I see some folk saying they are retired, but home is not paid for yet. This does not seem to make sense (to us), unless your retirement plan includes not owning but renting permanently.
.

Retiring with a mortgage is more a matter of retirement income than cost avoidance, I think. If you have enough to live on and pay your mortgage and retire, well....

Full home ownership is not necessarily a prerequisite for RE. But it sure does help!