30K a year

[W2R]

I really think that to downsize one's budget and work on minimizing expenses takes a lot of motivation.

If someone doesn't have sufficient motivation to figure out how to downsize a budget any further than to "x dollars/year", then they have learned something about themselves. Don't judge yourself or self-justify - - just realize you have learned something about your priorities! There's nothing at all that is inherently wrong with wanting to live a certain lifestyle that may mean working a few years longer.

Introspection and learning about oneself can be very valuable. For one thing, when you know your actions are consistent with your priorities, it lowers inner conflict and leads towards inner peace. Heaven knows we can all use that.

I think we (myself included) may have got a little carried away with the "LBYM more than thou" attitude in this thread. My apologies. It's just that I am so glad that I CAN retire, so late in the game (and for me, that is a higher priority than spending $20K/year).

 

[W2R]

The ~$5K difference between income and outgo goes into MMA.

Right, same for me. It's part of my budget. If it isn't spent, it stays unspent because the following year I may need it for these replacement expenses.

 

[ERD50]

Those of us who have to pay $1049 a month for health insurance (my family COBRA payment) plus another $100 a month in copays would have a hard time living on $30,000 a year, even with no mortgage.

Good lord have mercy!

Dawg52, why the shock? Those numbers are a reality for many people. I pay over $700/month and it goes up next year. 20% copays for many things.

-ERD50

 

[youbet]

I really think that to downsize one's budget and work on minimizing expenses takes a lot of motivation.

It also takes a reason. Once you're retired, you may not be as anxious to do without everything you can possibly do without. LBYM as an end in itself starts to lose its appeal!

Make no mistake, I'm very interested in doing the best job with my investments that I can, getting good value for the money I spend and assuring it is unlikely I'll ever run out of money. But, 18 months into RE, I am starting to find it's nice to obcess less about every penny spent and go do the things I retired to have time to do.

Your milage may vary.

 

[youbet]

I feel the same way and I live below my means. I don't deprive myself, but I take advantage of sales, buy mid-scale stuff when I need new stuff, and do not buy much in the form of extras. Annual expenses still run in the order of $45k net of income taxes.

What I don't see in most (if any) of the expenditures is the accrual for durable goods that need replacement on a certain cycle (vehicles, major appliances, major household repairs such as furnance, roof, A/C). That could easily run $5k per year for middle-line stuff.

My observation of people I know (obviously anecdotal) is that it's those with some money/good incomes who are the smart shoppers, getting good value, watching for sales, etc.

Agreed on the accrual for durable goods.

 

[Rambler]

All of my personal projections show two key totals: total expense including accruals for cars incl maintenance as well as a generous home maintenance fund incl accrual for durables. The other total is for cash flows without these durables, I always assume the accrual for the durables goes in a separate, special kitty set aside for them. Cash flow is for day to day expenses, and the accrual should cover the depreciation. New purchases of durables will come from the accrual account. If there isn't enough, the purchase won't be made until there is enough (unless dire emergency).

R

 

[youbet]

Yikes...some of the high numbers on here are nuts. I agree living on 30K a year is more than feasible. I am single and 32, with home and car paid for. I live in Canada so no health insurance concerns....anyways I get by on about $1300 average a month in expenses. I could live on around 22K pre tax I think if I absolutely had to. That would be very tight though and probably would mean no vacation in a given year. 30K would be an absolute piece of cake though. I can't believe some of you are spending 80K+ a year...do you really need that 5 bedroom house??

Well.......think about it. You say you could make it on $22K, but it would be tough, maybe no vacations, and you have a paid-for house and no one to worry about other than yourself. So add in $18K for a second person, $12K mortgage, $10K health insurance. That's $62K and we haven't even added in anything like vacations, entertainment or kids. $80K down here, for a couple, in an urban area, certainly is a comfortable lifestyle, but hardly extravagent.

 

[Dawg52]

Dawg52, why the shock? Those numbers are a reality for many people. I pay over $700/month and it goes up next year. 20% copays for many things.

-ERD50

I pay $170/mo and copays too if I have problems. Fortunately, the only prescriptions meds I take cost $4/mo from Walmart. My bcbs premium goes up to $180 next month.

Guess I have been lucky so far.

 

[ERD50]

Yes, many people forget those 'accruals'. Just because your car is paid for does not mean that you don't need to budget money each month for it's replacement (assuming you are paying cash for that). It does not show up as an 'expense' today, but it is a very real drain on your budget.

I have hesitated to chime in on these 'living on $XX,XXX' threads, because I have not done a detailed budget. But I *do* know how much total I spend - just two accounts with outflows, so just add up the debits and subtract any reimbursed money.

My friends consider me a cheapskate. I have the cheap pre-paid cell phones, no cable (I may need to crumble on that), just got hi-speed internet a few years ago ($29/month is not much more than a second line and $10 ISP), dining out is normally no more than once a week (if even), usually a cheap mexican place that we like. Vacation $ are almost nil (I hate driving, wife hates flying), CDs mostly from the library or listen on-line, no cleaning people, I do most repairs myself, lawn care (including weed/fertilize), research every purchase I can, etc, etc ,etc. *

And with that, we spend WAY more than $30K a year. Way more.

OK, so I've got a large house with high property taxes. Take away the mortgage, take away (not just adjust) the prop tax, the insurance, the utilities, and we still spend WAY more than $30K.

I find it tough to do a meaningful budget, other than the big stuff, so I don't. I can't learn much from 'costco - $500' - I would need to look at each receipt in detail and how much is food, clothes, gifts, etc. But I know we are careful with our money. So if you people really make it on $30K, great. But I'm having trouble seeing how this is done in most parts of the country, w/o hitting the z-tails of deprivation, or w/o neglecting a few details, like that roof on your paid-for house will need to be replaced in 10 years, and dozens of other little 'inconvenient expenses'.

-ERD50

* OK, just so no one feels sorry for us, we did 'splurge' today. I do take advantage of and enjoy a number of free/cheap entertainment opportunities, but today we were attended the Chicago Symphony and got Box Seats - first time for that. OK, it was the (famous) Brass Orchestra from the Symphony, not the full symphony orchestra, so box seats went for about half normal prices, so we treated ourselves. Worth all 22000 pennies. Another 1000 pennies for the train (holiday fares), a few more for a reasonable dinner and beer downtown, and one short cheap taxi ride back so we made the train on time. The Chicago Brass Orchestra and Mussorgsky's 'Pictures at an Exhibition' - PRICELESS!

But this may have back-fired, the wife was really impressed with the box seats (she was originally against spending the extra bux) - let's do THAT again!

 

[Goonie]

* OK, just so no one feels sorry for us, we did 'splurge' today. I do take advantage of and enjoy a number of free/cheap entertainment opportunities, but today we were attended the Chicago Symphony and got Box Seats - first time for that. OK, it was the (famous) Brass Orchestra from the Symphony, not the full symphony orchestra, so box seats went for about half normal prices, so we treated ourselves. Worth all 22000 pennies. Another 1000 pennies for the train (holiday fares), a few more for a reasonable dinner and beer downtown, and one short cheap taxi ride back so we made the train on time. The Chicago Brass Orchestra and Mussorgsky's 'Pictures at an Exhibition' - PRICELESS!

Cool! We're going next Sunday for the CSO Christmas concert! We don't have box seat though.....we're about half way back in the middle section on the main floor. We're going to Lawry's for a nice prime rib dinner before the Symphony....YUM! IIRC, transportation, dinner, and concert is 19000 pennies for the 2 of us. Money well spent!!!

 

[haha]

Nope, $30,000 not possible for me

because my rent, phone, healthcare, food and insurance alone cost $29,140. One person, living in 1 bedroom apartment.

And weirdly enough I have a few expenses beyond these. Like my car, etc., etc.

Ha

 

[Spanky]

Nupe ... my kid's college expense alone is almost $20K per year.

 

[ERD50]

Cool! We're going next Sunday for the CSO Christmas concert! We don't have box seat though.....we're about half way back in the middle section on the main floor. We're going to Lawry's for a nice prime rib dinner before the Symphony....YUM! IIRC, transportation, dinner, and concert is 19000 pennies for the 2 of us. Money well spent!!!

That should be fun. I've never done any of the pop type concerts from the CSO, but I'm sure they would be great. Have not been to Lawry's in years, but I suspect it is still a great place for prime rib & steak ( a quick check of Chowhound.com confirmed that). Another lower-cost CSO ticket option to consider in the future- Terrace seats. Those are the seats that are above and *behind* the orchestra. The side ones get you very close to the orchestra, and you get to see the conductor's face and look over the shoulders of some of the orchestra, which is kind of an interesting perspective. The sound is not as unbalanced as I would have thought, and you are close, so hear very well. However, if the concert primarily features a soloist, these are not such good seats - the soloist needs to be at the front, and project to the main audience - that sound is quite muffled at the rear. But the overall orchestra sounds great.

CSO is among the best in the world. I am in awe when I experience their concerts.

-ERD50

 

[Sandy]

Box Seats[/U] - first time for that. OK, it was the (famous) Brass Orchestra from the Symphony, not the full symphony orchestra, so box seats went for about half normal prices, so we treated ourselves. Worth all 22000 pennies. Another 1000 pennies for the train (holiday fares), a few more for a reasonable dinner and beer downtown, and one short cheap taxi ride back so we made the train on time. The Chicago Brass Orchestra and Mussorgsky's 'Pictures at an Exhibition' - PRICELESS!

Having those pennies to spend once you are FIRE'd, or even to enjoy a bit along the way, is what makes it worth it, IMHO. If your budget is so tight that you never have the extra pennies, then I am not interested. I have lived on much much less than I do now, but did not have any extra $$ to do anything over and above basic needs (shelter, food, minimum transportation, and health ins). That is not how I want to live in RE.

 

[kat]

Yikes...some of the high numbers on here are nuts. I agree living on 30K a year is more than feasible. I am single and 32, with home and car paid for. I live in Canada so no health insurance concerns....anyways I get by on about $1300 average a month in expenses. I could live on around 22K pre tax I think if I absolutely had to. That would be very tight though and probably would mean no vacation in a given year. 30K would be an absolute piece of cake though. I can't believe some of you are spending 80K+ a year...do you really need that 5 bedroom house??

I understand what you're saying. I've sworn off sharing my experience. Because I'm single (with an SO with his own house), I get silly stuff about not knowing what couples need.

My parents live on less than $30,000 by choice and their own sense of comfort and needs. They have several million invested, untouched. They invest either the pension or social security check -- I forgot which. Their spending level is not out of need, and they ended up with all that money because they were the same way all along.

I strongly believe a lot of this is based on experience and expectations and I don't judge anyone who chooses to live differently.

 

[Spanky]

My parents live on less than $30,000 by choice and their own sense of comfort and needs. They have several million invested, untouched.

Well, if they are planning to leave their kids all their money, you may be in good financial shape.

 

[Allegany]

No Way On 30k

Dawg, no health problems, just the problem of living in NY. HDHP with HSA's are not available to individuals living in NY. THEY say there is no demand for them but that is because it is illegal to sell them. The politicians must get off the dime and start working for the citizens. I can't stand Spitzer, the Governor, but maybe he can do something to help us get out from under this cost of health insurance. I'm not looking for a handout but we should be able to get health care at a more reasonable price.

 

[W2R]

Well, if they are planning to leave their kids all their money, you may be in good financial shape.

On the other hand, don't count on it. The cost of medical and other end of life care can sometimes really put a dent in a substantial nestegg, if dying is prolonged over many years and they live to be quite old. Insurance often doesn't cover everything, and there can be additional expenses. Then there is inflation.

My philosophy on inheritances is that if you don't expect anything, then you will never be disappointed. I'll let you know how that works once my mother's estate has been settled.

 

[kat]

Well, if they are planning to leave their kids all their money, you may be in good financial shape.

It's in a Trust. Two disabled siblings. The Trust idea came after they had all the money, not a goal. All 7 of us are fine with it. All in good financial shape already.

 

[ERD50]

Bottom line, I think it means very, very little to the OP what someone else spends.

We all have different circumstances, needs, and wants. If any individual wants to figure out if they can live on $X, they need to calculate it for themselves. Other data points may help them in that calculation, but comments like 'sure, you can do it on even less!', or 'no way I could live like that' are fairly meaningless.

It's like asking someone which car to buy, with no background of your requirements - do you need to haul stuff, a family, how many miles a year do you drive, long boring commute (maybe a great sound system is a 'value proposition' to you), have you always longed for a sports car and it is now or never, do you routinely drive through 5 miles of unplowed streets in winter, etc, etc.

Some people prefer chocolate, some vanilla. That does not influence my preference.

Don't retire on someone else's budget, you may regret it.

-ERD50

 

[Sarah in SC]

The problem with that is one Social Security payment disappears if the person dies so you are now living on $15,000.

I don't think this is the case. Once you get $X payment a month, SS does not reduce it when the first spouse dies.

I live on the coast, in lovely Charleston, SC, with water all around, and my property taxes on my paid-for home on 4 acres are $900 for 2008, a reduction from $1100 last year. Not all areas of the coast are excessively expensive.

Lots of different needs/wants shown here. I love seeing people's expenses, though, it is like spreadsheet voyeurism!

 

[maddythebeagle]

Bottom line, I think it means very, very little to the OP what someone else spends.

We all have different circumstances, needs, and wants. If any individual wants to figure out if they can live on $X, they need to calculate it for themselves. Other data points may help them in that calculation, but comments like 'sure, you can do it on even less!', or 'no way I could live like that' are fairly meaningless.

-ERD50

I would use "Ding, Ding, Ding" if it wasnt patent pending

 

[Spanky]

My philosophy on inheritances is that if you don't expect anything, then you will never be disappointed.

That's a very good philosophy. I am not counting on any inheritance from my parents. Most of it has disappeared from sibling's accounts.

 

[rjk514]

No problem on 30k..

Have been coming in around 28k to 30k for 2 people the last few years and we do all we want..a few golf trips a year etc...live in Wisconsin and are debt free...have health ins. thru work and will get good old medicare at 66...suspect the economy will be in the tank for some time to come and cost of living will go down..recession will drive down prices on almost all goods..more and more good paying jobs will be lost....folks just won't have the $$$ to buy a ton of things which just aids the loss of jobs...all this gloom makes the 30k a year seem more reasonable...our SS and 4% with drawl from the nest egg gets us in the 30k range...so I feel 30k a yr will work just fine...
thats my story & I'm stickin to it

 

[Moemg]

I don't think this is the case. Once you get $X payment a month, SS does not reduce it when the first spouse dies.

If a couple are both collecting social security and one dies the surviving spouse will only get their benefit based on their record or a Survivor benefit based on their partner's benefit not both.