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$50 per day revisited
Old 12-29-2004, 08:28 AM   #1
 
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$50 per day revisited

As most of you know, I have long held that a couple
could live comfortably on $50.00 per day in 2004,
just as Paul Terhorst suggested in his book 20 years ago. I will go
further. With no debt of any kind (paid up house and
car/cars), and by going without
health insurance, we could live on income of just my SS
benefits and still not be reduced to dumpster diving
(or at least no more than we do now)
Obviously, this would require a very tight budget
and no serious health issues. That aside, I have crunched the numbers and it is quite doable. I don't plan to do it. I don't want to do it. But, it's important to know what is possible.

JG
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Re: $50 per day revisited
Old 12-29-2004, 08:45 AM   #2
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Re: $50 per day revisited

John, I usually agree with most of what you state. However, if I were to try to 'exist' on less than my 1825 after tax income and 5k annual 457 withdrawal, that's about all it would be .... existence. In order to enjoy life, I couldn't do it for less than my almost 75 a day. 12 years to SSA but not counting :P
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Re: $50 per day revisited
Old 12-29-2004, 09:41 AM   #3
 
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Re: $50 per day revisited

Well, you'd have to use the library and look for free
or almost free entertainment. You would need to be careful about utilities, etc. Gift giving would be cut to the bone. Ditto dining out other than fast food joints.
Cars might be beaters and your pets would eat whatever you could scrounge (no IAMs). You would need to enjoy all the little everyday things, a soft bed,
a long walk in the woods, a good book, cheap wine.
It can be done. I'll bet there are millions right here
in the USA, who are doing it now and are quite content.
And, always remember that a lot of the consumption
in this country
is purely marketing driven.

BTW, I saw an interview with Ray Charles. He was asked about all of the pop singers who made many times the money that he did. He said, "I don't mind.
I can only eat one steak , wear one suit, and
make love to one women at a time". He may have been
blind but he was a smart guy.

JG
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Re: $50 per day revisited
Old 12-29-2004, 11:57 AM   #4
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Re: $50 per day revisited

Quote:
I saw an interview with Ray Charles. *He was asked about all of the pop singers who made many times the money that he did. *He said, "I don't mind. *I can only eat one steak , wear one suit, *and make love to one women at a time". *He may have been blind but he was a smart guy.
I think it all boils down to quality of life. Does one steak mean one 7-bone steak or one filet mignon?

I don't need to pay $30 for a filet mignon at a restaurant, but I do want to be able to pay $10 for a good filet mignon that I can cook at home. I don't want to retire early if it means I have to eat a tough cut of steak.

I'd give you a similar analogy with making love to women, but I'm happily married and there could be kids reading this
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Re: $50 per day revisited
Old 12-29-2004, 01:14 PM   #5
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Re: $50 per day revisited

Quote:
As most of you know, I have long held that a couple
could live comfortably on $50.00 per day in 2004,
just as Paul Terhorst suggested in his book 20 years ago. *I will go
further. *With no debt of any kind (paid up house and
car/cars), and by going without
health insurance, we could live on income of just my SS
benefits and still not be reduced to dumpster diving
(or at least no more than we do now) * *
*Obviously, this would require a very tight budget
and no serious health issues. *That aside, I have crunched the numbers and it is quite doable. *I don't plan to do it. *I don't want to do it. *But, it's important to know what is possible.

JG
With a paid off home, cars and no medical insurance a couple may be able to get by but the Terhorst's rule was $50 a day for everything.

How much per day would it require to substiite for a home and car/cars?
No medical insurance is really not an option for most people.

I would think all 3 would require at least another $50 per day totaling $100. Probably more.
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Re: $50 per day revisited
Old 12-29-2004, 01:56 PM   #6
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Re: $50 per day revisited

CT,

How long do your fishing trips last?

Does your DW come along? I forgot if she still is working?

MJ
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Re: $50 per day revisited
Old 12-29-2004, 02:57 PM   #7
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Re: $50 per day revisited

It's all based on one's perspective. Making it on $50 per day, health care excluded, would be the equivalent of working 40 hours/week for 52 weeks/year at $8.77/hour. There are people doing that in our community, and they are paying rent and FICA out of that! I had some of these folks as clients after injuries on the job, and they just wanted to get back to that level. If I could have told them that they didn't need to pay rent or FICA, and that they didn't need to work anymore, but they'd still get $8.77/hour, they'd think they were on top of the world. But if I had to do it, I would suffer. But I'd survive. Actually, if I were faced with living that lifestyle or going back to work, I'd choose living that lifestyle.
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Re: $50 per day revisited
Old 12-29-2004, 03:59 PM   #8
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Re: $50 per day revisited

Quote:
Money is funny, in that it only spoils you to the next level. In other words when you Fly First Class, you get used to it rather quickly. All it does it ruin coach class.
Cut-throat,
You put your finger on a central principle of happiness. It has been known forever, and psychologists have done lots of confirming studies. People adapt very quickly to any lifestyle improvement, so that it is no longer seen as anything special.

My Dad, who was born in 1911, made this a mainstay of his marriage and childrearing. He managed his reported earnings about as well as GE, so that eveything was on a gentle up curve. There was money stashed everywhere, to be used to fill in the troughs.

Some young kids in the 90s got this in reverse. Big up-front success, followed by a dashing of expectations that had gone too high. I think it was not easy for some of them.

Mikey
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Re: $50 per day revisited
Old 12-29-2004, 04:26 PM   #9
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Re: $50 per day revisited

If I remember correctly, Terhorsts' $50/day excluded travel expenses or at least airline travel.

They worked on 8% of 500k or $40k per year, then only spent 24k of that-- the rest was their inflation factor reinvested. So it worked out like a 4.8% SWR, I guess.

$50 per day would have been about 18k-- the balance was the extras.

Still, that was in the mid 1980s -- 20 years ago.

Inflation between now and then would mean that $50 in 1985 is worth $84.46 today. Put another way, the $50 today would have bought you $29.60 worth of stuff in 1985. About 60%.

(handy inflation calculator at: http://www.westegg.com/inflation/ )

So living the way the Terhorst's advised would be an $85 a day budget now, plus extras. The total 24k annual budget would be $40,500 now, about the average budget for this board? In any case, our "Modest" category from a recent post.

Knowing what we know now about SWRs that the Terhorsts were only guessing at, it would take a portfolio of about 1M to support that today at a 4%SWR.



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Re: $50 per day revisited
Old 12-29-2004, 04:56 PM   #10
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Re: $50 per day revisited

I agree that Paul Terhorst's $50 a day, adjusted for inflation is very doable today, but if I HAD to live of $50 a day now, I would move to another country. Like, maybe, Bangladesh, with a per capita GDP of $363 per year (per IBD), I should be able to live like a king.
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Re: $50 per day revisited
Old 12-29-2004, 06:43 PM   #11
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Re: $50 per day revisited

In the last twelve months, we visited 7 countries. Thailand, Laos, Vietnam, China, Burma, US, and Ecuador. This was just chance and not planned.

After 5091 days of retirement, or 13.95 years, our average is $56.10. And that includes everything.

Happy New Year

Billy
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Re: $50 per day revisited
Old 12-29-2004, 07:10 PM   #12
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Re: $50 per day revisited

This guy claims to be able to travel on $15 per day.

http://www.hobotraveler.com/

Some of his favorite places for living well on little money are Lima, Peru and Quito, Ecuador.
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Re: $50 per day revisited
Old 01-02-2005, 08:45 AM   #13
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Re: $50 per day revisited

Billy,

My next trip will probably cost 2k. Rt at home from home to airport on Bart = 14. *Airfare to Heathrow then Ben Gurion *= 930. 2 nights London = 145.18. *All day pass on 'tube' for 1st day = 6 GBP <11.7> *fund fares on it can be as low as 1 GBP <1.95> to 24 different destinations inc Scotland <that's for my summer trip, now I'm just going to Bath>. Best price I could find in Israel was 30 day inc breakfast x 11 nights = 330, rt from airport to lodging = 20. Lodging in Jerusalem is 300m from a local grocers. So far = 1454.78, assume balance will be around 500. Gone from 1/11 to 1/26. *What am I doing wrong? No where near the 56 a day tag
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Re: $50 per day revisited
Old 01-02-2005, 11:23 AM   #14
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Re: $50 per day revisited

Gayl,
Not sure about the places you're visiting, but they sound expensive...have you looked at The Lonely Planet or Rough Guide?

Then again, remember our figures are for 5000+ days...some of which are in inexpensive locations, while others are not. What I am saying is that it will average out, so don't panic if dinner costs 100 US at some point.

When you don't have to fit everything in a 2 week time allotment, your spending figures mellow out. When one is working, and "vacation" is crammed in... everything is special, therefore another reason to spend. Remember, ours is a lifestyle, not a vacation.

Billy
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Re: $50 per day revisited
Old 01-02-2005, 12:47 PM   #15
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Re: $50 per day revisited

It probably would have been smarter, in retrospect, to just do Israel this time and England / Scotland in the summer. Problem is that I am very land based in this area b/c of kids and grandsons. So I can't be gone for extended periods of time <emotionally>. At least everything is on auto pay and bills don't really accumulate while gone. So my daily costs for this month are closer to $87, $12 more than my annual cost. I admire you for being able to keep yours so low. I'll check out The Lonely Planet and Rough Guide at my local library to try to figure out how to bring my travel bug into line with my ordinary daily expenses. Or maybe its the travel bug that pushes up my 'ordinary daily expenses.'
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Re: $50 per day revisited
Old 01-02-2005, 08:37 PM   #16
 
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Re: $50 per day revisited

Back to Bob_Smith's comments. I could do it too and would choose the $50 per day life before going back to work (well, I might dabble more).
Anyway, he computed you would need $8.77 per hour
(pretax)
at 40 hours a week at 52 weeks per year to achieve
the $50 per day lifestyle. I can tell you that there are lots of people right here who would consider $8.77
per hour a very good wage. No one is starving in the
streets either.

JG
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Re: $50 per day revisited
Old 01-03-2005, 02:46 PM   #17
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Re: $50 per day revisited

I'm sure almost everyone can live on $50 a day (most of the world does) but I wonder how many people who are sitting behind their computer in their nicely furnished home with their cable TV on in the background and no real financial worries would do it.

If you live in the US and prefer to live in an enviroment other than the hills of Montana think about it.
$350 a week for everything starting from scratch.

I would not do it.
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Re: $50 per day revisited
Old 01-03-2005, 04:23 PM   #18
 
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Re: $50 per day revisited

Hey GTM, I have crunched these numbers backward and forward, and remember......I made my living mainly as
a number cruncher. You say you would "not do it".
I don't plan to either, but I could, on even less than $50 per day if
necessary. Brainpower and willpower...........an unbeatable combination.

JG
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Re: $50 per day revisited
Old 01-04-2005, 07:44 AM   #19
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Re: $50 per day revisited

I've been over my expenses again ... I've finished buying new furniture ... so if I stopped upgrading home, which will be done this year anyway / maintained car myself / cut travels in half .... I would be spending 50 a day. But that's not going to happen. Frankly I'd think about picking up a seasonal job before cutting travel. Luckily, I'm not taking my full SWR so that's not going to happen either
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Re: $50 per day revisited
Old 01-04-2005, 08:39 AM   #20
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Re: $50 per day revisited

Since retiring almost two years ago, my DW and I are averaging $175 per day. That's higher than I had anticipated, but it includes several expenses that won't be annual (new car, replaced home air conditioner, replaced computer, replaced dishwasher, and a few others). We have traveled a lot these past two years. I'm not sure whether we will slow that down or not in the future. Also it is an amount that is still well below a 4% SWR and that does not include three pensions or social security benefits that will kick in as early as 4 years from now.
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