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Old 11-14-2013, 08:21 AM   #41
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Originally Posted by Mulligan View Post
I just burned 10k this week on a new roof and Christmas present ring for SO, and I am not even a rich guy.. Car going into shop this week and nervous I may be attending its wake after a 12 year life. By next week, I may have blown through Alex's yearly budget, and still don't have any rice and beans to eat yet.
Me too. The 1st quote was $9500 we thought that was crazy. Turned out
to be the lowest bid. Since we have rentals we put $$$ away every month
for these things but still...
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Old 11-14-2013, 08:29 AM   #42
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While I can appreciate that on any given year such a low budget is possible, (DW and I have had several years in a row in the low $30 m ) but sooner or later you get whacked up side the head with some significant upkeep bills even with well and septic. You have to replace appliances and re-shingle the roof and paint the house, etc. Upkeep and replacement costs for us have been significant this past year. Sooner or later I will also have to replace my 9 and 11 year old vehicles. That cost is significant and I didn't see where you have that cost covered in your budget.
Agreed - I think the OP is confusing, what does it actually represent?

I do not think you can call it a 'budget' - it might be 'a list of what I spent last year on some subset of expenditures'.

Septics need regular pumping and eventual maintenance (we have had a few junction boxes corrode and require replacement). Skip the pumping, and maintenance will skyrocket one day. Our well has required a pump replaced, and had a leak that required digging up. Houses and cars need items repaired/replaced. If these are not being funded, then this is not a budget, and does not really represent the cost of living in that home.

A renter has many of these items rolled into their rent (so can be ignored for budget reasons), a homeowner does not.

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Old 11-14-2013, 08:34 AM   #43
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My bare bones budget is around $21k, though currently it's $27k thanks to my car payment, which will be gone in one year. This includes HI, subsidized by for megaconglomocorp. Have money to pay cash for the next car, left from financing the current one at 0.9%...

Admittedly, I need to monitor some expenses more closely, but the $21k covers the major bills. Next year for sure, and this time I really mean it!

I'm hopeful that my income in FIRE will be pretty close to my w*rking income, so there should be room for a bit of discretionary, to cover travel, and my liquor bill...
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Old 11-14-2013, 08:56 AM   #44
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That's great in VA we can do that but we are in MO which is easier to do.
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Old 11-14-2013, 09:08 AM   #45
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Agreed - I think the OP is confusing, what does it actually represent? I do not think you can call it a 'budget' - it might be 'a list of what I spent last year on some subset of expenditures'. Septics need regular pumping and eventual maintenance (we have had a few junction boxes corrode and require replacement). Skip the pumping, and maintenance will skyrocket one day. Our well has required a pump replaced, and had a leak that required digging up. Houses and cars need items repaired/replaced. If these are not being funded, then this is not a budget, and does not really represent the cost of living in that home. A renter has many of these items rolled into their rent (so can be ignored for budget reasons), a homeowner does not. -ERD50

I agree with you ERD. Up until this past year, I would have read your post and thought you were just being picky. The first few years I was on this forum, I just thought there were a bunch of over analyzing planners on this site. But a couple years ago, after being beat down by a million posts on the subject, I decided I would work part time for a bit longer to have funds saved for this sole purpose (I live off a pension). Well finally I found out that those problems don't just happen to other people, but also to me. In just the past 13 months, outside A/C unit, water heater and roof have been replaced and now vehicle is in serious jeopardy of being replaced. I can continue to say I spend 3k a month, but that is ignoring all these costs that have been incurred this year.
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Old 11-14-2013, 09:39 AM   #46
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I do not think you can call it a 'budget' - it might be 'a list of what I spent last year on some subset of expenditures'.
Good point. In a way, it's like how Comcast describes "basic cable".
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Old 11-14-2013, 09:59 AM   #47
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Just this year we had our health insurance premiums sky rocket, we reached the out of pocket max for one family member for health insurance, our dog ran into a cactus and had to go to the emergency vet, we have to replace a car, the termite report had $5K of work....

And then there are still all the regular expenses including food, college tuition, clothes and electricity. We normally don't have this many one time expenses, but if we hadn't budgeted for this kind of stuff we would have been SOL.
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Old 11-14-2013, 10:08 AM   #48
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It is possible to live on less than $1500 a month, but one has to get rid of the conventional house and move into one with wheels. And I am of course not talking about people with gargantuan motorhomes that cost $300K to $1MM+ new.

A web site for people who live this ultimate cheap life, but not to the level of the full-time residents of the infamous Slab City, has the following excerpt.
Let me prove to you right off the bat that you can live the free life. Here is a budget (to the right) showing just how little money you need to live and travel full time. One column is for a $500 a month and the other is for $1,000 a month.

Of course, at $500 per month this is a sparse life, but I am just showing you that it can be done. In fact when I posted the $1,000 per month budget on a yahoo group called VanDwellers, (everyone wanting to live this life should join VanDwellers!!) the majority of the responses were that they were living on much less. Several people mentioned specifically living on $500 since that was what they received in their disability check, so I know for a fact that it can, and is, being done right now in March, 2012.
Of course these people are either on Medicaid or Medicare, else they would not be able to live on so little. And "travel" as mentioned above is actually very limited. They move a bit every month from location to location to minimize fuel costs. They also park in public land to avoid RV park fees, etc...

It is a rough life to most of us, but far better and healthier than getting stuck in a ghetto in Detroit with so little money.
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Old 11-14-2013, 10:43 AM   #49
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It is possible to live on less than $1500 a month, but one has to get rid of the conventional house and move into one with wheels.
I think conventional house often come with a higher price tag than most people realize. Many of the posters I see on forums who have really low expenses but don't live in RVs often live in paid for condos with low HOA fees, they rent or they live in manufactured housing.
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Old 11-14-2013, 11:01 AM   #50
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I think conventional house often come with a higher price tag than most people realize. Many of the posters I see on forums who have really low expenses but don't live in RVs often live in paid for condos with low HOA fees, they rent or they live in manufactured housing.
I realize quite well how much being in our house costs over other alternatives. Most people here either have budgets or carefully review their costs.
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Old 11-14-2013, 11:24 AM   #51
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I realize quite well how much being in our house costs over other alternatives. Most people here either have budgets or carefully review their costs.
I didn't say you or even most people here on this forum. Offline how many people do you know who even have realistic budgets (including reserves for roof replacements, car replacements and medical emergencies) let alone carefully review their costs?
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Old 11-14-2013, 11:36 AM   #52
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Ok, I can now see the $18k budget. Its approximately the same that my mom lives on. She lives in a 900 sq ft apartment and has no car. She has only basic cable, no cellphone, no internet, and a $20 land line. She dries her clothes on a clothesline. She keeps her house warm in the summer and cool in the winter. So yes, its possible to live on $18k a year.

To Alexis' point, the less you spend on the "basics" the more you can spend on the discretionary. Cable TV and Internet are choices .... you can spend $1200 per year on that or on a four day cruise. Both are discretionary.

I guess the same could be said for most the "repair and replace" budget. At the most basic level, living in a house is discretionary. Its my choice to live in a 1500 sq ft house and budget $6k for insurance and taxes plus $4k / year in maintenance (including roof accrual). I COULD spend $5k a year living in an apartments and spend the other $5k on a vacation. I choose the house.

I do think there needs to be a repair/replace figure in the basic budget for things that are trully non-discretionary like basic appliances, a car if it is needed to get to a j*b and public transport is not available, and a television (although I guess that could be considered discretionary also).
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Old 11-14-2013, 11:56 AM   #53
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Ok, I can now see the $18k budget. Its approximately the same that my mom lives on. She lives in a 900 sq ft apartment and has no car. She has only basic cable, no cellphone, no internet, and a $20 land line. She dries her clothes on a clothesline. She keeps her house warm in the summer and cool in the winter. So yes, its possible to live on $18k a year.

To Alexis' point, the less you spend on the "basics" the more you can spend on the discretionary. Cable TV and Internet are choices .... you can spend $1200 per year on that or on a four day cruise. Both are discretionary.

I guess the same could be said for most the "repair and replace" budget. At the most basic level, living in a house is discretionary. Its my choice to live in a 1500 sq ft house and budget $6k for insurance and taxes plus $4k / year in maintenance (including roof accrual). I COULD spend $5k a year living in an apartments and spend the other $5k on a vacation. I choose the house.

I do think there needs to be a repair/replace figure in the basic budget for things that are trully non-discretionary like basic appliances, a car if it is needed to get to a j*b and public transport is not available, and a television (although I guess that could be considered discretionary also).
+1

More rambling thoughts along these lines - -

I think it is kind of wonderful that almost every expense can be considered to be discretionary, in a sense. My grandmother was penniless and supported my 100% blind grandfather while raising 4 kids out in the middle of nowhere, so she was pretty good at penny pinching. She used to grow her own food and used the excess to barter for meat. So for her, even the food expenses were discretionary. To me, clothing is not discretionary since even in New Orleans one can be arrested if wandering around nude (not to mention the sunburn). But then, there are always charities from which to get free clothing, or one could dress in animal skins as was done in historical times, so in that sense clothing is a discretionary expense. As for housing, there are plenty of people who spend zero on housing although I would not prefer that sort of lifetstyle and the choices it involves.

I don't fully understand the purpose in deciding what is discretionary (to me), and what isn't. Whether I (falsely) feel compelled to buy something or not, I am still buying it and still must plan on spending what it costs to maintain my lifestyle choices. The only purpose I can see is in trying to figure out what expenses I could drop. The answer to that question, though, is "everything". Every expense has a priority to each of us, and when minimizing ones expenditures it is pretty easy to figure out what has the lowest priority and drop that.
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Old 11-14-2013, 12:06 PM   #54
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This frugality is very easy to duplicate--buy a cheap house with low taxes on a well and septic. No secret to that. Not sure what someone who is Medicare aged is saving the surplus $6k to $14k of his passive income for. Is social security going to add to that income in the future? What is the goal here? I think we all know how cheaply we "could" live, but there is no intrinsic virtue in competitive frugality, is there?
Another thread here (forget where) majority of posters budgeted anywhere from $5K-$7K for health care annually even post-medicare. This includes medigap ins, hearing aids, dental, etc. FIDO RIP tool budgets about $7K per person for total health expenses, although I'm staying with $5K as I see that as excessive in my situation.
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Old 11-14-2013, 12:10 PM   #55
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...To me, clothing is not discretionary since even in New Orleans one can be arrested if wandering around nude (not to mention the sunburn)...
Ah, one does not know what sunburn is until she lives in AZ, particularly the high-country where the sky is often 100% clear and the air layer is 7000-ft less thick than at sea level, hence less attenuation to the UV. Also, in NO one can go topless during Mardi Gras.

However, for not getting arrested while being completely nude, one can go to London. Search youtube for "London 2013 Naked Bike Ride", as I just searched for Naked Ride and found it. The video looked more funny than erotic.

But what's this? "New Orleans Naked Bide Ride"! Hmm... Well that's one is definitely more benign, and even misleading as many riders are fully clothed or in bikinis.
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Old 11-14-2013, 12:25 PM   #56
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Also, in NO one can go topless during Mardi Gras.
This is a common misconception. The reality is, that:
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It's is important to know that nudity is illegal in New Orleans just as it is anywhere else in the country. So, if you believe everything you hear and see on TV, be careful. There are hundreds of arrests every year for public nudity and being in Central Lockup until your friends sober up enough to bail you out is no way to spend Mardi Gras.
from A Complete Guide on How to Plan a Trip to New Orleans Mardi Gras

This is why only tourists can be seen baring their breasts for beads. They just don't know any better.
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Old 11-14-2013, 12:27 PM   #57
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Hello there NW-Bound, Tom52, Animorph and Alan...

Thank you all for participating in the discussion and definitely thank you for drilling down on my basic expense line item for gasoline (which I presented as covering 200 miles per month at 20mpg for a cost of $35.)

It turns out that I've overstated my monthly gasoline cost under the basic budget. Every errand I could possibly have to run, I can do -- and do -- traveling a 20-mile round-trip loop once a week. That's 80 miles for the month, not 200. (Even my vet, my bank, my dentist, my mechanic, my Jiffy Lube station and my library are all on that same loop.)

(No, I never have to run out for an "emergency" quart of milk or a printer ink cartridge or what have you. I maintain redundant backup/substitute supplies of literally everything and that is why I never run out of anything.)

Of course, it also helps that I don't have to drive to a job and that I have the time flexibility to bundle errands together.

So I have to admit that a little discretionary driving has snuck into my basic living gasoline expense line item. That surplus 120 miles a month goes for drives to my favorite hiking/biking/fishing state park (an 8-mile round trip), hanging out visits to the library as opposed to returning/getting books during an errand run (a 9-mile round trip), possible meals at 2 or 3 "high toned" restaurants in town (all about a 10-mile round trip and totally discretionary, I know) and so on.

So, let's adjust the gasoline line item down to $14 a month and throw the excess $21 a month into the error allowance line item, which we'll now consider to be $950 a year. The overall budget is still $18,000 but we've actually got a little more elbow room for things that may have slipped through the cracks (like those dang-blasted postage stamps!).

My weekly 200-mile round trips to spend time with my wife are not included in my basic budget. Those costs get accounted for under discretionary spending (a separate and much more flexible budget) and are shared by my wife and I equally.

I hope that clears things up just a little bit more.

Cheers...

Alex in Virginia
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Old 11-14-2013, 12:31 PM   #58
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I think conventional house often come with a higher price tag than most people realize. Many of the posters I see on forums who have really low expenses but don't live in RVs often live in paid for condos with low HOA fees, they rent or they live in manufactured housing.
I could not get down at the claimed level being discussed here, no matter what I gave up.

I live in a paid for condo, for which in my opinion the dues are too low to adequately maintain the building long term. I currently do not own a car. I do very minimal traveling outside of Seattle, though in the future that might change. I eat few restaurant meals, though a Monday night football at a sport's bar with happy hour prices on good burgers and drinks will set me back $45-50 for two. In my experience, there just is no magic. You want some casual entertainment, you pay for it. You like heat in your house so your hands don't feel like they will fall off, you pay for it. You want medical care, you pay for it, one way or another.

For my condo, I pay 4% of purchase price in property tax and dues alone, and though the dues have been stable the tax goes up as the real estate market recovers. I don't think this amount is outlandish at all, our grounds are nicely landscaped the sidewalks kept clear of leaves and snow, the street-strip grass kept mowed. We get a break on this as a guy who lives here likes to do it, and is good at it, and needs the cash income. Leaves are a big deal, but without the trees along the street, it would be far less pleasing to live here. They are just now fading to yellowish from red, the ones which haven't yet blown down.

Something always equalizes. I used to live in the country where things were cheaper than Seattle. However, when my well pump gave up 400' feet down, that was not cheap. I couldn't walk down the street and go to a coffeehouse or meet a friend, so I put a lot of miles on my car. When I quit commuting I thought I would drive much less, but instead I learned that my amount of driving was largely driven by my needs for diversion, so if driving decreased at all, it was maybe 5%. And I was a 15 minute walk from the Sound, through a park. Still some days I wanted to fish in a river instead of the Sound, or go to town. Living in Seattle, I feel very little need to travel, but when I lived in LA, before I moved to the beach, it was out to the mountains or desert every weekend. Once at the beach, I went no farther than the 3 blocks to the sand, but my rent was higher, and I had to commute farther for work. Beyond a few easy things, frugality means doing without, at some level.

All I have to do when I read a thread like this is ask myself, would anything short of stark need make me choose to live this way? Absolute must-do need might, but I think then I might consider a step van and the Slabs first. Pull out the djembe and watch the dancing girls.

Ha
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Old 11-14-2013, 12:33 PM   #59
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Recently, I saw a news on how a topless bicyclist was causing traffic accidents in Massachusetts. The police stopped her and had to let her go because she was wearing pasties.

Oops. Should I have made it "him" and "he" in the above sentence, as Stacey Schnee is a transgender?

Well, to tie this to the thread topic, I will suggest that pasties cost less than a blouse or a T-shirt.
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Old 11-14-2013, 12:45 PM   #60
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I will try to be more serious now.

As we have been LBYM all our life and always underspent our income, we never had a budget. There was always money left over at the end of the month, and as we also never had a goal to save x% or y$, we never really cared what our expenses were.

When I seriously thought about ER, and came here to see how people stressed expense control, it dawned on me that I did not really know what our outflow was. Sure, we were LBYM, but when my earned income stopped, my M would be curtailed drastically. I also did not know what WR I should plan for.

I know a lot more now, thanks to Quicken. And that's all I use. No spreadsheets, but with a few quick clicks, I can see what I can cut down in case of an economic prolonged downturn. No more travel, no more dining out, no more charities and gifts, what that would save me? Sell the 2nd home (whose value is not even included in Quicken, only the expenses) for market value, what would that save me in yearly expenses?

So, in a way, although I do not have a set of "essential expenses", I do have a ranking order of priorities. For me, the bare necessities are not as low as $18K, but a lot lower than what I am spending now, and I feel safe enough with that.
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