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04-01-2008, 04:27 PM
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#121
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 44,378
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Quote:
Originally Posted by REWahoo
It's my understanding that prices in La La land are some of the highest in the country....
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La La land is definitely not on my list of tempting ER locations!
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04-01-2008, 04:32 PM
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#122
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 11,446
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04-01-2008, 05:19 PM
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#123
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Administrator
Join Date: Apr 2006
Posts: 15,752
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..
__________________
Living an analog life in the Digital Age.
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04-01-2008, 05:27 PM
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#124
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 44,378
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Quote:
Originally Posted by Moemg
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I really think the undisputed kings of LBYM are Khan and UncleMick (in his former cheapbastardhood life, that is), and a few others around here who probably know they fit that description. I don't even come close. I do try! Or at least I did, before my recent extravagances.
It's a $400K house NOW...  We sold it in 1984. My ex borrowed money from his mommy to buy it.
I know, I know - - my life is just EVER so fascinating. (yawn)
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04-01-2008, 05:39 PM
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#125
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
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Quote:
Originally Posted by kombat
Sure, but would we really save that much by downsizing? I'm sure we'd save a few hundred, but in a budget of $94,000/year, is it worth lowering our living standards to save a few hundred when we're already doing fine (debt-free, saving $2k/month)?
Besides, our house is a "normal" size for a family with kids (we just happen to not have/want any), and thus our budget is (I would bet) actually quite conservative and frugal. My point was simply to illustrate that it's not actually very hard to spend $8k/month on just the basics of living. It's not like $8k/month gets you a Corvette, boat, private plane, country club membership, etc., as others seemed to assume. It gets you a house, a '05 Mazda 3, and a bus pass. 
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You are heating several empty rooms in the coldest capital city in the world. Some people might call that waste.
But you could always fill the rooms with the patter of little feet, I suppose......
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04-01-2008, 05:48 PM
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#126
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 44,378
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Quote:
Originally Posted by Meadbh
You are heating several empty rooms in the coldest capital city in the world. Some people might call that waste.
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I have not lived in a cold climate in quite a while. Still, I would think that in cold weather, extra room would be really useful for things like a home gym, a large pantry, and recreation areas such as a music room in case you didn't feel like going out. On the other hand, the heating bill for such amenities would be pretty high.
Quote:
Originally Posted by Meadbh
But you could always fill the rooms with the patter of little feet, I suppose......
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 I won't say a word!
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04-01-2008, 05:56 PM
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#127
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 11,446
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Quote:
Originally Posted by Want2retire
I really think the undisputed kings of LBYM are Khan and UncleMick (in his former cheapbastardhood life, that is), and a few others around here who probably know they fit that description. I don't even come close. I do try! Or at least I did, before my recent extravagances.
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I don't know about Khan . He gives a good chunk of money to charity ( which I really admire him for )and Uncle Mick has reformed so you may be in the running .
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04-01-2008, 06:03 PM
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#128
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Thinks s/he gets paid by the post
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
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kombat,
Your expenditures for the most part look fine to me. But it does appear you might be "cooking the books" a bit. Calling $24k/yr ($2k/mo) that is going into savings/investments an expense. Stating $7.5k/yr ($625/mo) car maintenance and replacement allowance. You could replace your '05 Mazada 3 with 2.5 years of allowance. Since you still have a '95 Honda, we can probably assume you will keep your vehicles about 15 years (or longer); therefore 1 new car every 7.5 years. Maintenance on Hondas and Mazdas is cheap. I have a '92 Honda Accord and a '97 Mazda Miata. Your yearly vehicle replacement allowance and maintenace costs are probably closer to $2.5k than $7.5k. I would also question $12k/yr ($1k/mo) for discrecinary expenses. I suspect about 50% of this is going into savings. We put everything except utilities on a bankcard and pay it off each month. Easier to track expenditures. Last month we spent $780. That was food (including dining out); gas (included a 1,000 mile trip); wedding and house warming presents; DW spent $198 on clothes and $108 on quilting supplies.
Please do not take this the wrong way. I do think you are doing is great, but I think there is about $35k/yr you are calling expenses while they should be listed as savings (24k listed as savings; 2/3 of the $7.5 auto account; 50% of the discrecinary account).
With that being said, I believe $60k/yr ($5k/mo) is more like your true expenses.
While I have always paid cash for any of my vehicles, I agree (and do the same as you) by adding in a sum for replacement costs into my expenses. While paid for, they will eventually wear out and require replacement. Our vehicles are on a 20 year replacement schedule. While savings is not a true expense, if everyone treated it as one and paid into it the same as a house payment, etc. we would probably have less people dependent upon Government handouts.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
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04-01-2008, 06:19 PM
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#129
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Recycles dryer sheets
Join Date: Sep 2006
Posts: 372
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Quote:
Originally Posted by kombat
Is it really so difficult to imagine? My wife and my monthly expenses are $8K/month.
Granted, the couple in the article are utterly oblivious to their own idiocy. They've made their bed and will lie in it.
But for middle-class DINKs, $8K-$10K/month isn't that hard.
$2,100 - Mortgage
$2,000 - Retirement savings
$400 - Property taxes
$700 - Groceries
$600 - Car payment, maintenance fund
$500 - Natural gas, electricity, water, phone, cable, internet
$1,000 - Discretionary spending ($500/each)
$300 - Insurance - car, home, life, disability (this is Canada, hence no medical insurance)
$400 - Gas for car, bus pass, house maintenance
That, in fact, is pretty much our exact budget. It's not as hard as you think. Keep in mind, that's all *after* tax money. Neither my wife nor I have 6-figure incomes.
Note that that doesn't include a gardner or a housemaid, no country club dues or fancy sports cars, no boats or private planes. Note that there isn't even an item in there for clothing, dining out, gifts, hobbies, or vacations (that all comes out of our "discretionary" money). I don't have a cell phone, I won't even pay for "caller ID" on our landline. We don't get the movie channels. I take the bus to work and brownbag my lunch every single weekday. We actually live quite frugally.
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Add a few kids to that mix and see what happens! Kids that drive. Oh yeah and kids that wreck. Ouch!
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04-01-2008, 08:05 PM
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#130
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Thinks s/he gets paid by the post
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,934
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Quote:
Originally Posted by Arc
Add a few kids to that mix and see what happens! Kids that drive. Oh yeah and kids that wreck. Ouch!
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Oh yeah, the kids & insurance. DS is 18 & in 1st year college, just his part of car insurance is $2K. Fortunately he is at a state college. We look forward to a financial 'bmp up' in 3 1/2 years.
Picked an interesting time to retire 30 days ago....
__________________
T.S. Eliot:
Old men ought to be explorers
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04-01-2008, 08:13 PM
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#131
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,555
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A couple of thoughts.
I suspect that probably 80% of the board regulars spend between 4K - 8K/month, with housing payments and kids accounting for the bulk of spending differences.
Kombat retirement savings isn't spending, in fact $2K/month is impressive saving as is 25% of your income.
I find this nice wiki article on house hold income a good reality check. Only 15% of all households make over $100K. So while median income does vary by region anybody spending more than 10K/month is actually spending more than twice the median income.
I'll concede that for a couple with a two or three kids in a coastal city you can spend $10K/month without doing anything ridiculously extravangant. However, for a DINK like these folks use to be there are plenty of ways of cutting back and trading a vette for a Suburban ain't one of them.
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04-01-2008, 08:18 PM
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#132
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Thinks s/he gets paid by the post
Join Date: Apr 2007
Posts: 1,304
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Quote:
Originally Posted by Razor
Actually $3000 a month got me a house, a Corvette, boat, country club membership, but no private plane.
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I think living in Iowa helps. Move to NYC, Chicago, SF, LA or some other metropolitan area and your bucks don't go so far.
In response to the McMansion bashers, I don't have one but do have a nice size (2200 sf) house in a metro area. Yes it costs a lot to maintain it. The options are to move somewhere less expensive, however there are family considerations, ...etc. So one sometimes has to 'pay the price'. I am not complaining ... just explaining how one can have $70k in expenses and not be living extravagently.
__________________
Life is GREAT!
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04-01-2008, 08:39 PM
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#133
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Thinks s/he gets paid by the post
Join Date: Apr 2007
Posts: 1,304
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Quote:
Originally Posted by Moemg
Sometimes I think some of this board is in La La land about house prices in other areas .
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Agreed
__________________
Life is GREAT!
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04-01-2008, 09:45 PM
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#134
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Recycles dryer sheets
Join Date: Aug 2007
Posts: 433
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Quote:
Originally Posted by tiuxiu
Yep. It's an unfathomable goal for most.
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Oh, I don't know.
I know a fellow that must save at least 75% of net.
Probably more.
__________________
Consult with only myself as your adviser or representative. My thoughts should be construed as investment advice of the highest caliber. Past performance is but a pale shadow and guarantee of even greater results in the future.
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04-02-2008, 06:16 AM
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#135
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Full time employment: Posting here.
Join Date: Sep 2007
Posts: 514
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Quote:
Originally Posted by packrat44
it does appear you might be "cooking the books" a bit. Stating $7.5k/yr ($625/mo) car maintenance and replacement allowance.
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OK, there's a bit of a story behind that. I'll make it as short as possible.
1999 - Graduated university, started my first job, bought a brand new Volkswagen Jetta. Payments were $656/month for 5 years (do the math - that's $39,360 for a Jetta! Ugh, so young and foolish). Planned to keep it until it falls apart.
2004 - Car is rear-ended and totaled, with 3 payments still owing ( click here for photos of the crash). Insurance paid out $13,000. Used the money to buy a used 2001 Passat. Over the course of the next year, the Passat cost us $4,000 in repairs.
2005 - Sick of the neverending repair bills, we traded in the Passat ($6,000 trade-in value) towards a brand-new Mazda 3, and bought the longest extended warranty possible (7 years or 160,000 km). Once again, take a look at the math. We bought a Passat for $13,000, invested $4,000 in repairs, for a total investment of $17,000. A year later, it was worth just $6,000. Holy depreciation, Batman! My opinion of car ownership has taken a savage beating.
2008 - Mazda is paid off, and I don't want to get too used to having that $600/month back in our budget, so I'm setting it aside in a separate account as though we still had a car payment. This will reduce the pain when we inevitably have to replace another vehicle unpredictably.
We bought a relatively bare-bones Mazda 3, and with the trade-in, our monthly payments were $600 (for 3 years this time, instead of 5, as with the Jetta). So with the 5 years of $656 Jetta payments, the year of unpredictable Passat expenses, and 3 more years of $600 Mazda payments, I've pretty much just resigned myself to the fact that one way or another, it costs $600/month to own a car. But at least the Jetta/Mazda bills were predictable. That year with the Passat was horrible for our budget.
If we end up with more money in the "car fund" than we need, then that's certainly better than not having enough. The excess will go towards retirement savings, vacation (we still have never gone on a honeymoon), or towards the mortgage.
Quote:
Originally Posted by packrat44
Since you still have a '95 Honda, we can probably assume you will keep your vehicles about 15 years (or longer);
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That's certainly the plan, but as I've learned, you can't control what other idiots on the road will do. Who knows how long that Jetta would've lasted us if it hadn't been totaled. But we were forced to replace it, and the next car (Passat) cost us $11,000 in repairs and depreciation in just 1 year.
EDIT: I forgot to mention the Honda. My wife and I carpooled initially, but after the layoffs at JDS and Nortel, we needed separate vehicles. I bought a '95 Honda (in 2002) for $6,000 cash. It's cost me almost nothing in repairs, and sips fuel. Great little car.
Quote:
Originally Posted by packrat44
I would also question $12k/yr ($1k/mo) for discrecinary expenses. I suspect about 50% of this is going into savings.
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Haha! I wish I could say it was!  No, unfortunately it turns out I like spending money. My wife and I have tried a $300/month spending allowance, and I couldn't stick to it. I'm finding I'm able to manage with $500/month though. I enjoy beer on the weekends, woodworking, and some other hobbies. My wife, on the other hand, makes her own wine and is content to spend the whole weekend reading books in peace and quiet. She has trouble spending her whole $500, while I'm in self-deprivation mode by the 4th week of the month!
The benefit of this money, however, is it insulates my spending habits from the rest of the budget. The rest of our budget is pretty much on auto-pilot, and as long as I stick to my $500/month "allowance," our finances remain perfectly on track.
Quote:
Originally Posted by packrat44
Please do not take this the wrong way. I do think you are doing is great, but I think there is about $35k/yr you are calling expenses while they should be listed as savings (24k listed as savings; 2/3 of the $7.5 auto account; 50% of the discrecinary account).
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Fair enough, I suppose, although my experience with cars in the past decade has conditioned me to err on the side of overestimating rather than underestimating. And you needn't worry about hurting my feelings, this is a finance/retirement forum, I welcome comments on my plan.
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04-02-2008, 06:49 AM
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#136
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 463
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Quote:
Originally Posted by clifp
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Thanks for the link! According to the article, the lowest income for the top quintile (what I call "upper class") is $88,030.
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future
"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
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04-02-2008, 08:40 AM
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#137
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Thinks s/he gets paid by the post
Join Date: Sep 2006
Posts: 1,320
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According to that article, our household income puts us into the upper class. However, I can assure you that we do not spend anywhere near that level due to our LBYM lifestyle, and our neighbors would be surprised to know our income level. I suppose we fit the profile of the "millionare next door" (not to suggest we are millionares, we are not).
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04-02-2008, 08:52 AM
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#138
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,624
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Wow, 7 pages already.
Lots of discussion around " Is $10,000 per month 'a lot' of money? "
I've got two comments:
First, the $10,000 per month in the original article was: "Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month."
The $10,000 did not include food, clothes, cars, utilities, entertainment, etc. (unless they were funding those with home equity loans)
In my mind, that makes the $10,000 "a lot of money". The average American family doesn't come close to that number for those few expenses.
Second, the Wiki article above is a good reality check. With all the numbers in that article, I don't see "Median income for a family of four". I think that number is about $70,000. That is, the median family of four is spending less than $6,000 a month on everything combined (including payroll taxes) if they are spending every dollar they earn.
If they are saving a meaningful amount, then they are spending noticeably less than $6,000 per month.
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04-02-2008, 08:55 AM
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#139
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 463
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Lower limits for:
Second quintile (Lower Middle Classs) $18,500/yr = $1,542/mo
Third quintile (Middle Class) $34,738/yr = $2,895/mo
Fourth quintile (Upper Middle Class) $55,331/yr = $4,611/mo
Fifith quintile (Upper Class) $88,030/yr = $7,336/mo
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future
"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
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04-02-2008, 09:00 AM
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#140
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Recycles dryer sheets
Join Date: Oct 2007
Posts: 463
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Quote:
Originally Posted by Independent
With all the numbers in that article, I don't see "Median income for a family of four" I think that number is about $70,000.
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True. The Census numbers are per household, and don't adjust for number of people in the household. Would be interesting to know that number. Would also be interesting to have it broken down by single income and double income household of four.
__________________
TickTock Rule Of Finance - heavily discount any promises of money/benefits to be paid to you in the future
"I've traded love for pennies, sold my soul for less" -Jim Croce, Age
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