How low can you go?

[Alex The Great]

Oops, I meant I shoot for $350 on the grocery budget for 2, not $300, but I don't always make it
On the cost of living in the Bay Area, most of the high cost is in housing, which isn't an issue for households who bought homes years ago. Our overall state and local tax burden is actually pretty low between Prop 13 and SS not being taxed. We ran the numbers before retiring and except for housing would not save much, if anything, if we lived in a lower cost of living area. There is a lot of price competition here for goods and services like groceries, so some things are actually cheaper for us than they are for relatives of ours in a more rural area. Our rural relatives live where there is only one big grocery store, one plumbing company and one Internet provider so they are all free to set monopoly rates.

Actually it is not always true, about housing in Bay Area. I bought mine in 2007, right before the recession. Right now, the market price almost double since then, but I still need to pay around $13K in property tax. On my estimation, after 10 years I would need to spend $20K annually even if Prop 13 stay as is. This is a serious factor which may force me to move out some day. But otherwise I completely agree, you always can make the cost of living less when shop around here.

 

[Katsmeow]

Yes, I am going to have to do something about my hair this week - at home. My youngest kindly commented something to the effect that I must have been under a lot of stress lately as my hair had turned gray (Maybe try to weave in some light brown streaks.) We'll see how that works out.

YouTube is your friend. I watched several videos on just followed them.

I have been coloring my roots myself for years. I tried a few different products until I found a brand and color that I liked best. I usually pick up a couple of boxes when I see it on sale or have a coupon, and it comes to maybe $6 or $7 a box. I color about every 10-12 weeks.

The big issue for me is I really need 40 vol developer and most grocery store kits are 20 vol or 30 vol. You can buy the color and developer separately on Amazon but have to figure out which brands, etc. I wish I could buy a kit. I would buy it from my hairdresser but she is charging $55 which is just too much.

I really dislike going to the hairdresser and have joked that I'd even cut my hair myself if I could. Well, COVID changed things as I didn't feel safe going to the hairdresser for a cut. I wear it past my shoulders, and have a lot of wavy hair, so don't need a frequent or precision cut. I decided to try cutting it myself and so far it hasn't been too bad. I watched some YouTube videos and have haircutting scissors as well as thinning shears. I think I'm getting a little better at it and am hoping to continue doing it myself in the future.

I was in the midst of growing out my hair from short to chin length when COVID started. So, by last month it was shoulder length and wasn't very even since it had grown out from a short cut. You could see where it had been shorter over the ears. So I bought a scissor set from Amazon. Had regular shears and thinning shears. I watched the videos. We did the thing where you put the hair in a low ponytail and then DH cut it. It came out pretty well. In evening it up, he got it maybe an inch shorter than I ultimately want it. He was a nervous to use the thinning shears (I have thick hair) so we didn't do that. It isn't as good as professional cut but is OK for now.

 

[Lstansbury]

Thank you

The amount is for two people on Medicare, but I realized that I only included one person's Part B so it really should have been $8k for two rather than $6k. Essentially $150/month for Part B, $10/month for Part D and $175/month for Medigap Plan G * 12 months * 2 people.

Before Medicare our costs were about the same but we had a special situation and were able to qualify for catastrophic coverage for $260/mo each and would have a couple grand of deductibles and co-pays in a bad year.

$10k for one under ACA is very reasonable. Have you checked out healthsherpa.com for plans in your area? Can you manage your income to qualify for ACA subsidies? Many people here do and end up with affordable health care costs.

Appreciate all who responded on the healthcare costs. The ACA route is complicated for a lot of reasons. But I will definitely keep the $10K+ in mind for annual healthcare costs. Makes a big difference in my attitude and to how I approach the daily grind.

 

[Time2]

Living in the Florida panhandle, paid off home, no debt. Property taxes about $1200. Three vehicles. I'm on Medicare, my wife and two kids are on her BCBS policy, our total cost for HI is $12,804. We spent $55,000 in 2020 including taxes.
I didn't include tuition cost for a grown child still in college, $60k+, but we only have one more year left and that's done.
Edit to add,
I want you to know I splurge about two times a month and buy a chocolate shake at

Chick-Fil-A.

 

[anothercog]

Actually it is not always true, about housing in Bay Area. I bought mine in 2007, right before the recession. Right now, the market price almost double since then, but I still need to pay around $13K in property tax. On my estimation, after 10 years I would need to spend $20K annually even if Prop 13 stay as is. This is a serious factor which may force me to move out some day. But otherwise I completely agree, you always can make the cost of living less when shop around here.

I'm in the same boat but it we see some real inflation over the long haul, our prop taxes will seem small in comparison. Though I pay over $15k, my neighbor only pays $6100 and their house is worth more than mine. However, they bought in 1987 whereas I bought in 2005.

 

[MrBig1]

I want to thank you fine folks for responding to this thread. I somehow assumed that my wife and I were the only couple here living and thriving on 56k. We lack for nothing and save money monthly simply living off Social Security and a small VA disability. We have never in the 4 years after my forced retirement had to dip into our TIRA. We will both be 65 in March. No debt is essential in our lives. Pre Covid we traveled 8 months of the year all around the west chasing cool weather and beautiful scenery.
We live in South Carolina and here we pay no income tax state or federal. Property taxes on home and vehicles runs about 4k a year. We travel to escape the brutal summer heat and humidity. Life is good.

 

[aleabo]

I want to thank you fine folks for responding to this thread. I somehow assumed that my wife and I were the only couple here living and thriving on 56k. We lack for nothing and save money monthly simply living off Social Security and a small VA disability. We have never in the 4 years after my forced retirement had to dip into our TIRA. We will both be 65 in March. No debt is essential in our lives. Pre Covid we traveled 8 months of the year all around the west chasing cool weather and beautiful scenery.
We live in South Carolina and here we pay no income tax state or federal. Property taxes on home and vehicles runs about 4k a year. We travel to escape the brutal summer heat and humidity. Life is good.

May I ask how you manage not to pay federal or state taxes? Especially if you younger than 65? Also how to you pay for medical/dental insurance?

 

[Gumby]

May I ask how you manage not to pay federal or state taxes? Especially if you younger than 65? Also how to you pay for medical/dental insurance?

MrBig1 may come back to answer for himself, but, in the meantime, I note that VA disability payments are not taxable at all - federal or state. Social security is only federally taxable if 1/2 of your social security + your other taxable income exceeds $32k (MFJ) If their only potentially taxable income is $56k in social security, then 1/2 of that ($28k) is below the threshold for federal taxation. And South Carolina does not tax social security at all.

 

[Surewhitey]

Living in a nice place in Dallas, we live on minimum of $24k annually. Add in all the taxes, insurance and travel, $45k. After FIRE, add in some for health insurance.

Forgot to mention, debt free on cars & home makes a big difference...

 

[Dtail]

May I ask how you manage not to pay federal or state taxes? Especially if you younger than 65? Also how to you pay for medical/dental insurance?

My question too on the Federal side with having SS payments.

 

[anothercog]

Living in a nice place in Dallas, we live on minimum of $24k annually. Add in all the taxes, insurance and travel, $45k. After FIRE, add in some for health insurance.

Forgot to mention, debt free on cars & home makes a big difference...

How is your health insurance/costs so low?

 

[MatatuPuncher]

Late to this conversation but it does provide for some escapeism to think about it. If I had to I could get my nut down to $1500/month. So that's $18,000/year which makes for about $450,000 total at the 4% rule.

This would be a safe but modest 1br apartment in Tucson and local based activities like cycling, skateboarding, tennis, gaming, minor league and college sports attendance etc... Food would have to be mostly home cooked. Medical could be swung with a bronze plan at about $100/month. Yearly dental work would be an easy bus ride south to one of the Mexican border towns once or twice per year.

An economy car might be doable in that budget but one would have to be able to get by on the local bus system if needed. My biggest issue would be cutting down the carousing budget, lol.

I could do it if I had to and be reasonable happy.

 

[anothercog]

I used to live in the USA (Brit with greencard) but now my Mongolian wife and I live in Nha Trang, Vietnam.

We live on about $800-1000 per month, so let’s say $12k per year. We just rent, pay no taxes, hold no debt. I only ride 2 wheelers which were paid for in cash. We don’t have health insurance in Vietnam but are covered in our home countries. Our current rental is a very nice big studio in a beachside hotel but we could cut that down substantially by living in an apartment. However, the hotel is our one extravagance because we like the amenities pool and gym). We mainly cook at home but occasionally eat out but that’s cheap too. There’s no opportunity for international travel at the moment so that’s saving us a lot.

We plan to move to Turkey when the pandemic has eased off. We’ll rent for up to a year (about $150 pm) and possibly buy our own place for $50k. Monthly Expenses should be less in Turkey than Vietnam so we can use some discretionary buying for things like more e-bikes and trips. $12k per year is 4% of my cash assets but we do some online work too, mostly she does.

I’m surprised Turkey will be less expensive than Vietnam. Do you have a kitchen in you studio? I heard it us very inexpensive to dine out in Vietnam. I don’t think we would move overseas permanently but wintering in Southeast Asia or Philippines could be a early retirement option for us.

 

[Surewhitey]

How is your health insurance/costs so low?

DW is with mega-Corp insurance who gives us a nice boost for the HSA choice and subsidies the premiums too. In the end, we pay approx $150 / mo for insurance we don't really use as we're both pretty healthy.

If/when she wants to RE again, we'll likely sign up with the ACA...

 

[pb4uski]

My question too on the Federal side with having SS payments.

But if you don't have significant income other than SS then SS is not taxable so it sounds very feasible if his VA disability isn't taxable income.... it would be like only having SS.

 

[Teacher Terry]

The IRS has a withholding calculator on it’s website. When I put in my pension and SS which equals 30k for just me it shows I don’t owe federal taxes. Now if I withdraw from investments that will obviously change.

 

[Dtail]

But if you don't have significant income other than SS then SS is not taxable so it sounds very feasible if his VA disability isn't taxable income.... it would be like only having SS.

True, was assuming the VA income was taxable.

 

[Bullwinkle]

The IRS has a withholding calculator on it’s website. When I put in my pension and SS which equals 30k for just me it shows I don’t owe federal taxes. Now if I withdraw from investments that will obviously change.

I figured even with investments it should be tax free if you can stay below 80k, because long term capital gains are at 0% up to 80k... I'm just asking to make sure because I frequently make mistakes around taxes!

I guess there are other kinds of investments, but for stock index at least it seems to be almost all capital gains, with a trickle of dividends. Come to think of it I'm not even sure how to get Vanguard to show how much in a year was due to dividends, short of add up all the individual "reinvested" messages.

 

[Mauser]

Wow - I'm new here, and I cannot believe how fast these threads grow! But here's our situation:

We live on 20 acres in the mountains, fairly remote. Mortgage is about $2,000/mo (includes insurance and taxes). Other than that, we have ZERO debt. Healthcare is VA and Medicare.

When we are not traveling, such as all of 2020, our total spend every month is about $1,000, and that includes somewhere around $1,000 on liquor every four months or so when we finally come down off the mountain to get to Sam's. Travel is 100% discretionary, so I consider anything spent on travel is meaningless as long as we can afford it.

I cannot say what our "budget" is - we do not use one. I used to obsessively record every penny in Quicken for 20+ years, but I quit that when they tried to force me to start paying an annual license for their software. The stats and reports I got from Quicken were interesting, but unnecessary. Now I just track what we spend only by how much I have to transfer into our checking account every month to keep the balance steady. I have never made a budget, simply because I find it a waste of time when I already manage money without a problem - I have always spent much less than I made, even way, way back when I was paid minimum wage to build mobile homes. I can pretty much buy whatever I want without worrying about the price, but I DON'T. I compare prices on a box of toothpicks, and I buy anchovies in bulk because the 4oz cans cost too much. etc. It has never seemed difficult to me to live frugally. And I guess that is why we do not have to worry about money now.

I will admit that DW wishes we wasted more money - she would rather spend $12 lb on meat at the store than eat the elk I put in the freezer - the same with vegetables at the store vs what I grow in the garden. But she is one of those who doesn't feel she is rich unless she can spend it and be seen (sigh). She eats out 2-3 times a week with her friends; I almost never do.

I am totally happy with my 28 yr old truck, but we will break down and buy her a new car this year, just so she can feel better spending some money. I guess that will effectively increase our "monthly" spend, even tho we will pay cash for it.

 

[SecondCor521]

I figured even with investments it should be tax free if you can stay below 80k, because long term capital gains are at 0% up to 80k... I'm just asking to make sure because I frequently make mistakes around taxes!

I guess there are other kinds of investments, but for stock index at least it seems to be almost all capital gains, with a trickle of dividends. Come to think of it I'm not even sure how to get Vanguard to show how much in a year was due to dividends, short of add up all the individual "reinvested" messages.

As long as your regular income is less than your standard deduction and your total income is less than the 0% LTCG bracket for your filing status, and you don't have self-employment income, and your provisional income is less than the threshold level and you don't create any taxes or penalties by early or non-qualified withdrawals from IRAs and 529s, then you'll generally have no federal taxes. State taxes may apply.

To see how much you've received in dividends throughout the year at Vanguard, you can log in, then go to "My Accounts", then "Tax Center", then "Quarterly summary" then pick the account you're interested in. At the end of the year (well in January actually), Vanguard should send you a consolidated 1099, and your total dividends will show up there on your 1099-B in boxes 1a and 1b.

 

[gayl]

You've been on this board for 16 years, even if you have mostly lurked, and have not seen people who live on a small amount of income?

Hint: they don't live in the SF Bay area.

I live in the SF Bay area, in Oakland, to be precise. Current annual spend is ~$27,600/year....

I live in SF Bay Area (north side of Mt Diablo) and live on 3120 a month. Quite well actually. House paid off, property tax 3k yr, only travel (pre-pandemic) 3× year and always overseas (Europe, South America, Indonesia, and Australia 2019). But then I'm single

 

[gayl]

Delete

 

[finnski1]

I live in SF Bay Area (north side of Mt Diablo) and live on 3120 a month. Quite well actually. House paid off, property tax 3k yr, only travel (pre-pandemic) 3× year and always overseas (Europe, South America, Indonesia, and Australia 2019). But then I'm single

Sounds perfectly reasonable to me. It seems that the HCOL card is thrown out a lot when people explain why they "can't" live on 40k or 50k or 60k or whatever. To me the only real high cost of these places is RE. I don't think you have to pay $80k for a Toyota highlander, as an example, in Silicon valley that you could by in Fresno for $40k. Same for food etc. but you certainly can pay 2,3,4x or more for a place to live. So if one has inexpensive or paid off housing it can get them way down towards a national average or median. I realize that state and local taxes can be in the same category as the RE but mostly I believe it is still the RE as the main culprit. I have seen several posts of people living in SF that support this.
Obviously this is not some earth shattering observation on my part but felt like stating it anyway.

 

[Music Lover]

I live in SF Bay Area (north side of Mt Diablo) and live on 3120 a month. Quite well actually. House paid off, property tax 3k yr, only travel (pre-pandemic) 3× year and always overseas (Europe, South America, Indonesia, and Australia 2019). But then I'm single

There are people here paying $12 - $15k a year in property taxes alone...that's perfectly fine as it appears they're happy and don't have to run to the food bank every week.

There are also people here who pay $3k or less per year on property taxes with a paid off house and don't have expensive hobbies. In those cases it's very possible to live quite well on about $3k a month.

 

[Major Tom]

Sounds perfectly reasonable to me. It seems that the HCOL card is thrown out a lot when people explain why they "can't" live on 40k or 50k or 60k or whatever. To me the only real high cost of these places is RE.

+1. The cost of housing is the factor that seems to differ the most when comparing the COL in different areas. Many of the other differences can be ascribed to lifestyle choices.

If you're in a HCOL area in California, and purchased your home a long time ago, you are most likely in a good place. Prop 13 is the gift that keeps on giving.