How low can you go?

[MarieIG]

Katsmeow, some of the things you spend money on are things I wouldn’t no matter how much money I have. Subscriptions , updating electronics or appliances before needed. I have a iPhone but will keep it until I have to replace it. I get my hair cut and colored every 12 weeks. I did it every 8 when working. We spent a lot of money on our pets. At one point it cost us 450/month for medications for 4 old dogs. After they died we decided just to have 2 because of the work rescue involved. Since I got the 2 I have when younger I bought pet insurance. It’s very important to me that my home is nice so I spend there as well as my pets. My other priorities are travel, dining out and experiences.

Let's just say since Covid; as for my hair, I probably should be walking around wearing a hood.

We have "broken the bank" on vet bills in the past although in theory do not currently have a pet.

(We have partial custody of a granddoggie who cost out beaucoup bucks for an emergency surgery in the past, and more recently an out-door feral has been spending a few hours a night on our living room couch.)

Taxes have always been our biggest expense; Federal; State and Property Tax. DH retired 12/26/19, so a portion of the cost of health insurance now comes out of his pension check, and insurance has become another major expense. Then comes auto, homeowner's and umbrella insurance. (Not fun stuff.) Our taxable income should be slightly less in 2020 - but not too much. Expenses have not yet decreased, but we will need to work on that this year.

 

[JJpop]

Our grocery spend has been less than $200 per month for two adults, not that I'm on a budget, I know because I pay cash and monitor my ATM withdrawals for accuracy.

These days I try to minimize my trips to stay as safe as I can, so I now alternate between Aldi and 99c Stores. In my experience both offer a wide variety at favorable prices even though the major chains may win on one or two loss leaders. By contrast a shop at places like Bristol Farms or Mollie Stone's would run several times the cost, albeit you would be getting premium organics instead of just the basics.

A few years ago my brother told me that his family's grocery spend (two adults and one child) is well over 10x ours, and I know they're not foodies and they don't drink alcohol, so it really depends on where you shop.

Even though I don't aim for sales, I usually know a good deal when I see one, for example: https://imgur.com/a/Z3spZy9

So 2 adults eat for about 6 dollars a day? 1 dollar per person for each meal. I would love to see what your typical meals consist of because it is impossible to eat a somewhat normal diet for that unless you are growing a lot of your own food.

 

[11522914]

Our current yearly budget is $66,000. In 2020 we spent $57,006.33. I applied the $2,400 stimulus funds against our expenses. That includes everything down to the penny. Anything left over goes into our sinking fund for auto purchase and home repairs/appliances but I have included in our expenses any home repairs made during the year. When we spend more than budget I will then use the sinking funds.

I use Quicken to track every expense. Been doing this for well over 20 years. Made it very easy to determine our expenses for retirement. I am as patient as a one particular blind cave salamander when it comes to finding a good deal. Never in a rush to buy. Our average annual expense over the last 12 years has been $57,660.61. This was for a family of 4 (DS moved out in May 2020) in MCOL area.

My DW just retired yesterday ��. Yay!! She has retiree medical where she only pays the same premium while she was employed. Kids will remain on her plan until they are 26. I fell off her insurance when she retired and will be on an ACA HDHP. As a retirement gift the company bought her a new dishwasher, washer and dryer to replace our 17-year-old appliances. Won't have to worry about some appliances for awhile.

We have no debt at all. Paid off home, cars, etc. Combined, we have hundreds of thousands of airline miles and hundreds of thousands of credit card points. Saved up over many years, some have been used for nice trips. I budget $5,000 for travel each year but since I don’t expect any airfare, hotel or car rental costs for at least the next 3-5 years, 5k is plenty. And I will still be accumulating additional points/miles.

Total vacation costs in 2020 was $61.80. LOL. A one-day round trip drive to the mountains.

This is just a part of how we are able to stay under an average 60k expenses per year. We never feel deprived and are very grateful for the retirement lifestyle we worked hard for.

 

[Teacher Terry]

JJ, I doubt that they are eating 3 meals a day in retirement unless they have very active lifestyles. I eat a granola bar for breakfast, my main meal at noon and a evening snack. I just don’t require all that food anymore. I remember my mom didn’t either.

 

[NW-Bound]

The OP asks: "How low can you go?"

I think I can go quite low. As low as the thriftiest posters here, and still have a roof over my head, and decent meals. Just as they do.

I do not need to do that, so I don't.

 

[Bullwinkle]

Our expenses, for 2 in in Silicon Valley, are around around 31-37k, plus 28k mortgage, so around 60 to 70. Groceries are about 3k at the local YuppieMart (not Whole Foods, but not too far off). Restaurants at about 2k. About 1-2k for house and pet things, 2k for transportation (down to 400 in 2020!). House repair / maintenance another 2-10k. Utilities about 3-4k, which are pretty fixed, trash/water/electric is 1.5k and pretty much 80% fixed cost, so it doesn't really matter how much we use. International travel 2-6k, though not this year! The rest is tuition, insurance, electronics, clothes.

If we pay off the mortgage then 30-40k would be a nice amount to live on, with our current status. We don't budget, buy whatever we want, travel when we can, etc.

I hear people say one place is HCOL while another is LCOL but they usually don't put numbers on and everyone has such a completely different and subjective definition of what normal expenses are, and for different numbers of people at different parts of their lives, and on top of that completely different standards of what "living" means.

 

[RobbieB]

I could probably cut to a hundred grand a year, but it would be painful.

 

[daylatedollarshort]

Our grocery spend has been less than $200 per month for two adults, not that I'm on a budget, I know because I pay cash and monitor my ATM withdrawals for accuracy.

These days I try to minimize my trips to stay as safe as I can, so I now alternate between Aldi and 99c Stores. In my experience both offer a wide variety at favorable prices even though the major chains may win on one or two loss leaders. By contrast a shop at places like Bristol Farms or Mollie Stone's would run several times the cost, albeit you would be getting premium organics instead of just the basics.

I'm a fan of 99 Cents Only and Grocery Outlet. I've been spending more now because we're doing mostly stores that offer curbside pickup, but when there isn't a pandemic my target is $300 a month for two. Our 99 Cents Only stores don't have the selection of Whole Foods, but they always do have a large selection of nice specialty items and fresh produce, some organic, and a lot of specialty items like fresh herbs, microgreens and gourmet mushrooms. I spend an average of around 80 cents a pound for produce and buy 30 pounds or so a week. Add in some other foods like dried beans and rice for $1 a pound or less, organic chicken on sale, and mixed nuts and we eat what we consider pretty healthy for around $5 a day. The prices at Whole Foods and the local supermarkets near us are often 4 times the prices of 99CO and Grocery Outlet for the same foods.

We don't live super cheaply, but I think we do pretty good budget-wise for a high cost of living area with seven figure housing. Groceries are inexpensive where I shop and we eat mostly plant based. Our ACA plan is $2 a month, the kids went to community college, state schools, had paid internships and received financial aid that covered most tuition. We bought our house a long time ago so with Prop 13 the property taxes are under 1/2 of a percent of the house value. We've tried to make the house energy and water efficient to keep the utility bills low. Most of our clothes are from Costco and we try to keep those pretty basic.

For fun I spend around $500 to $1K a year on passes for places like gardens, wineries, zoos, museums, parks, theater memberships and seat filler tickets, then a lot of what we do all year is free or cheap. Like we can go to Sonoma for the day, pack a picnic lunch, visit a state park, a garden and a couple of wineries and everything is free with the passes except gas for the car and tips at the wineries. If we wanted to see a specific play, symphony or ballet the tickets might be $200, but if we just do what pops up on the seat filler and discount ticket lists each week there's usually a pretty big selection of fun stuff to do that is free except for the membership costs.

 

[anothercog]

Our expenses, for 2 in in Silicon Valley, are around around 31-37k, plus 28k mortgage, so around 60 to 70. Groceries are about 3k at the local YuppieMart (not Whole Foods, but not too far off). Restaurants at about 2k. About 1-2k for house and pet things, 2k for transportation (down to 400 in 2020!). House repair / maintenance another 2-10k. Utilities about 3-4k, which are pretty fixed, trash/water/electric is 1.5k and pretty much 80% fixed cost, so it doesn't really matter how much we use. International travel 2-6k, though not this year! The rest is tuition, insurance, electronics, clothes.

If we pay off the mortgage then 30-40k would be a nice amount to live on, with our current status. We don't budget, buy whatever we want, travel when we can, etc.

I hear people say one place is HCOL while another is LCOL but they usually don't put numbers on and everyone has such a completely different and subjective definition of what normal expenses are, and for different numbers of people at different parts of their lives, and on top of that completely different standards of what "living" means.

What do you pay for property tax and insurance? Any kid expenses?

 

[Katsmeow]

We don't live in SF/CA, so let's leave it at that. We also live in a development of about 50 homes. Our house is a one story brick at 5000 sqft, on 7 acres of land, and our taxes are under $2K. ....

Life can be good when you don't feel the need to live in a high tax area.

I don't live in SF/CA either. I live in Texas and pay almost $6500 a year in taxes. It would be more if I didn't get some tax relief for being over 65. We don't live in a terribly expensive house. But, Texas has no state income tax and so you pay a lot in property taxes.

Is the $6k for medicare, medical, etc per person? I keep getting estimates of "you should budget $10k per year in retirement for health insurance!" And its keeping me from being able to pull the ER switch. Thanks.

This is readily available information. Part B coverage is $148.50 a month unless you are high income and pay a higher rate (you can go to the medicare web site and see how much that would be if you are higher income in retirement). A supplement varies a bit depending on which one. DH and I collectively are paying about $360 for our supplements. He is on Plan F (no longer sold) and I am on Plan G. We have no out of pocket Medicare medical expenses except my annual Part B deductible which is about $200.

Part D (prescription) plans are mostly cheap. Mine is $19.50 a month. There is a deductible but I don't take a lot of prescriptions. Neither does DH. You can look up Part D plans and their formulary for medications you regularly take.

Some things are not covered by Medicare and are not usually covered by most private health insurance such as eye glasses, regular vision exams, dental. We have a private dental plan so really dental is only a major expense if we have something major wrong. FWIW, during my late mother's later years her main health care expense was teeth (she had to have an implant which was expensive).

Katsmeow, some of the things you spend money on are things I wouldn’t no matter how much money I have. Subscriptions , updating electronics or appliances before needed. I have a iPhone but will keep it until I have to replace it. I get my hair cut and colored every 12 weeks. I did it every 8 when working. We spent a lot of money on our pets. At one point it cost us 450/month for medications for 4 old dogs. After they died we decided just to have 2 because of the work rescue involved. Since I got the 2 I have when younger I bought pet insurance. It’s very important to me that my home is nice so I spend there as well as my pets. My other priorities are travel, dining out and experiences.

Good example of how people vary on priorities. I am with you on the pets, but travel is of minimal importance. We go on a vacation every several years. Last "big" vacation was 10 years ago. We did a trip for a few days (about $1200 as I recall) 3 years ago. We were actually going to go on vacation last year but.... Now we are thinking maybe next year.... But a lot of what other people spend on trips we spend on doing things at home that we enjoy....

Let's just say since Covid; as for my hair, I probably should be walking around wearing a hood.

For the first 6 months or so after everything sort of shut down I just let my hair grow. I kept thinking I would get back to my hairdresser but it was never safe enough for me. Finally when my gray hair had grown out 4 inches (!) I contacted her and she mixed up color for me. I started out with dark brown hair but am almost completely gray now so blond works best for me. Anyway, I applied it to my roots with DH's help.

What I learned from this: coloring roots is very easy. I thought it would be hard since I am coloring it blond. But, no, it is really very very easy. Now, my hairdresser applied highlights every few months and I am not sure if I could do that. But, I am pretty sure that I will continue to do my own roots. I probably won't continue buying the color from my hairdresser. It is a lot less than having her do it would be but is a lot more money than it would cost for me to buy color and developer myself.

 

[Nick12]

I know someone who used to volunteer in a nursing home pre covid. Her meals were comped . That's a savings on food right there.

 

[ksr]

For the first 6 months or so after everything sort of shut down I just let my hair grow. I kept thinking I would get back to my hairdresser but it was never safe enough for me. Finally when my gray hair had grown out 4 inches (!) I contacted her and she mixed up color for me. I started out with dark brown hair but am almost completely gray now so blond works best for me. Anyway, I applied it to my roots with DH's help.

What I learned from this: coloring roots is very easy. I thought it would be hard since I am coloring it blond. But, no, it is really very very easy. Now, my hairdresser applied highlights every few months and I am not sure if I could do that. But, I am pretty sure that I will continue to do my own roots. I probably won't continue buying the color from my hairdresser. It is a lot less than having her do it would be but is a lot more money than it would cost for me to buy color and developer myself.

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.

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.

 

[Teacher Terry]

When COVID was bad I didn’t go to the hairdresser for 6 months. I considered going white but really hated it. I go to a one person shop and the stylist is my age with asthma so I know he’s careful. I am going to Europe with my kids in 2022 and that will probably be my last trip there. I have been there 4 times. I will continue to take cruises once it’s safe which will be a few years.

 

[MarieIG]

I don't live in SF/CA either. I live in Texas and pay almost $6500 a year in taxes. It would be more if I didn't get some tax relief for being over 65. We don't live in a terribly expensive house. But, Texas has no state income tax and so you pay a lot in property taxes.

. . .


. . .


Good example of how people vary on priorities. I am with you on the pets, but travel is of minimal importance. We go on a vacation every several years. Last "big" vacation was 10 years ago. We did a trip for a few days (about $1200 as I recall) 3 years ago. We were actually going to go on vacation last year but.... Now we are thinking maybe next year.... But a lot of what other people spend on trips we spend on doing things at home that we enjoy....


. . .


For the first 6 months or so after everything sort of shut down I just let my hair grow. I kept thinking I would get back to my hairdresser but it was never safe enough for me. Finally when my gray hair had grown out 4 inches (!) I contacted her and she mixed up color for me. I started out with dark brown hair but am almost completely gray now so blond works best for me. Anyway, I applied it to my roots with DH's help.

What I learned from this: coloring roots is very easy. I thought it would be hard since I am coloring it blond. But, no, it is really very very easy. Now, my hairdresser applied highlights every few months and I am not sure if I could do that. But, I am pretty sure that I will continue to do my own roots. I probably won't continue buying the color from my hairdresser. It is a lot less than having her do it would be but is a lot more money than it would cost for me to buy color and developer myself.

NY has both high income and (at least for me) high property tax on a very unimpressive house.

Re travel, I could be happy with minimal travel except will visit children/ grandchildren; and my elderly in-laws.

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.

 

[dunkelblau]

So 2 adults eat for about 6 dollars a day? 1 dollar per person for each meal. I would love to see what your typical meals consist of because it is impossible to eat a somewhat normal diet for that unless you are growing a lot of your own food.

We mostly cook from scratch, and we have flexible tastes so we're fine with whatever's a good deal. That running FIRE joke about "lentils and rice" we've made a significant base for our regular diet. We almost never eat beef or lamb, shellfish, or wild-caught salmon; mostly it's chicken, eggs, and the like. For me a microwaved russet potato or a peanut butter sandwich works just fine for lunch. I realize this isn't "normal" vs say junk food, but I don't feel disadvantaged by our food choices. Our landlord prohibits vegetation on the patio, so no we're not running a hobby farm either.

I'm a fan of 99 Cents Only and Grocery Outlet. I've been spending more now because we're doing mostly stores that offer curbside pickup, but when there isn't a pandemic my target is $300 a month for two. Our 99 Cents Only stores don't have the selection of Whole Foods, but they always do have a large selection of nice specialty items and fresh produce, some organic, and a lot of specialty items like fresh herbs, microgreens and gourmet mushrooms. I spend an average of around 80 cents a pound for produce and buy 30 pounds or so a week. Add in some other foods like dried beans and rice for $1 a pound or less, organic chicken on sale, and mixed nuts and we eat what we consider pretty healthy for around $5 a day. The prices at Whole Foods and the local supermarkets near us are often 4 times the prices of 99CO and Grocery Outlet for the same foods.

We used to shop Grocery Outlet regularly, but ours is a small-ish store that seems pretty busy most times, so we'll go back after we get vaccinated. Ours does salvage, meaning meat+dairy they'll mark down 90+% on the expiration date. I've heard they're also standout on reasonably priced organics. Hard to beat their offers on frozen foods and discounted breakfast cereals, but their fruit/veg isn't very good. Unfortunately their steep markdowns are scattered throughout the store, so we've switched to Aldi during the pandemic. Aldi rarely marks down by much but their base prices are lower.

Now our 99 is well-stocked with vegetables and fruits, and prices are low enough here that I don't bother checking out their clearance shelf (IMO half that stuff really isn't sellable...). Last week they were overflowing with boxes of frozen salmon burger patties at $1 for the 1-lb box. Occasionally they have clearance sales on Oscar Meyer deli chicken or ham-- $1 for 16oz. But they regularly offer tomatoes at $1/lb (or $2/3lb) and usually have huge cauliflower heads for $1. Decent sized cabbages too.

 

[Poopycat]

Our property tax has touched $12K this year. One of the reason I planned a move to a large (to me) country property with a half the size of the house. Property tax is going to be $3K in the new place. House hack if can call that: We realized that lot of the space in our current huge house was not even used which we pay tax and utility for. So we built a small dwelling on a large land, plan to build a huge "shop" with play/storage areas and the empty land has use-based agricultural valuation which has close to zero property tax.

For those on the coasts who are considering TX, plan to spend a lot more than you might expect on property tax. TX doesn’t have income tax, but it has rather high property taxes to compensate. $15K/year on property tax for a $600K home may be about right.

When I lived in south central TX, I lived in a $435K house and my property taxes were nearly $13K/year. That was three years ago and I’m sure taxes have gone up since then. Fortunately, if you move to many parts of TX, you can still get a decent enough home for <$300K. But taxes will still be unexpectedly high for you.

 

[braumeister]

TX doesn’t have income tax, but it has rather high property taxes to compensate.

From what I've seen, that equation applies to a number of states. They have to get money somehow. Sales tax, income tax, and/or property tax.

 

[finnski1]

From what I've seen, that equation applies to a number of states. They have to get money somehow. Sales tax, income tax, and/or property tax.

Yes. In NH we have high property taxes but overall tax burden is very good(low) compared to many. Somehow we are the only NE state to get way down (#45) on the list. Has been this way now for the 32 years we have lived here.

It was a large benefit while we were both working. In retirement, the high property tax tends to hit widowers and widows as well as low savers.
Sometimes prices them right out of their long held family homes which somehow just doesn't seem right. For us we are still way ahead and very much like living here.

https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494

 

[frank2009]

Paid off the mortgage, by far my largest expense in October of 2020. I could probably survive on 20k a year. It would be miserable though.

 

[Boose]

Late to this discussion but wanted to highlight a complication to low-income retirement that I discovered while working a free meal delivery hotline during the pandemic. Our callers were seniors (usually the "oldest old" who were still living alone) and/or SAH caregivers of significantly disabled adult children. Many had SS incomes of $12,000/year or less, were living in paid-for homes or subsidized housing, and relied on public transportation or rideshares to get to the grocery store. Once covid hazards were added into the mix, the fact that they couldn't afford Internet, paid food/grocery delivery, or cars meant that they had few options for getting food. Many were candidates for food stamps but couldn't get to the market without the risk of contracting covid on a long bus ride. Sure, this is a scenario that (hopefully) won't happen often, but it heightened the importance of having spare cash to temporarily or permanently "upgrade" one's frugal routines.

 

[Vacation4us]

First few months of retirement for us. Never had a budget before but DH is now tracking every expense to the penny. He’s worried we can’t make it on his pension alone. I am not worried at all.

Time will prove me right I am sure. We own 2 homes have 1 paid for and 1 rented. Pension after taxes is 10 k a month. If we can’t manage on that we are a sorry lot.

In 11 years I will have 2 very small pensions totaling 1.4K a month and equal SS for me alone. Then RMDs at 72. Our biggest expense will be taxes property, federal, and state.

I can’t even fathom living on 20 k when our property taxes are 10k. I cook more at home than ever and we are feeding 4. 1 of which is a 250lb muscle machine with an endless appetite.

 

[Bullwinkle]

What do you pay for property tax and insurance? Any kid expenses?

Property tax and house insurance is included in the mortgage, it makes up about 8.4k of that. Health insurance is from work. So "just subtract mortgage" estimate was way too optimistic! Good catch.

No kid expenses, I expect a lot of the difference between what people consider baseline is kid expenses.

 

[Maidensong]

The whole trick to living on less is living in a LOCL area. The median income in our county per household is just under $40K. We don't stay anywhere near that, especially with all the traveling we like to do when the world isn't insane with Covid, but in a pinch, I see how we could. I checked our town on a Cost of Living calculator compared to the SF Bay area and SF is 113% more expensive.

Of course, we have no world class opera company (have to make do with the local community theater's annual musical). There are fewer choices for dining here, but we do have a new Thai place that just opened (Imagine that! Thai food in the Ozarks!) No professional sports teams in our area, but our local state college offers football, basketball, & womens' volleyball. We don't have a big aquarium, but we live about five minutes from a Blue Ribbon Trout stream.

It's like they say, "Take what you want and pay for it." If a HCOL place offers you more of what makes you happy don't worry about others living on less.

 

[anothercog]

The whole trick to living on less is living in a LOCL area. The median income in our county per household is just under $40K. We don't stay anywhere near that, especially with all the traveling we like to do when the world isn't insane with Covid, but in a pinch, I see how we could. I checked our town on a Cost of Living calculator compared to the SF Bay area and SF is 113% more expensive.

Of course, we have no world class opera company (have to make do with the local community theater's annual musical). There are fewer choices for dining here, but we do have a new Thai place that just opened (Imagine that! Thai food in the Ozarks!) No professional sports teams in our area, but our local state college offers football, basketball, & womens' volleyball. We don't have a big aquarium, but we live about five minutes from a Blue Ribbon Trout stream.

It's like they say, "Take what you want and pay for it." If a HCOL place offers you more of what makes you happy don't worry about others living on less.

The two main things I really like about where I live now is the year round comfortable weather and proximity to airports. I assume we will move to a LCOL area some day. I'm sure we will want to be near our kids and it is hard to imagine our kids being able to settle down around here due to the HCOL. Most of my neighbors' kids have moved far away.

 

[daylatedollarshort]

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.

Related link : Cost of living is really about housing
https://www.bloomberg.com/news/articles/2014-07-21/cost-of-living-is-really-all-about-housing