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How low can you go?
Old 01-24-2021, 05:43 PM   #1
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How low can you go?

I'm somewhat amazed on what people say they live on. I saw one guy said his annual budget is $15k!? How is that even possible in America.

Even after I pay off my mortgage, my property taxes, HOA, insurance and light maintenance will still run $20k/year. I'm sure my expenses will drop considerably once my kids are grown and hopefully financially independent but I can't see how DW and I can get any lower than 80k/year including health care costs and that is with cutting travel to the bone.

I'm not interested in a retirement where we have to live with roommates and live off ramen. I already did that in college.

For those couples living on less than $60k/year, how do you do it? What does your budget look like?
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Old 01-24-2021, 06:16 PM   #2
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Not me, but there are enough folks on this site who live on less than 60k.
Hopefully you get some responses.
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Old 01-24-2021, 06:23 PM   #3
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Once your house and vehicles are paid off it's pretty easy!
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Old 01-24-2021, 06:24 PM   #4
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Once your house and vehicles are paid off it's pretty easy!
My real estate tax is $15k a year.
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Old 01-24-2021, 06:27 PM   #5
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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.
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Old 01-24-2021, 06:32 PM   #6
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You live in the SF Bay area, so your perspective is skewed. The median household income in Missisppi is $48k.
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Old 01-24-2021, 06:35 PM   #7
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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, but it's only that high because about 18 months ago, I purchased a campervan, and have been fixing it up. Before I bought the van, my only form of transport was a bicycle, and annual spend was at around $17-$18K.
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Old 01-24-2021, 06:43 PM   #8
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Good on you, Major Tom! I should have said, "most don't live in the SF Bay area."
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Old 01-24-2021, 07:00 PM   #9
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I'm somewhat amazed on what people say they live on. I saw one guy said his annual budget is $15k!? How is that even possible in America.
It can vary also because of what some people are or are NOT including in their figures. Bare bones, sinking funds, health insurance, discretionary spending, etc.

Of my take home pay, what actually appears on my paycheck after taxes and health/dental is taken out, my yearly non-discretionary budget is $1100/mo., which is $13,200/yr.

If you include my health/dental insurance and money that I factor in as a sinking fund for a future car and long term home maintenance items, that figure jumps to $18,540/yr for all non-discretionary spending.

I also spend $1000 to $2000/yr on discretionary, which can sometimes get me above $20,000/yr in total spending.

My house and car are paid for. I have no revolving debt. I never eat ramen noodles, but I don't eat out much (even before the pandemic), and I'm not into traveling at all.

My savings rate is over 80% and is around that year after year.

My FIRE allowed spending budget (drawdown from stash) for just me is over $70,000/yr if I retire this year. I honestly don't see how I'm going to spend that much, even with the extra free time I'll have. It's a good problem to have.
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Old 01-24-2021, 07:10 PM   #10
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We don't budget any more - income exceeds expenses by a goodly amount - but we do track everything in Quicken. Both 71YO and we have a house in Oregon (bought 1995 and spent 6 years making it habitable) and one in La Quinta CA (2004 build, bought at auction in 2010). both paid off. 2009 BMW 328 wagon and a 2017 Maxda CX5. Bought the BMW used and the CX5 new, both for cash, totalling about $45k. Our biggest expenses by far in 2020 were the state and federal taxes, thanks to selling some rentals and having a stack of interest income and rental and property loan and contract income. Not counting income taxes, but counting home property taxes ($5514) we spent $36,932 last year. Dining was $2231, food was $4803, electricity $1144, natural gas $441. Dental was zero, medical $2081.

I'm sure we should be "budgeting" for roof replacement, AC or furnace failures; that sort of thing, but we just don't need to. If stuff comes up we pay for it. Our trip to Guatemala in January of 2020 was made with points earned on various credit cards used mostly for rental expenses. Running close to the edge financially is expensive - having enough makes life cheap.
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Old 01-24-2021, 07:11 PM   #11
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My real estate tax is $15k a year.
Plus 1..... Mine is $20K so I can't relate. But, I wish I could! Shoot me now.....
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Old 01-24-2021, 07:15 PM   #12
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Originally Posted by anothercog View Post
I'm somewhat amazed on what people say they live on. I saw one guy said his annual budget is $15k!? How is that even possible in America.

Even after I pay off my mortgage, my property taxes, HOA, insurance and light maintenance will still run $20k/year. I'm sure my expenses will drop considerably once my kids are grown and hopefully financially independent but I can't see how DW and I can get any lower than 80k/year including health care costs and that is with cutting travel to the bone.

I'm not interested in a retirement where we have to live with roommates and live off ramen. I already did that in college.

For those couples living on less than $60k/year, how do you do it? What does your budget look like?
On this thread a number of folks (including myself) posted details about their 2020 spending. It may help give you a better idea of what is possible: https://www.early-retirement.org/for...is-107122.html
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How low can you go
Old 01-24-2021, 07:19 PM   #13
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How low can you go

I/we live on exactly $60,000/yr. We live in a $245,000 condo home/cottage of almost 2000/sqft in Summerville, SC. We have 14 years left in our 15 year mortgage. We have 2 cars. A 2014 VW Tiguan loaded with sunroof, Nav and everything else. It is paid for. We just turned 50K miles on it. It is our “local” car.
We also have a 2018 Audi Q3. Loaded again. Low miles yet we have traveled to every state east of the Mississippi, to Maine, to Florida a dozen times or more. I owe $19,000 on it. At 1.9 interest rate.
We have no consumer debt. Our 4 chi are grown and in their own. Each has a family. They all went to premium universities. 3 are done with student loan payments, the youngest has 2 years left. Each had $25,000 in loans so they learned how to handle debt.
We take several vacations a year. Last year we went to Naples, Florida, Apalachicola, Florida, Michigan, Wisconsin and California (flew) rented car there.
We are fortunate. We have enough. Nice home, nice cars, nice furniture, nice friends. We have our health. And we have each other after 59+ years.
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Old 01-24-2021, 07:31 PM   #14
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Good on you, Major Tom! I should have said, "most don't live in the SF Bay area."
You're right, of course, that living on a modest income is harder in a HCOL area - especially if you're paying current market rate for housing. That's the big budget buster, IMO. Those who bought their houses a long time ago are in good shape, especially with the help of Prop 13, to keep their property taxes affordable. Similarly, those who rented apartments in rent-controlled areas a while back are also somewhat protected against sharp increases in rent. I'm in a relatively unique situation, as I live in a housing co-op. Monthly fees are low, but I'm not overly thrilled with co-op living. It puts me a little closer to my neighbors than I'd like to be. Anyway, the rent is cheap so, for the time being at least, I'm not complaining, and I have other options for the future.

One thing that works quite well for me is that I am content with a materially very modest standard of living. It doesn't take much to keep me happy.
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Old 01-24-2021, 08:06 PM   #15
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I/we live on exactly $60,000/yr. We live in a $245,000 condo home/cottage of almost 2000/sqft in Summerville, SC. We have 14 years left in our 15 year mortgage. We have 2 cars. A 2014 VW Tiguan loaded with sunroof, Nav and everything else. It is paid for. We just turned 50K miles on it. It is our “local” car.
We also have a 2018 Audi Q3. Loaded again. Low miles yet we have traveled to every state east of the Mississippi, to Maine, to Florida a dozen times or more. I owe $19,000 on it. At 1.9 interest rate.
We have no consumer debt. Our 4 chi are grown and in their own. Each has a family. They all went to premium universities. 3 are done with student loan payments, the youngest has 2 years left. Each had $25,000 in loans so they learned how to handle debt.
We take several vacations a year. Last year we went to Naples, Florida, Apalachicola, Florida, Michigan, Wisconsin and California (flew) rented car there.
We are fortunate. We have enough. Nice home, nice cars, nice furniture, nice friends. We have our health. And we have each other after 59+ years.
Wow. Well done!
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Old 01-24-2021, 08:13 PM   #16
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depends on the definition of "spend". roughly 14% of our monthly income is earmarked either for recurring bills like utilities, food, gas, etc. but another 59% is set aside in various sinking funds either for specific long term goals such as a new car or for certain types of regular spending like entertainment, out-of-pocket medical, vacation, etc. that leaves the balance for discretionary spending. lately we've been doing large donations to local charities with some of what's left.

so in that respect we "spend" nearly 100% of our monthly income (pensions and SS). but if i count only what is absolutely necessary it's more like 25%. if i include income tax it's more like 40% as roughly 15% of our income goes towards state and federal income tax.
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Old 01-24-2021, 08:20 PM   #17
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Originally Posted by anothercog View Post
I'm somewhat amazed on what people say they live on. I saw one guy said his annual budget is $15k!? How is that even possible in America.

Even after I pay off my mortgage, my property taxes, HOA, insurance and light maintenance will still run $20k/year. I'm sure my expenses will drop considerably once my kids are grown and hopefully financially independent but I can't see how DW and I can get any lower than 80k/year including health care costs and that is with cutting travel to the bone.

I'm not interested in a retirement where we have to live with roommates and live off ramen. I already did that in college.

For those couples living on less than $60k/year, how do you do it? What does your budget look like?
It's hard to do if you live near the coast. It's expensive to live in San Francisco, Portland, Seattle, Washington DC, New York, Boston, Miami, etc.

It's much easier if you move to what is sometimes called "flyover country". I do, and although I'm single, my annual basic spend rate is about $28K per year.

My property taxes are about $1729 this year. HOA fee is $250 per year. Not sure what you mean by light maintenance, but if you mean house maintenance I've spent about $155 in the last six months on my 16 year old home.

Let me know which budget categories you are curious about and I'll tell you what I spend and how I manage to spend as little as I do.
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Old 01-24-2021, 08:29 PM   #18
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I could live on ~ 42000$ a year but nothing extra and just bare minimum. That is just to pay for essentials nothing more.

15000$ I'd be eating cat food, walking and living under a bridge.
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Old 01-24-2021, 08:31 PM   #19
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12k - 1993. No property tax (75k exemption), Zero debt. No utilities except $60 average electric. Wood heat, well water. Liability only insurance. NO medical (not recommended). And a seriously 'cheap'. attitude.

Fast forward 27 years more like 120k. Cause we can and not getting any younger.


heh heh heh - Hindsight - perhaps overboard on expense reduction in early years but no real regrets or sense of deprivation. And this forum has touched on many ways of economizing if necessary.
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Old 01-24-2021, 08:32 PM   #20
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.... For those couples living on less than $60k/year, how do you do it? What does your budget look like?
We're not less than $60k a year but we are under if I exclude truly discretionary items like travel, golf, hobbies, dining out, etc..... and that is with two homes... one in LCOL area and another in a MCOL area.

Major items are $9k income taxes (manage to top of 12% bracket), $9k property taxes, $6k food & groceries, $6k for health insurance (Part B, Part D, Medigap), $4k for HOA fees, etc. Homes and vehicles are all paid off.
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