Early Retirement Extreme

[daylatedollarshort]

College kids know how to live cheap. Most schools have estimated cost to attend for 9 months of the year for room and board. So converting that to 12 months gives you an idea of what it would take. When I tracked it for our kids looking at different schools that was in the $8 - $20K annual range (more now with inflation). With rent split with a partner or roommate(s), public transportation, low cost college and free activities, Medicaid and frugal habits, it doesn't cost that much to live even in high cost of living areas.

One of our kids lived in a small but very nice apartment near the beach during college. We helped furnish it from thrift shops, Ikea and hand me downs. It looked really cute. (We live in an area with a lot of rich people so the thrift shops have some really nice stuff.) Some of their professors lived in the same complex. Students had free public transportation passes. Most of their activities were beach parties or on campus activities. They had a car but didn't use it since there was no place to park it. Without the car I think the the other expenses were around $1300 a month, plus health care (more now due to inflation and rent increases). And that even included subsidizing some of the lower income roommate's expenses. We paid the ACA premiums but without our income they would have been able to go on Medicaid for free.

Robert Shiller once said, “My students are living alright...I’ve suggested to them, why don’t you just continue to live at that level after you get a job? It would pile up into a lot of money.” https://www.yahoo.com/news/weather/how-to-bank-hundreds-of-dollars-more-each-month-163549084.html

 

[copyright1997reloaded]

I do my own lawn (a little under 1 acre cleared) using a push mower (powered, but not self-propelled). I used to have a riding mower but got rid of it after it developed problems and went the old school (i.e. exercise way).

I just got done w/about 6 chords of wood. Cut the trees, bucked them up, loaded in truck, split, moved and stacked.

I also try to walk every day - how long depends on what else I've done, so far this summer I've averaged about 21 miles/week.

Having said this, I do notice that I am slowing down. The wood is heavier, I need more breaks, I don't typically do all of the yard in one day, my walking pace isn't as good as 5 years ago.

ETA: I could certainly afford to not burn wood (or get it delivered) and have someone do the yard. Eventually that is what will have to happen, or I move to a townhouse/condo in some luxurious paradise!

 

[Teacher Terry]

Day late, Mr MM was notorious for leaving out big items such as travel, taxes, house improvement and claims to self insure for HC and home, etc. If you asked him specifically he would get grumpy and leave a crappy response.

 

[Midpack]

I bought and read the book when it first came out. Some interesting ideas that I took to heart, but there's no way I wanted to retire that early, that austere. Sounds like maybe Jacob didn't either exactly. Still an interesting read IMO.

 

[W2R]

Oh, and cutting one's lawn is very different depending where you live. If I did it here (S.Fla), that means every 7 days in 90 degrees + super humidity...plus edging and week whacking. Great workout, if dripping in sweat so hard you can't see is your idea of fun. Go away for 2 weeks in September? ha....only if you want to come back to dirty looks from your neighbors...

If I could simply get a rider mower and do that, I might, but it's all the extra stuff, then the storage, the gas, the oil, the mess... nope I just write that check and someone comes by and it's all taken care of, far better and more quickly than I can.

+100 (Bolded emphasis mine) Aerides, I love the way you phrased this! You have so perfectly described the reasons why I hire a lawn guy to mow and edge my lawn. Seriously, those here who claim they enjoy mowing might not feel that way if they were mowing in New Orleans in August. I did that for my first few years of home ownership here (2002-2004) and it was brutal; never again.

Before I moved into my Dream home back in 2015, I had the yard re-landscaped so grass is ALL that grows in my yard; no trees, no bushes, no flowers, just lawn. My lawn guy charges $35/mow, and here in New Orleans there's no need to water or fertilize the usual St. Augustine's grass lawn (due to excessive rain and sunshine). Consequently total yard care expenditure is around $1200-$1250/year.

I let my grass die long ago. Just stop watering it, and it's gone. Just like that. Not even weeds can grow without watering. Then, cover the whole thing with gravel, or rather decomposed granite.

Xeriscape is the way to go.

What a great solution for a drier climate like yours! Here, we get too much rain for that.

 

[ncbill]

Our property tax will be (estimated) about $1600 a year when our small house is finished. It is a lower population lower taxed area of Washington.

If we got rid of our cars and rode bikes (library is 6 blocks from house, Safeway is 4 blocks away, hospital 8 blocks away), we could drop all of our insurance except homeowners. Ok, also dropped snowmobile, motorcycle and boat insurance and registrations.

Free healthcare.

Super efficient house, high insulation. Electricity will likely average about $200 a month. Water/sewer/garbage about $100 a month.

Technically on our income you can get free internet (kinda feel bad about that so haven't tried).

So, the basics aside from food are $1600 + $2400 + $1200 = $5,200 a year.

$14,000 for a couple would then leave $8,800 for food and toiletries. That is about $170 a week.

It is lean but doable if one was inclined or had to.

Did you forget the cost of homeowner's insurance in the above?

Mine is only ~$100/month, and that's not counting the discount for combining home/auto coverage with the same insurer.

 

[W2R]

Did you forget the cost of homeowner's insurance in the above?

Mine is only ~$100/month, and that's not counting the discount for combining home/auto coverage with the same insurer.

Also, maybe some income taxes on whatever yield one might get from investments. Income taxes (if any) are, unfortunately, part of one's spending. Not the fun part, for sure.

I bought and read the book when it first came out. Some interesting ideas that I took to heart, but there's no way I wanted to retire that early, that austere. Sounds like maybe Jacob didn't either exactly. Still an interesting read IMO.

I love Jacob's ideas, and they do make one think! Even if we don't want to implement all of them, that book really motivates me to cut back.

 

[marko]

Get out of the recliner and keep active. Mowing is good for you during retirement. My >70 year old neighbor really enjoys mowing.

Good for your neighbor.

I don't have a recliner and I'm quite active. It's just that I've never even put a hand on a lawnmower and don't ever intend to. I can't imagine anything more tedious. I get bored just watching them cut my lawn (and they're only here for 15 minutes a week)

That's why there's 50 flavors of ice cream...to each his own.

And just how did a thread about Extreme Early Retirement drift into cutting grass?

 

[GenXguy]

I call BS on that $7K number. I'm sure he forgot to include some major detail that explains it, or is lying.

I have been around $16K spending for many years now.

Looks like that was just his half of the family household spending.

I feel like my spending is pretty low, but even my bare bones (estimated in retirement) would be about $24K when adding in sinking funds for home maintenance and eventual car replacement. And any discretionary would be on top of that. And that's going up quickly with inflation, as well. And when I reach Medicare age, it will go up even further.

 

[tulak]

Modern life gives me AC, else I would not last one day in 115F heat. Heck, it got to 118F just last week (all-time record high is 122F).

I wouldn’t want to be stuck inside with AC because it’s too hot outside. I’d miss going outside. Mid-70s is perfect. The only downside to PNW summers js the lack of warmth in the evenings. But I’d still ditch the grass or pay someone else for maintenance.

 

[NW-Bound]

Also, maybe some income taxes on whatever yield one might get from investments. Income taxes (if any) are, unfortunately, part of one's spending. Not the fun part, for sure...

A non-working single person can have up to $40.4K in long-term realized capital gain and qualified dividends and still pays no Fed tax.

This is way more than Jacob needs to live on.

 

[street]

Jacob lived with his wife in a motorhome parked in a trailer park. I don't remember if the motorhome was still drivable. And the $7k was per person. They kept their finance separate, and Jacob said his wife also spent around $7k/year.

According to an update, Jacob no longer worked for the stock trading firm. They have bought a small home. He stated that their spending remained $14k/year.

His update is here: https://www.getrichslowly.org/early-retirement-extreme/.

Thanks NW, and that is doable spending ~14K a year. Wouldn't be living like a king but I can see that amount working. I wouldn't make it on 14K but I could trim a lot of fat from my living ways.

 

[Fermion]

Also, maybe some income taxes on whatever yield one might get from investments. Income taxes (if any) are, unfortunately, part of one's spending. Not the fun part, for sure.

Any married couple filing jointly and living on $14,000 a year isn't paying income taxes lol! I think this year the standard deduction is something like $25,900. Anything below that and you pay the gov. a big goose egg.

 

[Fermion]

I actually have in the back of my mind an emergency budget (not $14,000 tight though) where we cut way back. It would be something I engaged if we got a massive market drop, like 80%...Great Depression type stuff.

 

[aja8888]

I cut my own lawn and trim the bushes, etc. Have done this since the first house was bought in 1976. We had 3 acres in Connecticut with one acre in grass while the rest of the yards over the years have been small. No big deal to do this. I used to heat with wood in CT and cut my own firewood.

I also repair everything that needs repairing and that includes cars, bikes, boats and anything else with wheels or has an electric plug.

Some guys are made for this and won't have it any other way until they can't get out of bed anymore. It's not about being cheap, it's a just who I am.

I wouldn't like living like the guy and his wife on $14 K per year. That's not anything I would ever care to do, unless it was forced up me.

 

[jim584672]

People assume the ultra low spenders HAVE TO spend that low. But some of us like a well below 2% SWR and could easily spend more. Also it never felt like a burden since this is how I was raised and it seems normal. I am puzzled that people equate spending with "living life".

 

[arcyallen]

Reading through these comments makes me think people haven't actually read through the pertinent blogs. Not only is Jacob's $7k/yr (per person) legit, but MMM's stated budget is also legit. People here are saying "He didn't count taxes or travel!". Yes, he did:

https://www.mrmoneymustache.com/2017/05/19/2016-spending/

He lists many years on his site - this is just one. I'm disappointed on this forum that people are sometimes quick to dismiss and demonize people or ideas that they literally don't know about. We are an ER forum! We've done, or are planning to do, what many think are impossible - retire early. I've seen people dismiss and demonize us for what WE'RE doing.

Can we maybe not do that to others?

 

[panhead]

Reading through these comments makes me think people haven't actually read through the pertinent blogs. Not only is Jacob's $7k/yr (per person) legit, but MMM's stated budget is also legit. People here are saying "He didn't count taxes or travel!". Yes, he did:

https://www.mrmoneymustache.com/2017/05/19/2016-spending/

He lists many years on his site - this is just one. I'm disappointed on this forum that people are sometimes quick to dismiss and demonize people or ideas that they literally don't know about. We are an ER forum! We've done, or are planning to do, what many think are impossible - retire early. I've seen people dismiss and demonize us for what WE'RE doing.

Can we maybe not do that to others?

I've read a bit of MMM and ERE and others over the years. I have never really been interested in whether their budgets are legit or not, nor do I care. I think they both have had some interesting ideas.

I also sometimes like the way MMM writes as it can be entertaining, but sometimes its a bit too preachy.

That being said, this thread is kind of funny so I'll leave you with a driving analogy:

The guy driving 60mph thinks the guy driving 40mph is an idiot and the guy driving 80mph is a psycho.

It's all a perspective....

 

[marko]

People assume the ultra low spenders HAVE TO spend that low. But some of us like a well below 2% SWR and could easily spend more. Also it never felt like a burden since this is how I was raised and it seems normal. I am puzzled that people equate spending with "living life".

To each his own.

My grandfather was worth mid eight figures when he died but lived like a pauper. We found it very, very sad that he'd deprive himself needlessly. It was so unnecessary. He did spend a lot and lived quite well in his younger days but as time went on he got incredibly miserly.

YOLO, but remember "if you don't spend it, your heirs will!" (thanks gramps!)

When there's no need to go without, why do so? Yes, you shouldn't acquire things for the sake of it, but there's all sorts of options out there to make your life easier, more comfortable and more interesting. Doing without them when you can afford it seems as much a waste as spending irresponsibly.

DW's best friend is worth over $5MM and admonished us for buying a 70 inch TV! "My 25 inch TV plays the same picture" What a shame.

"He knows the price of everything and the value of nothing". Oscar Wilde

 

[FANOFJESUS]

People assume the ultra low spenders HAVE TO spend that low. But some of us like a well below 2% SWR and could easily spend more. Also it never felt like a burden since this is how I was raised and it seems normal. I am puzzled that people equate spending with "living life".

This is very true. People always question my low spending. I just tell them I could drive a Lexus if I wanted to. After that they don't say much more. I grew up in a family like his which I view as a blessing. Our family wanted money in our pockets not to be broke. Since our family did not have the high paying jobs you had to be frugal.

 

[Trailwalker]

I find the ultra low spenders very interesting. I could easily live in a van in the mountains or desert, eating rice and beans. I would have to do that without my lovely wife, however, so it's a non-starter.

 

[Music Lover]

I could winterize our 3 season cabin for $5000 (probably less). Property taxes and insurance are a little under $2000 a year. It's 300 yards from the beach. Theoretically we could live there for about 8 months a year, shut it down and spend the 4 coldest months in Mazatlán for about $6000 for a decent rental.

Add in food, utilities, entertainment, etc and we could live quite well on $20k a year with little or no sacrifice.

 

[jim584672]

To each his own.

My grandfather was worth mid eight figures when he died but lived like a pauper. We found it very, very sad that he'd deprive himself needlessly. It was so unnecessary. He did spend a lot and lived quite well in his younger days but as time went on he got incredibly miserly.

YOLO, but remember "if you don't spend it, your heirs will!" (thanks gramps!)

When there's no need to go without, why do so? Yes, you shouldn't acquire things for the sake of it, but there's all sorts of options out there to make your life easier, more comfortable and more interesting. Doing without them when you can afford it seems as much a waste as spending irresponsibly.

DW's best friend is worth over $5MM and admonished us for buying a 70 inch TV! "My 25 inch TV plays the same picture" What a shame.

"He knows the price of everything and the value of nothing". Oscar Wilde

I'm no where near that level, if I had millions the spending would go up a lot. All I know is life can throw some nasty surprises and I don't want to be poor again.

 

[street]

I could winterize our 3 season cabin for $5000 (probably less). Property taxes and insurance are a little under $2000 a year. It's 300 yards from the beach. Theoretically we could live there for about 8 months a year, shut it down and spend the 4 coldest months in Mazatlán for about $6000 for a decent rental.

Add in food, utilities, entertainment, etc and we could live quite well on $20k a year with little or no sacrifice.

I like that idea a lot. If I was single that would be exactly what I would do. I would live 3 seasons at cabin and spend a few months in town. I could easily live between 15 & 20K a year. It wouldn't be depriving myself of anything except a fancier home. I never have had a dream home or desired one. I think it would be great and think it would be awesome to live in a beautiful home. I guess my standards are more of a simple home and things in life. I never was one to have the fancy stuff or new tech things in life. Still live in the home I built 38 years old.

 

[Music Lover]

I like that idea a lot. If I was single that would be exactly what I would do. I would live 3 seasons at cabin and spend a few months in town. I could easily live between 15 & 20K a year. It wouldn't be depriving myself of anything except a fancier home. I never have had a dream home or desired one. I think it would be great and think it would be awesome to live in a beautiful home. I guess my standards are more of a simple home and things in life. I never was one to have the fancy stuff or new tech things in life. Still live in the home I built 38 years old.

It's possible to live cheaply and not deprive yourself, especially if you're retired and don't have to worry about a work commute.

A couple we know are in the process of selling their house in the city. They own a condo in West Palm Beach (paid less than $100k) and winter there. They spend all summer at their trailer at a campground. Their house has just become a nuisance.