$50 a day? No way!

It is interesting and useful to get a glimpse of the expenses of others. I've focused on expenses a great deal. Here's what we're comfortable with (each category is followed by the MONTHLY expense):

APPLIANCES - $52.00 - Took actual costs of each appliance, divided by average lifespan of each, divided by 12 months. (see below).

CABLE TV - $31.00 - What we're paying now

NEW CAR - $164.00 - Nissan Sentra 4 Door = $13,071 + 5% tax (auto trans) @ Cars Direct.com (Total = $13,725 / 84 months = $164 per month)

CAR MAINTENANCE - $46.00 - I paid $550 per year in a two year period that included some significant maintenance on one car. (550 / 12 = $46.00)

CAR INSURANCE - $50.00 - Now paying $810/year. I estimate $600/year with only one car (I now have two) and without the teen driver. $600 / 12 = $50.00

CAR LICENSE - $15.00 - Now paying $252/year. Estimate $180/year with only one car. ($180 / 12 = $15.00)

CHRISTMAS - $40.00 - Enough!!

INTERNET (HIGH SPEED) -$40.00 - This is what we're paying now

CLOTHING -$50.00 - This should be more than enough

DECORATING - $40.00 - I figured we'd spend about $480 per year for something (a new sofa, chair, carpet, etc.)

DENTAL - $25.00 - A cleaning costs $60 now. So cleaning is $180/yr. for 3 people ($15/month). 1 major item for each person per 9 yrs @ $360 (crown, etc) = $10/month.

UTILITIES - $154.00 - We paid this from 8/1/2002 through 7/31/2003

FOOD - $390.00 - What we spent from 8/1/2002 through 7/31/2003

HEAT - $75.00 - What we spent from 8/1/2002 through 7/31/2003

GENERAL - $510.00 - We spent $588/month from 8/1/2002 through 7/31/2003. We can reduce this to $510 easily.

GLASSES - $13.00 - We figured $156 per so we can buy glasses every 3 years

HOUSE INSURANCE - $50.00 - We now pay $374 per year for a modest home. With house worth half again as much (we're moving) we figured $600 per year.

HOUSE MAINTENANCE - $100 - We spent $18,000 in 14 years or $107/month (we started tracking expenses 14 years ago). I'll do a little myself now and then and get by on $100/month

PHONE - $30.00 - US West bill is now $18.43/month. Long distance with our Sam's Club card is 3.47 cents/min x 300 min/month = $10.41 Rounded up to $30.

PROPERTY TAX - $125.00 - Now pay $938/year. Guessed about 60% more when we move up to a little better house.

MEDICAL - $1,494.00 - This is a killer and will vary widely from person to person. The premium in Iowa for a family plan that provides good coverage is $1,077/month x 12 = $12,924/year. There's a $3,000 Deductible and an out of pocket max of $7,000. If we spend even 1/2 of the out of pocket max (after deductible), the total is $17,924 divided by 12 = $1494. In Iowa there are very few choices for insurance without underwriting. So we'll need to either pay this or try to find another option after COBRA. Who knows, maybe some company will accept us for less. Or we may get a part time job just for medical insurance purposes. Furthermore, we won't be paying this forever. Medicare should be less. But since this is the only good option I'm aware of that is definitely available to us now, I built it into the plan. I think we'll do better, but I don't know for sure. I'd rather be surprised positively.

TAXES - $305 - This is an estimated average based on 2002 tax tables. It will be less in the early years (as little as zero Federal), more in the later years.

TOTAL - $3,795 ($45,540/year) WITH medical insurance or $125/day. $2,301 ($27,612/year) WITHOUT medical insurance or $76/day

We know we could do it for less, however.


APPLIANCES

Refrigerator - $600.00 - 17 Years - $2.94/month
Stove - $400.00 - 12 years - $2.78/month
Dishwasher - $350.00 - 10 years - $2.92/month
Microwave - $150.00 - 5 years - $2.50/month
Range Hood - $200.00 - 12 years - $1.39/month
Disposal - $180.00 - 12 years - $1.25/month
Washer - $400.00 - 15 years - $2.22/month
Dryer - $320.00 - 15 years - $1.78/month
Freezer - $230.00 - 20 years - $0.96/month
27" TV - $350.00 - 7 years - $4.17/month
20" TV - $160.00 - 7 years - $1.90/month
VCR #1 - $80.00 - 5 years - $1.33/month
VCR #2 - $80.00 - 5 years - $1.33/month
Computer - $1,200.00 - 5 years - $20.00/month
Dehumidifier - $160.00 - 20 years - $0.67/month
Stereo - $500.00 - 15 years - $2.78/month
Vacuum - $160.00 - 15 years - $0.89/month
 
Pretty interesting that you are budgeting $50 per day
just for medical. We currently spend about $10.00
(this is for a couple), but the insurance is non-
traditional and limits a lot of disaster situation coverage.
I've crunched the numbers backwards and forwards.
It is difficult, but $50 per day for a couple is still
doable in 2003. You gotta take risks, look for free
stuff and shop yard sales and thrift shops. I regret
all of those years of spending before I discovered
this.
 
       
TOTAL - $3,795 ($45,540/year) WITH medical insurance or $125/day.    $2,301 ($27,612/year) WITHOUT medical insurance or $76/day
Click to expand...

This medical insurance for an essentially health family is an indictment of our bloated medical system, which apparently sees people as feedstock for the "medical services industry". You are spending 40% of your pre-tax gross income on medical care!

Another thing I don't remember seeing-vacations, pleasure spending (movies, dances, sport fees or equipment). Did you forget these, or just not do any of it?

You sound like a family- how about school expenses?

Mikey
 
This medical insurance for an essentially health family is an indictment of our bloated medical system, which apparently sees people as feedstock for the "medical services industry".
Click to expand...


The main problem with the Medical System is that 70% of the costs of Medical Care is administered in the last year of the Patients life. This is a statisical fact! - In other words these very expensive procedures do not work most of the time!

As, with other insurance the healthy people pick up the tab for the ones using the insurance. As a society we have not figured out how to die gracefully. We actually go out of the way to punish people like Dr. Kevorkian who are only trying to help terminally ill people! Performing very expensive operations on people over age 80 - IMHO - should only be done if the patient can come up with the money themselves, rather than sucking up insurance money from younger workers.

At least with Medical Insurance, you have a choice - you can always choose not to buy it. My Threshold is about $20,000 a year - If it gets more than this - I won't buy it!
 
Bob, you've been pretty thorough!

Thanks for sharing the info with us. I hope one day (soon?) to be able to amass that kind of detail. I'm getting closer. But so many things are changing in and out in the past year, and the next year, I'm having trouble getting my arms around it as to what a "normal" would be. I did notice that your house and car insurance, and property taxes are very small compared to ours. We don't have a state income tax, so school funding comes out of property taxes. And due to acts of nature, (and maybe some by man :p) the insurance costs are high.

A few questions about how you categorized costs, as an aid to doing mine: Was "Heat" just natural gas cost? For the appliance costs, did you look at ads to come up with the initial purchase price? (I'm assuming you didn't just go out and equip your whole house with new appliances :D). Did "Other" include products most likely bought at a grocery store, but are inedibles (like paper products, cleaning supplies, etc.)?

In an attempt to track costs better, we have really reduced using cash for anything. By using a credit card at the grocery store (and paying it off when due, of course) we get a line item on the monthly bill that says the store name. So that means that amount was food, but also includes those allied supplies. So it really is becoming "Food +" for us.

Now places like a Super Walmart that have the usual stuff, plus groceries, does make it hard to figure out what's what.

I'm predicting about $5300 for health insurance premiums this year. There have been a lot of changes, some of the early months of the year were "free", but then some Cobra in parallel with private ins. (on different family members), and now some group coverage instead of the Cobra portion. After all that, next year the private plus group coverage premium costs will probably fall in the same general area.
 
Yes, Mikey, we are a family. And college is covered in a separate fund. Our daughter graduates in May and at the moment is #1 in her class with an ACT composite of 31, so the university she wants to attend will reduce their tuition rate for her by a large amount. We'll kick in $20,000 total and her need to borrow will be minimal. Entertainment comes out of general expenses, any part time work I can muster, and savings squeezed out of other categories. For example, I think I can reduce car purchase costs (not maintenance, license, or insurance) to pretty close to zero. I have a brother who buys used cars wholesale and sells them retail. He tells me I can buy a car wholesale through him, drive it two years, and sell it (through his auction) for as much as or very close to what I paid for it. I'll help him with his personal finances in return for his help. I suspect there are other ways to cut costs, and I'll frequent this group to learn what I can from those who have been there. Also, we'll be moving next year to a town with an incredible park system, a large lake, a university, and lots of free or cheap things to do.

Telly, yes, heat is just natural gas. Utilities includes electric, sewer, water, and garbage. Yes, those are actual appliance prices checked within the past few weeks at Sam's Club, Best, Buy, and Sears. They are actual prices one can get now. I figure that there will always be appliances breaking down, and that I can buy every appliance I use new for a grand total of $5,520. (I consider the furnace and central air to be part of the house - not an appliance). So I plan to factor in a regular monthly cost of $52 to cover all those appliances because I believe it I'll actually pay that on average going forward. Yes, the general category is a catch all for things not covered elsewhere. If it doesn't fit into any other category, it goes there. And food is only food - not napkins, etc. That fits our situation because we buy our food in one place and the other stuff elsewhere. It would be awkward for those who buy food at Sam's Club along with other stuff.

Medical insurance has me concerned. We're pretty healthy, but can't risk not having it, and choices here are few. We plan to do more searching for better alternatives. I wish I had something in the area of $5,300 to $6,000 per year, or even $12,000 per year. I have enough to cover $18,000 per year for health care if I must, but if it keeps out-pacing inflation by a huge margin, I could be in trouble down the road. I have one year of work remaining and 18 months of COBRA. So I'm hoping the system will be better by then. Anyone from Iowa who knows of a better way?
 
Medical insurance has me concerned. We're pretty healthy, but can't risk not having it, and choices here are few. We plan to do more searching for better alternatives. I wish I had something in the area of $5,300 to $6,000 per year, or even $12,000 per year. I have enough to cover $18,000 per year for health care if I must, but if it keeps out-pacing inflation by a huge margin, I could be in trouble down the road. I have one year of work remaining and 18 months of COBRA. So I'm hoping the system will be better by then. Anyone from Iowa who knows of a better way?
Click to expand...

I'm not from Iowa, but I have a suggestion: Try www.quotesmith.com

Just to give you an example of premiums they quote, I input information for a family of three in Des Moines: Husband and wife both age 50 with a 19 y/o daughter in college.

The premiums quoted ranged from $166 (high deductible) to $917 per month--so they are all under 12k per year. If your family is pretty healthy, perhaps you could go the high deductible route and just save the difference each year. Odds are you'd probably come out better in the long run.

Regards,

P
 
Thanks patnbj. We'll definitely do some shopping. I hope to find something better. We haven't actually applied for individual coverage yet, so maybe someone will accept us. I hope so.

I greatly admire your $41 per day expenses! It's good to know that is doable. I was "assimilated" by the Borg (Star Trek fans will understand what that means) 28 years ago, and I'm definitely going to escape to the ER life within a year at age 52. I hope this group will be here for the next couple of years as we make the transition.
 
Sure, we'll be here, we can all eat dog food together!

Hey, its your turn to buy, Bob :D
 
Suceess means going to the French Quarter and 'buying Lucky Dogs' and not having to take a temp job selling them!
 
Started out the week fine. Had a major toothache on Monday. The tooth had developed a crack all the way to the root. They could not do a root canal. Had it pulled on Tuesday. Will probably go for an implant that will cost over $3,000. Have Dental Insurance, but implants are considered a 'luxury' and are not covered. Just like braces.

This would put a real dent into $50 day. Used up 2 months worth on 1 tooth!  -

Of course I don't have to have a tooth in my back molar and that is how you could get by on $50 a day. Not my cup of tea however. I'm getting the implant.
 
Cut Throat,
Or...you could fly to Guadalajara, Mexico, receive excellent dental care at a fraction of the US cost, stay in a great hotel, and do a little fishing in the surronding lakes, easily for 3K.

Always, thinking outside of the box,
Billy
Web-site http://www.geocities.com/ba264
 
Billy,

Maybe for some dental procedures, but an implant takes series of visits over a period of a year. You might have a good time in Mexico, but you would end up spending far more!
 
Hello friends! I have pretty much exhausted my thoughts on the $50 per day thing. However, I noticed
our old pal health care being discussed. I can't
emphasize enough how important it is to stay with one
company if you are lucky enough to have some
affordable health insurance. I did not. While I was
jumping around I was developing some chronic health
problems (most everyone will eventually). This made me
persona non grata with a lot of companies. Either
that or I just plain could not afford it any longer.
We currently pay about $10 per day for insurance.
Quite affordable but it does not cover real health
disasters. For those the options will be bankruptcy or the
"Hemingway exit."
 
For those the options will be bankruptcy or the "Hemingway exit."
Click to expand...

Johngalt, the AP has a story out today about a new poll. The headline is "Poll: Public Supports Health Care for All".

One finding: "Eight in 10 in the poll said it is more important to provide health care coverage for all Americans even if it means higher taxes, than to hold down taxes but leave some people uncovered."

Simply extending Cobra from 18 months to an unlimited time would solve my problem. I'd be paying full freight, but it would be far better than any other choice I have. Hopefully some type of relief will come before too long. It's my biggest ER concern, by far.
 
I like Scott Burns. Good stuff!

COBRA never helped me much as I couldn't afford it
over the long haul. As to raising taxes to cover everyone, my income is so low that I doubt that
approach would impact me significantly. Still, I am
wary of anything that even smells like a tax hike.
 
$50 a day?

Changing the subject slightly, Paul Terhorst, the original perpetual tourist, wrote in his 1988 book, "Cashing In On The American Dream: How to Retire at 35", that his target was $50/day plus $4,000/year travel expenses. How much is that in today's dollars?

The Federal Reserve Bank of Minneapolis has an CPI inflation calculator on their web site:
http://woodrow.mpls.frb.fed.us/research/data/us/calc
that references a table of inflation at
http://woodrow.mpls.frb.fed.us/research/data/us/calc/hist1913.cfm

Assuming tht Paul wrote the book in 1987, $50 in 1987 would be $80.81 in 2003 (16 years, say); 62% total inflation, or about 3.1% average per year (less than I thought). $4,000 then would be about $6,500 today. Total of about $36,000 per annum. At 4% SWR, the pot should be $900,000 in today's dollars to do that.

Just for reference.

Ed
 
Ed,

Yup, I think you got that right. Turns out that is closer to $100 a day! - Also Medical Costs, insurance have gone through the roof! I wonder what they would recommend if they wrote the book today.

My objective was never to live cheaply in retirement, but to live as lavishly as my nest egg would provide. When my wife retires in 9 years, we plan to be doing about $200 a day in today's dollars.
 
I wonder how much insurance costs vary in ER-house,car,medical,etc. - as $/day. The land company that owns my swamp wants liability insurance(after 24 yrs). Prior to that I only carried minimum car insurance - the camp(house) is unisurable as it is over water. The women are covered via union pension medical and medicare/supplemental.

If your not a 'perpetual tourist' - how does insurance play into a frugal budget. I'm curious in how ER's apply risk/reward thinking in this area.
 
Hello Cut Throat! I still say you can do it (support a couple on $50 per day), but it would be the barest of
bare bones by American standards. Low rent, one beater car, maybe no
health insurance at all, etc. etc. My lifestyle is
substantially more lavish, even cut back as it is from my
big spender days. However, I am quite certain there
are millions living on $50 per day or less right here in the USA who don't feel
the least bit deprived. You see, it's all relative.
 
Paul Terhorst's famous $50/day

Paul's book is long out of print. I got my copy via abebooks.com (good place for out-of-print books).

The essential basis was:
- own no car
- own no property--rent, don't buy
- live outside the US and move whenever you want to or need to
- buy high-deductable international health insurance (much cheapre than in the US)
- oh, yeah--no kids. (He does address families with children in his book, though. Grandchildren weren't mentioned--you are on your own there.)

His $50/day budget included everything except travel costs, which he budgeted at $4,000/year at the time. I understand that they found that it was possible to do better, but tht was the budget.

Paul and Vicki have since lived in Argentina, Paris, Thailand and Mexico, among other places.

They have a web site that they update occasionally at:
http://www.geocities.com/TheTropics/Shores/5315/

Yes, corrected for inflation, that is about $100/day total (including travel costs) today. However, from my research, it should be possible to live on $50/day today (not including travel costs) in several places outside of the US without having to live in desperate poverty. In a few of these places it may be possible to do this without knowing much of the local language, but don't count on it. You had best learn how to habla.

This is my own current Plan A, by the way.

Cheers,

Lalo el Gitano
 
I first got my hands on Paul Terhorst's book from the
library in Irving, Texas. My wife finally bought it through
Amazon.com. Guess I've read it about 6 times.

Although I refer to Paul as my ER guru, I have not followed a lot of his advice. For example:

We own a Jeep, a pick up truck, a motorcycle and a boat.
We own our house plus some raw land.
We live inside the USA and move as seldom as possible.
WE buy our health insurance inside the US.
I have 3 children, all college educated.
We own 4 dogs, mostly uneducated.

Even so, I still use the basic concepts from the book
although I have thought that Paul might be aghast
at the way we live.
 
Hi Johngalt,

One thing that is important to keep in mind when we are having the $50 a day discussion, is that we are all living very large here in the States.

Half of the World's population gets by on less than $2 a day. Over 3 Billion People! :eek:

Here is an eye opening link on where you are on the World's Rich List.

http://www.globalrichlist.com/
 
Wow! I put in the lowest number I could justify. Still
ended up in the top 13.26 % world wide. I guess this
confirms my point about the validity of the $50.00 per
day rule.
 
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