Living Expenses under $10k/year - can it be done?

[Chuck1986]

Apartment rent: 749/month
Heating & Electric: 50/month
Food: 15-20/week
Car Insurance: 1200/year
Fuel: 5/week

You can see I'm a little over $10k/year for my living expenses at this time but here's how I plan on living off under 10k once grad school is over:
- Move into a cheaper apartment, or buy a house with mortgage payments under what I pay now. I want the cost of shelter to be 600/month including utility paymentst.
- When I'm 25 my car insurance will go down. I have a clean record and hope to keep it that way. 25 seems to be the cut-off age that insurance companies use for the "young driver" risk tier.

Here's how living expenses may also increase:
- I won't be on my parent's health insurance plan so I'll have to get my own. That's a big one.
- I may have to move somewhere that requires a longer commute time. Currently the only places I drive are school, the gym and the supermarket - which are all very close. (Hence the low cost of fuel).

According to salary.com, as it stands the average salary for the profession I am entering is $110k/year. I figure if I work hard and set aside $5k/month (after taxes and cost of living expenses) - assuming it earns about 3% interest per year, compounded monthly - I would have $1.2 million by the time I am 40 and I could certainly retire and live off that for many years

 

[hardcore302]

You are not including alot of things in that list, like phone, cell, other small bills and amenities (cable? internet?) pocket cash, ALCOHOL!!

I've tried for the longest to plan everything but there are so many little expenses that add up over the month.

It might be doable, but don't be upset when you find yourself a grand or so over. Good luck!

 

[Chuck1986]

You're right about the phone expenses. (Haha before anyone asks I DO have a cell phone, I just forgot to include that in my calculations since my parents cover that expense at this time). I don't need cable, as I don't watch much TV and I already have six seasons of Two and a Half Men on DVD! Wi-Fi internet is included in my current rent.

Alcohol? I have an OCCASIONAL Long Island Iced Tea made only from the CHEAPEST generic vodka, gin, rum and triple sec - with generic cola and home made sweet n sour mix. Costs me about 50 cents a drink and I have only a few per month at the most. Alcohol is the one expense that can easily be forgone.

 

[Silk]

You have a life plan!!! What about fun,have you factored in enjoying yourself as you do it right?

 

[crinkles]

good luck. you poor t hing going into a 110k job out of school.

you'd be surprised how expensive things become too. you may end up living in the bad part of town just to make that schedule. not worth it. money is overrated.

what good will $1.2m be when you're 40? you still need another 40 years of life.

oh, and don't even think about a family if this is your plan.

my advice; relax.

 

[crinkles]

28, 3 kids, wife, car paid off, renting a [censored] house, and my living expenses is $45k per year. and we do NOT live a life of luxury or spend it up AT ALL. we are actually really thrifty.

the cost of housing in Australia is HUGE. our 3 br, 1 bath, run down SHACK sets us back $15k per year...

 

[Johnny]

Lord, my utilities (gas and electric) run me $300 per month alone. I think you might be in for a big surprise.

 

[Cup of Joe]

Originally Posted By: crinkles
28, 3 kids, wife, car paid off, renting a [censored] house, and my living expenses is $45k per year. and we do NOT live a life of luxury or spend it up AT ALL. we are actually really thrifty.


I quit counting when I hit 60k. Health, dental, life, car, home owners, flood all add up and thats just insurance don't forget your portion. As people walk away from their homes, rentals continue to rise.

If you stay single, only rent dives and don't get sick ever you might get by at 20k per year. Insurance costs in the US are not the cheapest. If you need additional dental or vision $$. Get the dental trust me. I just had a dentist quote 27k for my wifes dental.

Almost left out the obvious the car you have now is going to need repairs or replacement at some point. I have a car that is getting 4 tires $440 and 2 struts $340 if the ac needs a recharge I am over $1k on routine maintenance.

 

[bubbatime]

Look into buying a cheap fixer upper house. Much better than throwing money down the drain renting. Probably would be cheaper per month too.

You might want to be a little more realistic on salary. I know folks with masters degrees that make $9 per hour. Now that may not apply to you, but the job market is terrible right now. Plus if you have no real work experience per sey, you may have to start at the bottom and work your way up just like every other Tom, Larry, and Jerry.

Food at $20 per week? I eat $20 worth of food per DAY!!
Electric and heat for $50 - Not gonna happen

 

[demarpaint]

Originally Posted By: Chuck1986
Apartment rent: 749/month
Heating & Electric: 50/month
Food: 15-20/week
Car Insurance: 1200/year
Fuel: 5/week

You can see I'm a little over $10k/year for my living expenses at this time but here's how I plan on living off under 10k once grad school is over:
- Move into a cheaper apartment, or buy a house with mortgage payments under what I pay now. I want the cost of shelter to be 600/month including utility paymentst.
- When I'm 25 my car insurance will go down. I have a clean record and hope to keep it that way. 25 seems to be the cut-off age that insurance companies use for the "young driver" risk tier.

Here's how living expenses may also increase:
- I won't be on my parent's health insurance plan so I'll have to get my own. That's a big one.
- I may have to move somewhere that requires a longer commute time. Currently the only places I drive are school, the gym and the supermarket - which are all very close. (Hence the low cost of fuel).

According to salary.com, as it stands the average salary for the profession I am entering is $110k/year. I figure if I work hard and set aside $5k/month (after taxes and cost of living expenses) - assuming it earns about 3% interest per year, compounded monthly - I would have $1.2 million by the time I am 40 and I could certainly retire and live off that for many years

Man plans and God laughs. How can one person possibly live a healthy life with only $15-$20/week for food? It costs more than that to feed a dog. Cost of a phone wasn't factored in, how about when something needs to be repaired or replaced? How about tires on your ride, brakes, many a transmission, etc, etc, etc? How about needing clothes, shoes, medicine, dental work, etc, etc, etc? I can't heat and light my house for $50/week, a modest home heated with a woodstove burning ~6 cords of wood a year or more. I can go on and on.

I did the math when I was your age and on paper at age 55 I would have been able to retire. Guess what, it ain't happening. 1.2 million sounds like a lot of money now, 15 years from now it won't be enough. My buddies Grandfather, did some similar math, his only problem was he figured how long the average man lived added some time to that number for a cushion. He outlived his money, ended up moving in with his daughter and died poor. He outlived his money by 10 years, and was not a happy camper.

You have a good plan, stick to it. Just factor in the curve balls life tosses in when you least expect it. Or that right hook that lands on the button that knocks you out, the one you never saw it coming.


One last thought: Marriage and a family change EVERYTHING!


Good luck, and best wishes!!!!!!!!!!!!! Most 25 year olds plan on week end parties and not much else!!!!! Good on you for planning.

 

[seemore]

What you are planning on doing may be possible ,just don't give up on your dreams,and never let someone that can't or wont try discourage you from trying !
Write your plan down , and keep it so you can look at it every so often to remind yourself what your goals are. As the old saying goes, shot for the moon, even if you only hit the street light , at least you will be able to look back and say you tried, which is more than most can say .

 

[simple_gifts]

Quote:

buy a house with mortgage payments under what I pay now.

Figure in property taxes and you will need to live in a garden shed. Encouraging you have a plan however.

 

[The_Jeff]

With my employer's contribution included, I pay 180% of my mortgage payment for health insurance.

You will find the producers pay for everything, and everyone.

As for frugality, your steps are correct, few actually need the unlimited cellphones. I get by on virgin mobile prepaid, $5/ month, and a $20/year magicjack VOIP landline.

Antenna TV only, well that and Hulu. Spluring on Netflix's $5/mo plan and maxing out both discs and online.

Burning wood the power company dumped on the roadside during line maintenance.

Here's the trick though... you need a second skill like car repair, wedding photography, etc. Make that income your "mad money" so you don't go crazy pinching pennies all the time.

 

[tonycarguy]

It's nice to plan but your numbers are way off. $20/food per week? So you plan to only eat white rice, canned tuna and drink tap water? What about entertainment and travel and enjoying the finer things in life? How about clothing & shoes? Car maintenance? New toys and gadgets? Dating and dining out? When your laptop or car dies and you need a new one? You said you go to the gym -- what about the membership cost?

I think $25k annually is the minimum for a single person in the US, and that's living in cheap area with a frugal lifestyle. In an expensive area, figure $30k. If you want a good lifestyle, add another 10-20k.

 

[tonycarguy]

He's young so his health insurance will be fairly cheap. Not until age 45 does it really become a big portion of his expenses.

 

[BigCahuna]

I hope you live next to where you work, $5 a week for gas? maybe 2 gallons. How about clothes? you may want some.even at second hand stores they cost something.And your gonna have to wash them, even a laundry mat cost $$$. Where I live you couldn't get an apt in the worst part of town for $750 a month.I hope your heat is included in your rent and your electric. How about your school loan payments? Usually after 6 months the payments start. If you can swing all that on what you hope to pay, let us know how you did it.Also you may want to have a room mate to share the costs.,

 

[Cutehumor]

Chuck, your going to be a pharmacist. So why the penny pinching? if you move in with your parents for free, you can bankroll a ton of money (no expenses for rent/electric/food if your lucky) but your Dad will kick you in the can if you live with him for free on a pharmacist salary. I did the same when I was in nursing school and graduated with no student loans/debt. I drove beaters. When I think about it, I'm ashamed on how long I stayed with my parents but I did what needed to be done. Now, I'm stylin and profilin but that's another story

 

[fdcg27]

1.2 million USD is not nearly enough to retire on at age 40.
You need not live like a pauper to accumulate some capital, either.
The road to personal wealth runs through stocks and bonds.
There is an academic paper from years ago charting the long run rate of return for various asset classes.
IIRC, the average long run rate came out at 9% and change, with the highest returns found in low rated bonds.
Anyway, sock away 3.5-4K/mo, and split your assets between perfectly safe (CDs, T-bills, MMM funds), and riskier, higher return assets (stock mutual funds, esp. US market index funds, junk bond funds, and def some $ in Asian funds).
Do this, and you will have considerably more than 1.2 mil by the time you are forty, and you may then actually be able to go to either retirement or part-time work in your field.
Finally, I hit forty a dozen years ago. Even north of fifty, I am still in my prime, and am not yet ready to retire.
By the time you are forty, you'll be hitting your peak earning years.
Work another ten years, and you should be able to accumulate real [Anglo Saxon word not allowed here]-you money.
Also, as many above have mentioned, life has a way of throwing you a curve ball, or a hard brush-back pitch every now and then.
If you have a decent cushion of cash assets, you need not suffer badly from the occassional reversal in personal fortune you will inevitably experience.

 

[djb]

I was very frugal when in school and for many years after I graduated. So I know that budget is unrealistic.

You don't yet understand the expenses that will grow and appear.

A job that pays $110K just out of school is in a professional environment. You'll be expected to go out to lunch with your group and split the check. During Girl Scout cookie time you'll be buying. There might be a charity drive where donations are almost mandatory. If you cut back too far, the working environment suffers.

You may also need to upgrade your wardrobe more than you think. Most jobs don't require a suit, but they do require a different level (and higher cost) of clothing than a student.

 

[DieselTech]

LMAO you must plan to be single your entire life. Have fun enjoying your boring life.

3% interest is nothing. You better invest in a company match program or look elsewhere for higher yields. When your 40 1 million will be nothing to retire on. As a matter of fact it's nothing to retire on currently especially at 40.

You will be working too hard to lead such a boring life. Enjoy yourself or you may have a heartattack at 39.