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

[Drew99GT]

Chuck, if I've learned anything in my 30 years of life on this here planet Earth, it's that life plans usually stray of course about 5 years after you make them for unforeseen circumstances!

Budgeting and being a spendthrift is all fine and dandy, but don't do it to the point you're not budgeting and spending money to do the things you enjoy doing. That is what life is all about IMO.

In addition, your math and economics is close to Zimbabwe. No offense, but not including taxes in your budgeting?

All I can say is that our countries finances WILL (it's a question of when, not if) break the piggy bank in the next 3 decades. It's inevitable. So plan for that as well. In the end, just be glad if you end up happy and healthy with a roof over your head and food in your stomach 20 years from now. I know some wealthy people and some spendthrifts who are equally miserable. It's a fine line between not spending a dime and being a hobbit, and spending some money to have fun and fulfill your wants and interests.

 

[DieselTech]

I think ol chuck will change his mind as he gets older and gets a taste of that money. It's easy to say this when you don't have any money. I'm 32 in the process of selling my rather large business to allow more time with family and enjoy life....i'm almost 33, but have worked my arse off almost 18 hours a day for the past 6 years, making much more then 110k a year.

You need a financial planner to meet your goals and help you enjoy life to the fullest

 

[PandaBear]

Originally Posted By: Chuck1986
And for all the people telling me 1.2 mil isn't enough to retire off of: If it earns as little as 3% interest yearly, well, that's 36k per year! 36k is close to the net income of someone earning a gross income of 50k/year. Thus, the interest alone is more than enough to sustain a comfortable living. Not to mention the fact that some living expenses decrease (ex. transportation) once one retires.


1) living expense increase as you retire if you don't have free health care.

2) 3% interest yearly is a big assumption (currently 1.5% ING Direct CD) and nothing if you don't know the inflation number.

You can probably retire in Thailand or Mexico, but not in California or NY.

 

[tonycarguy]

Originally Posted By: Chuck1986



Geez that's funny cuz just the peanut butter, oatmeal and spaghetti alone combine to over 10,000 calories. I guess that's why my diet sustains a lean 190 lb physique?


A 190 lbs male who's active (goes to the gym) would need 20,000-22,000 calories per week. There's no where near that much in your shopping list. You've completely underestimated every other expense, food included. Double your 20/wk grocery bill, that's probably what you really spend on food. Double your 10k annual living expenses, because that's probably what it really is in reality.

 

[tonycarguy]

Originally Posted By: PandaBear

2) 3% interest yearly is a big assumption (currently 1.5% ING Direct CD) and nothing if you don't know the inflation number.



The specific return on a CD is not important. What's important is that 1-year CD's (and shorter duration) typically pay less than inflation. That's how banks make money: they borrow at below-inflationary rates and lend at higher rates. He would need to move into longer duration CDs, which involve interest rate risk (ie, you lock into a low rate and suddenly inflation rises).. Or invest in TIPS treasuries.

Regardless, investing in risk-free assets will not beat inflation over the long haul. More likely, inflation will be higher than these assets returns long-term. His $1.2m estimate is waaaay too optimistic. He needs about $2.5m to retire at 40, assuming no family to raise.

 

[Big_Ed]

Originally Posted By: L_Sludger
I recommend getting in good with the local food banks and community shelters - they supposedly give really good food away.

I hope you are kidding.

Anyone who makes 110K per year and takes food from a food bank should be arrested for theft! That food is for people who can't afford to buy enough food on their own. Not for those who are hoarding their money so they can retire early. That would be truly shameful.

 

[PandaBear]

Originally Posted By: Big_Ed
Originally Posted By: L_Sludger
I recommend getting in good with the local food banks and community shelters - they supposedly give really good food away.

I hope you are kidding.

Anyone who makes 110K per year and takes food from a food bank should be arrested for theft! That food is for people who can't afford to buy enough food on their own. Not for those who are hoarding their money so they can retire early. That would be truly shameful.


The OP is still in school, and hopefully will make 110k in the future. For now I think he is qualified for food bank, but I don't think he will be high on the waiting list.

 

[Gary Allan]

Originally Posted By: tonycarguy
Originally Posted By: PandaBear

2) 3% interest yearly is a big assumption (currently 1.5% ING Direct CD) and nothing if you don't know the inflation number.



The specific return on a CD is not important. What's important is that 1-year CD's (and shorter duration) typically pay less than inflation. That's how banks make money: they borrow at below-inflationary rates and lend at higher rates. He would need to move into longer duration CDs, which involve interest rate risk (ie, you lock into a low rate and suddenly inflation rises).. Or invest in TIPS treasuries.

Regardless, investing in risk-free assets will not beat inflation over the long haul. More likely, inflation will be higher than these assets returns long-term. His $1.2m estimate is waaaay too optimistic. He needs about $2.5m to retire at 40, assuming no family to raise.




I (think) I agree ..sorta.

I would tend to ignore ..well, not ignore, but surely not plan on true net growth in any investment and/or savings. Just assume a variable shrinkage/loss in the savings process. No "plan" will result in growth. Not a chance. The "players" may make money, but any plan will be a managing of losses.

 

[bigmike]

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

My advice, coming from someone that has lived off of $14400 living expenses for more than 12 years when I was younger, which included housing, vehicle, insurance for housing/vehicle, gas, food, electric, cell phone, etc. is to quit listening to anyone else here.

You are thinking smart. Now, stick to the plan and keep it within moderation.

 

[DKT]

It's been several years since I've posted on this forum, but this topic particularly caught my interest.

I came across this website that is very interesting, at least to me. It has several retirement calculators and articles on the subject. There is also an awesome article on how to collect social security at age 62, and then refile at age 70 and get the higher amount. I'm 55 so this was very interesting to me.
Here's that article:
http://www.retireearlyhomepage.com/SS_delay_70.html

Chuck, it sounds like you are a prime candidate for this: http://www.retireearlyhomepage.com/

 

[Cogito]

I think your estimates for food and gas (transportation) are not realistic, but you could massage the rent and heating/electric downwards a bit and gain a little breathing room. Sounds kinda boring though.

 

[occupant]

Purchase a used fixer-upper park model (12x32 or equivalent, 1 bedroom, typically found with a large enclosed porch called a Florida room) trailer home in a mobile home park in central Florida or the Panhandle for about $2000-$3000 cash.

Lot rent at these parks are typically in the $250-$350 range. Water, sewer, trash are included in some places. Wireless internet, albeit slow, is also common. If it's not where you end up, DSL/cable can be had cheap. Use one of those $45/month unlimted MetroPCS or StraightTalk cell phones and skip the landline unless you want fax ability. Local phone/internet deals can save you some money if bought at the same time. Don't bother with cable TV or satellite TV and watch episodes of the shows you like on YouTube or Hulu or whatever, unless it's REALLY cheap to add it to your communications package.

Work from the home. You can do freelance work for all sorts of different skillsets without leaving your desk.

Many household products (paper towels, toilet paper, soaps, shampoos, cleaners, detergents) can be bought either through Amway or Amazon.com. Trips to the store for a few things could be nearly eliminated. Mass grocery shopping could be done probably once a month and done so at one store. Interim trips for short-life consumables like dairy products, fruits, vegetables and the like could be done at a local c-store and the trip would likely be short enough to do by bicycle and use a backpack to carry the items back to the trailer.

Shave your head daily. No more haircut costs, and you won't need hairspray, gels, creams, or other styling products. Maybe some Turtle Wax. To get the most mileage out of razors, use a sonic cleaner on them when not in use. Use of an electric razor could save money from cartridge or disposable models. Wet/dry rechargeables can even be used in the shower, saving you time.

Do not drink, smoke, or consume sugary carbonated beverages. They cost you money, time, and the health risks outweigh the pleasure.

For a vehicle, since you won't be doing a lot of driving anyway, buy a car you can't stand, so you continue to NOT want to drive. A diesel-automatic Isuzu I-Mark, Chevy Chevette, Ford Escort, or VW Dasher would do nicely. If you want hauling ability, the Escort and Dashers are available as wagons and there's always the VW Caddy mini-pickup. Other early 80's small pickups with diesels would do nicely. 40mpg is great if you can only stand to drive the pile of mmhmm 400 miles a month, right?