How Little Can You Live On?

As of late I have been looking into what it costs me to live the life I lead.  I generally don’t spend a lot of money, a lot less than most of my peers, but I still don’t think where I am at with my spending is good enough.  Then I went over to Early Retirement Extreme where I reread some of their articles and I was very impressed on how little Jacob lives on….  $8,000 a year!

Come this summer I will have a yearly cost of living of $15,000.  Like Jacob, I am single with no kids, which inherently drops my costs significantly.  Here is a general summary of my costs:

  • Cell phone $80
  • Food (grocery and eating out): $350
  • Utilities (power, water, gas, internet): $150
  • Gas:$150
  • Car (savings): $200
  • Spending/Entertainment: $200
  • Insurance (employee portion): $45

Monthly Total: $1175

retirement_jar_custom-e47537ac27aa5cf9b11f4e4732c87e1def232852-s6-c10So obviously I am almost double the cost of Jacob’s spending, but I have elected for some things that he’d label as “luxuries”.  Namely a car, eating out and I also have a much more comprehensive insurance package.  For the things not included: taxes and car insurance, that is where I get the difference between monthly ($1175 x 12 months = $14,100) and yearly of $15k.

For retirement savings, paying off student loans etc I make a lot more than my costs; so right now I focus on double and triple paying my student loans each month.  Once that is gone I will be shifting that focus to building my retirement account.

Part of what ERE points out is if you can drastically minimize your monthly costs, you can retire much earlier than most.  It certainly is a balance of living comfortably vs saving so much that you don’t enjoy it, but I think living comfortably is much less than most people think.

Your Turn!

  • How little can you live on (what does that cover)?
  • What are things you gave up or wish you could give up?
  1. The average health care premium for single coverage in 2012 is $468 per month. $45/month is not coverage or you employer is very very generous. Car insurance? The typical automobile insurance policy can cost up to $150 a month.

    Just those two items = 468 + ~100 = 568 * 12 =~ $6500 per year. That is about a 50% increase in your budget. Did you accumulate any College loans that you are paying off?

    Your calculations are not realistic…

    • My employer covers my health care, the $45 a month is my portion, my company pays about $500 a month on my behalf. This has been my experience at several employers, but your experience with it might differ depending on the job/industry/location/etc. As for car insurance, the remainder ($900 more than covers my insurance).

      I addressed college loans in the post.

      • Reading is fundamental.

      • What about rent or mortgage payment?

        • Come this summer I will live in my Tiny House (its paid for, so no rent) and the land I will be on is bartered for with some help on a project (0-3 hours a month).

          • There seems to be a few items that haven’t been included. Will you have tenant insurance, or at least liability coverage? What about an allowance for home repairs, whether planned or emergency? Expenses for regular car maintenance? An allowance for car repairs, tire replacement, etc.?

  2. Rent-$650
    Car Payment-$250
    Insurance(car, life, renters, health)-$310
    Land Payment( I bought a half acre to put my tiny house on. Part of my renters covers this too)-$121

    I am moving into a smaller place to save $300 a month and will use that to pay off my car by next August.

  3. I have done this exercise – before I quit my job and we moved into the tiny house. Reducing my expenses made that all possible. All I pay for now is my insurance (I have a pretty good personal policy at about half the cost of the average), my phone, and food (to include the bar, of course! Love living in Beer City USA).

    My average yearly expenses are under $10,000 which gives me the ability to freelance and do what it is that I love to do.

    • That’s impressive! Do you and Matt share a car? In my budget I included $200 a month to save for a new car, my goal is to pay with cash in full for my next car.

      • We each have our own cars and neither have car payments. We don’t drive that often so we are thinking about eventually only having one car.

  4. Ok, I’ll go waaay out on a limb here and be as honest as I can force myself to be….

    Land payment – varies between the minimum of $250 and $500/month

    Car/Renters Insurance (lowest possible coverage but still have some protections, like under-insured drivers hitting me) – $55/month

    Food (I almost never eat out) – $150/month

    Credit Card – varies between minimum of $122 and $375/month

    Health Insurance (Basic Health of Washington) – $17/month
    This will go up to $200/month in approximately 2 years.

    Gasoline (I drive a gas-guzzling ’87 4Runner and a 100 mpg scooter, so this is an average over the year) – $50/month

    Animal Care (I have a small farm, and have financial help paying their costs) – $200/month

    Gym (showers! while I “camp” during building of my Tiny Cabin) – $35/month

    Other Stuff (including pay-as-you-go basic phone)- $50/month

    I have most of the building supplies I need for my home, so right now haven’t included any costs there. More will arise in the future, and I’m working hard on eradicating my property and credit card debt to pay for them when needed.

    So, total for now (at most) is: $1432/month.

    I have a lot of conveniences I don’t pay for, at least not with money. I work on my mother’s property and help her out in return for her covering things like the internet, which she already has for herself, and electricity, which is quite minimal, and some animal care costs – the most expensive thing. She enjoys them immensely though, and willingly helps out).

    If not for my mother, I’d never be able to do this huge undertaking.

    Phew! Lengthy answer, sorry!

  5. I have done this numerous times, and each time I am frustrated that my costs are so high. I pay $500 a month for health insurance and out of pocket expenses, which will be going up as soon as my health insurance changes to meet the new requirements. If I take that out, then I am living frugally at just another $500 a month, but health insurance and expenses really add up! That still only comes to $12,000 a year, but I wish it were less so I could pay off my student loans faster and save more for a house and retirement.

  6. Spending money is easy, even saving it isn’t so hard, what makes a real difference is figuring out how to separate your needs from your ego…for every dollar you spend simply ask which it is, need, or ego?
    Life isn’t black and white, neither is frugality…treat yourself on occasion, it’s a worthy reward for saving and spending so well…

  7. I’m going to sell one of our cars to become a one car family. I love riding my bike and taking the light rail so much more than driving! Going car-free (if you can) saves enormous amounts of money and makes the air so much happier.

    • Yes indeed! And another thought – if you can’t use or don’t have access to light rail or buses, then an appropriately sized scooter is awesome. I can ride in town or even on the highway (wouldn’t like to risk the freeway too often as my own scoot is very lightweight) and get – seriously – an average of 100 mpg. I can load her down with groceries and even brought some building supplies home on her. A window once….got some looks with that one!

  8. Last year my family of five moved out of our 800 square foot NJ home, where our yearly expenses for everything including health insurance premiums was $31.5K, to a 1500 square foot home in our new state with a yearly expense for everything at $36K. Our health insurance premiums were $350 month but went up to $400 this year.
    Things that save us the most:
    kids aren’t in programs and activities
    borrowing from the library instead of paying for entertainment
    $300 month for groceries and cooking everything from scratch
    old paid for cars and barely driving at all
    eating sensibly and keeping active keeps the doctors and medical expenses away
    thrift for clothes, secondhand and homemade for gifts
    stay with relatives on vacation, staycations
    never, ever, ever being in debt apart from an affordable home mortgage

    Jacob on ERE passed the reigns of financial guru-ism onto a fellow called “Mr Money Mustache” who runs a site and forum of the same name if you want to peruse the lifestyles and plans of more people living on less now to get out of the rat race sooner. 🙂

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