Author Topic: Low Income Mustachian  (Read 5083 times)

allie280

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Low Income Mustachian
« on: October 30, 2016, 04:32:24 PM »
Howdy, folks, I'm new here. I've been learning a lot by reading this blog and others in the financial independence blogosphere, and I've done the math and determined that I need half a million stashed away for me to safely withdraw and live on 20,000 a year. I know I can live on that because I already spend less than that and have been living just fine. It's easy to spend very little money when you make very little money. I know that it's possible to save money for the future--I've been religiously maxing out my RothIRA ever since I got it three years ago. But I know that I'm not one who is going to live up to this "retired at 30" ideal because I'm not a high-income earner choosing to live frugally. I'm a low-income earner living frugally out of necessity (plus, I'm turning 30 next month). Fortunately, I do feel I'm ahead of most others in my bracket because I actually do save and I do keep my overhead as low as possible.

I guess I'm posting to ask if there's anyone else out there like me.

La Bibliotecaria Feroz

  • Magnum Stache
  • ******
  • Posts: 4193
Re: Low Income Mustachian
« Reply #1 on: October 30, 2016, 04:41:53 PM »
Hi allie280!

I am not exactly "like you" but I am also low-income (and in a HCOLA). I'm 35 and recently divorced. My two kids are on reduced lunch and we live in a one-bedroom apartment.

But I love my life! I am fortunate to have backup from my family and I'm optimistic that I'll grow my income. Sounds like you're doing great.

Adge

  • 5 O'Clock Shadow
  • *
  • Posts: 50
  • Location: North Carolina
Re: Low Income Mustachian
« Reply #2 on: October 31, 2016, 08:46:45 AM »
Welcome!

I'm also in a similar boat, and turning 30 in December. On the positive side, we don't have to worry too much about lifestyle inflation on a lower income ;) Also, even small changes can have a big impact on your savings rate when you're working with less, so we can see a positive impact more quickly than someone making 3x our income.

A couple things that help me stay positive: 1. No matter what, even if I never get anything more than cost of living increases from now until I retire, I can still be out before 67 because I'm not waiting on SS to pay for my retirement. 2. I like to keep a sort of mental list of frugality tips that are even more extreme than I'm interested in now (i.e. washing out and reusing ziploc bags, line drying all my clothes, living with a roommate) as a reminder that if sh*t ever really hits the fan, I have ways to cut costs even more in order to get through it.

limeandpepper

  • Magnum Stache
  • ******
  • Posts: 4459
  • Location: Australasia
Re: Low Income Mustachian
« Reply #3 on: October 31, 2016, 08:56:02 AM »
Welcome to the forums! I'm also a low-income earner who spends less than $20k/year, and will not be retiring super-early. I had a mini-retirement a couple years ago however, and will probably have another mini-retirement within the next few years.

Paul der Krake

  • Magnum Stache
  • ******
  • Posts: 4452
  • Age: 11
  • Location: USA
Re: Low Income Mustachian
« Reply #4 on: October 31, 2016, 09:30:12 AM »
Welcome!

Being "low income" is a spectrum and can mean vastly different things to different people. But to answer your question, we have forum members who make less than 20k/year, others who make over 200k/year, and everything in between. Do not be intimidated by engineers and physicians discussing how to sock away 6 figures this year.

The good news is that actual numbers don't matter- the savings rate does.

Without knowing anything else about you, if you live on 20k and max out your IRA every year, assuming no other savings, you are already saving over 20%. You will not retire in 10 years, but will be comfortable in your old age.

The even better news, is that the income you can earn is largely only bounded by your willingness to reach and grab it.

Good luck!

Cannot Wait!

  • Pencil Stache
  • ****
  • Posts: 719
  • Age: 52
  • Location: Canada
  • FIREd 2016 @ 49
Re: Low Income Mustachian
« Reply #5 on: October 31, 2016, 12:07:46 PM »
The mindset is so much more important than the income!  After "waking up" to the MMM call, I rearranged how I thought about money and made huge changes to my life.  I stopped leaking money but I also started making more by doing things other people wouldn’t think would be worth doing, like petsitting,  selling stuff on kijiji, Airbnbing an extra room, taking a 2nd job, etc.  So it worked both ways - not spending and making more - sometimes $10 at a time.  It all adds up, and then it snowballs.
I wish I knew this stuff in my 30s, but it all worked out for me - retired in Feb at 49.
« Last Edit: October 31, 2016, 06:34:54 PM by Cannot Wait! »

Johnez

  • Handlebar Stache
  • *****
  • Posts: 1065
  • Location: Southern California
Re: Low Income Mustachian
« Reply #6 on: October 31, 2016, 12:28:27 PM »
Middle-class Mustachian here, make about $60k per year. In Southern CA that does not go far, however the attitude is what matters most. The difference between thinking "I deserve it" and "do I really need it?" adds up very quickly.

$80 Verizon phone plan ===> $28 Republic Wireless plan
$50 high speed Internet===>$15 bare bones cable internet.
$80 cable TV===>$9 Netflix
$15000 new car===>$4700 "pre-owned" car.

drp

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Low Income Mustachian
« Reply #7 on: October 31, 2016, 05:55:20 PM »
Hello!

We're definitely low income. We're a family of 4 (34,33,12,7) living on around $30k gross a year. And we manage to save, too.

Used to be super frugal, fell off the wagon, but are getting the ball rolling again. We don't max out our 401k (DH is just now eligible so our first deduction has yet to go through - but he has a former 401k from past job just sitting...and growing). We're only starting with 6% and HOPEFULLY going to keep inching our way higher as we get comfortable with the lower income adjustment. We save as much as we can, too - every penny counts here! We have a fully funded emergency fund ($10K) and are presently saving for a house (cheap as possible!).

Anyway, we don't expect to retire crazy early - though it's fun to dream. Even though we clearly can get by (and are happy) on a lower income, let's get real - a lower income family/person saving 50% is not the same as a high income family/person saving 50%. Their 50% is much higher, clearly, and our family literally cannot get by on 50% of our income (though I have fun trying to figure out low we can go!). We're still hoping to retire early...just not sure HOW early.

All I know is we're just gonna keep saving, and it's gotta lead us somewhere!

Blessings!

Cannot Wait!

  • Pencil Stache
  • ****
  • Posts: 719
  • Age: 52
  • Location: Canada
  • FIREd 2016 @ 49
Re: Low Income Mustachian
« Reply #8 on: October 31, 2016, 06:33:34 PM »
Middle-class Mustachian here, make about $60k per year. In Southern CA that does not go far, however the attitude is what matters most. The difference between thinking "I deserve it" and "do I really need it?" adds up very quickly.

$80 Verizon phone plan ===> $28 Republic Wireless plan
$50 high speed Internet===>$15 bare bones cable internet.
$80 cable TV===>$9 Netflix
$15000 new car===>$4700 "pre-owned" car.

===>  no cell phone, no cable, no TV, no netflix, and a $3000 car for me; you're living like a king!  😉😈😅

scrubbyfish

  • Guest
Re: Low Income Mustachian
« Reply #9 on: October 31, 2016, 06:35:03 PM »
Yep! I blog about it, too (and offer a book, see sig line).

drp

  • 5 O'Clock Shadow
  • *
  • Posts: 20
Re: Low Income Mustachian
« Reply #10 on: October 31, 2016, 08:24:16 PM »
Yep! I blog about it, too (and offer a book, see sig line).

Oh! I'm checking out your blog now...thanks for sharing!

frugaldrummer

  • Pencil Stache
  • ****
  • Posts: 624
Re: Low Income Mustachian
« Reply #11 on: November 03, 2016, 05:25:28 PM »
Allie -
One thing that struck me about your post - you're only just turning 30, yet you speak as if your low income is a permanent condition.  Surely at your young age there are many paths to making a larger income (and therefore hitting your early retirement goals).  What kind of work do you do?  What skills do you have?  Goals and ambitions?  Side hustle possibilities?

allie280

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Low Income Mustachian
« Reply #12 on: December 07, 2016, 02:46:35 PM »
Thanks for the replies, folks! I've gotten sucked into the "overheard at work" thread which I find hilarious!

As for the answer to the question about my line of work: DH and I co-own a video production company. We're not making much (yet), but we're getting our bills paid. That, combined with neither of us having to have "real jobs" for the last two years is successful to us. If push came to shove and we had to go back to something normal, he would go back to IT and I would be a homemaker. I want to get better about managing our finances in the coming year. So far, all we've really stuck to is "don't spend more than we make" which we've succeeded at. We haven't kept track of our business's income like we should, and we know nothing about how to maximize tax deductions as a small business. We've just been flying under the radar, which we didn't think was that big of a deal considering we make less than poverty line wages.

I wish I'd discovered this years ago. Then maybe I would have gone to school for something sensible, worked really hard in my 20s, and then saved all of it so I could do whatever I want to do now, but I wanted to be an actress. Though it may not have been the most logical choice at the time, I wouldn't have ended up where I am now with DH doing what we do had I not decided that in the first place. So I regret nothing. I can only go forward from here. So, here I am. Thanks everyone for your suggestions. I'm looking forward to learning more on this journey with you all. :)

Dicey

  • Walrus Stache
  • *******
  • Posts: 9715
  • Age: 61
  • Location: NorCal
Re: Low Income Mustachian
« Reply #13 on: December 07, 2016, 06:29:43 PM »
Yep! I blog about it, too (and offer a book, see sig line).
Hey scrubby, I've missed you heaps! Welcome back. Posting to say there is no signature line. Maybe because you're a "guest"? What happened to all your beautiful and inspiring words?

ETA: I can't even click on your name to see when you came back. What the what???

badasswizard

  • 5 O'Clock Shadow
  • *
  • Posts: 16
Re: Low Income Mustachian
« Reply #14 on: December 07, 2016, 07:15:33 PM »
I'm in a similar boat (young and have never earned more than 30K/year). One thing I've learned from the forums is that lots of people who have high income a) hemorrhage money with wasteful spending, b) hate their jobs/aren't following their passions, and c) struggle with frugality.

Personally, having never earned much and being surrounded by other low-earners, I think believing that you can earn more is helpful and seeking out different types of work/higher paying work if you want. Then if you stay frugal with the higher income your pace accelerates. If you don't earn more, then the savings rate math still works.

You are doing great!

yachi

  • Stubble
  • **
  • Posts: 243
Re: Low Income Mustachian
« Reply #15 on: December 08, 2016, 05:36:22 AM »
Welcome!

2. I like to keep a sort of mental list of frugality tips that are even more extreme than I'm interested in now (i.e. washing out and reusing ziploc bags, line drying all my clothes, living with a roommate) as a reminder that if sh*t ever really hits the fan, I have ways to cut costs even more in order to get through it.

You might want to have a look here too: http://forum.mrmoneymustache.com/share-your-badassity/dumpster-diving-for-groceries/

Gin1984

  • Magnum Stache
  • ******
  • Posts: 4693
Re: Low Income Mustachian
« Reply #16 on: December 08, 2016, 07:15:37 AM »
Thanks for the replies, folks! I've gotten sucked into the "overheard at work" thread which I find hilarious!

As for the answer to the question about my line of work: DH and I co-own a video production company. We're not making much (yet), but we're getting our bills paid. That, combined with neither of us having to have "real jobs" for the last two years is successful to us. If push came to shove and we had to go back to something normal, he would go back to IT and I would be a homemaker. I want to get better about managing our finances in the coming year. So far, all we've really stuck to is "don't spend more than we make" which we've succeeded at. We haven't kept track of our business's income like we should, and we know nothing about how to maximize tax deductions as a small business. We've just been flying under the radar, which we didn't think was that big of a deal considering we make less than poverty line wages.

I wish I'd discovered this years ago. Then maybe I would have gone to school for something sensible, worked really hard in my 20s, and then saved all of it so I could do whatever I want to do now, but I wanted to be an actress. Though it may not have been the most logical choice at the time, I wouldn't have ended up where I am now with DH doing what we do had I not decided that in the first place. So I regret nothing. I can only go forward from here. So, here I am. Thanks everyone for your suggestions. I'm looking forward to learning more on this journey with you all. :)
The other option is that you keep work that job and he goes back to IT.  Since you were a homemaker, you would not be bringing any money in so even a small bit would still work for you.

Sent from my SPH-L710 using Tapatalk


Guesl982374

  • Pencil Stache
  • ****
  • Posts: 501
Re: Low Income Mustachian
« Reply #17 on: December 08, 2016, 10:31:36 AM »
allie280

Great job keeping your overhead so low. You might want to take a look at these two articles as increasing your income to $40-100K AND keeping your overhead at the same level will yield you better results than being more frugal than you actually are.

http://www.mrmoneymustache.com/2013/07/25/50-jobs-over-50000-without-a-degree-part-1/
http://www.mrmoneymustache.com/2013/08/05/50-jobs-over-50000-without-a-degree-part-2/