How much do you need to live?

[SailorGirl]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

Well for me, it's because I've never earned $50k!  I'm frequently shocked and appalled that lots of people can spend more money in a year than I've ever earned.

Bingo

Yes, exactly.

[Giro]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

Well for me, it's because I've never earned $50k!  I'm frequently shocked and appalled that lots of people can spend more money in a year than I've ever earned.

Bingo

totally fair.  necessity is also the mother of frugality and efficiency. 

I'm combing through my budget and I know some of my expenses are face punch worthy.   the low numbers are INSPIRING!

[accolay]

Btw, not to derail the thread, but Accolay are you a violinist?

Wow! Gold Star for that association. No violinist, but I dabble.

[dmc]

While I truly admire those that can live on $20K or less a year, for me that would feel like a life of constant deprivation.  My number is much higher, in large part because DW and I like to travel a lot and eat well.

Our health insurance alone is $15,000. I didn't even include taxes.

[Cassie]

Ours is $10,000 even though we retired from a public employer.

[PatStab]

I dread to see what ours is.  I initially went on medicare but it cost so much since my husband was still working I went back on his.  I thought medicare would be cheaper.  But no, since he made so much we had to pay a higher amount because the premiums are means tested, I had no idea about that.

[libertarian4321]

Y'all are going to laugh, but I really don't know what we live on.

By far, our largest expense is TAXES.  Followed by TAXES, TAXES, TAXES and Insurance.  These taxes typically vary with income.

So if I work a lot, they are higher, if I work less, they are lower.

My guess is that we (most years) live on 40-50K per year, with a huge percentage of that being TAXES.

Our actually cost of living, outside of taxes, though, is very low.

[Bjorn]

http://earlyretirementextreme.com/ere-health-insurance.html

[2lazy2retire]

Y'all are going to laugh, but I really don't know what we live on.

By far, our largest expense is TAXES.  Followed by TAXES, TAXES, TAXES and Insurance.  These taxes typically vary with income.

So if I work a lot, they are higher, if I work less, they are lower.

My guess is that we (most years) live on 40-50K per year, with a huge percentage of that being TAXES.

Our actually cost of living, outside of taxes, though, is very low.

IMO taxes are not an expense ( apart from property ) , money was never yours to begin with. Any calcs I do for saving rate etc  are always based on take home, could never understand why anyone factors in gross pay.
The fact that couple can earn 90k from investment income in the US and not pay any tax is amazing and if you can live on 4o-50k taxes should be the least of you worries - so stop f@cking whining

[HenryDavid]

In the mid $40k range, excluding principal on a soon-to-be-paid off mortgage.
This is for 2 adults and includes luxury on a truly epic scale! 3 months in Europe! A week in Venice, a week on the French riviera, 2 months in southern France, etc. Truly millionaire living.
It's mind-boggling what you can do on about half of the median income for my area of western Canada (which was $94k in 2010, and likely a fair bit more today).
Our "need to live" sum would obviously be far below this millionaire-level spending. I'd say about $24k (Canadian) could be very comfortable.
If we spent that whole median income amount . . . . what would we use it for? I know: granite countertops. We don't have those. Waaahhhh.

[MsPeacock]

Well, "it depends" ... My house payments are almost 31k per year right now (augh!!!!!!). But, when the house is paid off, and if I don't have to buy health insurance - I could live on not too much money. But right now - right now I have two little kids, and debt from a divorce which cost me basically all my savings, and a house, and hope to retire someday.

But if it were just me - maybe $1000 a month if I didn't have to pay rent or for health insurance. IN fact, $1000 a month would be lovely for just food and clothes and discretionary spending sorts of things.

[FIRE me]

First time post, besides introduction.

Hey accolay, I'm new here too.

To answer your question, to live as I currently do, I require about $950 per month. That includes no contingencies (home or vehicle repair, doctor visits, etc). My house is paid off, which helps a lot. My actual spending is closer to $1,500 per month. My savings rate is 80% or better, so I am going to allow myself to spend a little extra.

[daverobev]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

Well for me, it's because I've never earned $50k!  I'm frequently shocked and appalled that lots of people can spend more money in a year than I've ever earned.

Bingo

totally fair.  necessity is also the mother of frugality and efficiency. 

I'm combing through my budget and I know some of my expenses are face punch worthy.   the low numbers are INSPIRING!

Yes *but* it's all about cost of living.

If you buy a $40k house in (large number of places in US where this is possible), get 'homestead allowance', you need a damn site less than if 2 bed houses are $150k.

That's why stuff likw this is not hugely helpful - in India you could live pretty well on a few $k a year, in the UK in certain areas £5k and in others £25 might be tight.

In Canada it's the same. Work somewhere with high pay? Good chance the cost of living there is going to be high.

The bestest thing IN THE WORLD is being able to work remotely while being paid well.

That, and root beer. Mm, and the pizza we had last night was pretty good, too.

[dude]

While I truly admire those that can live on $20K or less a year, for me that would feel like a life of constant deprivation.  My number is much higher, in large part because DW and I like to travel a lot and eat well.

Our health insurance alone is $15,000. I didn't even include taxes.

I'm fortunate, mine is only $7,385/year, but that's because it's subsidized very heavily by my employer, and will continue to be so (hopefully) in retirement.

[Iron Mike Sharpe]

When people throw out their budget numbers, are they including money for long-term housing repairs or next vehicle purchases? 

[slugline]

The bestest thing IN THE WORLD is being able to work remotely while being paid well.

Good old-fashioned arbitrage is to earning HCOL-area pay while actually living in a LCOL area.

I've been thinking recently about the amazing opportunities the Internet has opened, especially regarding investing. It's empowering to know my "little green employees" can go to work on Wall Street just like anyone else's while I'm many hundreds of miles away.

[cazaubon]

$24,000 a year, of which about $9,000 is housing, and yes that includes long-term maintenance (I live in a condo and the monthly fees pay for current upkeep and long-term planned maintenance).  I don't own a car because Montreal has fantastic public transportation and I prefer to walk or bike anyway. That number is the gross amount before taxes BTW.  Includes all the usual expenses and 1 flight to the US a year to visit family.

[daverobev]

We're trying YNAB but, honestly, it's not helping *that much* because.. we're all over the place.

Wife works part time, plus side job; I work part time; we have rentals; because I'm temporarily working we have a couple of days a week of daycare at the moment.

We have dividends coming in, investments going out, tax set aside for our businesses... she has invoices and expenses one month that might not get paid til the next month..

I'm finding it very hard to separate "our" expenses from our "costs of earning money".

And it's all transitional. I know I won't be working (much) after June (til next year, maybe), but I'll be stepping up my BeerMoney game.

Closest I can come is that we've spent $5k in the last three months. But that's *spent* not budgeted. We are *budgeting* all the money that comes in.

I guess at the end of the year we can go and make our own reports to see exactly how much we spent on groceries, per month.

We're of course budgeting for maintenance on the house, car repairs, house insurance (which we pay once a year as they charge ~3% to do it monthly... though I'm beginning to wonder if that's a better deal).

It's good in that we're setting an allowance, and I can see where the money's going, I guess.

[Malaysia41]

Our burn rate is currently $100k per year / $8.3k per month.  Family of 5 with one daughter in college another about to start.

Monthly break out with some categories rounded up to the nearest $100.

$2500 tuition + living expenses 3 kids
$1800 US house ITI
$1000 travel
$900 Malaysia rent
$800 household/clothes/furniture/gifts/entertainment
$700 food
$400 insurance/ medical
$200 local transportation

[louloulou]

for those of you sub $20k, are you single adults living on that?

We are a family of 4, converted to USD, we live on about 35k p.a..

[kathrynd]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

Well for me, it's because I've never earned $50k!  I'm frequently shocked and appalled that lots of people can spend more money in a year than I've ever earned.

Bingo

Yes, exactly.

Same here.

Another thing that boggles my mind, are the people who spend $300+ per couple on food, and think it is normal.
Maybe it is normal, but averaging $150 per person, per month, is a lot to me.

[Malaysia41]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

Well for me, it's because I've never earned $50k!  I'm frequently shocked and appalled that lots of people can spend more money in a year than I've ever earned.

Bingo

Yes, exactly.

Same here.

Another thing that boggles my mind, are the people who spend $300+ per couple on food, and think it is normal.
Maybe it is normal, but averaging $150 per person, per month, is a lot to me.

Oh.  We used to easily spend $1500-$2000 a month on food for 4 people.  So, $500 per person?   Getting it down to $700 for the whole family was a big deal and was one of the things that enabled us to FIRE. 

I don't understand how you can't understand how others blow money out of their asses.  We live in a society where at every waking moment you have an opportunity to buy shit.  It just takes an ounce of mindlessness and access to credit and you're off.

[kathrynd]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

Well for me, it's because I've never earned $50k!  I'm frequently shocked and appalled that lots of people can spend more money in a year than I've ever earned.

Bingo

Yes, exactly.

Same here.

Another thing that boggles my mind, are the people who spend $300+ per couple on food, and think it is normal.
Maybe it is normal, but averaging $150 per person, per month, is a lot to me.

Oh.  We used to easily spend $1500-$2000 a month on food for 4 people.  So, $500 per person?   Getting it down to $700 for the whole family was a big deal and was one of the things that enabled us to FIRE. 

I don't understand how you can't understand how others blow money out of their asses.  We live in a society where at every waking moment you have an opportunity to buy shit.  It just takes an ounce of mindlessness and access to credit and you're off.

I guess if you are going to embrace the  "MMM" lifestyle (for lack of a better word), spending that much money on food is crazy.
I would think people would be taking to heart how to be FIRE, if they are following this forum.

....My husband and I already were retired when I started reading MMM (aged 46 & 50)...4 years ago
I only read this forum for fun, not advice .

Your previous spending on food (2k) is almost double than what we live on now...and we travel 8 months of the year in Australia (we are from Canada)

[lostamonkey]

I "could" live on maybe 6K/year but this would require an extreme lifestyle which would not be fun.

I currently spend just over $20K/year but I am young and single.

My FIRE budget is $40K.

Since the question is how much do you need, it's probably $6K.

[Cassie]

Food is also really going up. We used to spend $300/month for 2 people & now spend 400. Meat especially has risen & we eat meat once a day.  I also make some casseroles to stretch the meat.  However, we built into our budget extra expenses so it is no big deal.

[PencilThinMustache]

let me pose a question to the folks out there with actual annual living expenses <20k/yr:

If you made, say, 250-500k/yr...would you still do it?

I wager to bet that lifestyle creep would kick in, despite what you may think...

A better question might be posed to those of you who do make that kind of money.  anyone?

[ender]

When people throw out their budget numbers, are they including money for long-term housing repairs or next vehicle purchases?

We're at about $20k/person right now pace. About 25% rent, 25% giving, and about 20% total vehicle expenses. Includes vacation, gifts, etc.

About $300-350 on food and household expenses per month for two of us.

These numbers will go down I'm sure over time since we're relatively newly married and still getting used to what that looks like.

[Cassie]

When we both worked full-time we made together $130K/yearly & spent $70,000K.

[andy85]

let me pose a question to the folks out there with actual annual living expenses <20k/yr:

If you made, say, 250-500k/yr...would you still do it?

I wager to bet that lifestyle creep would kick in, despite what you may think...

A better question might be posed to those of you who do make that kind of money.  anyone?

I'm probably around $15-$18k (does not include housing)
if i made that much money i'm sure that number would be more like $25-$35k plus housing
I honestly dont know what i'd spend money on...more golf? more tools? more travel? those are about the only things i 'want' more of...

[Guses]

Those of you that post, are you answering for your family or dividing by the number of people?

It seems most posts say "I spend x amount" and not "We spend X and are a family of Y". Not sure if this is because most posters are single or simply stating their amount per person.

We are a family of 3 and we spend about 24K$ excluding mortgage principal.

[andy85]

Those of you that post, are you answering for your family or dividing by the number of people?

It seems most posts say "I spend x amount" and not "We spend X and are a family of Y". Not sure if this is because most posters are single or simply stating their amount per person.

We are a family of 3 and we spend about 24K$ excluding mortgage principal.

I'm single, spend about 1200/month give or take a few hundred depending on stuff (again, doesnt include housing/utilities)

getting rid of my car payment would reduce that by 270/month

My next biggest spending category is hands down groceries....i love organic quality meat, and the grocery bill reflects that :)...i also probably drink too much :)

[a moist sack of nickels]

I need to live quite a bit. Not really flexible on that point.

[h2ogal]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

I'm finally starting to track all of my spending but my DH and I have separate finances so I can only work my own half of the budget.  I spend at least twice as much as him anyway, because of kid expenses (he's stepdad). 

I will get there!!!

Giro - I hear ya!  I've cut my budget a LOT from over 5000/month down to 3900 per month. (My house is paid off) I need to get down to less than 3000/month to retire in 2017, so Im still workin' it. 

Here is what Ive done so far:
1. Analyzed all spending.  I used Fidelity expense tracker because I already have a fullview account linked to everything. I already had all past spending data in the system going several years back.  I just had to spend a few hours digging into the transactions and editing the categories.

2. Once I had the categories set up, I compared my spending with with MMM family to see where mine was way out of line. 

3. Then, I started knocking down budget, one category at a time, starting with the big ones. 

Heres what I found so far:
My grocery spending was way out of hand.  Sometimes I spent up to 1000/month on Groceries.  Now Im spending around 400 or so.  Cutting this was much easier than I thought it would be. 

My property tax is over 6K where MMM is like 2K.  I called my tax collector and she sent me forms to fill out to file for a STAR reduction in tax.  I wont see it this year, but next year I should see a 700$ reduction.   

Also MMM house insurance is 410 a year, and mine is over a thousand...so I called our insurance agent and ask him to do a policy review of ALL our policies, home, auto, umbrella, and give me some options...higher deductible?  Shop Around?   I found out that DH had an active policy for a couple of old "classic cars" that he doesn't even drive anymore!

I feel Ive made huge strides in cost cutting, and have been amazed at how painless some of the cuts really were.  So dont give up!

[kathrynd]

let me pose a question to the folks out there with actual annual living expenses <20k/yr:

If you made, say, 250-500k/yr...would you still do it?

I wager to bet that lifestyle creep would kick in, despite what you may think...

A better question might be posed to those of you who do make that kind of money.  anyone?

In a few short years, that will be our reality, because all of our rental property mortgages and debt will be paid off (we will then make closer to $250k pa)
Maybe lifestyle will creep in, but not by much.
I hate shopping, except for groceries (love searching for bargains there)

I think it is similar to people winning the lottery.
Some will blow through that money quickly, and others don't.

[Retired To Win]

I cannot understand how people's budgets are sooo small.  I want to get there, I really do.  Right now, we are at at least $50k a year - probably more.

Well for me, it's because I've never earned $50k!  I'm frequently shocked and appalled that lots of people can spend more money in a year than I've ever earned.

Yes, it can be shocking how much people think they NEED to spend.  You'll find it gets worse if you go to other non-Mustachian blog and forum sites.

Like you, I never made more than $50K gross.  That didn't stop me from being able to earlier retire at 53.  And I got started on the journey pretty late (at 42).

So... keep the faith.  You can get there.

[aschmidt2930]

let me pose a question to the folks out there with actual annual living expenses <20k/yr:

If you made, say, 250-500k/yr...would you still do it?

I wager to bet that lifestyle creep would kick in, despite what you may think...

A better question might be posed to those of you who do make that kind of money.  anyone?

I'm at about 22k/yr right now, with about 50 percent of that being rent and $3600 being car payments (Which will soon be over, thank god).  I'm fortunate to already have a strong income, but if it was 250k strong, my expenses would likely increase dramatically.  There's very few things I would buy, but I would definitely go out to eat more, go on longer trips, ect.   

Let's be honest, if you're single and making 250k+, a little lifestyle creep isn't going to significantly alter your path to FI.  You're pretty much there. 

[Mistah Cash Lion]

Currently my expenses are 11-12k a year as a single male.  Could get them down to around $7,500 or less if I had to.  Would be quite unpleasant though.  At my current spending of 12k/year I am comfortable although plan to spend 15k - 18k in retirement.

[Ricky]

It's difficult to define a need. If you need a job to support your basic needs, then you likely need a car and housing near where your job is, artificially inflating your "real" needs.

1. Food - couldn't be more than $2,400 a year no matter where you are in the country...and that's arguably over ones needs at $200/mo
2. Housing - basic housing should cost no more than $500/mo or $6000/yr if you own in a reasonable  part of the country (again, do you need to live in NYC?) including taxes/insurance/maintenance
3. Cell phone - no more than $120/yr
4. Insurance/medical- highly variably but we'll say $2,400 a year to be fair. $200/mo doesn't seem to be uncommon now
5. Internet - $720/yr (one could argue if this is a need or not for non work purposes - but for most it definitely is)
6. Car - no more than $1,400 a year (assuming paid off car in great shape - probably pushing this number slightly)
7. Entertainment - $1,200/yr (includes travel

Total - $14,240/yr per person. This obviously drops if one doesn't need a car or lives with someone else. I'm considering entertainment a need because if would be silly not to. Did not account for any sort of unexpected expense that could occur.

So I'm not sure how anyone is living under $14k without being in some sort of alternative lifestyle or with subsidized housing.

This number is also very close to what many answered, so I think it's pretty accurate. It's not exactly bare bones, but pretty accurate for most people. The car expense is debatable depending on how far one lives from work, but most people still need a car around. The entertainment expense, is the "live in the now" at a basic level to reward oneself, and the reality is most aren't going to live without this one.

[Cressida]

I need to live quite a bit. Not really flexible on that point.

hahaha.

[GuitarBrian]

I was raised on less than $20k a year. Family of 4. We lived quite well. Traveling, sailing, fishing.. homeschooled.

I am now trying to pin down my monthly expenses. But they are all over the place. And lots of stuff is related to work.

I do know that for Dec, Jan, Feb, I spent a total of $2,440 so $813 a month. But I was out of the country and I didn't "do" much, just worked on the internet booking shows for my summer tour.

For March I am at around 1,500 already. But the majority of that is business expense that would not otherwise be there unless I was making money.

It is hard to define "need" and then including rent is hard, since some people have none... Including health insurance is hard, since again not everyone has health insurance.

This is a hard question to answer.

[Trimatty471]

Y'all are going to laugh, but I really don't know what we live on.

By far, our largest expense is TAXES.  Followed by TAXES, TAXES, TAXES and Insurance.  These taxes typically vary with income.

So if I work a lot, they are higher, if I work less, they are lower.

My guess is that we (most years) live on 40-50K per year, with a huge percentage of that being TAXES.

Our actually cost of living, outside of taxes, though, is very low.

I agree with this.

[MrFancypants]

Another thing that boggles my mind, are the people who spend $300+ per couple on food, and think it is normal.
Maybe it is normal, but averaging $150 per person, per month, is a lot to me.

What are you eating?

Are you eating mostly processed stuff or are you buying fresh ingredients and preparing your own meals?

$150/person a month is absolutely do-able, and probably not even all that extreme.  But something my wife has noticed in a lot of YouTube videos she's watched that are about saving the maximum amount of money is that they're eating garbage.

[Mistah Cash Lion]

Another thing that boggles my mind, are the people who spend $300+ per couple on food, and think it is normal.
Maybe it is normal, but averaging $150 per person, per month, is a lot to me.

What are you eating?

Are you eating mostly processed stuff or are you buying fresh ingredients and preparing your own meals?

$150/person a month is absolutely do-able, and probably not even all that extreme.  But something my wife has noticed in a lot of YouTube videos she's watched that are about saving the maximum amount of money is that they're eating garbage.

I think she was saying that $150 / person is more than enough and thinks it's probably too much.

[MrFancypants]

Another thing that boggles my mind, are the people who spend $300+ per couple on food, and think it is normal.
Maybe it is normal, but averaging $150 per person, per month, is a lot to me.

What are you eating?

Are you eating mostly processed stuff or are you buying fresh ingredients and preparing your own meals?

$150/person a month is absolutely do-able, and probably not even all that extreme.  But something my wife has noticed in a lot of YouTube videos she's watched that are about saving the maximum amount of money is that they're eating garbage.

I think she was saying that $150 / person is more than enough and thinks it's probably too much.

I was just wondering what that buys them.

[johnny847]

Y'all are going to laugh, but I really don't know what we live on.

By far, our largest expense is TAXES.  Followed by TAXES, TAXES, TAXES and Insurance.  These taxes typically vary with income.

So if I work a lot, they are higher, if I work less, they are lower.

My guess is that we (most years) live on 40-50K per year, with a huge percentage of that being TAXES.

Our actually cost of living, outside of taxes, though, is very low.

I agree with this.

I don't. As somebody said earlier, you can't really count taxes as an expense. That money was never really yours to begin with.

[MDM]

To those who think, referring to taxes, "that money was never yours to begin with" - whose money was it?

Taxes absolutely are an adjustable expense.  E.g., you can choose to live where property taxes are high or low.  You can also choose to live in states and cities that have income taxes or not.

There is even legal precedent: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." - Learned Hand.

[MrFancypants]

To those who think, referring to taxes, "that money was never yours to begin with" - whose money was it?

Taxes absolutely are an adjustable expense.  E.g., you can choose to live where property taxes are high or low.  You can also choose to live in states and cities that have income taxes or not.

There is even legal precedent: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." - Learned Hand.

You're very cavalier about the decision to pick up everything you own and move it.  I've done this several times in my adult life and let me tell you, it's not easy, and it's not for the faint of heart.

Clearly there are times when it's necessary, but abandoning your social network simply to save a few thousand a year in taxes is a lot of effort for not a lot of reward.

[TheAnonOne]

Age 24 and 22

3500->4000 a month + mortgage

So around 50k to 60k a year but probably closer to 75k this year as we are planning a pretty unmustachian wedding currently, so the costs may go down after June.

That being said we pull in around 220k, so we save quite a bit a year anyway (80k to 110k yearly) (Taxes are quite a bit 60k->80k)

[johnny847]

To those who think, referring to taxes, "that money was never yours to begin with" - whose money was it?

Taxes absolutely are an adjustable expense.  E.g., you can choose to live where property taxes are high or low.  You can also choose to live in states and cities that have income taxes or not.

There is even legal precedent: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." - Learned Hand.

You can certainly manipulate your tax liability to an extent. But that's just it - "to an extent." After moving to a no income tax state and maxing out your retirement accounts, there's really not much more you can do. Well okay you can do many things to reduce your tax bill but increase your overall expenses (ie, have kids and get a child tax credit).

Whose money was it? The government's.

[MDM]

You're very cavalier...

You may choose to read that into what I wrote, but you would be inferring too much.  johnny847's reply is closer.