Author Topic: How low can you go before you start to really notice it?  (Read 2587 times)

caleb

  • Stubble
  • **
  • Posts: 168
How low can you go before you start to really notice it?
« on: June 07, 2019, 09:10:47 AM »
I'm curious how low you folks have been able to go with your budget before you felt a real pinch or perceived some major tradeoffs.

Going over our budget, my wife and I (household of two, no kids) currently spend about 28k annually on non-housing related expenses.  Housing, property taxes, and homeowners insurance are an additional 24k in a MCOL area.  I'm mostly considering the housing costs fixed at this point.  The rapid increase in housing prices in our area means even a major downgrade wouldn't lower our mortgage payment by much, if anything.

That leaves me with the 28k of non-housing to find budgetary gains, and I'm not feeling particularly motivated.  Everything we could cut seems like it's either really small (i.e. a NYT subscription for $21/mo), or it would meaningfully impact parts of our lives that we value (i.e. seriously reducing our consumption of fresh food, or never/very rarely accepting an invitation to dinner out with friends).  I don't see those sorts of cuts as great value propositions.

The fat has been mostly cut at this point: no clown house, one old Toyota that we rarely drive, biking and taking transit to work, et cetera.  Most all of those changes have made our lives better, and made us happier and healthier.  I'm inclined to look at the budget and say "good enough."

Maybe I'm in need of a face punch, though.  Hedonic adaptation is a powerful force.

How low have you been able to push your non-housing budget without feeling like you're making major tradeoffs?
« Last Edit: June 07, 2019, 09:13:29 AM by caleb »

ketchup

  • Magnum Stache
  • ******
  • Posts: 4016
  • Age: 28
Re: How low can you go before you start to really notice it?
« Reply #1 on: June 07, 2019, 09:41:58 AM »
There are definitely budgetary inflection points. 

A $10,000 car is basically the same as a $40,000 car.  A $5,000 car is a little less nice.  A $2,000 car is a bit less nice than that, but a $500 car is typically an entirely different animal. 

Personally, we have two ~$2,000 cars (household of two).  The bottom end of decentness, where further cutting would be substantially less desirable for whatever reason. 

That's where I tend to end up on most budgetary line items.  The point where you don't get much bang-for-buck cutting more, and where increasing spending would not linearly increase value received.

We spend an average of around $26/mo on streaming services (depending on the mental accounting).  We could spend four times as much without much gain, or zero to half as much with substantial loss (of course that's being a drama queen about it - nobody NEEDS Netflix).

I spend about $25/yr on clothes these days.  Less than that would mean I'm showing up to work looking ratty, more would be of limited gain.

And so on.  The exceptions where nonlinear gains are desirable typically are related to work productivity.  My GF is a pro photographer so yes, she has five figures in camera gear, and her computer stuff all-in cost about the same as our cars combined.  This makes her equipment not the bottleneck nearly ever, which is the only way to work if you're making any money at all.

Zikoris

  • Magnum Stache
  • ******
  • Posts: 3487
  • Age: 33
  • Location: Vancouver, BC
  • Vancouverstachian
Re: How low can you go before you start to really notice it?
« Reply #2 on: June 07, 2019, 09:42:59 AM »
Well, we spend 27-28K including housing, and that includes living in a nice city, pursuing all our hobbies/interests, and travelling to generally six countries a year. I think we could cut maybe 3-4K from that, mostly from travel, before it would really hurt.

SwordGuy

  • Walrus Stache
  • *******
  • Posts: 5788
  • Location: Fayetteville, NC
Re: How low can you go before you start to really notice it?
« Reply #3 on: June 07, 2019, 03:00:56 PM »
Ö or never/very rarely accepting an invitation to dinner out with friends). 

One person's "rarely" is another's "all the damn time".   Talk to us about where you are calibrated on this one.

Second, why not counter with a "How about coming over to our place for dinner?   You bring the wine!   If we have too much fun we've got a spare bedroom to sleep it off in."

NonprofitER

  • Stubble
  • **
  • Posts: 160
  • Location: Texas
  • Reaching FIRE w/ High Purpose (Low Pay) Nonprofit
Re: How low can you go before you start to really notice it?
« Reply #4 on: June 07, 2019, 03:41:34 PM »
I think its totally up to you how far you want to squeeze - the point is to spend (or not) with full knowledge of the value exchange and whether your spending on priorities/values.

FWIW - I subscribe to the NYT too and every year I threaten to cancel because I feel a bit guilty spending the money, and they always offer me a "discounted 50% off" rate for the next 11 months to keep me around. I do read it most days and like supporting journalism. Currently paying $8.50 for digital access. So give that a try and save a few bucks.

use2betrix

  • Handlebar Stache
  • *****
  • Posts: 1774
Re: How low can you go before you start to really notice it?
« Reply #5 on: June 07, 2019, 03:48:28 PM »
We tried to cut back our monthly restaurant budget to $150/mo this year and it simply wasnít worth it to us. We donít go out to eat a ďlotĒ I.e. not during the week, but we do like to go out to a nice meal once or twice on the weekends. I have coworkers that go out to lunch every day, I bring my lunch every day.

Different people have different levels of comfort.

I have taken long sabbaticals, and during those times I find I am content with spending significantly less because I can find other ways to bring me joy. When Iím working, I am more confined with less options of things I enjoy, and as such thereís some more expensive things that I find worth it.

seemsright

  • Stubble
  • **
  • Posts: 227
Re: How low can you go before you start to really notice it?
« Reply #6 on: June 07, 2019, 04:12:00 PM »
We are still 8 year out before FIRE the goal is for DH to RE the day DD graduates high school.

I am not willing to penny pinch now. If I spend $10 on a bottle of wine it will not change our reality. If we decided to do what ever we want it will not change our reality.

I did the phase of save every cent, we did that for years and that is why we have the double commas, but for now we are allowing compounding and or stash to do the work. Are we spending every cent...hell no. We are still saving 50-55% But I am not going to allow the feeling that if I buy the book or the bottle of wine make me feel like our long term goals are in jeopardy because they are not.

Freedomin5

  • Handlebar Stache
  • *****
  • Posts: 2077
  • Location: China
Re: How low can you go before you start to really notice it?
« Reply #7 on: June 07, 2019, 04:25:18 PM »
In our case, we are with you in that it doesnít make sense for us to cut the little costs. At the same time, we have been able to get down to $1000/month including housing in a VHCOL city. We did this by looking for ways to revamp our entire lifestyle. Iím not cutting things; Iím changing to a less expensive structure.

Basically, The other side of the equation is to find ways to offset the expense. For example, if your housing expense is set, can you find a roommate to offset some of the expense? Buy good quality food, but is there some way to use coupons or shop sales or find a discount grocer that offers the same things for less? Have dinner with friends, but invite them to your house or hold a potluck, or use coupons to try out new restaurants (Iím doing this one tomorrow ó have a 50% off coupon at a really good Thai restaurant). Ride your bike or carpool to reduce gas usage. Or become an Uber driver only for the route on the way to work. Someone may be going the same direction and will pay you to basically drive to your workplace.

Again, itís not about cutting until it hurts. Itís about cutting out the things that do not bring value to your life, and then finding ways to optimize the things that do.

BicycleB

  • Handlebar Stache
  • *****
  • Posts: 1598
  • Location: Live Music Capital of the World
  • Older than the internet, but not wiser... yet
Re: How low can you go before you start to really notice it?
« Reply #8 on: June 07, 2019, 04:33:27 PM »
I also spend roughly 14k plus housing per person. I make a few choices based on not spending money but buy anything I really want.

If you want reassurance, you can find it here. But it's good to stretch yourself too...ERE can help you with that! :)

@Zikoris does a super job re expenses. Very admirable!!

I did 2 experiments measuring spending vs joy. In one, I gave myself $3k/year for play, pleasure, socializing, etc. Have never exceeded that; doesn't seem to be difficult limit. I love feeling free to spend up to that point, I end up feeling free completely.

I tracked my food spending for 6 months to see if I could whittle them down the $1 per meal target MMM offered in an early article. Didn't happen. I got down around $160/mo easily, $140/mo with some effort, was dabbling around 125-130/mo when I stopped. Pretty sure I floated back up to $160/mo though. Not impressive in this forum, let alone ERE.

Villanelle

  • Magnum Stache
  • ******
  • Posts: 2958
Re: How low can you go before you start to really notice it?
« Reply #9 on: June 07, 2019, 04:54:19 PM »
I'm not following your logic about the mortgage if you move.  If housing prices have gone up, that may mean you would pay the same price now as you did for a larger house when you bought, but when you sell, you capture that growth on the current place.  So if you paid $500k for a 2500sqft house, and now you buy a 1800 sqft house, your mortgage will still be lower because you are selling that first house for $700k, meaning you bring $200k, plus whatever equity you have, to the new house.  (Whether you choose to put that money toward the house or invest it is a different question.)  Your property taxes shoudl go down, too, since you'd be going from a $700k house to a $500k house. 

If you don't feel it's worth it, I completely understand.  It's sounds like you are doing quiet well already.  But the logic that because house prices have gone up you won't gain anything by downsizing seems very faulty. 

spartana

  • Pencil Stache
  • ****
  • Posts: 534
  • FIREd at 36? Or maybe it was 42?
Re: How low can you go before you start to really notice it?
« Reply #10 on: June 08, 2019, 12:15:05 AM »
I spend very little on my day to day life outside of my housing expenses or budget travel expenses, both which are low. I don't budget but some months I only spend a few hundred bucks. No trade offs are needed since I pretty much live the life I want. I guess I don't want much.

I'm in the camp of doing reasonable things to enhance your life even if they mean it costs more than barebones spending. But I also think examining why you want those things and if their value is truly worth the trade off in terms of your time to earn that money or work longer (if FIRE is your goal). I do this self examination with most things I do and it really works to hone in on the value of your trade offs.
« Last Edit: June 08, 2019, 12:23:58 AM by spartana »

Hula Hoop

  • Handlebar Stache
  • *****
  • Posts: 1218
  • Location: Italy
Re: How low can you go before you start to really notice it?
« Reply #11 on: June 08, 2019, 01:18:45 AM »
I like the NYT example.  We also subscribe digitally which costs around $10 a month.  I read the NYT online every day and my husband usually does too and I also like to support quality journalism so I see it also as a contribution to a worthy cause. 


I agree that it's easy to cut some things - for example eating out for lunch at work.  But it's harder to cut some others that are relatively inexpensive and add a lot of joy to life.  We eat out with friends usually once every 2 weeks and I meet friends for wine (I never spend more than 10 euro for a couple of glasses of wine at the enoteca - usually more like Euro 5-6) after work on a Friday.  I see this Euro 120 a month as essential for my sanity and worth every penny.  But cutting out work lunches was easy as it was just mindless spending and with a bit of organization I'm perfectly happy eating lunches I bring from home. 

Obviously, everyone is different on this but as the "do you pay for cleaners?" thread shows we're all different in what we consider "essential".

caleb

  • Stubble
  • **
  • Posts: 168
Re: How low can you go before you start to really notice it?
« Reply #12 on: June 08, 2019, 10:33:29 AM »
I'm not following your logic about the mortgage if you move.  If housing prices have gone up, that may mean you would pay the same price now as you did for a larger house when you bought, but when you sell, you capture that growth on the current place.  So if you paid $500k for a 2500sqft house, and now you buy a 1800 sqft house, your mortgage will still be lower because you are selling that first house for $700k, meaning you bring $200k, plus whatever equity you have, to the new house.  (Whether you choose to put that money toward the house or invest it is a different question.)  Your property taxes shoudl go down, too, since you'd be going from a $700k house to a $500k house. 

There are two factors that make a housing downgrade not really something I want to consider.

First, we've only lived here a year, and we don't have a bunch of equity to pull out that we wouldn't need for another house.  Meanwhile, housing prices locally have gone up by 15-20%.

Second, we're already on the lowish end of the housing stock in any area that's walkable/bikeable for work.  Buying a seriously-cheaper house would mean a bunch more driving.

I think you're right that we could probably squeeze a little more out of our housing budget (mostly by reducing property taxes by moving to a lower tax suburb), but in our situation it would mean creating other additional financial, logistical, and lifestyle costs that make it unattractive.  That's the dynamic that prompted me to start this thread: yes, we could live a little cheaper, but doing so would have real downsides beyond not scratching every stupid consumer itch.

caleb

  • Stubble
  • **
  • Posts: 168
Re: How low can you go before you start to really notice it?
« Reply #13 on: June 08, 2019, 10:52:53 AM »
Ö or never/very rarely accepting an invitation to dinner out with friends). 

One person's "rarely" is another's "all the damn time".   Talk to us about where you are calibrated on this one.

You've got a good nose for spending!  Yes, this is a major issue I struggle with.

My wife and I go out to dinner just the two of us less than ten times a year.  It's not a big part of our lives.  We've never eaten lunch out at work, so that's a bullet we dodged entirely.

The issue we have is that we have lots of friends whose friendship we value extremely highly who are really into eating at the latest restaurants.  They're also extremely high spending households that don't blink at a restaurant tab of $150+.  Very much of the group that works really long hours and then blows a ton of money in their little downtime.

We've struggled to divert their social invitations into less spendypants venues: you come to our place, we'll BBQ in the park, let's go for a hike together.  The truth is though, they (more precisely   their wives) want to use their limited time to blow money at fancy restaurants.  They're not all that divert-able.

Did I mention we value their friendship?  We've been friends since before any of us had money.  Now we all have plenty of money, but we use it in radically different ways.  I've certainly become more of a cheap-ass, while they're out test driving Teslas.  I've mostly made my peace with this dynamic by trying to limit the meals out with them to once a month, and just not stressing about the bill.  It's tough to say "no" when friends know you have the money, you just don't value the activity with them enough to spend it.

Luz

  • 5 O'Clock Shadow
  • *
  • Posts: 61
Re: How low can you go before you start to really notice it?
« Reply #14 on: June 24, 2019, 12:54:41 AM »
It'd be helpful if you posted your budget. I regularly try to challenge everything in my budget (not according to cost, but the way I think about the particular line item). The cool thing about case studies on this forum is that you get tons of extremely objective (and often ruthless) feedback, challenging your previous notions. I find the more I challenge things, the easier it is to shed another layer of attachment to doing things a specific way.

A few thoughts:
-I don't approach it from the standpoint of cutting costs. I start with nothing and add things back in, according to the total dollar amount I have to work with.

-I start with bare bones (as in lose everything and survive on disability benefits or minimum wage) and then work up to middle of the road, and high end. I use the bare bones as the skeleton to which I add a varying amount of fat. Bare bones is not simply the categories: "housing", "food", etc, but varying levels within those categories according to the limits within which I am constrained.

-I always distinguish between needs and wants. In fact, I highlight the wants in my budget so I'm aware of how they affect my decision-making (because of the adaptation tendency you described). I try to see them as the extras they are.

-Within my needs, I also try to regularly think about how good I have it. To be healthy and productive, everyone needs fresh air, clean water, sufficient quantity of whole food (not like Whole Foods whole food though), roof over their head, clothes on their back, way to get from point A to B, a method of communication with others, health care and education. My shelter, air, health care, etc is of particularly good quality. It really puts things into perspective when I'm aware that drinking uncontaminated water is a big deal. Not only are my wants a luxury, but the level of many of my needs are as well.

-Sometimes certain reductions in spending from a previous level also happen without any sacrifice. For example, finding a better deal on your insurance, internet, adjusting your taxes, etc. I wonder what lateral moves you could make?

-Laying it out in ridiculous detail is always helpful. I find most people over-generalize and lump together certain categories. I do it by the penny and flesh out each category. I think that gives me a much more accurate picture of where I'm at and the changes I want to make. When I run the numbers for a cost analysis or whatever, I'm always surprised at how far off my guesstimate was. And it's easier to be aware of opportunity costs when you truly run the numbers for different scenarios. Let's say the eating out supports great friendships, but in doing so you're giving up something else that is important, like reducing your work hours or taking trips you've always dreamed of.


-I'm a huge fan of that adage that it's easier to say no to things when you know your yes. Why do you want to reduce your spending? What are your values and how does your spending line up with those? After I've established my bare bones budget and as I'm adding things back in, I keep my values and priorities front and center. The point for me is that I'm intentional with money and I'm making a conscious decision about how I'm spending it.
« Last Edit: June 24, 2019, 01:00:39 AM by Luz »

Luz

  • 5 O'Clock Shadow
  • *
  • Posts: 61
Re: How low can you go before you start to really notice it?
« Reply #15 on: June 24, 2019, 01:03:47 AM »
Well, we spend 27-28K including housing, and that includes living in a nice city, pursuing all our hobbies/interests, and travelling to generally six countries a year. I think we could cut maybe 3-4K from that, mostly from travel, before it would really hurt.

You survive on that much in Vancouver while traveling to 6 countries a year? Tell us your secrets!!!

FIREstache

  • Pencil Stache
  • ****
  • Posts: 642
Re: How low can you go before you start to really notice it?
« Reply #16 on: June 24, 2019, 04:44:41 AM »
Maybe $1100/mo for a while.  It couldn't be sustained due to longer term home maintenance costs that eventually come along, plus that wouldn't allow additional savings towards a future car, figuring my car won't last forever, although it should have at least several years of life left in it.

Definitely no subscription to NYT here.  I wouldn't pay a nickel for it.  I can get all the news I need for free, and then some.
« Last Edit: June 24, 2019, 04:50:15 AM by FIREstache »

Rosy

  • Handlebar Stache
  • *****
  • Posts: 2123
  • Location: Florida
Re: How low can you go before you start to really notice it?
« Reply #17 on: June 24, 2019, 08:46:35 AM »
How low? If you subscribe to ERE then as close to zero as possible - which doesn't even really have to be extreme if you were single and a truck driver with an $85K income.

Obviously, your situation is different - but the principles of MMM still apply - question everything at least once a year and optimize everything. At a min save 50% of your income and voila.
The little stuff no longer matters (as much) once you hit a certain level of income and accumulated savings and investments.

$150 once a month to spend time with friends that matter to you and have a nice evening out at a nice restaurant with your sweetie - hell yes. As long as you are on track with your goals and the $150 doesn't derail your plans in any way go for it.
We all have our little luxuries or guilty pleasures we choose not to live without.

As far as the newspaper subscription we get the local paper and on the weekend read it together over a late brunch. We discuss local and international events and politics and use the coupon section.
We enjoy it, but if it were just me, I'd only get the weekend paper and I'd opt for the NYT as well:).

« Last Edit: June 24, 2019, 08:48:45 AM by Rosy »

Zikoris

  • Magnum Stache
  • ******
  • Posts: 3487
  • Age: 33
  • Location: Vancouver, BC
  • Vancouverstachian
Re: How low can you go before you start to really notice it?
« Reply #18 on: June 25, 2019, 05:29:34 AM »
Well, we spend 27-28K including housing, and that includes living in a nice city, pursuing all our hobbies/interests, and travelling to generally six countries a year. I think we could cut maybe 3-4K from that, mostly from travel, before it would really hurt.

You survive on that much in Vancouver while traveling to 6 countries a year? Tell us your secrets!!!

It's really no trouble for us at all - aside from the international travel, we just stick with the same lifestyle we had when our income was really low. Cooking, small apartment, walking places, going for hikes and dinner parties with friends, etc. There's virtually nothing we do that's difficult, complicated, or sophisticated, just exactly what your great grandparents would have told you to do to reduce spending.

Luz

  • 5 O'Clock Shadow
  • *
  • Posts: 61
Re: How low can you go before you start to really notice it?
« Reply #19 on: June 25, 2019, 09:37:01 PM »
Well, we spend 27-28K including housing, and that includes living in a nice city, pursuing all our hobbies/interests, and travelling to generally six countries a year. I think we could cut maybe 3-4K from that, mostly from travel, before it would really hurt.

You survive on that much in Vancouver while traveling to 6 countries a year? Tell us your secrets!!!

It's really no trouble for us at all - aside from the international travel, we just stick with the same lifestyle we had when our income was really low. Cooking, small apartment, walking places, going for hikes and dinner parties with friends, etc. There's virtually nothing we do that's difficult, complicated, or sophisticated, just exactly what your great grandparents would have told you to do to reduce spending.

I've heard that even a 1-bedroom apartment outside the center of Vancouver goes for a minimum of $1,500/month (we pay $650). Nice work!