Living on $1000 a month

[Asgard01]

Hi all,

I have a target of $1000 a month in passive income after 5 years. I just wondered if there are many on here right now that are living on this amount currently and how their experience has been of sticking to that $1000 amount. 

What I have done as I am fairly new to this is started to record all my expenses to the penny to see if I can live life now for that amount when minus the extra fuel and work expenses I will not have when I reach that target. I managed to spend $1100 last month. Big yearly purchases are included but what I do not account for is much unexpected outgoings and perhaps some more activity based expenses that I may incur.

I must say that I've really enjoyed tracking my spending which is something I wouldn't have thought. It gives me much more confidence knowing that I can live on that planned amount and also I don't feel guilty for spending like I thought I would, I feel I get a lot of value out of everything I do spend money on. Been influenced by your money or your life no doubt.

Chris

[Bearded Man]

I paid for my first house in cash, so with the single biggest expense most people have out of the way and no kids, I was living on 1K a month or less. I didn't really like the house location due to noise, and bought a new house in a better location with a mortgage. While I could pay it off, I don't due to the low interest rate and investment opportunities for my cash. Plus, with the rents from my first house which is now a rental, my tenants are basically paying the mortgage on my new house closer to my work not to mention the best job market.

That said, I did spend more than 1K a month some months, but largely due to buying an occasional gadget for myself when there was a great deal. I certainly did not have to, and have not done anything like that in close to 2 years.

My ER plan is to retire on 1K a month. I can literally do that now, but choose not to in order to build a larger nest egg.

[Asgard01]

but choose not to in order to build a larger nest eg

Interesting that, I wonder how many delay pulling the trigger on FI in a leaving work scenario because they want more in essence, do they need more? Maybe but I have often thought to myself will I regret going FI sooner when I could get so much more money later that could enable holidays etc and more safety from risks... How much if that is greed versus really needed etc. for myself, I am not sure. I like the idea of enough is enough and excess is unneeded as freedom in time would be far more valuable...sorry that just set me off on that train of thought.

[Joggernot]

One thing to consider, which I didn't, was the cost of prescriptions.  Apparently we older people will need prescriptions that we don't plan on.  One of my recent prescriptions costs $398 every three months and it is forever.  Add that in to your plans after you get close to 60.

[Asgard01]

Luckily in that regard I live in the UK which gives you free prescriptions over 60, and if you are under that age and not on any benefits,it's  up to a maximum of $180 a year.

I am 27 years old and own my house with no mortgage, so $1000 goes a bit further than someone who has rent/mortgage but it's still tight.

[mcervin3]

Well, I've been lurking here for a while, and this seems as good a time as any to start replying to posts.

I currently live on under $1K/month, and to me, at least, it doesn't really feel as though I'm "missing out" on a whole lot. Looking back at some data from recent months, it seems I've averaged just shy of $925/mo since last October, with my "normal" expenses closer to $750/mo. The average has been pulled up by several factors, including the purchase of a new computer (~$700) and the initial bulk purchases for my DIY Soylent recipe (which accounts for about 50% of my food).

I spend time with friends around the city at least one or two nights a week, and I travel to the next state over (by car) monthly. This also includes rent ($340/mo).

There are probably some large, rare expenses I'm not accounting for in my monthly budgeting appropriately, but on the whole it would seem that I am living under $1000/mo and (as per your original question) my experience has been very positive.

[Asgard01]

I currently live on under $1K/month,

Thanks for your reply. Are you still working or FI at 24 which would be incredible?

Chris

[mcervin3]

Still working for now I'm afraid! I should be technically FI (at 4% SWR) in another 1.5 years, but, like the Bearded Man above, will likely keep working a while longer at that point, in order to build up the nest egg further.

Re: your comment on his comment... I would say that I probably will continue working at that point for several reasons. First, additional security. Second, although I get by very nicely on fairly little money now, I may at some point in the future decide I want to support another human being for a while (18 years or so). I don't buy into the "Children are incredibly expensive!" myth, but my current expenses are fairly... irreducible, to a certain extent, so I think it would be unavoidable to spend at least a little more in that situation.

Then again, I thought my expenses were irreducible several hundred a month ago...

[RyanAtTanagra]

My FI number is based off $1k/month.  I'm not currently living on that due to being in California for the time being, but before we moved out here from Ohio we were both living on $1k/month each, which included renting a 2 bedroom house in a nice (not expensive) neighborhood.  We were not deprived at all, we both owned a car, I owned two motorcycles, we'd go out to eat every couple weeks, go out to the bar equally as often, were active, etc.  It was a very comfortable living and I'm not sure what I would have spent more money on except probably going to the bar more.  Planning on moving back east before/when I hit FI, so I still use that number, and considering I want to buy a house cash before I stop working, that $1k/month should go even further.

[deborah]

I am not living on $1000 a month. However, when I retired I had been living on the same amount for 6 years, so I thought I would continue to live on $x per month (or less) in perpetuity. I actually had enough nest egg to live on 2 x $x per month. This year I have needed that because I have had some foreseen expenses. I think when you are living on a relatively low amount, you probably need some sort of cushion for these situations.

[arebelspy]

Lots of people live on under 12k/year (especially if you're talking GBP rather than dollars), but usually the more extreme spenders (extreme on the low end of spectrum) hang out at the ERE forums, rather than here.  MMM type spending is more moderate, typically around 2k/mo.

Mr. H.Derp is living on under 10k for 2014 (under 833/mo):
http://forum.mrmoneymustache.com/throw-down-the-gauntlet/spend-less-than-$10-000-in-2014/

That might give you some inspiration.

The wife and I live on about 18k annual right now (1500/mo., or $750/person), but are shooting to have around 4k/mo. in passive income in FIRE to support us and a kid and full time travel.

The risky thing about living so low is the unlikely large expenses that can infrequently occur (medical, for example) - a 25k issue is a lot less of a big deal (though obviously still not ideal) when your annual income is 50k than when it's 12k (a half year versus 2 years).  It can be, and is, done, however.  :)

[Jon_Snow]

I COULD live on 1000k per month, but I'd really rather not. :)

[DollarBill]

I'm currently at $1150 for the basics, but plus the fun money $400. I think $2K is sustainable if you have no debt.

[taekvideo]

I COULD live on 1000k per month, but I'd really rather not. :)

Damn didn't know the night's watch paid so well.

[johnintaiwan]

I live on less than 1k USD a month over here. It is more than enough for me, but I my FI number is higher than that. One reason is added safety. Now the COL is pretty cheap and could rise. I could always move to a cheaper area/country, but would rather have the option of staying put. Or even moving to a higher COL area. If I has 1k/month coming in from my investments now, I would continue working at my not so demanding job for much longer. I think it is better to have a little more than you need than it is to be worried about whether or not it will last you til the end.

[Jon_Snow]

I COULD live on 1000k per month, but I'd really rather not. :)

Damn didn't know the night's watch paid so well.

5k monthly after tax... not too shabby.

[ChrisLansing]

We're living on about $1,500/mo. but we are still too "spendy".   We are trying to bring it down.   

[arebelspy]

I COULD live on 1000k per month, but I'd really rather not. :)

Damn didn't know the night's watch paid so well.

5k monthly after tax... not too shabby.

He was making a joke about the k you tacked onto the end, making it 1MM.

[MoneyCat]

I live on about $1200/mo right now, which I am having trouble getting lower because property taxes are very high here.  I've been working on my vegetable garden and breadmaking to bring food costs down, but I'm not sure I will be able to get it much lower than that.  If you can get it under $1000/mo, you are doing really well.

[Asgard01]

Thanks for the replies everyone so far.

I must say that I am thinking of FI as enough money from passive income to pay for everything I need to survive, be healthy and flourish both physically and mentally at a basic level. The $1000 amount would allow me to have that. I also have 2 years worth ($20000) in a bank account as a reserve if I need to lower spending.

For me, I think FI will mean I don't NEED to work, but I will continue to work. It will just change how work feels and is thought of. It will literally be more of a choice that I make. The idea that I can change jobs to really find something I enjoy, or start my own business without really worrying about sustaining myself is what attracts me. The idea of part time work, semi retirement is what I am going for. This will mean I will be topping up my amount and the extra cash can go on unexpected outgoings and a bit more fun money (travel etc/occasional ipad, new computer or car even). I love the idea that I could work a couple months in the year and have enough for all those extras. The whole notion of rat race will have changed.

Maybe this is not the same FI that many on here pursue, I want to contribute to society and carry on doing things which will likely pay albeit perhaps a low salary but that will not matter anymore.

Chris

[arebelspy]

Yeah, many call that semi-ER, barebones FI, etc., it's a common sentiment.

[Jon_Snow]

I COULD live on 1000k per month, but I'd really rather not. :)

Damn didn't know the night's watch paid so well.

5k monthly after tax... not too shabby.

He was making a joke about the k you tacked onto the end, making it 1MM.

Ah... I was several beers into my Friday evening at that point. :)

[rocklebock]

I'm at about $1300/month for 1 person, if I disregard mortgage payments and expenses on a rental property (covered by rent). I don't feel like I'm missing out on a lot, but I also don't think it's sustainable given my future plans include travel and maybe kids. To cut down to $1000/month I think I'd have to cut out all entertainment, restaurants, and vacations, and that's too extreme for me.

[Davids]

If you are a young person with a paid off house it can be done and probably with ease but the older you get those medical costs add up...

[Gin1984]

If you are a young person with a paid off house it can be done and probably with ease but the older you get those medical costs add up...

I am not even sure how a young person can.  My health insurance is about $500/month.

[Lian]

At one time, I calculated a base level FI assuming I could live indefinitely on $1000/month if I had to, as it does cover my housing, food, and various insurance coverages; but like one of the other commenters, I need expensive prescription medications (my employer health coverage doesn't cover them anymore!). Also, in the last 2 months I've had large, unanticipated expenses - car repair & maintenance, plumbing, dental - and it's clear I have to change my assumptions to include unanticipated expenses. I don't want to live so close to the edge - need to be able to top off the emergency fund after I dip into it.

[Sofa King]

Rite now I live with average bills per month $1,800 when I payoff my house in 3 1/2 years I figure to have living expenses of around $800 per month.

[Cassie]

As  a few other people have mentioned as you age the meds & cost of health insurance really sky rockets.  You can take good care of yourself & still end up needing meds. Our health insurance is now $10,000/year with it going up about every 2 years.  The younger people really need to plan as if this will happen because you just never know.

[Gerard]

I lived for about three years in the late 80s on $400 a month ($709 a month in today's dollars), sharing a place with my girlfriend/wife who earned about the same. Of course, this was in Montreal, so health care was not an issue, rents were low at the time, and I was a musician so there was no entertainment budget because I was the entertainment. After that, we had kids and lived on one minimum-wage salary and later student aid -- about $1200 a month, $1760 in today's dollars, for two adults and two young children.  It was tough, but do-able.

My current projections are that I can retire fairly comfortably in Toronto on between $900 and $1200 a month (my share of rent or the fees/taxes on a paid-off condo, food from mostly Asian supermarkets and restaurants, lots of biking and transit, long-distance vacation every couple of years), although I won't have to.

[Foggier]

I'm 27 and living in Stamford near the beach. My monthly spend is about $1200. I have about $1500/mo in passive income from a rental property a few towns over. I'm still eating out at a buffet every day and drinking Red Bulls ($1.5/day) along with a Starbucks iced coffee every 3 days since I have a habit (it took effort to cut it down to this). I think if I learned to cook properly I could cut down my monthly food spend from ~$350 to $150 or so?

I'm renting a room in a big house for $600/mo with utilities covered except for internet. I'm also still paying for gym membership at $40/month since I really like swimming year round. Can probably just invest in a dry suit and pick heavy things up? Fishing is also easy round here since they stock the rivers with clueless farm raised trout during the warm months. If I wasn't working full time I'd probably be out trying to catch and eat those saving more money and enjoying nature. I'm not quite yet at my FI cash pile number however.

[wtjbatman]

My budget is right around there, and I have a car, rent a house with my fiance, and drink cold beer and cook fresh meat on the grill.

We also live in a really low COL area (small city/town in Minnesota), we got rid of cable TV, I cut my cell phone bill to a fraction of what it was, stopped eating out almost entirely, don't pay for any utilities except internet, work long hours but fewer days (saving on the # of trips to work each week), and buy my beer when it's on sale because it's off season. It might not be winter anymore, but this Shock Top Honey Bourbon Cask Wheat beer I've been drinking is still delicious. And I just realized has a super long name.

Honestly I was below $1000 a month for a bit, but I'm back up to around $1100-1200 thanks to certain new expenses/elective medical procedure.

[Conjou]

Arebelspy, "The risky thing about living so low is the unlikely large expenses that can infrequently occur (medical, for example) - a 25k issue is a lot less of a big deal (though obviously still not ideal) when your annual income is 50k than when it's 12k (a half year versus 2 years).  It can be, and is, done, however.  :)"--- I make myself a little crazy thinking about all the things that could happen. What is the "'catastrophe' buffer / risk that it won't happen" line in determining what one amount one should add to the FI number? Or as others said in this thread, how does one adequately anticipate the med needs of being older? Some skate through, others buy the pharmacy. Is there any actuary table for this? :)

[Gin1984]

Arebelspy, "The risky thing about living so low is the unlikely large expenses that can infrequently occur (medical, for example) - a 25k issue is a lot less of a big deal (though obviously still not ideal) when your annual income is 50k than when it's 12k (a half year versus 2 years).  It can be, and is, done, however.  :)"--- I make myself a little crazy thinking about all the things that could happen. What is the "'catastrophe' buffer / risk that it won't happen" line in determining what one amount one should add to the FI number? Or as others said in this thread, how does one adequately anticipate the med needs of being older? Some skate through, others buy the pharmacy. Is there any actuary table for this? :)

I remember a recommendation from a long time ago that said those over 65 (on Medicare) should set aside $250,000 for health related expenses.  I have been budgeting off of that and that is one of the reasons I don't could SS in my prediction.  It is what accounts for health insurance for me.  I also budget in COBRA cost of health insurance plus my average annual costs into the regular budget.  For me and my husband, it adds up to about $30,000 a year, and prior to our daughter we lived on $24000.

[ch12]

As  a few other people have mentioned as you age the meds & cost of health insurance really sky rockets.  Our health insurance is now $10,000/year with it going up about every 2 years.  The younger people really need to plan as if this will happen because you just never know.

I live on less than $1000 a month. While I know that health insurance costs will go up, there are subsidies for people with low incomes. If I was 60 and lived where I live now, my premium would cost $106/month for the best insurance possible for someone who maxed out all the deductibles and got really sick for someone with a $25,000 income.

[arebelspy]

Arebelspy, "The risky thing about living so low is the unlikely large expenses that can infrequently occur (medical, for example) - a 25k issue is a lot less of a big deal (though obviously still not ideal) when your annual income is 50k than when it's 12k (a half year versus 2 years).  It can be, and is, done, however.  :)"--- I make myself a little crazy thinking about all the things that could happen. What is the "'catastrophe' buffer / risk that it won't happen" line in determining what one amount one should add to the FI number? Or as others said in this thread, how does one adequately anticipate the med needs of being older? Some skate through, others buy the pharmacy. Is there any actuary table for this? :)

It's all about your comfort level.

That is a big reason for OMY syndrome though.

Wish I had a better answer.  No one can know the future though.  :)