It's hard to answer this without writing my life story :-) I live in Shizuoka prefecture, right on Suruga bay. We live in what I
think is the most expensive apartment in town -- it costs $600 a month. It's a concession to my wife who put up with the $120 a month shack that I loved to death (but that she called a haunted house -- they tore it down after we moved out ;-) ).
I work as a software developer on contract to an English company. We spent 2 years in London, before moving back to Japan. Before that I worked as an English teacher in the high school in this city. Before that I was a software developers for 20 years or so.
I actually started in research labs too. I worked my way through school (or rather, I got free tuition because my father was a prof, and I paid for my other living expenses by working for various departments while I was in school). I didn't always have this idea of living cheaply... I had a house, a car, 2 dogs, the works...
I've had a few times in my career where I absolutely hated my job. One day I just quit. I had no prospects and no idea what to do. I was just done with the place I was working at. The next day, not knowing what to do, I started fixing some bugs on free software projects. I just kept doing that every single day, 12 hours a day, 7 days a week for 8 months. It was at that point that I realised that I liked programming ;-)
I've been very, very poor a couple of times in my life. Once in my early twenties I spent a few months in London. I had enough money for either meat or beer, so I became vegetarian (which lasted... until I got married ;-) ). I remember being happy every day despite being unbelievably poor. There were a couple of times that I ran out of money on a Thursday and was unable to eat until I got paid on a Monday. That taught me the importance of budgeting ;-)
Other times have been like I described above. I got paid a good salary as a programmer, but was often unhappy. I decided to quit my job (or the companies I worked for decided to run out of money) and I took a sabbatical to write free software.
One day I met a guy who suggested I go teach English in Japan. I only meant to go for a year in order to learn Japanese and improve my presentation skills. I stayed for 5 years.
At that point, I asked my wife, "What should we do? Do you want me to make a lot of money? I'm sure I could as a programmer. Or we could open a brewery. Or I could become a tour guide. Or I could..." And then it dawned on me. I could do anything because we had learned over the years to live on tiny amounts of money.
It's freedom more than anything else. These days we spend quite a bit more than we used to. My wife even has a car (bleh...). Getting the balance right is tricky ;-)