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How I live on $7,000 per year

earlyretirementextreme.com

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Re: How I live on $7,000 per year

#11

Post by erejacob »

munin wrote: post #6
6ren wrote: post #4

He doesn't seem to include rent or mortgage.

he implies that he owns his own home. maybe he inherited it? he's also in his mid-30's. it's possible to have bought a property on a 15yr mortgage, paid it off on a modest salary, have some money saved up, and then just chill out. if you don't have kids, this works. if you don't have any medical problems that cause your insurance carrier to illegally drop you (what are you going to do, sue them?), this also works. my…

I like living in the US.

We bought our home in cash. Our home is currently an RV---bear with me here. The cost of it was $16k. We pay a combined $6000/year in rent (half of which is my half). You need $200k in investments to support such a cash flow (which I have). So the total cost or asset base or our current living situation is about $216,000 (not counting repairs which I can mostly do myself). We're seriously thinking of moving to Oregon (away from California) buying a house in cash for around $125,000. If real estate taxes are $1,500, this requires 50,000 in investments. Thus the cost of living of switching over to a house would be $175,000. Again, a lot of the maintenance I can do myself. It would be cheaper to not live in an RV, but it was a fun experiment.

Re: How I live on $7,000 per year

#13

Post by erejacob »

dhume wrote: post #8
6ren wrote: post #4

He doesn't seem to include rent or mortgage.

Nor does he seem aware of inflation (see his "grandparents" paragraph at the end). The site below suggets $7k in 1950 would be about the same as $65k today, and I would hope people aren't amazed at the notion of being able to live on $65k per year. http://www.dollartimes.com/calculators/inflation.htm

I am aware of inflation. I did not intentionally imply anything about CPI. I was referring to the old generations attitude of "make it do or do without" compared to the current attitude of "just charge it on the card".

Re: How I live on $7,000 per year

#14

Post by kd0amg »

munin wrote: post #6
6ren wrote: post #4

He doesn't seem to include rent or mortgage.

he implies that he owns his own home. maybe he inherited it? he's also in his mid-30's. it's possible to have bought a property on a 15yr mortgage, paid it off on a modest salary, have some money saved up, and then just chill out. if you don't have kids, this works. if you don't have any medical problems that cause your insurance carrier to illegally drop you (what are you going to do, sue them?), this also works. my…

my only question is why do this in the US? on $7k a year you can live like a king in other parts of the world...

That was the strategy I was expecting to see (the other low-budget living strategy I've seen promoted a couple times pretty much amounts to subsistence farming).

I was a bit surprised to see his total rent/utilities given as $270. I've lived in a pretty cheap area, and rent alone was that much. Of course, living there, $7,000/yr wasn't out of the ordinary for living expenses and some entertainment (though calling a car "optional" there is a stretch).

Re: How I live on $7,000 per year

#15

Post by ahsanhilal »

Basic economics tells you that this is not a good growth strategy to adopt especially if you have a consumption-based economy, and not savings-based one (aka China, India). In short population is going to increase over time, resources are going to decrease over time, in order to keep GDP per capita in line with an increasing population, you cannot just decrease your spending (or tighten your belt). You have to grow by increasing income levels, and thereby increasing aggregate demand.

If we only increase incomes, and dont spend, then aggregate demand goes down, leading to less consumption, less investment, which leads to lower employment opportunities, which leads to even lesser consumption, and so on so forth until we get to a severely regressive cycle, where our industries shut down.

Point is, more power to you if you want to spend less, but making everyone else adopt your way of life because it works for you, does not mean it will work for them, and in entirety would not promote greater economic growth.

PS for those arguing 'well it works for China'; well the USA is not China, and they are big structural differences which make it unnecessary and useless to adopt that model.

Re: How I live on $7,000 per year

#16

Post by erejacob »

Sodaware wrote: post #9

The title of the article is slightly misleading in that it's $7,000 per person, so it's actually $14K in this case. I know that's a little nit-picky, but things like rent would eat a good chunk of that $7k. Living on $14k is certainly possible, and the usual suspects can be cut to save some cash: * Drop cable TV * Same for cell phone - keep one pre-pay for emergency and use Skype for business/personal * Stick to one…

Yeah, it's not rocket science. The biggest money losers are too much house and too much car and all the interest payments that go towards it. Even by eliminating the interest by paying in cash you're already cut your expenses on those items by 50%. The rest is just details, but most importantly. Don't buy ANYTHING on credit.

Re: How I live on $7,000 per year

#17

Post by munin »

erejacob wrote: post #11
munin wrote: post #6

Earlier quoted context omitted.

he implies that he owns his own home. maybe he inherited it? he's also in his mid-30's. it's possible to have bought a property on a 15yr mortgage, paid it off on a modest salary, have some money saved up, and then just chill out. if you don't have kids, this works. if you don't have any medical problems that cause your insurance carrier to illegally drop you (what are you going to do, sue them?), this also works. my…

I like living in the US. We bought our home in cash. Our home is currently an RV---bear with me here. The cost of it was $16k. We pay a combined $6000/year in rent (half of which is my half). You need $200k in investments to support such a cash flow (which I have). So the total cost or asset base or our current living situation is about $216,000 (not counting repairs which I can mostly do myself). We're seriously thi…

oh! neat! some friends of mine live in a van (it's a big van but not quite an RV), it's a pretty sweet deal.

I think you have a good thing going on for yourself. if you can save that kind of money it definitely changes how you interact with the world. I only had 1/10th of what you have in investments and it definitely made me bolder in the world.

I wasn't being hyperbolic about insurance carriers though, and I'm sure you already know about this but I'd really caution you (and others) on this. As a small (10 person) company, we had a health insurance policy that was dropped without cause by the carrier. They told us to our face, "sue us". They know we won't, because what would it accomplish? We'd lose (burn) money, they have money to burn, it makes no sense.

When you're small (an individual or a small company), they can get away with doing that to you. So, you're making payments on a policy, but I'd wager that when you need it, is when you'll be getting a letter in the mail saying "after we received your letter telling us to terminate your policy, we did"...

Re: How I live on $7,000 per year

#18

Post by erejacob »

ahsanhilal wrote: post #15

Basic economics tells you that this is not a good growth strategy to adopt especially if you have a consumption-based economy, and not savings-based one (aka China, India). In short population is going to increase over time, resources are going to decrease over time, in order to keep GDP per capita in line with an increasing population, you cannot just decrease your spending (or tighten your belt). You have to grow b…

Well, not to worry, most people won't make "the sacrifice".

Maybe if we transitioned to a production based economy but producing only quality items we needed. That way we wouldn't have to work so much. Unemployment would go down because people weren't scrambling for the the ability to consume. Concepts like planned obsolescence would go away.

A lot of what we refer to as "growth" is just an indicator that the volume of economic transactions is going up. However, just because the economy is getting bigger doesn't necessarily mean it's getting better. Breaking windows and replacing them creates economic growth, but it doesn't make the house better.

Re: How I live on $7,000 per year

#19

Post by illumin8 »

Sodaware wrote: post #9

The title of the article is slightly misleading in that it's $7,000 per person, so it's actually $14K in this case. I know that's a little nit-picky, but things like rent would eat a good chunk of that $7k. Living on $14k is certainly possible, and the usual suspects can be cut to save some cash: * Drop cable TV * Same for cell phone - keep one pre-pay for emergency and use Skype for business/personal * Stick to one…

He lives in a trailer at an RV park also... that right there cuts your rent significantly. Hey, if you want to live in a trailer at an RV park for $400 a month, barbecue with charcoal because it costs less than propane, and grow a few vegetables by the side of your trailer in a makeshift garden, more power to you.

Unfortunately, I prefer living in a solid structure made of wood and bricks that doesn't wash away in a flood or blow away in a storm.

Re: How I live on $7,000 per year

#20

Post by diiq »

I've been living on $6000 a year for the past five years. Next year, I intend to spend 10 months in New Zealand on It's very doable. I rent a very nice room in a pleasant suburb. I eat well, if repetitively. I have enough pocket money to go out somewhere nice with friends now and again. I don't make much more than I spend --- product, in part, of a BFA --- and sure, an extra few thousand would improve my lifestyle considerably. But I don't need much more, and I've been very happy and very comfortable.
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