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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

#111

Post by phlyingpenguin »

erejacob wrote: post #110
phlyingpenguin wrote: post #106

Earlier quoted context omitted.

My rent (which is the cheapest possible in town) is $6,000 (not including heating oil, which is ~$75/mo in the winter) a year for a very small room of a duplex in which each half is shared by 4 people. In a very different real estate market I've been in within the last two years (KY houses are on the order of 1/2 the cost of houses in NH), it's still about the same price for rent. You won't make it on the $1-2k that'…

Since 2001 and up to now. Are you positively sure you have the cheapest rent in town? We lived in the same city for two years before we found a place that was 30% cheaper. Go to craigslist and set up an RSS feed. The underpriced places don't stay on the market for more than a day before someone snatches them up.

Yeah, it doesn't get a hair more than $500/yr cheaper and would exclude bus access. (note the shitty living situation) Part of the reason is that NH has a high property tax instead of having income tax. That's passed on to the renters.

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

#112

Post by tryitnow »

erejacob wrote: post #100
rdouble wrote: post #92

Earlier quoted context omitted.

With those numbers $4K isn't nitpicking it's 10% of your net.

But 2-3% of my assets. I wouldn't get too hung up on the details. I didn't earn 40k every year. Some years were less. And some were more (see FAQ). I didn't live in New York. Everybody can run their own spreasheets for their personal income and tax situation presuming an expense level of 6k/year. Figure an investment return of 3%+inflation (so 6% or so total). See what you get.

For some reason I initially assumed $300,000 plus was your retirement target. I am now assuming $175,000 in savings is what you define as "financially independent" That makes sense given your $7,000 per year expenses. ($7,000 divided by 0.04).

1) Starting from zero (because where else would we start for this analysis?)

2) We save $26,000 per year (2,166.7 per month).

3) Assume 6% return.

4) It takes about 5 to 6 years to get to $175,000.

Makes sense, a retirement fund that covers 7,000 per year in living expenses (i.e. about $175,000), takes only about 5 years of saving $26,000 per year (and conservative investing).

Quick and easy math here: http://www.math.com/students/calculators/source/compound.htm

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

#113

Post by spodek »

erejacob wrote: post #16
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.

If you have a credit card with no annual payment and you pay every month, should you still not pay on credit?

I'm not sure if I see the problem then.

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

#114

Post by erejacob »

spodek wrote: post #113
erejacob wrote: post #16

Earlier quoted context omitted.

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.

If you have a credit card with no annual payment and you pay every month, should you still not pay on credit? I'm not sure if I see the problem then.

Okay, to be more precise: >>Don't pay any interest or fees<<. I do run online purchases through my credit card and then pay off the balance in full every month.

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

#115

Post by erejacob »

phlyingpenguin wrote: post #111
erejacob wrote: post #110

Earlier quoted context omitted.

Since 2001 and up to now. Are you positively sure you have the cheapest rent in town? We lived in the same city for two years before we found a place that was 30% cheaper. Go to craigslist and set up an RSS feed. The underpriced places don't stay on the market for more than a day before someone snatches them up.

Yeah, it doesn't get a hair more than $500/yr cheaper and would exclude bus access. (note the shitty living situation) Part of the reason is that NH has a high property tax instead of having income tax. That's passed on to the renters.

Have you checked out Seabrook (dunno what your feelings are towards salt marches and nuclear plants). I hear they almost pay people to live there. We were talking about moving to the Free State for a while but the property taxes are scary. Now it looks like we'll be buying a house in Oregon.

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

#116

Post by phamilton »

msbarnett wrote: post #75
rick888 wrote: post #70

Earlier quoted context omitted.

"So if he gets cancer or heart disease (most common serious illnesses), he is fucked, and will be fucked every year, if he can still afford that insurance after the first year." I already looked. $3000 deductible, no lifetime limits, and it covers major surgery, doctor visits are $40. If you want prescription coverage, there are plans less than $200 (in the $190 range) that cover 80% of prescriptions. Cable costs thi…

Well, the "no lifetime limits" is thanks to the legislative healthcare reforms that were driven by a need to reduce the number of medical bankruptcies, so obviously that's a good step towards making healthcare more affordable to people who previously would have been driven into bankruptcy. But a $3000 yearly deductible is still likely to be utterly unaffordable to a significant portion of the uninsured, and it would…

Read his post about HSA and how it plays into his retirement. Most high deductible plans have full coverage ( 100% ) when the deductible is reached.

Worst case scenario it costs him $4000 ($3000 of which is pre tax) a year. Thats ~300/month. Best case he doesn't visit the doctor once and it cost him $1000 and he puts $3000 into his rainy day / retirement account.

You need to have $3000 available day one of each year to do this, but it makes a lot more economic sense.

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

#117

Post by [deleted] »

scarmig wrote: post #32
rorrr wrote: post #25

Sorry, but this story is garbage. Rent/mortgage, retirement completely ignored. Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick. On average people after 65 spend $2,920 per year on medical out of pocket expenses (Source: http://www.newretirement.com/Planning101/Rising_Medical_Cost... ) Then his food comes from his garden, which…

I believe he does account for rent/mortgage, by doing an RV. And his idea is that he has handled retirement--he's living in retirement now. The catch is that he had six figures saved up beforehand (he lives off the investment income), which doubles as a rainy day fund in case of serious illness.

[deleted]

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

#118

Post by philwelch »

dgallagher wrote: post #54
rorrr wrote: post #25

Sorry, but this story is garbage. Rent/mortgage, retirement completely ignored. Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick. On average people after 65 spend $2,920 per year on medical out of pocket expenses (Source: http://www.newretirement.com/Planning101/Rising_Medical_Cost... ) Then his food comes from his garden, which…

Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick. A bigger issue with the cheap health plans is they tend to have a very high deductible, usually in the $2000 - $3000 range (his is $3500! http://earlyretirementextreme.com/my-hdhp-hsa-and-some-comme... ). If you end up in the E.R. once for anything, like a fever, you have to pay t…

I've never seen a $3000 blood test. A family member got an exceptionally rare blood test this summer though; I'll try and look through his paperwork, but I'd be shocked to hear even that test cost so much.

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

#119

Post by jergason »

philwelch wrote: post #118
dgallagher wrote: post #54

Earlier quoted context omitted.

Plus he has the shittiest $82 health insurance plan he could find, and he doesn't calculate the costs of what will happen if he gets sick. A bigger issue with the cheap health plans is they tend to have a very high deductible, usually in the $2000 - $3000 range (his is $3500! http://earlyretirementextreme.com/my-hdhp-hsa-and-some-comme... ). If you end up in the E.R. once for anything, like a fever, you have to pay t…

I've never seen a $3000 blood test. A family member got an exceptionally rare blood test this summer though; I'll try and look through his paperwork, but I'd be shocked to hear even that test cost so much.

It is actually really difficult to find out how much stuff costs at a hospital. That is one of my main complaints about the healthcare system. It is wasteful because the hospital environment makes you forget that things cost money, and that some tests have a very low probability of doing anything other than costing you money (not saying that was the case with your family member, just in general).

Hospitals really mess with people's cost-benefit analysis, which isn't normally too good to begin with. I was with someone in the hospital a few months ago, and we got the strangest looks when we tried to find out how much a test would cost. Ultimately we decided not to do the test, which was a long shot to find anything for a problem that wasn't very serious, and save a bunch of money. I wish there were some way to inject some more rationality into healthcare to get around the mindset of always doing everything possible, no matter the costs and possible benefits of treatments or tests.

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

#120

Post by msbarnett »

phamilton wrote: post #116
msbarnett wrote: post #75

Earlier quoted context omitted.

Well, the "no lifetime limits" is thanks to the legislative healthcare reforms that were driven by a need to reduce the number of medical bankruptcies, so obviously that's a good step towards making healthcare more affordable to people who previously would have been driven into bankruptcy. But a $3000 yearly deductible is still likely to be utterly unaffordable to a significant portion of the uninsured, and it would…

Read his post about HSA and how it plays into his retirement. Most high deductible plans have full coverage ( 100% ) when the deductible is reached. Worst case scenario it costs him $4000 ($3000 of which is pre tax) a year. Thats ~300/month. Best case he doesn't visit the doctor once and it cost him $1000 and he puts $3000 into his rainy day / retirement account. You need to have $3000 available day one of each year…

I'm not talking about him, I'm talking about why these $85/month plans aren't the blanket answer to the question of solving medical bankruptcies among the uninsured.
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