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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

#161

Post by erejacob »

potatolicious wrote: post #131
erejacob wrote: post #93

Earlier quoted context omitted.

It wasn't written "for a general audience". I and my regular readers are regularly judged negatively for not choosing to consume and go into debt like everybody else so the blog is more of a support group for those who are willing to go against the stream and actually save money so they can avoid the typical middle class problems above. I admit, there's a bit of "I told you so"-attitude, although one quickly learns t…

You're still working against a straw man. > "for not choosing to consume and go into debt like everybody else" What everybody else? There's a certain contingent of people out there who have spent wildly beyond their means thanks to cheap credit, have poor fiscal responsibility, and suffer justly for it. You seem to grasp onto this and extrapolate it across all the "normals" you see. I know a great number of people wh…

What I'm trying to say is that people who are ultra-frugal are sometimes told (insofar they don't keep it secret) that their life sucks and they're not having fun or various things about their stuff. (See examples above.) This is followed by comments about building credit and some moralizing(?) that we should be cool and spend like everybody else.

The millionaire next door [there or to be] types---the silent majority?---may get caught in the crossfire.

However, having seen this recession coming from two years away and having tried to warn people about it only to be told by some/many that there's no problem and everything is fine, etc. I can't really sympathize that much, sorry. While it may not be someone's fault for being laid off or not being able to find a job, it certainly is their fault for not having the savings to cover two years of unemployment given the known 20% risk of it. I don't feel smug about it. I feel exasperated having told people who proceeded to do nothing. And now they want my sympathy?

The Cassandra complex comes to mind. Given how I come across to you, it indicates that I'm just a poor salesman when it comes to getting my point across to your demographic.

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

#162

Post by stfu »

fennecfoxen wrote: post #145
rubashov wrote: post #61

Earlier quoted context omitted.

> eating out more, because I realized it was relatively cheap. Relative to what? My experience is that eating out is extremely expensive.

In San Francisco, you can go to a place like Greenburger's and get yourself a really fine burger with fries, and it will run you about $11. In North Carolina, you can go down to the Steak and Shake, get an okay burger with fries and a shake for around $3.

Eating out on the cheap is really often overlooked. I eat out every single day and spend a maximum of $10 - most of the time even organic food. You just have to figure out when restaurants have happy hours, take out discounts, etc. With the right strategy eating out is much cheaper than doing it yourself. Even in a worst case scenario I would prefer much more writing a stupid online marketing article for one of the freelance sites and earn $5 for half an hour of work "work" than doing some cooking instead.

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

#163

Post by erejacob »

gnosis wrote: post #150
blrgeek wrote: post #85

Earlier quoted context omitted.

Of all the blogs, this one does a great job of explaining how they built up their wealth! Where's the magic? Save 80% of your net for 5 years. At a 3% return you will match what you spend now. That's EASIER than a spreadheet.

The math does not work out for that. Let's say you make $100,000 per year. Saving 80% would mean saving $80,000 per year, and living on $20,000 per year. After 5 years you would have saved $400,000. 3% of $400,000 is $12,000, which is only about half of what you need to equal what you'd lived on for the past 5 years. You'd need a 5% return in order to make $20,000 per year from $400,000. And this doesn't even take ta…

Try something slightly higher, like 83%. Maybe 5.4 years. You did get pretty close there. You're in the ball park.

Tax laws differ by income. If you make less, taxes go down. The capital gains tax goes away. Dividends become qualified.

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

#164

Post by erejacob »

dragons wrote: post #153
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…

What you describe sounds reasonable to me. Is there coinsurance on this plan? High deductibles don't bother me. But coinsurance, where you have to pay 20% or 30% of costs, scares me. If you get seriously ill or are hit by a bus or something, the cost to you could be huge, way more than the typical deductible.

0% coinsurance on mine. Go to www.ehealthinsurance.com and see what pops up (that's what I've used ... they may not include your state very well, but for CA, it finds 20 HSA eligible plans for me, 12 of which don't have coinsurance.)

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

#165

Post by gnosis »

erejacob wrote: post #163
gnosis wrote: post #150

Earlier quoted context omitted.

The math does not work out for that. Let's say you make $100,000 per year. Saving 80% would mean saving $80,000 per year, and living on $20,000 per year. After 5 years you would have saved $400,000. 3% of $400,000 is $12,000, which is only about half of what you need to equal what you'd lived on for the past 5 years. You'd need a 5% return in order to make $20,000 per year from $400,000. And this doesn't even take ta…

Try something slightly higher, like 83%. Maybe 5.4 years. You did get pretty close there. You're in the ball park. Tax laws differ by income. If you make less, taxes go down. The capital gains tax goes away. Dividends become qualified.

The amount people pay in taxes do vary, which is why this "approximately 80%" savings for "approximately 5 years" system is probably only going to work for people who don't pay much if anything in taxes (ie. people with a pretty low income).

Depending on your income, your tax rate, any unforeseen expenses, and your desired standard of living, you might need to work considerably longer.

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

#166

Post by stonemetal »

h6165 wrote: post #133
nirvana wrote: post #10

I've been living on $13,754 per year for the past 4 years. (Average as of last month.) There are two of us, so, double that and you have the average cost over that period. While we've been doing it, we've been traveling full time, spent the last year in europe living in AirBNB pads, and doing our startup. We buy a MacBook Pro each year and an iPad or iPhone each year as needed, with the old one going to the other per…

Is it really possible to do a startup while travelling? Don't people expect you to be sort of more stationary/accessible ? How has your experience been on this?

Define "people". I could see your bank wanting you to have a defined location so they can send you snail mail. Your customers don't really care. Take steam or amazon for instance. As long as I can login and play games or buy books, I don't care where they are or if where they are changes every week. Customer service is certainly easier if you are in the right timezone, but not impossible from others.

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

#167

Post by joezydeco »

0x12 wrote: post #147
joezydeco wrote: post #139

Earlier quoted context omitted.

Some people get married and start families. There's no way this plan costs $80 for anyone other than an under-40 single healthy nonsmoker. Add kids and a pregnant wife and see where it goes.

Maybe move to a country with more decent healthcare?

That might change his whole budget, no?

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

#168

Post by flounder »

sliverstorm wrote: post #122
tryitnow wrote: post #45

Earlier quoted context omitted.

It disappoints me, but I have to agree with you (at least in part, I wouldn't call his story garbage). I say it's disappointing because his blog really inspired me to make some changes and I agree with the overall thrust of what he's saying. But the problem I have is figuring out how he accumulated his wealth. Of course, being a former physicist you'd think spelling that out in a simple spreadsheet would be a trivial…

He is a former physicist? Good god, the waste... He attended a public school for free. I wonder if he has factored in the price his government paid for only 10 years of physiking out of him... Companies allegedly don't recoup the cost of hiring you for at least a year. Public schools are offered because it is seen as a worthwhile investment in the future, and graduates help pay for the next generation's schooling. In…

> He is a former physicist? Good god, the waste...

Not sure what you're getting at. I got my BS in Physics. Then even went to grad school for a while. There is no such thing as "getting a job in physics". There are no "physics jobs" that I could find. It's basically either go into high school teaching, or else get your PhD and try for an associate professor job while learning how to apply for grants.

My education in Physics was basically a bust. Entertainment. Fun to learn that stuff. Then I owed a lot of money. That's it. Had to actually learn something else in order to pay off the loans and make a living.

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

#169

Post by lionhearted »

Some nice points, but this one is dead wrong:

> Regardless of how much I made, I think I would pick up a goddamn broom myself before I started talking about my financial struggles. The gall!

Paying someone else to do cleaning is one of the easiest positive ROI moves for your life. Not just because it frees up your time, but also because living somewhere clean and organized just does wonders for your sanity, mental health, physical health, productivity, ability to entertain others without cleanup lead time, and has follow-on effects of making you want to be better groomed, prepared, and organized because that's what happens when you live in a hyper-clean environment. Also, everyone else treats your place nicer because it's clean, and messing up a clean place is bad.

So yeah, pay someone to come clean every week. It's cheap, it's like $10 in developing countries and $50 max in developed countries. Well, well worth it. Especially if you're any sort of skilled professional at all that works from home ever on anything.

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

#170

Post by [deleted] »

Locke1689 wrote: post #62
nirvana wrote: post #29

Earlier quoted context omitted.

I'm sorry, that's not "basic economics". That's neo-keynesian economics. (They call themselves keynesians, but they aren't following what keynes said.) The word "capitalism" comes from the word Capital. You accumulate capitals so that you can invest it in productive assets. You could blow your money on a consumptive lifestyle, as you advocate. Or you could save that money, and use it to start a business. Notice, your…

Every Austrian economics school recommendation should immediately be followed by the caveat: The Austrian school of economics is like the anti-climate change minority, but in economics. If you accept their premises you are in the minority of professionally recongized economics.

[deleted]
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