Live Cheap!

[RedScare]

You know, it is kind of interesting that this thread came back up today. Over the last week, a friend of mine and I had been talking about different countries that one could move to and live on the cheap. Examples thrown out were Costa Rica and Belize. Naturally, I then came home and stayed up half the night googling websites of US expats in these tropical paradises. They all say sort of the same thing. That is, if one lives like the locals, it is extraordinarily cost efficient. However, the more one attempts to live like the US that one left behind, the more expensive it gets.

This made sense, and it certainly does NOT makes sense to go to another country and attempt to recreate what you left in the US. But, as I thought about it last night, it occurred to me...why can't one live like a Costa Rican local in the US? What makes it so expensive here is the constant bombardment of advertising, the attempt to force one to purchase more stuff. It is very effective, as millions of people go very far into debt in an attempt to look and act like the actors in the commercials. I got the distinct impression that expats in other countries tend not to miss what they do not have (within reason, of course). It is decidedly tougher to not miss what is all around you.

So, the question became, if I WERE successful at not missing all of the unnecessary junk being peddled all around me, just how cheap COULD one live in the US? Obviously, the answer varies, depending on where you live. But, if you took the standard of living there and put a price on it here, my initial cost analysis is not that bad. I'll post a few numbers as I play with it some more.

[TheNiche]

So, the question became, if I WERE successful at not missing all of the unnecessary junk being peddled all around me, just how cheap COULD one live in the US? Obviously, the answer varies, depending on where you live. But, if you took the standard of living there and put a price on it here, my initial cost analysis is not that bad. I'll post a few numbers as I play with it some more.

For about 4 or 5 months after I moved to Houston, I managed to eat on a monthly budget of $45. I'd suppliment my diet on occasion by going down to my grandparents' place and helping them with all their yard work and general clean-up in exchange for a decent meal or two, and about once per month I'd blow my entertainment budget on a bowl of Vietnamese bun from the Hung Kim supermarket, but that was pretty much it. Now, I go through about that much worth of food every three or four days. Being gainfully employed helps.

I also turn on my air conditioning at 81 degrees now. It used to be set to 85. That was a real money-saver.

[musicman]

Cooking and eating at home saves you quite a bit. I lived on $1000/month for a yr. I don't think i could do $45/month for food. that's too much sacrifice for me.

[Guest danax]

So, the question became, if I WERE successful at not missing all of the unnecessary junk being peddled all around me, just how cheap COULD one live in the US? Obviously, the answer varies, depending on where you live. But, if you took the standard of living there and put a price on it here, my initial cost analysis is not that bad. I'll post a few numbers as I play with it some more.

You and I are on the same wave length with this. Food is cheap if cooked at home. I still have 9 years to go to pay the house off and the car is paid. If the car holds up that long, I figure by then I'll be able to live on $1500 mo, even if property taxes have doubled. The reduction of material desires is key, and then discovering that happiness can actually be greater with less then cements it into a lifestyle, and then the saved income can enhance happiness even more once reserves build up a bit and the knawing stress of living paycheck to paycheck is diminished somewhat. Plus, there's a quiet, counter-culturesque feeling of victory in there somewhere too.

But we're sliding off topic. As for total debt to income ratios currently being approved; Fannie Mae still goes up to 65% on loans with up to 100% financing, no fancy credit scores required either. I think the intent is to get as many people into homes as possible and almost no one lives with little or no debt anymore, so the ratio bar had to be lowered. If the economy really tanks at some point, the foreclosure situation will really get ugly.

[RedScare]

I'm not talking about a subsistance diet, Niche. Seriously, when I started going home for lunch, and some days working from home, my $10 to $15 lunch budget dropped to zero. At 22 days per month, that knocked out close to $300 monthly. Likewise, when I tired of my old habit of dining/drinking out every other night to more like once, or occasionally twice a week, that budget dropped from upwards of $900 per month to closer to $100 to $150. Not only do I save over $1,000 per month, but it is a little easier to keep my weight in check.

Also, I dumped Starbucks, saving about $60 a month. Even though I splurge on coffee at home, I would be hard pressed to spend more than $20 a month on it. Got rid of Houston Texans tickets, because I hated spending 8 hours in a football stadium and parking lot during the nicest weather of the year. That saves probably $2,000. Unloaded the Porsche for a Toyota pickup. That saves over $2,000 a year.Moving from the Woodlands to Houston allows me to drive about 500 miles a month instead of over 2,000. At the time, in 1999, it was not a huge money saver. Now, it saves me between $250 and $300 a month.

I "could" get rid of the truck and save another $800 a month, but I think the better route is to finish paying it off in a year. At that point, my transportation cost drops from about $9,600 a year to about $2,000. That is tolerable.All of the above represents about $37,600 in savings from just 5 years ago. Frankly, I am stunned at the number, as I do not miss any of the things I gave up. In fact, I rather enjoy waking up without the hangovers.

danax, you are right about the countr-culture thing. I feel a bit like an anarchist, violating US law by not spending what I should. You are also correct about straying off-topic. If you want to spin the last half dozen posts into a "Live Cheap" thread, that would be fine by me. I know niche and music would add some more to it.

[MidtownCoog]

Cheap is a dirty word.

[musicman]

Cheap is a dirty word.

parsimonious sounds better.

[RedScare]

Cheap is a dirty word.

Only to credit card companies.

[MidtownCoog]

Y'all are frugal, hence the Frugal Gourmet.

By August 2008 we will be debt free with the exception of our houses. Damn car notes.

But the last time I said that I hit a deer and totaled a BMW. So this time I'll just shut up.

[Subdude]

If you want to spin the last half dozen posts into a "Live Cheap" thread, that would be fine by me.

Done.

Examples thrown out were Costa Rica and Belize.

A friend of an old friend relocated to Costa Rica, and although it was cheap, she didn't think it was as cheap as she expected over the long haul. I'm not sure how frugally she was living, however.

I got the distinct impression that expats in other countries tend not to miss what they do not have (within reason, of course).

Except for the supermarkets. American supermarkets are the best in the world. Besides that, you are probably right.

[musicman]

danax, you are right about the countr-culture thing. I feel a bit like an anarchist, violating US law by not spending what I should. You are also correct about straying off-topic. If you want to spin the last half dozen posts into a "Live Cheap" thread, that would be fine by me. I know niche and music would add some more to it.

Red i think quite a few would love to live on your 2500/month "budget", i know i could. Minimizing your housing costs is IMO the best thing you can do to live cheaply. A need vs want mindset can save you a bundle. I'm living for less here than i could in an apartment.

[ssullivan]

This is a great thread. It's something I struggle with, because I've always been somewhat more of a spender at times than a saver. My boyfriend is the opposite in many ways, and I can say I'm learning quite a bit from him about where to trim some things out of the budget. Unfortunately my job situation (travel just about every Monday-Thursday), plus the challenges of being in a long-distance relationship (Houston-Atlanta) make it hard to cook at home much. At least during the week my meals are reimbursed by work, which is a considerable savings. But I tend to spend that money on other things, including travel a couple of weekends a month to be with the guy I'm dating.

However, I am trying to change my habits and save more. I just increased my 401(k) contribution substantially, which is great for my future, but short-term savings is definitely something I need to focus on more. I wouldn't be surprised if I don't move to another state next year, and I would like to pursue purchasing a home of some sort in the next two years. Those are goals that require a little more attention to saving for the short-term, which is something I could certainly do if I started to watch my discretionary spending a little more.

[RedScare]

Red i think quite a few would love to live on your 2500/month "budget", i know i could. Minimizing your housing costs is IMO the best thing you can do to live cheaply. A need vs want mindset can save you a bundle. I'm living for less here than i could in an apartment.

Looking back at it, I see your point. However, the $2,500 includes my mortgage, and includes the extra $225 a month that I tack on in an attempt to pay it off quicker. Technically, I could sell the house, invest the profits and live in a $900 to $1000 rental forever. Who knows, someday I may even do that, if I left Houston.

I suppose for the purposes of this thread, we should separate housing and everything else. But, the two main drivers of overspending in my world seem to be eating out to excess (easy to do for a single guy), and stinkin' electronics. Luckily, I do not play video games, and am largely unimpressed with cell phones that have internet service, or it would be worse. As an example, even though I have a HD ready television, I found myself perusing the Sunday ads for a flat screen TV for the kitchen! And, I don't even watch TV in the morning! And the living room is only 15 feet away! I have since come to my senses.

[musicman]

sell the heights money pit and move to an eastside money pit! your payment will be less!

seems you and I have similar splurging though (food and electronics). i want a 42" HDTV however i already have a 32" HDTV that works just fine. i ordered a handful of christmas cds from the net and there was no reason to. i have enough of those already.

[RedScare]

sell the heights money pit and move to an eastside money pit! your payment will be less!

The thought has crossed my mind more than once. I have had realtors tell me that the equity in my current house would allow me to pay cash for something on the East Side. Of course, I would want to get a brick bungalow this time, and I am not convinced that I could find a decent one at that price. I am also not sure that the market is that great right now to do that. Maybe in a couple of years. Always fun to look, though.

Plus, there's a quiet, counter-culturesque feeling of victory in there somewhere too.

Maybe we are not quite the consumer anarchists that we thought. Just saw this article a few minutes ago.

http://www.msnbc.msn.com/id/21309318/?GT1=10450

[moni]

I would Never move to Belize. Bugs that get under your scalp, and bugs that get into your system. Lots of articles about it on Dave Barry, but NOT funny. Also I have heard the same from many others including our good friend and author Bill Crider of Alvin, Texas.

"While studying herbal medicine in Belize, a travel friend got an infestation of worms that worked their way through her blood system until ultimately, the worms crawled out from 100's of boil-like growths all over her body. The infestation also made her very sick for many months. The simple truth is, most pets (and some humans for that matter) are not very well cared for in the developing world and can carry a slew of diseases, parasites, worms, etc. Summary: It's extremely tempting (and natural) to want to relax in the heat and lose the footwear, but you've gotta' think of what lurks below your tootsies. So, unless you are willing to deal with the possibility of this (or something much worse) happening to you.... don't go barefoot".

[Subdude]

i want a 42" HDTV however i already have a 32" HDTV that works just fine.

Right now I don't even have a TV. How's that for scrimping?

Interesting article Red. I suppose it is easier, and more satisfying, for people to condemn others for extravagance.

[RedScare]

Right now I don't even have a TV. How's that for scrimping?

Hey, BestBuy has a flat screen on sale for $299. It'll look GREAT in your kitchen!

[musicman]

Right now I don't even have a TV. How's that for scrimping?

Danax doesn't either.....now if i can just keep him from Starbucks.

[millennica]

Living frugally is one of my favorite pastimes. I've always been frugal (some would say cheap) which I attribute to having grown up and my family having lived in New England for many generations. Like danax and redscare when it comes to most things in American culture, I have always had a counter culture attitude and this includes consumerism and spending money as much money as possible, something all good Americans are encouraged to do. My spouse has a tendency to have more wants than I have, but has over the years become more restrained insofar as spending money is concerned. Except for monthly bills food, phone, utilities, and yearly bills such as property taxes and car insurance my spouse and I have no debt. Our expenses don't run more than 2000 per month. The rest of the money we save and invest, something we have always done. When I was younger, my goal was to save 1 million dollars because I reasoned if I could get 5% in interest each year, I would have 50,000.00 and never touch the principal. At that time, when my salary was low, I figured that 50,000 was a lot of money. At this point in my life, my spouse and I have saved more money than 1 million and even though I believe that our investments, my spouse's pension, my pension and social security should be more than enough to see us through retirement, when we retire, unless we begin spending exorbitantly. I sometimes worry which is fueled by financial planner types trying to scare people into believing that they will not have enough funds to last in retirement.

We have always paid cash for our cars and keep them a very long time. At the moment, my spouse and I both drive vehicles--a Nissan pickup truck and a Volkswagen Fox- that are 20 years old. One reason we have been able to keep our cars for so long is that until 1991, we lived in cities that had good public transportation system that we utilize instead of driving our cars. Because the public transportation system in the SF Bay area is not as good as it was in Philadelphia and Boston, since living in California, we have had to rely our automobiles more than previously. We own two houses--our SF Bay area residence and a rental house in Philadelphia near the University of Pennsylvania-- clear and free with no mortgage on either. I do have charge cards and credit cards, but have always paid the balance in full in 30 days thereby never incurring interest fees. My spouse and I don't smoke or drink and never have. We rarely go to Starbuck's and have always prepared lunch at home and taken it to our offices. Because we purchase very little prepared food which is costly, our grocery bill is between 200-220 per month. We manage not to spend much on food because we make most things from scratch-- main course items such as soups, spaghetti sauce, lasagna, hummus, tabouli, desserts like pies cakes, cookies and even salad dressings. Once a month we go out to a restaurant to eat--never a chain, but restaurants known for good food and inexpensive prices, of which there happen to many in the SF Bay Area. We do not and when our son was young did not celebrate Christmas even though our extended family did. Instead of buying presents for our extended family members at Christmas and for their birthdays, my spouse, son and I always them made something. Although our son did dress up for Halloween, rather than going to a store and purchasing an off of the rack costume, we always made the costume, which we turned into a family affair. One year our son was a robot and to make his costume, as a family project we covered a box in aluminum foil, put a light on top of the box and added other items to create a robot costume. Another year because our son was studying the Greeks as part of his central subject at school, he dressed up as a Greek, complete with chiton and other Greek accessories. Although many of our friends make fun of our frugal spending habits and argue that we are denying ourselves, we have always spent money on things our family values--mainly travel, good schools K-12, college/university, live theatre, music and dance. Sometimes children don't adopt the same values as those of their family or origin, but in our case, as an adult our son lives a frugal lifestyle as well.

[RedScare]

Here are two paragraphs from the article that explain a lot.

That notion is changing. People no longer feel certain they will be better off than their parents, for example. "What really messes with your economic mind is when your expectations and aspirations are violated, Bernstein said.

[MidtownCoog]

The things people say to justify their existence living in a 2/1. It's crazy.

And FWIW, 20 year old cars are not safe, or good for the environment.

I know this, too, is some kind of badge of honor, but let's be real here.

[Guest danax]

Here are two paragraphs from the article that explain a lot.

Neither of these experts ever mentions the fact that the middle class (indeed, everyone) has been conditioned to believe that if they do not have a larger home and more stuff than their parents, they are a failure. The second one alludes to it a bit when he talks of air conditioning and larger homes, but the fact is, the size of one's home is NOT the barometer of success! Certainly, the banks and credit card companies want you to believe it, so that you will borrow more, and the retailers want you to believe it, so you will purchase more, and even the government wants you to believe it, so they can tax you more, but the only success you guarantee is THEIRS!

The "conspiracy theorists" also believe that the government likes to see the current lifestyle of the masses with the maxing out of credit. This would allow the government to easily create societal chaos in order to try out the idea of the future soft police state by deliberately tanking the economy and knowing that no one has any savings. Then, big brother comes to the rescue.

It's really a very thin veil keeping everything afloat economically. Once people "wake up" and realize less is more, the system will collapse. That veil seems safe for now though.

[musicman]

The things people say to justify their existence living in a 2/1. It's crazy.

just like the mcmansions..huh?

[MidtownCoog]

What exactly are they saying?

And how many kids do you 2/1 fans have?

[RedScare]

No one is forcing you to downsize, Coog. You are free to keep both houses. Our little debate here is merely trading a few hints on how we live on the cheap....and, the sideline benefits of not worrying about as many bills. If our thread makes you feel a little conspicuous in your consumption, you are free to start a thread on the joys of paying two mortgages, two electric bills, and furnishing two homes.

There are numerous magazines and books and TV shows about second homes, as well as frugal living. So, I am quite sure that there will be a market for your thread, just as there is for mine. I promise not to be jealous of your wealth and success. Not even a little bit.

The things people say to justify their existence living in a 2/1. It's crazy.

And, you are correct. It IS crazy. A single guy and his dog ought to be able to live in less than 1358 square feet. Call me gluttonous.

[musicman]

What exactly are they saying?

And how many kids do you 2/1 fans have?

having children and being able to control your spending are two different things. you CAN do both.

[Guest danax]

The things people say to justify their existence living in a 2/1. It's crazy.

And FWIW, 20 year old cars are not safe, or good for the environment.

I know this, too, is some kind of badge of honor, but let's be real here.

Weak, Coog. Weak.

Yeah, we have no children living with us, true. We're just heathen bachelors with as few responsibilities as possible, and I wouldn't have it any other way.

And the environment? My 20 year car is in the shop so much, I end up taking Metro most of the time anyway.

[lockmat]

I'm not talking about a subsistance diet, Niche. Seriously, when I started going home for lunch, and some days working from home, my $10 to $15 lunch budget dropped to zero. At 22 days per month, that knocked out close to $300 monthly. Likewise, when I tired of my old habit of dining/drinking out every other night to more like once, or occasionally twice a week, that budget dropped from upwards of $900 per month to closer to $100 to $150. Not only do I save over $1,000 per month, but it is a little easier to keep my weight in check.

Also, I dumped Starbucks, saving about $60 a month. Even though I splurge on coffee at home, I would be hard pressed to spend more than $20 a month on it. Got rid of Houston Texans tickets, because I hated spending 8 hours in a football stadium and parking lot during the nicest weather of the year. That saves probably $2,000. Unloaded the Porsche for a Toyota pickup. That saves over $2,000 a year.Moving from the Woodlands to Houston allows me to drive about 500 miles a month instead of over 2,000. At the time, in 1999, it was not a huge money saver. Now, it saves me between $250 and $300 a month.

I "could" get rid of the truck and save another $800 a month, but I think the better route is to finish paying it off in a year. At that point, my transportation cost drops from about $9,600 a year to about $2,000. That is tolerable.All of the above represents about $37,600 in savings from just 5 years ago. Frankly, I am stunned at the number, as I do not miss any of the things I gave up. In fact, I rather enjoy waking up without the hangovers.

danax, you are right about the countr-culture thing. I feel a bit like an anarchist, violating US law by not spending what I should. You are also correct about straying off-topic. If you want to spin the last half dozen posts into a "Live Cheap" thread, that would be fine by me. I know niche and music would add some more to it.

Saving money is great. It's a wise thing to do. I'm a saver. But if we're saving all this money, what are we gonna do with it?

I know someone mentioned putting more into their 401k. There's a lot I don't know about retirement. But I do know that I'm gonna have to have a lot saved up in my retirement plan to be able to live. What do the experts say these days, over a million dollars? I don't know what standards they're expecting us to live by, but regardless, it's not gonna be cheap, especially with no income. And then I got to thinking about health insurance when I retire. I'm not gonna have an employer providing that for me. I'm not aware as to who retirees get it now. I've seen commercials for it though.

All the cutbacks yall have mentioned, I already do. So what do I cutback on? Well, for me it's at what I set my thermostat at, getting a heated blanket, not making unneeded car trips, eating at cheaper places when I do eat out, shopping at Stein Mart or Ross instead of the mall.

[MidtownCoog]

I am all about being frugal. No credit cards debt in my house. That's why I like this thread.

But when being frugal turns into a "nobody needs a 2,800 sf house, blah, blah, blah) y'all start to sound like pious Prius drivers.

I like Dave Ramsey and his ideas. But something tells me he does not live in a 2/1. And I'd be willing to be he also owns a vacation home.

You don't have to throw all that extra money into a 401K, either. Being debt free opens other opportunities like having a vacation home.