$1,000 or less per month

A couple of years ago I asked my retired clients during my meetings with them during the tax filing season how much they spend each month to live - their "cost of living". Nothing scientific about my survey and I didn't record and summarize the responses but I recall that it ranged from $3,000 to $5,000 per month depending on whether they were still making a house payment. And what I discovered is that it didn't seem to vary that much due to variations in their current income and wealth levels.

So I started asking this question again. Two responses have caught my attention.

One was a married couple (not retired), kids grown and away, home completely paid off with no debt. Their combined income is about $130,000. They own a nice home but otherwise live a very spartan life. Their response: we spend less than $2,000 a month to live!

Yesterday I asked this question to a single male client of mine. He is about 45 years old and has never married. He earns about $60,000 a year, owns his home free and clear and has no other debt. His response: I spend less than $1,000 a month to live! I then asked him if that included vacations and he said yes.

Both of these cases are absolutely amazing given that we are talking California, not Mexico or some 3rd world country. These people are black belt masters of financial security and will never have to worry a day of their lives about money.

It never ceases to amaze me how much I learn from my clients. The moral of the story: live below your means and you'll never worry about money.

Happy Easter!

[Firehawk]

The single guy...that's an interesting one. So, no house payment which means you can knock at least 1k off per month (maybe more), never been married which means he likely isn't a sociable guy, so you can knock out any social gathering costs including gas money, and if he must live close to work.

Total up cable, phone, and energy bills and that's around 500, then add in gas money (for work), food, and you're close to 1000. Tells me alot about this guy (if the numbers are accurate). And does he take vacations? I'd venture to say probably not.

I know a few engineers like that, except they'er about 28 years old and they rent with a roomate and only spend their money on video games (seriously). LOL

The married couple, with no kids, not surprised...

Why is it shocking just because you're in California? Is ALL of california some heavily liberal, superficial-filled plethera of folks or something?

The single guy may not be as social as some people but I do know he goes to Mexico with friends to go fishing. And I believe he is a beer drinker so he spend some money on that.

He told me he does go on vacation - to Mexico with work friends to go fishing and to Oregon to visit his sister and go fishing. In both instances he has his lodging and probably food covered.

California because I believe it is more expensive than some other parts of the country. I know we pay more for gasoline than my friend who lives in Texas.

This guy will be able to retire and live off social security and probably still add to savings. But he will also get a union pension that isn't bad. The only financial stress he has is what to do with his money.

[LiftGirl]

Originally Posted by Firehawk

Why is it shocking just because you're in California? Is ALL of california some heavily liberal, superficial-filled plethera of folks or something?

I believe Mr P is surprised about this being possible in California because the cost of living in California is notoriously high, especially housing.

[Firehawk]

Originally Posted by LiftGirl

I believe Mr P is surprised about this being possible in California because the cost of living in California is notoriously high, especially housing.

In the entire state?

[westside24]

maybe not as bad in northern cali as southern, but I cant imagine its much of a difference......... its like the difference between u n me... gas here all weekend was 3.03 and up by great lakes crossing it was 3.20-3.30 just up in luna pier, or temperance or morenci its up to 3.20

[luke.w]

I'm spending about $5 more on gas (a week) from 10years ago, since I've changed my driving habits, sotra wish I did that 10years ago.

since my fiance is moved in with me, my driving is back to normal (40mins a day mon-fri) about $25 in gas! 10years ago I was putting $20 a week in driving same route.

[Merrida]

Both of those examples involve people owning their homes free and clear. I'd be interested in these "cost of living scenarios" for married couples with a child or two, who still either rent (cannot afford a house yet) or moved into their house which they've just begun to make mortgage payments on so there's very little equity and a lot hanging over the heads,....and let's add in the kids schooling, and maybe 1 or 2 vacations (the cost? How is it budgeted), cars that are not yet paid off,....and even if living "moderately" what would be considered the "average" credit card debt? (Ideally there wouldn't be one, but for the sake of argument)...

I'd be very interested in other figures that have a few more variables, (a few more bills in the equation). Both of those situations sound pretty idealic, especially for California. But I am definitely intrigued by the prospects of variables.

.

[westside24]

wanna hear my figures? Im single I rent, and I gaurantee im no where near 1000 a month. and Im about to get a house...

[arbit]

Originally Posted by pierini

It never ceases to amaze me how much I learn from my clients. The moral of the story: live below your means and you'll never worry about money.

Happy Easter!

Unless you encounter a serious health problem which caps out health insurance.

[Lady C]

In CA, with house values between $500-700k, it is not unusual to see morgage payments of $3000-4000 per month. Add to school/education, utilities, gas, vacations, etc. I can see how some households need alot more than $1000 per month just to stay above water.

[Firehawk]

Do these people own a home that values between 500-700k? In the US, wherever there's a house that is in that range, you'll probably have a house payment up there...it's proportional to a house for 150k. I pay just over 1,000 a month (including Escrow) for my home that valued at 165. Multiply that by 3...

WHos' going to live in a house worth half a million if they can't afford 3-4k a month? It's all proportional. A house in Michigan valued at that is still going to have a house payment as such, doesn't matter where you live...of course unless you had a massive down payment...

[arbit]

Firehawk, the median price in california is 430k, in bay area its 700k,
http://www.svdaily.com/realestateprices.html

[minime]

hmm we pay 1500 a month just to rent a 1 bedroom apartment..

I can see how somebody who owns their own place (no mortgage) and does nothing that costs money could live on 1k or less. Assuming they have health insurance through their jobs of course.

But if you enjoy eating out once a week, have a hobby (usually hobbies cost money), don't want to wear the same outfit every day, and like to take vacations I don't see how you could do it. I certainly wouldn't want to as I see no point in stockpiling all of our money and not having any fun.

Of course if you are in an income bracket of more than 100,000 for the household you can afford some luxuries that others can't.

I do think the biggest cost for most is housing though... it is ridiculous how much it costs to buy a place in the city here. We can't even consider it and we make good money (well we could buy a condo but don't want to pay $350,000 for 800 square foot of space)

[Firehawk]

Originally Posted by arbit

Firehawk, the median price in california is 430k, in bay area its 700k,
http://www.svdaily.com/realestateprices.html

Ok.

I mean, if I had an extra 1000 dollars a month to spend on whatever I want, I guess I have to admit I'd probably be buying up more pinball machines...lol