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howmuchcanliveon-new

How Much Money Can You Really Live On?

howmuchcanliveon-new

Andrew and Matt calculate the absolute minimum they could each live on.  We hope it will inspire you to cut some of the frills out of your spending.

If you cut your expenses to the bone, how much could you live on?  And what does “live on” mean?  Would you be willing to eat ramen for every meal or would you still need a weekly Whole Foods run?  Is it realistic to get rid of your car?

We pad our expenses with a lot of unnecessary fluff.  If you lost your job or if you decided to quit your job, you would get by on a lot less than you are spending now.  As a hypothetical, list out your expenses, or check your Mint account and decide what you could cut but still maintain a good quality of life and be happy.

Now see what you could cut to live like a recluse, never going out, eating only two meals a day, no alcohol, no public transport.

Of course you could try one of these approaches for a month and see how you do but it’s really just an exercise.  It can be reassuring to know that if you had to live on $1500 a month you could.

Imagine if you did it though.  For just one month.  How much money you would accumulate and the things you might discover you could live without for longer than a month.  Maybe some of those changes will become a permanent part of your life.

Our mental attachment to things is strong but once that attachment is broken, we usually see that not having cable does not really change day to day life in a negative way.  It may even have a positive impact.  Now you have to fill those hours spent in front of the TV with something else.  Maybe you read more, cook more, start exercising, spend more time with your family.  Take the one month challenge and let us know how you do!

Show Notes

Shiner White Wing Belgian White: With hints of coriander and orange peel.

Mint:  The easy way to budget.

Betterment:  The smart way to invest.

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  • Since you guys asked.

    My number is $709, which breaks down like so:

    Rent: 305
    Utils: 75
    Phone: 50
    Car insurance: 15 (’98 Malibu ftw)
    Web hosting: 25
    Podcast hosting: 12
    Mailchimp: 27
    Groceries: 200

    Getting down to that number would mean locking myself to my city, which isn’t too bad since I have a bike and there’s a good bus system. But I wouldn’t be able to go to Des Moines.

    It would also mean cutting out several non-essential business services like Buffer, Fizzle, and my Verizon Jetpack, along with Spotify Premium, which I almost put down as essential.

    As it stands, I spend way more than this each month. It’s hard to pinpoint a good average since each month I’ve been hit with abnormal expenses like quarterly taxes, paying my roommate for development work, and conference fees/airfare. But suffice it to say that I could probably stand to cut back a bit.

    • Wow, damn dude, that is really impressive. I’m actually not sure what I’m more impressed with, how dedicated you are to your business (it shows in your spending) or how low your rent is. I mean damn, $305 a month… in Hoboken you can’t even park a car for that much. I may have to move by you so I can legit bootstrap LMM.

      I def hear you on the random unexpected monthly expenses. Between maxing out Libsyn (one podcast every day!) and random birthdays, expenses definitely have a way of sneaking up on you.

      Not that you want to cut out fun stuff like the conferences but it’s always good to know what you can live on should shit hit the proverbial fan.

    • Damn, and I thought my 1200 was good. And I can BARELY stick to that.

      My biggest budget problem just arose: I recently used Mint to factor in my big annual and semi-annual expenses (property taxes, heating oil, car insurance, etc.) When Mint broke those down into monthly “budgets” to cover each of these eventual costs, it jacked up my monthly spending (and took my fun money down to, ohh, around -$20.

      Now, I usually pay all of those big bills with the hefty lump sum that I get back in federal taxes (by withholding extra and claiming zero allowances). But this year I will be claiming 1 allowance and not withholding any extra, keeping more of my paycheck. Now I’ve got to prepare early for these semi-annual costs (rats!), but having the extra cabbage up-front to invest is worth it.

      • $1200 is what I budget now for each month and here’s how it breaks down:

        Monthly Bare-Ass Minimum Unmarried Girl Total: $555
        Utilities: 50
        Cell Phone: 65
        Landline Phone: 25 (I live in rural PA, no cell reception)
        Car insurance: 45
        Homeowner’s Insurance: 45
        Groceries: 150
        Gas: 175 (big commute)

        Monthly Fun Money: $275
        Restaurants: 100
        Personal Trainer: 100
        Massage: 75

        Monthly Amount I can afford to blow on everything else: $400
        Usually this is plenty to cover both fun and needy things, like doctor visits and my regular medication, a purchase or 2 for my beau (which usually consists of food and movies), fees for the occasional 5K race, and other random social expenses. And really important stuff like 4 pounds of Jelly Belly sours.

  • Grace Villafuerte

    Thanks for another great episode – I’ve had this same conversation//debate/argument with friends over the years, and perspectives on housing and food are always the biggest differences that affects what one’s bottom number is. Living in Sonoma County, this is a heated and political issue in general, i.e. discrepancies in regional costs, rental gouging, cost of healthy vs unhealthy food, SUV vs prius, etc. I think your listeners will already have a frugal lean, which may slant the results :) I personally love eating and going out, but I’m not really a foodie, and could easily eat simple and cheap. My partner is a foodie and a cook, so the value she would place on what the lowest cost of groceries could be would be much different than mine. Despite us basically having the same expenses, I bet our “number” would still be different. Because I’ve had this debate too many times, I have wanted to – for years – buy groceries for various friends’ family for a month, as an experiment, just to see what is possible. Being raised uber frugally by immigrant parents probably had the biggest influence on my opinions of what’s ok to spend… however skewed it may be. So, I think I’ll have to conduct a teeny experiment this summer and see how honest I can get my friends. I’ll also come up with my number, though I must factor in my passions that are absolutely necessary in every day life. Thanks again!

    • You know, I’m actually curious how frugal the LMM crew is. I do have a feeling we as a group are a bit more saving conscious as compared to the average.

      That’s awesome your partner cooks, that’s probably the best way to get tasty food on the cheap. Laura has been working really hard on expanding her cooking knowledge so I can only imagine what it’s like to live with a cook.

      You absolutely have to hold a competition between you and your friends on who can run live on the least in a month. When you guys do you’ve gotta share it too! So far we’ve gotten some pretty awesome numbers – like Daniel from our This Financial Life episode at $936.