Only Rice and Beans Response from friend on Spending Goal

[UrbanHomesteader]

So, I have a friend that I frequently talk early retirement and finance with. Friend asked how far out I am from reaching my early retirement number, to which I responded, if I can keep my spending under $1,200 a month I could be there in about 3 years at age 40.

Friend scoffed and said that that budget was way too low and I wouldn’t want to be eating nothing but rice and beans. I assured friend that my normal grocery spending is accounted for in that budget and I eat plenty of meat and veg.

I am posting here to see if I can get some feedback from the ERE crowd. Am I going to far with a $1,200 budget in a paid off house in a low cost of living area?

I am child free by choice, if it matters. My spending has been less than $1,000 the last few months, but I spent more earlier this year due to putting a fence up on my property. Even after hitting the proposed ERE number, I am open to semi-retirement compatible work to pad the nest egg for more irregular expenses.

[enigmaT120]

No you're not out of line, especially with a paid off house. Should be easy. You're doing well.

[Jean]

If you can already live with less than 1000$ per month, I think you aren't being delusional at all.
It's very likely that your spending will go further down if you start to work less.
I lived for about 500.- in switzerland for several years (My spending only went up this year because I started a degree in a far away city thus requiring a train pass).
So be reinsured.

[jacob]

Following the focus column in this table, where would you say your focus is and where's your friend's? If you're two or more levels apart in this table, this would explain the "rice and bean" comment.

The median person on this forum is around 4.5--5.5, so your budget would be pretty normal here.
Also see viewtopic.php?p=99322#p99322

[UrbanHomesteader]

Thanks for the reassurance folks. I needed to hear it.

Friend’s focus would be at level 3 these days. Mine may very well be at 7 now that I have been pursuing ERE for 9 years. That would explain the disconnect.

It is an extreme path but the rewards are awesome! Thanks Jacob for the inspiration!

[Dream of Freedom]

Dude show the math. Show the bills. Few things are as convincing as evidence.

Of course, I don't think you should advertise your plans without forethought. So be careful there.

[chicago81]

@OP You're not out of line at all if you can make that budget work for you long-term!

I'd suggest (if you aren't already)

- Maintain meticulous records of your spending habits, for a decent length of time, so you aren't forgetting to account for anything. I've kept a record of all expenses dating back for several years, so I'm very familiar with my spending habits
- Once you achieve your target number, consider adding a little bit extra as a buffer.
- Consider any expenses that might be more (or less) after you stop working. (e.g. health insurance might be more or less, depending on situation. Clothes might be less. Transportation might be less, etc.)

Of course, I'm probably a bad example of ERE. I've been constantly moving the goal-posts on myself, and I'm still working -- the the point of probably surging past MMM-level, and approaching Boglehead-level, and I'm still working.

[UrbanHomesteader]

All great points! I have kept meticulous spending records for years and it is powerful. I am definitely of the mind to build a buffer and redundancy.

Health insurance is a wild card for sure, what happens with the ACA in the next several years will be interesting.

The link in Jacob’s post mentioned skill levels a big factor in ERE. I think that’s really interesting in the context of the friendship that inspired this post. My friend and I both have a ton of DIY skills and enjoy DIY and cooking at home, etc. However, applying skills can be a road to expense reduction, or it can just be a hobby that has it’s own expenses. My friend doesn’t have the desire to retire early, so even though we do a lot of the same things we are approaching those activities from different angles. I have fewer kitchen gadgets for example, but we both cook at home. Both paths are okay, but different. I’ll probably let the topic rest for a while and keep enjoying the friendship as it is.

[classical_Liberal]

One more affirmation here that $1200/mo is reasonable.

I'd also like to point out,if you're very comfortable at $1200/mo while working full time, and there are some things you want to do, but aren't because you spend so much life energy working, it's very possible that number could come down.

I've only worked 3 of the last 12 months, and there are soo many things I used to throw money at that I no longer do. Mainly because I no longer judge it as against how much I could make spending an hour at work vs how much I save by DIY. Instead I just don't work and do it, because it's part of a good life. But it happens to save a few bucks.

[enigmaT120]

I don't drive a hundred miles per day for my commute anymore. But that was pretty stupid anyway. I'm pretty sure that my Costco 5% cash back rewards for buying gas won't pay for my Costco membership anymore. But they used to.

[UrbanHomesteader]

@Classical-Liberal I think you’re right. Many times I have had ideas for streamlining things but put them off because I am committing my best hours to work. Or I am required to spend money because of work. For example;

I work from home, but pay for super fast internet to conform to my employer’s expectations, even though I have done the job on a fraction of the internet speed before. I also still have some need for professional clothes for the occasional business conference or Zoom call.

There are ways to make watering my garden more efficient, but I haven’t had the focused brain power to implement them. A local seed library just opened up for free seed sharing as well, and I hope to participate in that.

I was given a solar cooker, but it is tricky to get the timing right while working during peak sun hours.

And of course, I know of cheaper ways to travel, but they usually involve more flexibility than I have while working. Traveling on the cheap can be so much more fun when done creatively rather than the standard hotel deal. I like camping on public lands more than generic hotels, but it’s much easier to work remotely in the hotel.

When I leave full time employment, I look forward to doing more of all the interesting stuff and less of the thing that I have specialized in for a career. I like learning and variety.

I recently came across the Rich, Broke or Dead calculator on the Engaging Data website and that summed up my sentiments well. At a certain point, my concern is more about running out of lifespan rather than not having enough money.

[sky]

Tell your friend that you plan to enhance your diet by foraging dandelion greens and road kill.

[UrbanHomesteader]

@Sky, Yes! Actually, this wouldn’t be far from the truth. I made a bunch of “pesto” from wild mustard greens I gathered during quarantine. Also ate snails that were eating my garden. I don’t think the snails were really worth the trouble, it’s a bit of a process, but it does make a great rebuttal to friend’s rice and beans comment.

The crazy thing is, I don’t think friend realizes that I am already living on as little cash as I am.

[Salathor]

That's about our spending for a family of four with a paid off house in a high COL area.

The thing is, you don't have to eat just rice and beans. You DO have to cook pretty much everything yourself though. No hiring personal chefs to cook for you in far away kitchens and send the food, frozen, to your grocery store.

[unemployable]

If I ever buy a house, I calculate my monthly baseline expenses to be very roughly $500-600. This includes necessary food and similar expenses and carrying costs of living in the house. A condo with an HOA would be a hundred or two higher. You still can't be real extravagant on $1200, but if you have the ERE mindset down you'd have plenty of breathing room.

[take2]

Another one in the “not crazy” camp. My 12 month rolling average is c. $1300 in a HCOL area, including my share of rent. COVID has “helped” to a certain extent as I haven’t traveled much in the last 6 months which is usually where I would tack on an extra $300-400.

I’ve gotten to the point where it’s hard to imagine spending much more. If you cook your own food, use a bike/public transport, optimised housing expenses, and don’t want for fancy things $1200 covers a lot.

More important is what’s right for you anyway. Sounds like you’re on your own right path.

[2Birds1Stone]

Chiming in with a <$1,000/month trail twelve month spend as well. I don't know how much fun this lifestyle would be when my age doubles and I'm in my late 60's though!

[Scott 2]

I agree it is doable. IMO, it can be a little unclear to just say $1200/month:

1. Your paid off home changes that picture a lot
2. Optimizing ACA subsidies drastically changes the insurance picture. There's a good chance you employer health plan retails at $1200/month.
3. I bet income taxes are not in that number

[Hristo Botev]

If your numbers consistently show $1,200/mo., then there you go, as this is all very case specific.

That said, for me in a HCOL area, with very high property taxes (I think, haven't really compared it to other places), we'll be paying at least $1,200/mo. just for the house (1,300 sq. ft townhouse valued at ~$330K) even when it is paid off in a couple years--~$770 tax/ins; $254 HOA (pool, tennis court, lawncare, and ability to prevent the neighborhood from being overrun with non-resident cars using our neighborhood roads as a cut-thru); plus utilities and maintenance. Granted, we're a family of 4 and when the kids are out of the house we could easily downsize; but we'll never be able to do $1,200/mo. household spending as long as we've got the kids in the house.

[ZAFCorrection]

This person is probably an outlier in terms of lack of financial awareness. Or they just weren't clear that you aren't paying much in housing costs. In grad school my wife and I spent like $2000 a month and $1250 was rent. We were eating tons of chicken and vegetables under those constraints, and our level of DIY awesomeness is at best MMM.