Cost of Living - Island of Sanity

Island of Sanity



Off-the-Wall Stuff

Cost of Living


People often complain about how expensive it is just to survive in America today. So I got to thinking: If you really tried to be frugal, what's the least you could spend to get by?

There are, of course, ways that you could survive for no money at all. You could live in a cave in the wilderness, eat fruits and berries off the trees, and wear animal skins made from creatures you have hunted yourself. But let's assume that we're not talking about quite that radical a lifestyle.

You could sponge off relatives, or live in homeless shelters and eat at soup kitchens. But that isn't really living for free, it's just pushing the cost on to someone else.

There's a lot of ambiguity and interpretation to a general statement like "just get by". Let's use the following ground rules:

  1. You are going to lead something that resembles a normal American life. You will live in some sort of house or apartment and not a cave. You will wear normal clothes and not something sewn together from fig leaves. Etc.
  2. We will count the value of what you consume, not just what you actually spend. So if you live with a relative, we count your share of their housing costs. If you eat at a soup kitchen, we count what it cost the Salvation Army to provide the meal. Etc.
  3. Similarly, if you use something bought before the start of the "experiment", the cost still counts. If you live on canned goods that you have stocked up, you're not eating for free, they cost you something when you bought them. If you live in a house you inherited from your parents, it cost them something, so we count the fair market value of the living space.
  4. While of course we are assuming that you are not going to live in luxury, we also assume that you are not going to live on the brink of death. You will eat well enough that you are not starving or malnourished, you will have some protection from the elements so that you are not freezing to death in the winter. Etc.
  5. We'll base costs on a family of two. Some costs are largely per person, like food. Others can be shared, like housing. I choose a family of two for the completely arbitrary reason that that's the size of my family, so I can use my own expenses as a reference.

So what do you need to live in America? Well, basically you need food, clothing, shelter, utilities, and transportation. Let's calculate expenses monthly.

Food We spend about $500 a month for food. But we could eat for a lot less. We could cut the eating out. We could use less epackaged and microwaveable foods, which are more expensive than making things from scratch.

Perhaps the cheapest meal we eat regularly is grilled cheese sandwiches. One such sandwich costs about 15 cents for the cheese and 20 cents for the bread. If I eat three of them, the meal costs me about $1. For breakfast I often have an egg and a couple of sausages. Egg: 10 cents, two sausages: 40 cents, total cost: 50 cents. There are many similarly economical meals one can make: hot dogs and hamburgers, soup, macaroni and cheese. I think with a little effort at economy someone could eat for $1 per meal each, or $200 per month for two.

Clothing I once took several of my sport jackets to a dry cleaner for $5 each. The next day I went to a Goodwill store and noticed that they were selling sport jackets for $3 each. They must clean them before they put them on the racks, so I figure I could save money if instead of taking my suits to the cleaners, I donated them to Goodwill and bought them back the next day! (I never have followed up on this idea. Somehow it just seems too cheap.)

How often do you need new clothes? I think you could manage with two new outfits a year, maybe a little more often for things like underwear and socks. A coat can last several years. If you buy at discount stores that would cost maybe $50 per person per year, less than $5 per month, $10 for two. Go to consignment shops and Goodwill and it would cost you almost nothing. But say $10 per month.

Shelter I think this is the hardest area to cut expenses to the bone. In my area a one-bedroom apartment that is not a run-down dump appears to cost at least $400 a month. The mortgage on a small, simple house would probably be somewhat more than that. You could buy someplace run-down cheap and fix it up yourself, or share living space with another family. But let's go with $400.

Utilities I spend about $50 per month for electricity, not including heating and air conditioning. That includes lights, TV, refrigerator, electric oven, microwave, computers, and all sorts of electronic gadgets. I'm sure you could spend less by being cutting back on conveniences and toys and being careful about turning off lights when not in use and the like. Still, let's say $40.

Water costs me about $30. I never water the lawn because then I'd just have to mow it more often, and I can't imagine the occasional car washing and the like uses that much water. Short of not showering and not flushing the toilets there's not a whole lot of room to economize there without abandoning the "normal American life" rule. Let's say that $30 is about as low as it's going to go.

Do you need a telephone to live a "normal American life"? Let's say yes, but you don't have to spend hours on the phone to friends and relatives. I presently use a cell phone service that costs me $15 per month for 150 minutes of air time. I only go over that occasionally. My daughter mostly text-messages and, amazingly, spends even less on her phone than I do on mine. We surely could get along with just one phone. So $15 per month is easily achievable, let's round that up to $20.

I spend about $250 for heating in January, somewhat less in December and February, and of course almost nothing the rest of the year. That might total $1000 per year or less than $100 per month. I do use an electronic thermostat that turns the eat down at night and during the day when no one's home. We could certainly manage to live with a colder house and wear sweaters. A smaller home would cost less to eat. If we really wanted to economize we could close off most of the house in winter and only heat a couple of rooms. Still, let's say that only modest economies are practical from what I'm spending, and say $80 per month.

Transportation Do you need a car to live a normal American life? Again, let's say yes, but you don't need a new car or a fancy one. I bought my last car for $4000 from a used car dealer and have now had it for four years. I had $1200 in repairs last year. (It's probably getting near the end of its useful life.) I do some of my own maintenance work, the easy stuff like oil changes and tune-ups and harder stuff when I'm in the mood or particularly broke. I'd guess that between the cost of buying and maintaining a car, I probably spend about $1000 a year for servicable transportation. When I was young and poor I bought cars that ran, and that was about all that you could say for them, for a few hundred dollars, and drove them until they fell apart.

The average American drives about 750 miles per month. Assuming your car gets 20 miles per gallon and gas costs $2 per gallon, that comes to $75 per month.

You can't avoid having auto insurance. I think it's required by law in every state. I just saw a news story saying the average American pays $70 per month for car insurance. That's what it costs me. Let's assume that's unavoidable.

So I'm spending about $100 plus $75 plus $70 equals $245, toss in some modest expense for oil changes and wiper blades and the like, and owning and operating a car probably costs me $270 per month. (I find that surprisingly high when I add it up.) I think I spend less than most, but you could economize further by buying really cheap used cars, driving less, and doing almost all your own maintenance work. Let's say $200 per month.

If you live in a big city, you could make do without a car and use busses and subways. Last time I used a subway I think it cost $1. I'm sure it's more now. We have a bus system in my town that cost $1 to go anywhere in town. Even at those pretty low rates, just one round trip per day -- to work and back on weekdays and to shopping and back on weekends -- would mean 60 fares per month, or $60. For two people you'd be talking $120. But for most Americans this isn't practical, so lete's stick with the $200 per month for a cheap car.

Entertainment Most Americans spend a lot of money on entertainment, from cable TV to sporting events to vacations. None of that is necessary for survival. Just 100 years ago the average American spent almost nothing on entertainment. People made their own toys, read books, played sports using minimal equipment, and so on. One can find all sorts of entertainment for very modest costs. But the minimum to spend on entertainment is clearly zero.

Miscellaneous There are all sorts of other things you'd need now and then. A "normal American life" presumably includes things like furniture and dishes. But you don't have to buy these often, so the average cost per month should be small. There are various other things you'd buy regularly, like soap and toothpaste and light bulbs, but the cost of these would be small. It would be difficult to estimate the cost of these two categories of things. Let's say $50 as a plausible guess.

So this adds up to: Food $200, Clothing $10, Shelter $400, Utilities $170, Transportation $200, Miscellaneous $50, Total $1030. Of course it's not possible to calculate this sort of thing to the penny, but I conclude that the ballpark would be $1000 or so per month.

What do you think? Can you think of practical ways to economize further? Or is this number unrealistically low? I certainly spend far more than this. I don't claim to be living the most frugal possible life.

A few years ago I ran into some financial problems for a variety of personal reasons. At the time I felt really stressed and sorry for myself. I worried about money constantly. But then I got through it, and now that I look back, I realize: The whole time that I was agonizing over how poor I was, I always had plenty to eat, I had a car, I had a house with heating and central air, I had cable TV and a computer with Internet access, and in general I was probably living better than 90% of the people in the world could ever hope for. My "financial problems" were really just that I could not afford to buy myself any new toys, but was forced to live with the toys I already had. I think Americans have it pretty good.

© 2009 by Jay Johansen


Comments

RLTjiEZgXH Mar 25, 2018

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David Crookes Aug 10, 2018

Checkout Early Retirement Extreme. Jacob Lund Fisker claimed and perhaps still claims to live off $7000 a year in the US including accommodation.

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