DH and I were just having a conversation about people we work with that we know earn the same amount or less than we do (we both work in jobs with very structured and open pay scales so we aren't just guessing) and yet are able to afford much more extravagant lifestyles than we think we can. DH and I live in a small house that costs well below the midrange average for our area, drive moderately priced cars (one is paid off and older, the other is newer) we save for retirement, take one cheap getaway a year that we help pay for with our credit card rewards and don't carry credit card debt. If we were to shave off everything that is non essential (occasionally eating out, our trip, any new clothing for anyone, cable, traded our newer car with the payment for an older one we would buy outright etc...) I honestly think we could only shave off 700-1000 per month in costs and would still really be short money. I am honestly baffled as to how these people are doing it. We seem so much more financially conservative than our coworkers yet they are able to have someone stay home, pay for daycare, go on multiple expensive trips per year, etc...DH asked if I was jealous and I said no way! I want to know their secrets lol! My question just for fun is this: assuming you live in a major metropolitan area- what is the bare minimum you feel you need to get by? (Let's assume you are paying for all of your own medical care, food, housing, etc...) Maybe we are way off in the way we are thinking about this!
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It's so hard to say. Does "get by" mean not having money to save for retirement or a rainy day fund?
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Just because they seem like they can afford their lifestyle doesn't mean they actually can. They might be charging up credit cards or not contributing to retirement, etc. Or, maybe they have other sources of income or were/are excellent savers. You never know what someone else's financial situation really is.
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A lot of our expenses are based on our student loan payments, which even at minimums is more than most people pay towards their mortgages, even here in pricey California. So based on that and our higher cost of living here in NorCal, we'd need at least $70,000 after taxes to live on for just DH and I, not including the baby due any day now. That's just loan payments, gas, utilities, rent, insurance, and food. No extras, no savings, no retirement.
Without our student loans, we'd need like $45,000 to survive in a barebones manner.
I know what you are saying though. DH and I are both attorneys and on paper we make quite a bit of money, but we live in a really old dumpy rental, have no debt other than our monstrous student loans, menu plan, coupon, put modest amounts in retirement, and don't really save that much money while we're paying back our loans. We take 1 vacation a year that we pay for in cash. We also visit our at least families once a year for the holidays, but plan and budget for that all year.
Our friends who are in similar financial situations seem to have much nicer lifestyles, but they are making really different decisions than us. For instance, buying a house is super important to them. Or driving a car that's NOT 12 years old. In exchange, they are on 30 year repayments on their student loans or feel perfectly comfortable with carrying lots of credit debt because they plan on working full time forever and assume their income will continue to go up as their careers advance. They work hard, so they feel they are entitled to the finer things. Its not necessarily a bad plan - it seems pretty normal in our industry to assume you will work long and hard for several decades.
We work hard too, and DH at the very least plans on working forever because he just isn't the retire and play golf type, but our motivation is financial freedom. We are living frugally now so we can pay off our law school loans in under 10 years and have me be able to spend more time at home if I want with our kids. We're okay with the old cars and not owning a home until we're in our 40s.
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Without making major life changes? (i.e. selling our house) Over 100k. Just paying our mortgage and our student loans (not including other necessities like utilities, gas for our car, or food or formula or childcare) would require a salary over 50k/year.
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we're living on it. and that's not saving and having an emergency fund to dip into if needed. it's not a place i feel comfortable with, but it's a season.
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Wouldn't this depend somewhat on geography? If you live in place where you can rent something "reasonable" for $700-$1,000 per month whereas in another place that would not even get you a studio in a not so nice area, that would totally change things. Also I agree with what was said above regarding student loan payments. That can play a role as well as how you choose to space those payments.
I think there are too many variables.
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Just for reference, I live in the Midwest and we're debt free and own our house outright... so that makes a huge difference.
I would say $30k would be bare minimum, paying the bills and living paycheck to paycheck. $40k would be enough to be comfortable and put a little in savings.
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Get by on or maintain current lifestyle on?
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I think a lot of people live beyond their means. Just because they make it look like they can afford to do so, doesn't mean they can.
ETA: it's also possible they get income from another source, like family money?
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A surprising amount of people get family help, too...even if their own parents aren't well off. I have several friends in their 30's whose parents gave them money for a down payment, or pay for a vacation each year, and in one case even bought a new car for them. And their parents are just middle class, it's not like they are swimming in money themselves....
Just different family dynamics than I am used to =) I would never let a family member pay for those big things for me, even if they offered. But I don't think it's bad their families work this way.
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We've gotten by on DH's salary alone before when I was pregnant. It's a stretch but definitely doable!
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I don't think it's much of a secret how people fund lifestyles they can't really afford - the average American outside of HB land where no one admits to having any debt (haha ), has something like $15k in credit card debt.
To pay our non-negotiable bills we need about $5200/month in take home. That doesn't include retirement or other savings. That figure is based on our incomes now, though; I've definitely lived on less at different points in my life.
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I know where I live, employment is booming. People are actually seeing a lot of money coming in. However, most people I know are taking out ridiculous mortgages to build HUGE houses, buy lake cabins, own new vehicles and go on lots of fancy trips. Some people may be able to afford this stuff but if interest rates were to ever go up, which they most certainly will, is going to hurt them big time. Thats what DH and I tell each other all the time. Anyone can have all that stuff, but not all can afford it.
Right now we are mostly living on DH's salary and I bring in a small amount. We have just enough to maintain our lifestyle (old house, older vehicles, small vacations).
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DH and I were just talking about this last week. We thought the bare minimum we could 'get by' on was about 125k. But to us, 'get by' meant still being able to save a significant amount for retirement (maybe 30-40k instead of the full 50k), pay for our mortgage and current utilities, and have 500-1k to save each month. To just scrape by paycheck to paycheck with no retirement and savings, we could maybe do it on 75k.
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@yoursilverlining: whoa! Get out of town - that debt average is HUGE! Does that include student loans?
I don't think I could really answer this question. Our jobs are both on the lower paying end of middle class. We are living right-at or below our means right now. By that I mean, we are able to contribute to retirement, save money some months, and still occasionally buy things we "want" and go on vacations (mostly to family) without scrimping to save it up. But we created a really nice nest egg for ourselves after college which has helped us tremendously. Some of the nice things we have were gifts. Our kid goes to the "expensive" daycare because I work there. We drive a new car because our other one is 14 years old.
I still don't know how "little" we could live on, because we could change So Much about our lifestyle. We could move into a smaller house. We could eat different foods. We could cut down to only one car. I could stay home with our child. I'm sure we could find a way to get by on a small income, but I don't really know what that number would be.
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We live in a city, but not a major metro area, and we're living off of one of the options on the lower half of the poll. (DH is a full-time grad student at the moment.) We manage to pay all the necessary bills, put a little into retirement and savings, and afford a few extras. However, we're able to live off that little because we have no debt and we rent at a very reasonable price. We actually could get by on a little less.
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@tillma: people say that the answer is hard because it could change and all (which I agree) but I took your question to mean right now, with no extra for retirement or college funds or whatever. For us, that puts us in the 40-50 range, because we don't carry debt except for the mortgage, which is cheap because we live in a crap part of town.
I can commiserate with everything you say- it seems that we should be living higher on the hog but choosing to try to live debt free means that we don't have much nice stuff or take great trips. Definitely torn between jealousy and incredulity re: peers who seem to have more extravagant lifestyles on the same budget. Shallow,? Yes. Working on it. -
People just charge it. I have a coworker who has two homes (JUST bought one) and buys crap....yet tells me she has credit card debt on numerous cards. I have no idea why she thought a second (large) home was a good idea...on one income.
If we had to live on less, bare bones style, we would have to cut a lot of things like cable and internet and junk like that. But I have no idea what I could wittle it down to. Especially with daycare and college funds and retirement...which, the latter aren't considered bare bones I guess.
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@JoyfulKiwi: no; that's straight credit card debt. A lot of keeping up with the Jones' going on!!
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Husband just did up our numbers, it would be between 42 and 45k to do the bare minimum paying bills and buying groceries/gas etc and never buying anything extra or going to restaurants, etc. We have a lot of student loan debt and his benefits are really expensive to pay into, otherwise we could do with less than that. But really, we could work with whatever amount - people live that everyday. That is just the amount we could live off without applying for assistance.
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We would need to make $75k-$80k to get by on. I'm looking at ways to cut our monthly bills but we're already pretty skimpy.
That's putting just a little bit away in savings and contributing to his 401k. -
I would say around $46-$48k. We use all of my income for everything (cars, rent, insurance, gas/groceries, cell, cable/internet, education loan pmt ect.) so all of DH income goes to savings and fun money every month. I'm sure we could cut it down by cutting cable/internet and buying cheaper cars (both of our cars needed replacing this year so they're brand new).
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I would say $5,500/month - so $66K a year (after taxes). This is including our mortgage, car insurance, health insurance, food, utilities, and my grad school loans (sigh).
I guess if we cut out cable, downgraded our smart phones, never went out to eat (we already don't eat out much), etc... we could possibly get by on $5,000. My loan payments make it hard to get by on less
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60k a year without taxes. So no extra's just getting by on very, very minimal without saving. If we downsized to a less expensive home/car, probably 40k.
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There are so many variables so its really impossible to compare between people. For instance, our mortgage is currently based on a 15 year amortization period. This means the payment is higher than what it would be for a 30 year amortization period. Ergo, my "bare minimum" is automatically higher because of this (you can't change the payment amount unless you refi). As other people mentioned, geography also plays a huge role. A 2 bdrm for rent in Manhattan is much more expensive than a 2 bdrm for rent in Austin.
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I can't really answer your question because I don't live in a major metropolitan city, in fact, most won't even say I live in a town, it's more a village. But I had given this topic a lot of thought especially when we first moved here because I'm from a large city.
For us, if we took our income here and transported us to my hometown in CA, we would starve! Housing, medical, dental, insurance, childcare, education is all really low here and it greatly offsets the high cost of goods and services.
But if we decided to move to CA, we'd also get a much higher salary. But the cost of childcare, insurance, housing, medical, dental kind of offsets it. Being closer to my friends would definitely increase my personal expenses. Goods and services are cheaper, but I would (without a doubt) shop a lot more.
In the end, it's about the same. The main differences are the amount of vacation days, work environment, sunlight, weather, my family and friends nearby. Other aspects that affected my choice is the closeness to nature, and safety. Things I miss is the diversity. It's always a give and take, but we're happy with our decision.
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I suck at math so I have no idea. To keep our current living standards, we probably can't afford to lose much of our income. We already don't make that much, and esp with a baby on the way. If we drastically change our lifestyle, then of course we can live on a lot less! But we live in metro NY and it would be tough!
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When Dan started with his company he was only bringing in about $29k. I did photography part-time and didn't bring in much at all. We live in one of the larger metropolitan areas in the eastern US (though not to the scale of NYC or Chicago!), but we made it work without credit card debt.
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I guess it depends, we can "get by" on one of our incomes (and do when I'm on unpaid maternity leave) however it's a struggle to maintain our current lifestyle. We do make adjustments (no eating out, only necessary shopping, ect) but it is not something I would want to do always. We COULD make it work by eliminating some unnecessary bills and what not, but only in the case of an emergency if one would lose a job or have a medical situation. We would have to really adjust our lifestyle, which at this time we aren't ready to do.
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If we didn't have student loans, ours would be a lot less. But we pay upwards of $20k a year to those.
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Questions like this are so hard because "get by" in Manhattan is going to be in a different stratosphere than "get by" in Michigan... money does not equal money.
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Of course geography matters, but these answers still strike me as pretty ridiculous. We must as a group have a skewed perception of what one needs to "get by" if the plurality of members think they need to be in the top 20% of wage earners nationally just to live.
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I think it's really hard to say, as what we would need now is based on where we have LO for daycare, our mortgage, etc. I think our house is bigger than we "need", LO goes to a nicer daycare than we "need" and so forth. I think we could get by on about 1/3 or 1/4 of what we make, but we would need to move, cut out a lot of extras, etc.
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@JoJoGirl: I agree!! We live in an expensive town, but not as bad as say NYC, but I can't imagine living on what some say they could. I don't know where would live. Not having two cars isn't an option for us.
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@rattles: @tillma: I think the question could be worded a bit better...is it the bare minimum to maintain current lifestyle or bare minimum period? It's hard to answer the question because i'm sure our family could happily live on far less if we had to, but that's because we're lucky in that we have no student loans or debt outside of our mortgage.
Also, i've come to realize that people have different priorities. Not everyone places value on retirement savings, or enough that they'd put money into savings instead of a new bag or vacation.
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@rattles: I don't think its really that skewed. Of course people can live on far less if they HAD to, but the question wasn't posed as if we were all about to become homeless. To me it seemed the question was more how much do you need to leave reasonably.
For instance, I said we'd need at least $70K a year after taxes to live on, with no savings, vacations, consumer/car debts, etc. About $28,000 of that figure is the minimum payments on our student loans, so if we put those into hardship deferral because we couldn't afford those payments, we could then live on $42,000 after taxes if we stayed in our current rental and had no extras. In that figure, I assume that my modest 5% pension contribution and health care premium, which are already taken from my paycheck, are maintained.
Assuming we could break our lease without too much expense, we COULD move to a 1-bedroom apartment for about $500 less than that we currently pay for our rental duplex. We COULD probably slash another $500 from our monthly expenditures if we cut our weekly $20-30 date night, drank the really gross tasting hard water from the tap, went back to using/eating strictly things I could coupon for, and if we did not visit our families for the holidays, both sets of which live out of state. We do not have cable or a landline, but we do have internet and phones with data plans, which if we cut, would save us another $150-200 a month, but it would basically make it impossible for DH to run his business and put us in a worse financial position.
That means DH and I could live on $30,000 after taxes if we absolutely had to, or $2500 a month (and we have actually lived on less than that in the past). Considering a bare bones 1-bedroom in our town would run was $1000-1150 a month, I think that's cutting it pretty close to the bone. That's still on paper a household income of approximately $55-60K a year for a married couple, depending on the taxes in your state and locality, which sounds reasonable, but the reality of living on that is much different, especially if you live in a higher cost of living place like California.
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I've thought a lot about this, because we'd eventually like me to stop working full-time. We have no debt except a mortgage, and living pretty decently, we could get by on 30-35k. It wouldn't be particularly comfortable, but it's doable. Oh, and we live in a suburb of DC.
I'm really surprised so many people need above 100k to "get by". People must have a lot of expenses...I bet a lot of it is also student loans.
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Also surprised at what you guys need to "get by"! I know that it's more expensive to live in NYC but it can't be 100k for the bare necessities! Adding to retirement and 401k or savings is not the bare necessities, those are luxuries that most people can't even afford to do.
To afford our current home, cars, basic bills etc.. that's removing all cable/internet/dates/splurges/etc we could easily live off of $30k a year. Easily.
If we sold our house and rented/bought a cheaper one & if we got rid of my car for a cheap one that number could go way down.
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@rattles: @sotofamilia: I'm also surprised by the amount of people who voted they needed at least 100k to "get by" but I agree with @Freckles: that part of it may be the way the question was worded. It wasn't clear if the OP meant how much do you need to "get by" without changing your current lifestyle/circumstances, or how much do you need to "get by" in general.
And of course, if people are living in NYC or LA or DC or somewhere else with a high cost of living, they will need more to get by.
I did some rough calculations and I think we could live bare-bones style off of $25k per year without moving, BUT my caveat is that we have no debt at all. We have no mortgage (we rent), no car payments, no student loans, no credit card debt, etc. So basically we just need enough money to pay the bills. Obviously people who are actively working to pay down debt, or at least not accrue more, will have a different answer.
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