My ERE budget...by popular request

[doodle]

Some have been curious about my ERE budget. Here it is as it presently stands. There is certainly room for improvement in the housing area but, the location of where I live allows me to get by without a car so it balances out in some ways.

Housing
$400 dollar a month  15 year mortgage - I put some money down at purchase
$ 260 dollar a month HOA includes everything but electricity
$ 30 dollars a month in property taxes
$25 dollars a month in insurance
$25 dollars a month in electricity

Transportation
$10 dollars a month for misc.....bus, bike parts etc.

I live about 5 minutes walking from work and in an urban area with plenty of shopping so I have no need for a car. 

Food
$200 dollars a month.  Buy only in season fruits and veg. Stock up and freeze meat when on sale. Creatively substitute or drop expensive ingredients from recipes at times. Cook large meals and eat them for a while. Use protein powder as a meal replacement snack....cheapest way to get 20 grams of protein that I know. 

Phone,cable, Internet
$1 dollar a month for magic jack phone on iPod 
Cable is included in HOA. It is a total waste and I'm working to have it taken out
Very slow Internet included in HOA, I share with neighbors in exchange for little chores houseplant watering, pet sitting etc.

Clothes
$20 dollars a month for shoes and socks when I might need them. As for clothing I don't buy it. I either inherit things from friends or family or my mom sends me stuff occasionally that she thinks I might look nice in :-)

Entertainment, eating out
$30 a month for occassional coffee or beer or whatever. I have a gazillion hobbies and interests that keep me occupied. If I go out with friends to restaurant I eat ahead of time and usually just get a drink or small appetizer.

***Anything that falls outside of this budget like a new computer or whatever would be paid for by picking up shifts at my friends catering company. This also has the added benefit of making me question if I reeeaaaallly want what I'm about to buy because I have to work extra for it.

Total monthly expenditure is around $1000  dollars give or take.

[Ad Orientem]

The master bows before you.

[Pointedstick]

Very, very impressive. No cell phone? No health insurance? Not needing a car or an expensive unlimited transit pass is great, and it looks like you've really killed those shopping and entertainment expenditures. I think you might be getting ripped off on those HOA expenses though. My apartment's water, sewer, garbage, and internet bills total $112/mo, which is less than half what your HOA is charging you!

[MachineGhost]

I live about 5 minutes walking from work and in an urban area with plenty of shopping so I have no need for a car.

Where do you live?

How viable/secure is it to not have a car, really?  What would have happened if you were in New York during the hurricane?

[doodle]

PS,

No cell phone other than Internet phone. Wifi is ubiquitous in urban areas though so its pretty easy making calls from wherever.

I have health insurance as part of job. It is deducted from salary. I consider it just another tax. I don't go to doctor unless I'm having a heart attack. Haven't been in about 10 years.

As for car there is no need. If I'm dying I'll call 911. If I need to leave because of a hurricane or whatever I'll hitch a ride with a friend, rent a car, or borrow one of my parents. I haven't felt the slightest inconvenience from dumping my car 5 years ago.

HOA fees are high and I'm working with board to cut them back. There is a lot of wasteful spending going on that could be curtailed.

[WiseOne]

Doodle, that is absolutely awesome.

Those HOA fees sound unspeakably low compared to what I have to put up with.  I'm curious - do you have a budget breakdown for that?

I'm part of a grassroots group trying put some of us on the coop board so that we can get our insane spending under control.  City taxes have doubled since 2007 (!! - yes, really), but there's plenty of waste in the budget.  We noticed, for example, that the building pays $18,000 per year for fresh flowers in the lobby, which hardly anyone ever looks at because they're too annoyed at the peeling wallpaper that was installed only 3 years ago (cost:  $30K).  And don't even get me started on the hallway redecoration, which apparently is being done by the same company that screwed up the lobby at a cost of $800K - paid for by refinancing the underlying mortgage at a penalty of $2M.

I think I'll shut up now, lest I be tempted to go egg the door of the coop board president.

[BearBones]

Doodle, I am curious about your phone arrangement. Have you experienced any downside to the magicjack? How do use your iPod both in and out of the house?

[KevinW]

Usually HOA fees cover exterior maintenance, snow removal, or other expenses that a freestanding home owner would pay for directly, which should be factored in. There can be a lot of waste in there, it depends entirely on how it's being run. Being an HOA officer is usually a thankless volunteer position and sometimes you get what you pay for. FWIW $250 is low by California standards.

[doodle]

WiseOne,

We recently formed a group among a few owners who culled through past year budgets and all sorts of financial statements looking for out of the ordinary expenditures. We have managed to tighten things up and this group will continue the maintain a vigilant eye on the money. Condos usually get into trouble when the owners give up control of their finances to a professional mgmt company that has no incentive to save you money or to a group of spendthrift board members.

Bear bones,

Magic jack is far from a perfect solution. The app works all right, but sometimes is hit or miss. If you absolutely need to depend on a phone this might not work for you. I tend to use text messages most of the time anyways which I do with the free app Heywire. This works great. As for communicating outside the house, I just take the iPod with me and connect where there is a wireless network....which is most places these days. Financial freedom requires a few sacrifices. This is one that made sense for me. And frankly, money aside, it's nice not to feel tethered to a phone. When I leave the house I'm able to fully focus on what I'm doing and who I'm with without the disruption of being in constant contact all the time.

[BearBones]

And frankly, money aside, it's nice not to feel tethered to a phone. When I leave the house I'm able to fully focus on what I'm doing and who I'm with without the disruption of being in constant contact all the time.

Yes, I was thinking about that in the context of how you have said that your lifestyle is so liberating. Financial freedom is probably only a part of it. The rest comes from flexibility with time, lack of materialism, and lack of the constant distraction of a "wired" world.

[BearBones]

One other comment. In putting together your budget, isn't it important to include the perks from work? If you and Pointedstick were to truly retire early, the office entitlements would disappear and have to be added back, so why not show them now?

My budget is surprisingly small too, at least compared to my peers. But my cell phone, internet, health insurance, and automobile are all paid through work.

[MachineGhost]

I think I'll shut up now, lest I be tempted to go egg the door of the coop board president.

Why are these people so economically incompetent?

[doodle]

Bearbones,

The primary perk I get from work is health insurance. It is a big perk for sure and it really is the only thing that keeps me tethered to my full time job right now. As for work in general, I don't have a typical notion of financial freedom leading to a life of leisure. I enjoy the challenges and feeling of productivity that work brings. I just want to relegate it to being part of what I think is a healthy life balance. In my mind, even if I had a billion dollars, four or five hours of work a day is an energizing and healthy thing. Unfortunately, the average American needs to put in 10 hours a day to support their consumptive lifestyles. What is uplifting and energizing for five hours a day, becomes a dreadful chore at ten.....at least for me. Luckily, by choosing to lead a simple life, getting by on five hours of work a day isn't all that challenging.

[Pointedstick]

One other comment. In putting together your budget, isn't it important to include the perks from work? If you and Pointedstick were to truly retire early, the office entitlements would disappear and have to be added back, so why not show them now?

I agree, and that's why I included it in mine ($250/mo). If I'd left that off, the monthly average would be a bit lower at $2,250.

Still... most impressive. I think I'd want a cheap prepaid cell phone though in addition to the iPod touch. It wouldn't cost you anything on a monthly basis; you just load it up with $50 worth of minutes and forget about it. If you truly don't use it much, then it just sits around not costing you anything, and you replenish the minutes every year or two.

[BearBones]

Why are these people so economically incompetent?

Why? Because they do not believe what MG believes or act in a way that MG believes they should act. It is actually as simple as that.

Incompetent is a judgement, an opinion. It is not a fact in isolation. Rather, it is based on a foundation of assumptions about world view and what is the preferred outcome. As soon as we confuse our assumptions and preferred outcomes as fact, we start viewing the world as very perplexing and quite annoying.

[BearBones]

The primary perk I get from work is health insurance.

So, in the ERE perspective, how does one deal with the uncertainty of loss of health or function? What happens if you lose an arm and cannot work, repair your house, or grow your own food? What happens with health insurance costs when you are 60, you lose your pancreas to unexplained bout of pancreatitiis, and you are dependent on insulin to survive?

[Pointedstick]

The primary perk I get from work is health insurance.

So, in the ERE perspective, how does one deal with the uncertainty of loss of health or function?

Er, that's why we've got health insurance!  I don't think there are any ERE practitioners who advocate going uninsured, especially if you have a family.

What happens if you lose an arm and cannot work, repair your house, or grow your own food?

You rely on your family and savings -- same as if you were still working, but with much less devastating consequences, because if already achieved financial independence, you're not dependent on daily labor for cashflow.

What happens with health insurance costs when you are 60, you lose your pancreas to unexplained bout of pancreatitiis, and you are dependent on insulin to survive?

Again, same as if you were still working -- you'd probably scrape by until Medicare eligibility in this situation.

[MachineGhost]

Incompetent is a judgement, an opinion. It is not a fact in isolation. Rather, it is based on a foundation of assumptions about world view and what is the preferred outcome. As soon as we confuse our assumptions and preferred outcomes as fact, we start viewing the world as very perplexing and quite annoying.

Very true.  So should WiseOne take the Taoist pespective and just let things be, no matter how unjust or unfair they are to herself or others?

[BearBones]

Incompetent is a judgement, an opinion. It is not a fact in isolation. Rather, it is based on a foundation of assumptions about world view and what is the preferred outcome. As soon as we confuse our assumptions and preferred outcomes as fact, we start viewing the world as very perplexing and quite annoying.

Very true.  So should WiseOne take the Taoist pespective and just let things be, no matter how unjust or unfair they are to herself or others?

not sure "letting things be" is exactly the Taoist perspective, i would guess the Taoist perspective would be, not being adversely affected by allowing the mind to react in negative ways to the way things are.

what you describe sounds more like moral nihilism..

Could not have said it better. Yes, there is a subtle difference between indifference/complacency and serenity. In the former, you don't care, and you give up on trying to achieve outcomes. Hard to do and remain integrated into a society. In the latter, you realize fundamentally that you are dealing with your opinions rather than an absolute right and wrong (that only you are able to differentiate and everyone else is an absolute moron). The result is not indifference but non-reactivity, peace of mind, and a letting go of that human tendency to question, "why the hell doesn't the rest of the world see things exactly the way I do?"

IMO, we all create our worlds. If you think negative thoughts, you create a negative world. And the converse. Not just psychology or spirituality, perhaps, but may be grounded in physics. An electron is both a particle and a wave. But once it is observed, once it is affected by our consciousness, it can be only one or the other. You choose.

I take the risk of posting such things here only because I know that it goes hand-in-hand with some of the wise things Doodle has posted elsewhere. I may be way off, but perhaps it will spark some wise thought elsewhere.

[WiseOne]

We recently formed a group among a few owners who culled through past year budgets and all sorts of financial statements looking for out of the ordinary expenditures. We have managed to tighten things up and this group will continue the maintain a vigilant eye on the money. Condos usually get into trouble when the owners give up control of their finances to a professional mgmt company that has no incentive to save you money or to a group of spendthrift board members.

Doodle, thank you so much for posting that...this sums us up in a nutshell.  We have a deadly combination of a sleazy property management company and a financially un-savvy board  Unfortunately, board positions have been passed around behind the scenes rather than through annual elections.  We've forced the issue by circulating a successful petition for a recall election.

I think I'll shut up now, lest I be tempted to go egg the door of the coop board president.

Why are these people so economically incompetent?

One, they apparently have money to burn - it is no coincidence that nearly all shareholders who bought and combined 2 apartments are on the board.  Two, the board president is an architect (not a very competent one unfortunately) who has been hell bent on redecorating the hallways regardless of the expense incurred or what other problems get ignored in the meantime.

Sorry for taking the conversation off track - but this is such a huge issue for those of us with coops or condos.  Very little of my spending is discretionary, and reducing coop fees are far and away the best way for me to cut expenses.  I'm interested in hearing what other people have done to keep HOA/maintenance fees under control.

[doodle]

Bearbones,

So, in the ERE perspective, how does one deal with the uncertainty of loss of health or function? What happens if you lose an arm and cannot work, repair your house, or grow your own food? What happens with health insurance costs when you are 60, you lose your pancreas to unexplained bout of pancreatitiis, and you are dependent on insulin to survive?

If I didn't have health insurance provided through my job, I would buy a catastrophic policy to keep me from going bankrupt in the event of a serious health problem. If I were to lose my ability to work in the future as the result of an accident I would be in the same situation whether I subscribed to the ERE lifestyle or not. Actually, because of ERE, I would have probably amassed a good deal of savings as well as spending habits that would allow me to live with on social security benefits with little need to drastically alter my lifestyle. ERE isn't a bulletproof shield against all life's possible catastrophes, but no matter what hits you, having a healthy bit of savings and a low cost lifestyle will make weathering the storm easier.

Ironically, amassing a fortune and retiring early is not the primary reason why I adopted my particular lifestyle. What I am really after is peace of mind and a feeling of independence. Other than providing me these two feelings, I don't have much need for money.

WiseOne,

I recommend that you form a budget committee at your condo and review a few years worth of financial statements and budgets. Oftentimes people are unaware of where costs have gotten out of control or how to implement savings in certain areas. Start with a few egregious areas and move slowly making sure to build consensus. Getting overly pushy or demanding can backfire. In my experience rolling back spending can be a slow process, but if one stays levelheaded and diplomatic eventually, you can get things moving in a more responsible direction. Once you get on top of things (which can involve quite a bit of work) keeping future spending under control becomes a whole lot easier. Good luck to you!