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I don't understand how people can live on $100/month in food or some of these other abnormally low quoted figures.
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Food is expensive here - milk $4/gallon, ground beef $7.50/lb for lean, bread is $2, etc.
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The only way I can see reducing my grocery bill much farther is to basically fully shop at Aldi and the local salvage grocers. Most people are not shopping at salvage grocers, and I don't think it's reasonable to assume folks should. My increased grocery bills have probably consumed by TN state income tax savings over IN.
One thing that costs people money is pride. You can call Aldi a "salvage grocer" (or nearer enough to it to refer to it in the same breath as them) but I pay $0.80 a gallon for whole milk and $0.59 for a dozen eggs there. I'm almost completely vegetarian so I don't know the price of ground beef there but I'm sure it's not $7.50/lb.
If you don't want to "stoop" to such low levels, keep paying what you're paying! Now, please don't come back here saying you'll only buy organic...that's another issue entirely and yup, you'll pay premium prices - another choice you'll have made.
As others have said, we all have choices...and that's good - but there's no reason to whine about the ones you have freely made.
We will only have SS. If we weren't decent savers we'd be in a very dire situation. SS should cover 70% of our living expenses. That's if we both take it at FRA.
I have a daughter who is single and in spite of a $50K gross income and owning a paid off car is still struggling to make it.
The biggest problem is that rents in the Denver area are about $1500 per month for a decent apartment. That seriously crowds out other expenses. Although she needs a room mate, she treasures her privacy.
If you have a car note or other consumer debt, that crowds out money that could either be saved or spent on essentials.
I made a big error several years back rolling negative equity from a previous car into another car. That left me about $7,000 - $8,000 underwater from the car's purchase price, and probably at least $10,000 from the time I drove the new car off the lot. The negative equity is bad, but it also inflates your monthly payment by a couple hundred dollars over what it would be on a "responsible" loan. If I had any cashflow problems (and I was facing pretty much imminent job loss this time last year), that negative equity could mean the difference between being able to make the payment and not. Lose that car four years into making payments, and you've just lost everything you've paid into the car, along with having to try to somehow get another car to get around.
It's a horrible situation to be in. I've since paid off my cards, paid off the negative equity, sold that car, and bought a used car. I have about $750/month of freed up cashflow over what I had this time last year. The used car (a 2006 Escape) is not as nice as my newer Hyundai was, but I am saving around $600/month in payments and extra insurance. Going forward, I'm going to try to avoid having a car payment - if I have to, it won't be more than $200/month.
The sad thing is it is honestly hard for one person to make it. Housing, especially in major urban areas where most people live, is basically tuned around two middle income earners. If you're single and not making a lot, presumably a single retiree, carrying all the "trappings" (literally - mortgage, car payments, maybe other consumer debt) of a middle class life into retirement is going to be particularly burdensome.
Yeah but according to the CD experts, you can certainly consistently make more than enough on investments to covers debts. Borrow baby borrow!!
One thing that costs people money is pride. You can call Aldi a "salvage grocer" (or nearer enough to it to refer to it in the same breath as them) but I pay $0.80 a gallon for whole milk and $0.59 for a dozen eggs there. I'm almost completely vegetarian so I don't know the price of ground beef there but I'm sure it's not $7.50/lb.
If you don't want to "stoop" to such low levels, keep paying what you're paying! Now, please don't come back here saying you'll only buy organic...that's another issue entirely and yup, you'll pay premium prices - another choice you'll have made.
As others have said, we all have choices...and that's good - but there's no reason to whine about the ones you have freely made.
You're in Illinois. I lived in Indianapolis, and you could find milk for $1.50 at Costco or Walmart. Aldi's milk here is still in the $4/gallon range. Groceries are much cheaper in the Midwest than they are in east Tennessee. You're rarely going to get a dozen eggs cheaper than $2 here. Yes, lean 90/10 ground beef not on sale is $7+. If you're willing to buy a chub of 73/27 beef, then sure, it will be cheaper. Want store brand lunch meat? Better be ready to pony up at least $8/lb.
The fact that you are in the Midwest is why I mentioned earlier that the additional grocery expenses here in Tennessee probably consume most of my income tax savings from Indiana. Milk is double. Many staple items are 20%-50% more at my local Walmart are more than what I would pay at Meijer or Costco. Food is also taxed at 5.5% - in Illinois, it's 1%. Someone not working is not going to benefit as much from TN's no state income tax, but the high food prices and high sales tax on food is going to disproportionately hurt low income people (especially seniors on fixed, low incomes) who spend a higher percentage of their income on food than a working person with more income.
The true salvage grocers are local operations basically run out of small warehouses. Think dented cans, fresh produce that doesn't look very appetizing, stuff close to its expiration date, things rejected from mainline stores for whatever reasons. I don't think it's a reasonable expectation that people go from Kroger to salvage stores.
No, I am not some froufrou shopper only shopping at the highest end grocers. We have one regional mainline grocer (Food City), Walmart/Sam's, and a dumpy Kroger per town in my area. The lack of competition and distance from the ag areas means food is going to be higher.
The bottom line is that a lot of people think "cheapsville" is cheap across the board. While housing here is less expensive, it appreciates slower, so if you sell, not as much equity. Other items, like the car insurance and groceries, often get more expensive the more rural and isolated you get. We're a high crime small town, which is why car insurance is where it is.
There is no across the board answer for anyone, but a lot of people think they can just relocate to podunk USA and save a bundle, and that may not be true.
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Originally Posted by jasperhobbs
Yeah but according to the CD experts, you can certainly consistently make more than enough on investments to covers debts. Borrow baby borrow!!
Which may technically be true. People will get a big mortgage, taking on more house than they could when interest rates are low. They get a mortgage interest deduction. They can often invest and get a higher RRoR than their mortgage interest rate.
Personally, after having my financial life nearly fly apart last year after being overleveraged, it's not somewhere I want to end up again. I'd rather forego some theoretical higher returns and have less of a monthly nut to make, just to have more peace of mind.
Quote:
Originally Posted by Vision67
SC, you are right about the housing expense.
I have a daughter who is single and in spite of a $50K gross income and owning a paid off car is still struggling to make it.
The biggest problem is that rents in the Denver area are about $1500 per month for a decent apartment. That seriously crowds out other expenses. Although she needs a room mate, she treasures her privacy.
Safely withdrawing $40k annually would assume basically a $1m portfolio. Most current retirees don't have that (this board is more affluent than average, by far), and I honestly doubt a majority of my generation will either. It doesn't go all that far, especially in high property tax states or if you're stuck in a hot rental market like Denver.
Rent and housing prices are much cheaper here than Denver, as are taxes. Still, a $50k income is comfortable, but it's by no means extravagant.
Last edited by Serious Conversation; 05-31-2017 at 08:30 AM..
Which may technically be true. People will get a big mortgage, taking on more house than they could when interest rates are low. They get a mortgage interest deduction. They can often invest and get a higher RRoR than their mortgage interest rate.
The trick is to NOT do that. You can get the mortgage interest deduction and invest to get a higher rate of return than the mortgage interest paid without over-leveraging yourself by buying a too-expensive house.
Debt versus no debt is not the major issue when it comes to financial health. Not spending beyond your means and maintaining a positive cash flow is what matters.
I don't understand how people can live on $100/month in food or some of these other abnormally low quoted figures.
An after tax income of $40,000 annually is $3,333.33/monthly. That's not chicken scratch income. I make around $60,000/yr, and that's slightly under what I clear with no retirement contribution. I make a fairly well above average income for my city.
That goes "OK" here in Cheapsville, but not as far as you might think. A car costs about the same anywhere you go. Food is expensive here - milk $4/gallon, ground beef $7.50/lb for lean, bread is $2, etc. Car insurance is expensive - with no claims/traffic offenses in five years, driving a Hyundai, and at age 31, State Farm is nearly $900/six months for full coverage - others are not much cheaper. Gas is about $2.10/gallon.
I really don't live any better here in small town Tennessee than I did in Indianapolis on the same income. I clear a little more due to cheaper employer provided insurance and no state/county income taxes, but other things are far more expensive, so it's pretty much a toss-up COL wise.
The only way I can see reducing my grocery bill much farther is to basically fully shop at Aldi and the local salvage grocers. Most people are not shopping at salvage grocers, and I don't think it's reasonable to assume folks should. My increased grocery bills have probably consumed by TN state income tax savings over IN.
By the time you get two people, feed them, likely two cars (maintenance/gas/insurance/registration, assuming cars are paid off), pay utilities/property taxes (assuming mortgage is paid off), health care (!), and other essentials, a retired couple is by no means going to be living high on the hog here at $40k net.
Throw them in an expensive area and watch the red ink pile up.
I guess we made the right decision of moving to the central Tennessee area instead of eastern Tennessee where you are. Milk last week at Kroger was $2.39 and we buy excellent ground beef from a local farmer for $4.30 lb. Insurance for two vehicles (full coverage) is $1326 for a year.
I guess that means that not only do I live in Cheapsville, I am in the low rent district of it. But even if the people who live in the high cost of living areas look down on us, we are doing OK. There is even talk about us eventually getting indoor plumbing to go along with our 'lectricity. Then we'll be living high on the hog!
To get back to the topic, we are currently living on an income of my wife's social security, my spousal benefits and a very small pension that she gets. So our income is about $3200 per month. It covers most of our expenses and if we need more, we tap the IRAs. In abut 26 months when I turn 70, I'll file for my social security and our income will jump about $1700 per month. Looking forward to that raise
What an absurdity! A couple of well-to-do posters must have stuck in your mind to the extent of wiping out the memory of all the rest of us.
Bada Bing. We are up there but not that high up 245k a year without pensions is a lot of investment and SS income. With pensions that is different. 245k a year total is realistic for some. Consider a professional couple each with 80k a year in pensions and SS. Two million invested with a 4% drawdown and you have 240k annual income. Not impossible in high Cost of living work environments.
You're in Illinois. I lived in Indianapolis, and you could find milk for $1.50 at Costco or Walmart. Aldi's milk here is still in the $4/gallon range. Groceries are much cheaper in the Midwest than they are in east Tennessee. You're rarely going to get a dozen eggs cheaper than $2 here. Yes, lean 90/10 ground beef not on sale is $7+. If you're willing to buy a chub of 73/27 beef, then sure, it will be cheaper. Want store brand lunch meat? Better be ready to pony up at least $8/lb.
The fact that you are in the Midwest is why I mentioned earlier that the additional grocery expenses here in Tennessee probably consume most of my income tax savings from Indiana. Milk is double. Many staple items are 20%-50% more at my local Walmart are more than what I would pay at Meijer or Costco. Food is also taxed at 5.5% - in Illinois, it's 1%. Someone not working is not going to benefit as much from TN's no state income tax, but the high food prices and high sales tax on food is going to disproportionately hurt low income people (especially seniors on fixed, low incomes) who spend a higher percentage of their income on food than a working person with more income.
The true salvage grocers are local operations basically run out of small warehouses. Think dented cans, fresh produce that doesn't look very appetizing, stuff close to its expiration date, things rejected from mainline stores for whatever reasons. I don't think it's a reasonable expectation that people go from Kroger to salvage stores.
No, I am not some froufrou shopper only shopping at the highest end grocers. We have one regional mainline grocer (Food City), Walmart/Sam's, and a dumpy Kroger per town in my area. The lack of competition and distance from the ag areas means food is going to be higher.
I'd not expect MY prices to be the same as yours, but what I would expect is that if Aldi is roughly half to 2/3 typical prices in IL it would be half to 2/3 typical prices in Tennessee. And yes, Aldi is several steps up from the warehouses you talk about - such that they are not even in the same league. BTW, the best way to avoid expensive meat is to eat more beans. ha
Taxes are another issue altogether if you want to play that game. SOME food may not be taxed highly in IL but I pay 8.75% otherwise..so let's not go there.
The trick is to NOT do that. You can get the mortgage interest deduction and invest to get a higher rate of return than the mortgage interest paid without over-leveraging yourself by buying a too-expensive house.
Debt versus no debt is not the major issue when it comes to financial health. Not spending beyond your means and maintaining a positive cash flow is what matters.
True, but people see the monthly payment for such a nice home and think "it's no so bad." Meanwhile, as they get older and their incomes decline, that may be too heavy burden to bear.
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Originally Posted by JRR
I guess we made the right decision of moving to the central Tennessee area instead of eastern Tennessee where you are. Milk last week at Kroger was $2.39 and we buy excellent ground beef from a local farmer for $4.30 lb. Insurance for two vehicles (full coverage) is $1326 for a year.
I guess that means that not only do I live in Cheapsville, I am in the low rent district of it. But even if the people who live in the high cost of living areas look down on us, we are doing OK. There is even talk about us eventually getting indoor plumbing to go along with our 'lectricity. Then we'll be living high on the hog!
To get back to the topic, we are currently living on an income of my wife's social security, my spousal benefits and a very small pension that she gets. So our income is about $3200 per month. It covers most of our expenses and if we need more, we tap the IRAs. In abut 26 months when I turn 70, I'll file for my social security and our income will jump about $1700 per month. Looking forward to that raise
$5,000 per month with reserves you can dip into should be plenty enough to live around Cookeville. The point I was trying to get across is that people just think "small town/rural area" and think everything is wonderfully inexpensive. In many cases, it isn't and cheapsville isn't all that much cheaper than mid-sized metro areas in the interior of the country.
Quote:
Originally Posted by TuborgP
Bada Bing. We are up there but not that high up 245k a year without pensions is a lot of investment and SS income. With pensions that is different. 245k a year total is realistic for some. Consider a professional couple each with 80k a year in pensions and SS. Two million invested with a 4% drawdown and you have 240k annual income. Not impossible in high Cost of living work environments.
Keep in mind that many currently retiring and soon-to-be retirees are too young to have been around during the pension heyday. This scenario would be possible with mostly high-earning government employees in affluent, prestigious states. I doubt you'll find many couples in their early 60s now not from a coastal state with an $80k annual pension per person on top of two million of their own investments.
It's going to be a very niche scenario.
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