Most of us have heard of the consumer price index. It makes assumptions. If those assumptions are not true for you, then the index has no validity for you!
For instance, the CPI assumes that you replace your house periodically. And that you replace your car periodically - with a brand-new one. Recent statistics show that 80% of cars purchased in the US are purchased used, not new. The CPI is very clearly slanted toward those who chose to make their purchasing decisions in a fairly expensive manner...i.e. new everything.
So, just what is the cost of living if you choose to be careful? If you choose to only purchase that which is necessary to stay alive and remain employed?
Rather than a quote from a book, here's a summary from a reader of this blog.
"I can't believe how much people spend on simply living that's way out of proportion to reasonable. In 2009, our family of two adults and two dogs spend only $19,000. It helps that our has has been paid off for years. Otherwise, we don't think of ourselves as cheap.
"We cook most of our own meals, because we prefer the flavor and we like to know what's in our food. We buy whole, healthy, locally-grown, natural products, not the cheapest. We grow a little bit of our own food, but not much of it...we're not very good at gardening.
"We refuse to tolerate an unreliable car. But today's cars, as long as you get the lower-cost simple ones, are amazingly reliable. Ours are both over 15 years old, and between them, have over 450,000 miles and neither has ever required a repair over $300. One of them, in fact, has never had a single repair, the other one only two repairs. If either one needs a major repair, we will throw it away and buy another ten year old car for $4,000 to $6,000 and enjoy it for most of a decade.
"We enjoy life a lot. In addition to the usual hiking, biking kinds of things, we attend a lot of concerts and shows. For free, because if we like an art form, we find a way to volunteer to help. This is not just less expensive, but more entertaining. You can meet the actual performers and it's a lot more fun when you get to see some of the behind-the-scenes actions. Our choice to be volunteers is not from a sense of cheapness, but it's more fun.
"The only conscious decision we make that is specifically for money savings is to subscribe to nothing. No Cable TV, no NetFlix, nothing. We do have a small business that's internet-based, so we have a high speed internet connection. We call it our $45 per month indulgence, but it's a deduction anyway. No cell phones, either.
"We go on a lot of vacations, twice a year we fly somewhere, and stay with friends. We do house-sharing with people in Europe or Asia once a year, so our only expense is the airfare. We have not stayed in a hotel room, except for business trips, in decades.
"All of this is 99% done because we find it a lot more fun to enjoy what exists, instead of spending more and more for fleeting things.
"That $19,000 is almost everything. It's fuel and maintenance for the cars, utility bills (small because we dress for the season and use very little heat and no A/C), all food including going out to eat about once a month, most insurance. It does not include our 401ks, which are fully funded, our Roth IRAs, which are fully funded, or health insurance, which comes out of one of our paychecks.
"We could, if we wished, live exactly like this on two minimum wage jobs. And we don't really try very hard to do so."
Congrats to our readers. We get stories like this from many, but this one had more detail than most, so I posted it.
Another reader reports that his two nieces share an apartment and are going to college, and without any form of student loan, are able to survive happily on $12,000 per year between the two of them, which they earn doing waitress jobs.
What is your actual annual expense? We'd like to hear from more readers about what they really spend on what.
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