Q: I find it hard to believe that you/anyone can live on $5-7k/year without living in hardship. [Most common question off the blog]

A: That’s alright, I find it hard to believe how you/anyone can spend $30,000/year [without flushing money down the drain]. Fair enough? A simple break-down of the most important expenses for the year 2016 where we now live in a fully owned single-family house just outside Chicago would be$3900 for real estate taxes; ~$200/month for utilities (water, gas, electricity, internet);$150/month for food (two people and including the dog, we cook his food too); $2000/year for insurance (home, car, health, umbrella). This comes to about$10000/year or 5000/year/person for my wife and myself. All the loose stuff is noise. We don’t have any expensive hobbies. We rarely if ever pay retail prices. If you want to get more precise than that (think car depreciation, imputed rent, house maintenance events) then it gets complicated, real fast! [See this entire thread for a detailed discussion of what happens when accounting gets overly complicated](http://forum.earlyretirementextreme.com/viewtopic.php?f=3&t=7870). The take-away is that while it’s maybe 6357 or $4521 and not$5030, the point is that my spending far away from $3000,$12,000, $21,000 or$33,000 and that I’ve intentionally accounted for plenty of slack in the cash flow calculations. (see net worth considerations below).

Keep in mind I’ve spent between $5-7k/year for more than a decade while living in several different situations: being single and married, living in three different countries, in dorms, apartments and house rentals, in an RV and as a home owner. There are many different solutions at this spending level. For more examples, look through the forum journals.

and we drove 2200 miles across the [western] US and moved into a 1bd/1ba apartment near the brown L-line in the City of Chicago. The move was easy because we didn’t have a lot of stuff. Because the cost of living is lower in Chicago than in the East Bay, we were able to pay rent, insurance, food, etc. for around $14000/year for the two of us, thus staying within budget. Most of that was rent (heat+water was included, no cooling, our electric bill has always been ridiculously small, and food costs dropped a lot.) After a few years living in the apt. building, I was getting tired of spending nearly$10k/year on rent and really tired of the squeaky “vintage” floors. At the same time I didn’t like how the markets were getting so overvalued so we pulled out enough money from the markets to buy a 3bd/1.5ba [stick] house in cash in the near suburbs in 2014. This is where we live now (in 2016).