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How Low Can You Go?

How Low Can You Go?

Sometimes it’s good to create a bare-bones budget. It’s nice to know what the very least amount you could live on would be while still maintaining your current housing. You can use this amount to figure up how many months you could go if you lost your job or wanted to quit working. You can also use the listing of items that make up the amount to visualize just how many extras you really do have in your life. (Whether it’s simply to be grateful for those extras or whether it’s to consider whether you want to continue with them.)

Here is the process I went through to figure out my bare-bones budget. First, I made a list of my current expenditures:

Mortgage, taxes & insurance, home phone, electricity, water, internet, Netflix, other entertainment, gas, car insurance, groceries, haircuts, IRA, investments, savings, eating out, allowance & lunches, gifts, clothes, yard cleanup, postage, household items.

Next, I looked at the list and decided what I could easily cancel or do without for a year or two if I had to. That left me with mortgage, taxes & insurance, electricity, water, some gas, car insurance, life insurance, groceries. That gives me this:

 

Mortgage – $416.98
Taxes & insurance – $80.00
Electricity – $53.50
Water – $19
Gas – $30.00
Car insurance – $36.84
Life insurance – $16.70
Groceries – $80.00
TOTAL – $733.02

 

Ok, so I could survive indefinitely on a minimum wage job within walking distance or live on savings and passive income for a good long while. (And realistically, I could probably cut that $733 amount down even more. I could buy cheaper groceries, cancel my life insurance, reduce my car insurance or sell my car in 3 years, etc.) Living that way would be a bit of a struggle, but it would certainly be possible. Now let’s add in the things that I’d really prefer to keep, at a minimum:

At least inexpensive haircuts – $14
Eating out once a week – $40.00
Partial allowance for my son – $40.00
Home phone + high speed internet – $41.50
Netflix – $7.56 for my share
Gifts or household items – $20
Additional gas – $20

That brings the revised total to $916.08. I feel I get a lot of value for that extra $183. We could do something similar to figure out what would happen if we both lost our jobs. The lesson I took from this is that the fewer expenses you are committed to, the more freedom you have. Losing my main source of income would be stressful, but not a disaster unless it continued indefinitely. And I’m grateful for the ability I have right now to save and splurge on the things I enjoy.

*Edited to say that duh, I forgot health insurance. COBRA is probably horrifically expensive for me, but I’d need to take it until I was sure I could get private health insurance. So I’d need to add in another $700 per month or so, which would change the situation significantly. Guess I’d need two minimum wage jobs within walking distance.

View Comment (1)
  • Wow BM yours is much lower than mine…

    Mortgage with PITI $1137
    Water and Trash $75
    Electric $82
    Gas $95
    Allowance $120 (cut in half)
    Cell $100 (would be penalized $175 per phone–4 phones if I cancel)
    Medical $200 per month OOP
    Dont even want to think about what COBRA would be
    And $80 a month for food for you and your son?? Wow, wow, WOW!!
    We could cut ours down if needed…but probably be closer to $500 – $600 per month for myself and three teens…for meals, making lunches for school, etc.

    And what about activities your kid goes to or particpates in? I allot $100 a month for that alone.

    I’d estimate mine to be closer to $2500 per month.

    Interesting thoughts though…

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