Living on Less Than $2,000 Per Month

I have outlined it on my about me page that I certainly wasn’t a frugal person in the past. The word frugal really doesn’t capture how I live my life now. Frugal to me always embodied someone who is miserable, lonely, unhappy. So for now I’ll do away with an adjective to describe my living situation and let you decide for yourself. I do want to start by saying that as an employee you technically are an entrepreneur, you are accepting a certain risk amount (working for one employer) in return for a reward (your net paycheck). You run your household on a budget the way a COO of a company would run the finances of the company. You are in essence the CEO of your business. That business is you! You buy insurance to cover against events that put your business at a risk that you yourself can’t cover. Moving forward with this mentality I will tell you a little about my life and my expenses…

Expenses for Dr. Mo

As of this writing I am single with no dependents living in an apartment that I am renting. I started out with expenses in the $8,500/mo range back in 2012. Some of this went to credit card bills, student loans and some for groceries, utilities, mortgage, cell phone/internet and entertainment. Entertainment was a hodgepodge of traveling, meeting friends for dinner/drinks, buying new toys and consuming theater, plays, musicals and movies. And at some point I ran the numbers and realized that if I continued on this path I would work well into my late 60’s before I could retire. Of course there is something ‘easy’ about imagining one’s retirement age to be in the in the 60-70’s mainly because from there on things become more predicable; there is possibly social security income, there is access to tax deferred accounts (401k’s etc), sometimes there is a pension and there is a more limited number of years that one has to plan for. Having to plan for 60 years of income after retirement is a very daunting task but having to plan for 15-30 years is much more manageable.

Expenses Down But Still High

I wasn’t comfortable cutting back on my expenses bit by bit… just took too long. I tried getting a cheaper cell plan, a cheaper home internet, a cheaper cable plan etc. It felt tedious and I wasn’t really making a big difference. I would still shop for clothes but buy less. I would still eat out with friends but tried not eat out as often or sometimes skip the appetizer. I was also calling around and trying to negotiate cheaper insurance bills on my condo and car and umbrella policy etc. Long story short, I got fed up with this and went right back to my spendy ways for a few months. I then decided that I need to cut everything out and introduce things back in that I really cared about. What was it I really wanted and what was it I really needed. I sold the condo, found the cheapest apartment that was in a reasonable distance to my work, got the cheapest car insurance, got rid of cable and internet at home and cancelled the gym membership and started cooking my food at home. This is where the story starts… it was 2013 sometime and I moved into a beautiful studio apartment in a 1920’s building in a gorgeous neighborhood called Banker’s Hill. I was able to walk to the library, able to walk to a coffee shop and able to walk/bike to the grocery store. I paid $820/mo and the studio was 220sqft. It didn’t come with a kitchen but believe me when I say that I was able to cook up some mean dishes and dessert on my hotplate and mini convection oven.

Lower Expense And Less Stress, Better Lifestyle

I slowly added the internet back in, I kept my car but paid it off and found a much cheaper insurance. I got rid of the umbrella policy (I’ll leave that discussion for another time), I started using some mileage points for traveling and I got home internet. However, getting rid of the car, enjoying cheap entertainment and finding cheap rent was still really hard in San Diego. As a CEO of myself I was doing a great job, I had a very high paying job as a physician and was strategically picking up extra shifts and cashing out the right amount of vacation time and making good investments in my future career potential. As a COO however I wasn’t doing well. I still had an overhead in the $3,500 range and I wasn’t doing good tax planning and needed a higher total savings amount/investment amount to maintain this $3,500 lifestyle. The COO and CEO clashed and the COO won. I made the move to Portland, found an apartment for the same price (820/mo) but within 2.5 miles of my work, walking distance to the library and kitty corner from a cafe and grocery store.

Sure, there are months when I might be paying for something extra but usually that’s something like a bicycle light or a clothing item. But there are also times when I might get a bonus from work, or work might cover an expense that I would have to pay for myself otherwise etc.

Breakdown Of Expenses

So let’s break this down. The rent is a little under $740/mo for a studio in a beautiful part of NW Portland. The owner owns a few buildings and is very involved and the place has awesome reviews. There is free internet at this location and I may get rid of my home internet once my contract expires. All utilities except for water and electricity is paid for. I still have student loan payments but only for another 4.5 months, by then it should be paid off. I eat out with friends or grab drinks after work and sometimes when I’m in a rush and not able to make food I’ll buy something to eat at work. Which brings me to groceries, I could get by with 225-240/mo but I like my ‘organic’ options so I spend around 300-320/mo. I spend some money on entertainment such as a movie or a show every once in a while.  My cell phone is covered by my work and I have a gym membership which is a great way for me to meet people and socialize in a healthy inexpensive way.

If I was frugal, if I was a miser, or a penny-pincher then my budget would probably look something like this:

In this second budget numbers I would be saving nearly $300/mo because I would cut out entertainment and gym and decrease my grocery spending. It would work fine for someone who just may be a penny pincher inherently or someone who has a very strict financial goal or someone who has a very limited income to work with. However, to many people my budget is very ‘restrictive’ and my friends wonder if I can have any fun spending so little. I don’t own a car but live in a city where I can get nearly everywhere I want to go by bike or public transport. I also have friends that I can get a ride with should they be going my way. My rent is low because I go home to sleep, shower, toilet and prepare my food. I don’t see the point in creating a resort or hotel experience in my house like many others do. Don’t get me wrong, nothing wrong with that! And I definitely did that with my first condo but I missed out on some experiences. Being outside, hanging out with friends, doing new things are the things I enjoy a lot more than having that perfect sofa and that voice activated TV that syncs with my phone.

What This Lifestyle Affords Me And What Am I Potentially Missing Out On

Well, it affords me happiness, freedom. I don’t feel reliant on my income. I could work so many different jobs… even at a grocery store which would cover my overhead especially with my soon to disappear student loans. I could walk away from my career if I needed/wanted to, I can retire very soon, I can pursue another career purely out of interest. I can go volunteer full time and live off my funds for a long time.  As for ‘missing out’. I don’t ‘travel’ as much which means that I don’t rush to get to the airport to be put through machines, padded down, passport checked, bags checked, then shoved into a tiny seat. I don’t have to pay $25 extra for my bag that’s 10 lbs over the weight limit while the guy next to me weighs an easy 385 lbs and is shorter than me. My style of travel is that I move to a new city/country and live there for a while, live like the locals and leave the touristy areas to the tourists. I don’t own a car, but that hasn’t been an issue, I don’t miss the bills and the oil changes and the tire changes and the parking and accidents.