Living on $5,000 a year

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
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mathwhiz
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Living on $5,000 a year

Post by mathwhiz » Mon Oct 14, 2013 9:31 am

See folks, it can be done! Who's going to join this guy?

http://www.cnbc.com/id/101109785
More than two decades ago, then-33-year-old Dan Price had a wife, two small children, a high-interest mortgage, and a stressful job as a photojournalist in Kentucky. He worried daily about money and the workaday grind.

"I told myself, 'buck up and pay the bills,'" said Price. "This is just the way normal life is."

Then he learned about what he calls "the simple life." Price read "Payne Hollow," a 1974 book about author Harlan Hubbard's rejection of modernity and his primitive home on the shore of the Ohio River. Price's marriage dissolved soon after, and the whole family moved to Oregon, where he grew up. Price opted to move alone into a tiny cabin in the woods, then a flophouse, then a teepee, and finally into an underground "Hobbit hole" on a horse pasture near a river, where he still lives. During the winter, he decamps to Hawaii to surf and avoid the harsh weather.

rec7
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Re: Living on $5,000 a year

Post by rec7 » Mon Oct 14, 2013 9:37 am

And I thought getting by on 14k was a feat. I have been living like Bill Gates.

mathwhiz
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Re: Living on $5,000 a year

Post by mathwhiz » Mon Oct 14, 2013 9:41 am

And this guy winters in Hawaii too!

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momar
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Re: Living on $5,000 a year

Post by momar » Mon Oct 14, 2013 9:43 am

"I like being able to do what I want to do," said Price, who pays $100 a year for his land. "I don't believe in houses or mortgages. Who in their right mind would spend their lifetime paying for a building they never get to spend time in because they are always working?"
I don't know who would do that, it seems crazy. That's why I don't spend all my time working and spend plenty of it in my house with my family.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep

stoptothink
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Re: Living on $5,000 a year

Post by stoptothink » Mon Oct 14, 2013 9:46 am

I lived off ~$10k in '12 (final year of my PhD), $7200 of that was rent.

leo383
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Re: Living on $5,000 a year

Post by leo383 » Mon Oct 14, 2013 9:47 am

mathwhiz wrote:And this guy winters in Hawaii too!
Does not compute for me, either.

How do you winter every year in Hawaii on $5k a year? Tickets alone are close to $1k.

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bottlecap
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Re: Living on $5,000 a year

Post by bottlecap » Mon Oct 14, 2013 9:49 am

I don't really want to give up my wife and kids like this guy did. Plus, i'm sure the cost of his yearly jaunt to Hawaii is not included in the $5,000 he supposedly lives on.

While may enjoy himself, his life seems pretty meaningless, at least from what we're given in the article.

JT

mathwhiz
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Re: Living on $5,000 a year

Post by mathwhiz » Mon Oct 14, 2013 9:52 am

Does not compute for me, either.

How do you winter every year in Hawaii on $5k a year? Tickets alone are close to $1k.
Yeah, not sure how that works. He's probably sleeping on the beach under a coconut tree. It's been many years since I've visited but I think I remember there was a large homeless population sleeping on hawaiian beaches. Maybe someone that knows more about it can chime in but It is apparently legal?

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VictoriaF
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Re: Living on $5,000 a year

Post by VictoriaF » Mon Oct 14, 2013 9:56 am

I once spent 24 hours on an island in Lake Titicaca. The people on the island refuse building commercial properties, and overnight visitors are assigned to stay in private houses. I stayed with Sr. Alfonso in a stand alone structure on his land. I spent a night in a dorm room with very clean beds, candles instead of electricity, and an outhouse. I had three vegetarian meals: lunch, dinner, and the next-morning breakfast--prepared by Sr. Alfonso's wife. The total cost of a full day in my life was about $1. For $400 I could spend a year there.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

HoosierJim
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Re: Living on $5,000 a year

Post by HoosierJim » Mon Oct 14, 2013 9:57 am

mathwhiz wrote:And this guy winters in Hawaii too!
Anybody that can use the word "winters" as a verb and is not an anatidae is doing ok.

reggiesimpson
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Re: Living on $5,000 a year

Post by reggiesimpson » Mon Oct 14, 2013 10:00 am

His newsletter will be out shortly.

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greg24
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Re: Living on $5,000 a year

Post by greg24 » Mon Oct 14, 2013 10:02 am

If only my family would leave me, I could live the good life.

YttriumNitrate
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Re: Living on $5,000 a year

Post by YttriumNitrate » Mon Oct 14, 2013 10:06 am

So the guy in the article is proud of not taking food stamps or welfare, but is happy to let others foot the bill for raising his kids?

The $5k a year might include the trip to Hawaii...based on a quick Travelocity search, round trip plane tickets from Portland to Honolulu can be purchased for ~$500 if you're flexible on the dates. Once you're there, you can supposedly make it on $3 a day.

Hawaii on $3 a day:
http://www.npr.org/templates/story/stor ... =126675999

stoptothink
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Re: Living on $5,000 a year

Post by stoptothink » Mon Oct 14, 2013 10:23 am

YttriumNitrate wrote:So the guy in the article is proud of not taking food stamps or welfare, but is happy to let others foot the bill for raising his kids?

The $5k a year might include the trip to Hawaii...based on a quick Travelocity search, round trip plane tickets from Portland to Honolulu can be purchased for ~$500 if you're flexible on the dates. Once you're there, you can supposedly make it on $3 a day.

Hawaii on $3 a day:
http://www.npr.org/templates/story/stor ... =126675999
His kids are all grown, he is 50. Several of the comments also made this mistake.

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greg24
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Re: Living on $5,000 a year

Post by greg24 » Mon Oct 14, 2013 10:44 am

stoptothink wrote:His kids are all grown, he is 50. Several of the comments also made this mistake.
He seemingly started his new lifestyle around 33, although the article makes it hard to pin it down.

"Price's marriage dissolved soon after, and the whole family moved to Oregon, where he grew up. Price opted to move alone into a tiny cabin in the woods, then a flophouse, then a teepee, and finally into an underground "Hobbit hole" on a horse pasture near a river, where he still lives."

It doesn't mention if he had partial custody of his kids while living in a flophouse, teepee, or hobbit hole.

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stemikger
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Re: Living on $5,000 a year

Post by stemikger » Mon Oct 14, 2013 10:48 am

Hey I'm only five foot six, I can probably be pretty comfortable in a Hobbit Hole. LOL.

But truthfully, I think one of the things I did right was I never upgraded my home. I bought a brand new Townhome 20 years ago and took out a 30 year mortgage. I paid it off and don't feel the need to ever own a mortgage again. Most of the people I know, felt that they had to leave their first home or they would die. It seemed to be more of an ingrained way of thinking. God forbid we stay in our Starter Home. I never liked the term Starter Home. I rather use affordable home and if you do very well salary wise down the rode and feel the need to move, that is o.k., but many people don't do so well but still make that move anyway and have a mortgage for much longer then they should.

Warren Buffett used this technique also. He is still in his first house which make many people scratch their heads in amazement. I could never live frugal or even cheap, but the best thing I ever did was not to take on a big mortgage.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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stemikger
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Re: Living on $5,000 a year

Post by stemikger » Mon Oct 14, 2013 10:52 am

greg24 wrote:
stoptothink wrote:His kids are all grown, he is 50. Several of the comments also made this mistake.
He seemingly started his new lifestyle around 33, although the article makes it hard to pin it down.

"Price's marriage dissolved soon after, and the whole family moved to Oregon, where he grew up. Price opted to move alone into a tiny cabin in the woods, then a flophouse, then a teepee, and finally into an underground "Hobbit hole" on a horse pasture near a river, where he still lives."

It doesn't mention if he had partial custody of his kids while living in a flophouse, teepee, or hobbit hole.
+1. Good point. He should have realized he did not have what it takes to sacrifice and bring kids into this world. I liken this to a lot of wise guys I grew up with. They all got involved in the mafia lifestyle and most wound up in jail. All I kept on saying was if they wanted to live this type of life why the hell do they try to raise a family. They should just stay single and don't involve anyone else in their mess. I'm all for this guy living the way he wants, but once he had a family, unfortunately this option should not have been available to him.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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VictoriaF
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Re: Living on $5,000 a year

Post by VictoriaF » Mon Oct 14, 2013 10:55 am

stemikger wrote:But truthfully, I think one of the things I did right was I never upgraded my home.
Not upgrading is not enough. You should have downgraded to tiny cabin in the woods, then a flophouse, then a teepee, and finally into an underground "Hobbit hole".

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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BigFoot48
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Re: Living on $5,000 a year

Post by BigFoot48 » Mon Oct 14, 2013 11:00 am

He has an Airbook and what appears to be two tablet computers so he must be carefully managing his $5K to afford those items. I wonder if the $100 rent includes electricity.
Retired | Two-time in top-10 in Bogleheads S&P500 contest; 12-time loser

jasc15
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Re: Living on $5,000 a year

Post by jasc15 » Mon Oct 14, 2013 11:04 am

For only $7k, he could upgrade to an RV. All joking aside, with the exception of living in the RV, I don't see Jacob's lifestyle as all that extreme.

My path to bogleheads actually began with reading the ERE blog, and eventually through much of the personal finance community. Many of the same concepts throughout.

Honobob
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Re: Living on $5,000 a year

Post by Honobob » Mon Oct 14, 2013 11:38 am

His social scene must be fascinating! :sharebeer
It's slowly dawned on me that we won the real estate lottery!

hsv_climber
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Re: Living on $5,000 a year

Post by hsv_climber » Mon Oct 14, 2013 12:05 pm

stoptothink wrote:I lived off ~$10k in '12 (final year of my PhD), $7200 of that was rent.
Does this number includes medical/dental insurance and car/bike/etc. amortization that has happened during that year?

Wricha
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Re: Living on $5,000 a year

Post by Wricha » Mon Oct 14, 2013 12:38 pm

Re: Living on $5,000 a year
by VictoriaF » Mon Oct 14, 2013 10:56 am

I once spent 24 hours on an island in Lake Titicaca. The people on the island refuse building commercial properties, and overnight visitors are assigned to stay in private houses. I stayed with Sr. Alfonso in a stand alone structure on his land. I spent a night in a dorm room with very clean beds, candles instead of electricity, and an outhouse. I had three vegetarian meals: lunch, dinner, and the next-morning breakfast--prepared by Sr. Alfonso's wife. The total cost of a full day in my life was about $1. For $400 I could spend a year there.

Victoria
Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

Victoria

Victoria
Stayed in the interior of Brazil next to beautiful river at a hotel (very clean) 3 great prepared meals (fresh mangos,papayas,jack fruit) and 2 large beers in evening. $22/day that also included cleaning lady and a women to wash clothes. A bit more expensive but look at the amenities!

stoptothink
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Re: Living on $5,000 a year

Post by stoptothink » Mon Oct 14, 2013 12:49 pm

hsv_climber wrote:
stoptothink wrote:I lived off ~$10k in '12 (final year of my PhD), $7200 of that was rent.
Does this number includes medical/dental insurance and car/bike/etc. amortization that has happened during that year?
Yes. Not that I am proud, but I did without health insurance (and some other far more embarrassing things) for the year. I owned a car but it was parked for over 13 months in my garage, I biked or walked 100% of the time (even in the crazy Houston rain). I was fortunate to be only a few blocks from campus and the grocery store was literally 500' from my front door.

Along with going through the very fun dissertation process, I was also going through a very messy divorce; was an interesting period in my life.

hsv_climber
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Re: Living on $5,000 a year

Post by hsv_climber » Mon Oct 14, 2013 12:59 pm

stoptothink wrote: Yes. Not that I am proud, but I did without health insurance (and some other far more embarrassing things) for the year. I owned a car but it was parked for over 13 months in my garage, I biked or walked 100% of the time (even in the crazy Houston rain). I was fortunate to be only a few blocks from campus and the grocery store was literally 500' from my front door.

Along with going through the very fun dissertation process, I was also going through a very messy divorce; was an interesting period in my life.
Many students live even on less than that. My first year of grad school I was spending less than $5k / year and that included purchasing a driveable car. No HI, dental or car insurance (was not required by my state at that time). Got a really good used bike (Fuji, but with shifters on the frame) for $25 + new chain.

But obviously, things like that are not sustainable over any reasonable period of time.

stoptothink
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Re: Living on $5,000 a year

Post by stoptothink » Mon Oct 14, 2013 1:20 pm

hsv_climber wrote:
stoptothink wrote: Yes. Not that I am proud, but I did without health insurance (and some other far more embarrassing things) for the year. I owned a car but it was parked for over 13 months in my garage, I biked or walked 100% of the time (even in the crazy Houston rain). I was fortunate to be only a few blocks from campus and the grocery store was literally 500' from my front door.

Along with going through the very fun dissertation process, I was also going through a very messy divorce; was an interesting period in my life.
Many students live even on less than that. My first year of grad school I was spending less than $5k / year and that included purchasing a driveable car. No HI, dental or car insurance (was not required by my state at that time). Got a really good used bike (Fuji, but with shifters on the frame) for $25 + new chain.

But obviously, things like that are not sustainable over any reasonable period of time.
By far more embarrassing things, I meant (primarily) electricity. Pretty sure it was against the law and my landlord would have flipped, but I showered at the school gym and spent all of my time in the lab/library so I really saw no point in having it. I honestly can not think of a single other thing I could have given up at that point; maybe my bike but I already owned it and am pretty sure maintenance was $0 for the entire period. I also gave away pretty much all my possessions, to the point where I could fit everything I owned in my backpack and 1 large duffle. Not a period in my life I am particularly proud of, but I learned a lot about myself and have some great stories. I have no interest in living like the man in the article (although I am still very much a minimalist), but I know I could.

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bogleblitz
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Re: Living on $5,000 a year

Post by bogleblitz » Mon Oct 14, 2013 1:44 pm

He lives in the forest/woods so story is not too exciting.

I like to read about stories of people living in cities spending 5k a year. Or someone making 100k a year and living on 5k.
I think most bogleheads are pretty frugal in general.

protagonist
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Re: Living on $5,000 a year

Post by protagonist » Mon Oct 14, 2013 2:50 pm

It can be done much more comfortably and easily in other countries.
IMHO, unless you are a very generous philanthropist, making $100K and living on $5k is sort of ridiculous.

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Re: Living on $5,000 a year

Post by LadyGeek » Mon Oct 14, 2013 3:54 pm

This thread has run its course and is locked. The intent of this forum is for personal investing. The discussion is not personal nor actionable (it's a general comment). See: A reminder that non-investing general comment threads are OT
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