Comments on Boston Gal's Open Wallet: How to Escape the Rat Race

Living anywhere in the US on just $10,000 a year g...

2009-11-21T20:30:49.171-05:00

Living anywhere in the US on just $10,000 a year gross is almost impossible in 2009. That is $833.33 gross per month. From that you have to subtract your portfolio tax (different from earned income or passive income). Not sure what your net would then be - but assume less than $800.00 per month. From that you will need to pay your rent (or property taxes/insurance if a mortgage free homeowner). In my area of the US, the cheapest apartment possible will run you at least $500 per month. Then add utilities and - oh, now you are out of money. Forget things like eating, paying for health care, transportation (even a bus pass is out of your budget), etc.

Now, if you had other income coming in - say a modest pension after serving 20 years in the armed forces or something like that - then fine, the $10,000 extra per year might make exiting the rat race more feasible.

But without some sort of indexed for future inflation income stream, relying solely on interest/dividend income from savings/investments is not going to cut it for most.

Hi Moneyapolis, True - the escape worked for you,...

2009-11-21T19:46:53.230-05:00

Hi Moneyapolis,

True - the escape worked for you, but as a single, my pulling up stakes and relocating to the Midwest would make me miserable. I spent four years of my life (college years) in that part of the country, and it just was not for me. Plus, I am close to my family and most of them live in Massachusetts - so staying in a high cost coastal area is a non-negotiable for me.

That is not to say a move does not make sense for others.

I don't know...I haven't looked back after making ...

2009-11-21T18:33:44.931-05:00

I don't know...I haven't looked back after making my own escape from a high-cost East Coast city and my money goes a lot farther. ;)

Hey Boston Gal, great post. From experience, the h...

2009-11-21T04:52:09.914-05:00

Hey Boston Gal, great post. From experience, the hardest thing I found in the whole process was just making the decision.

I kept putting it off until it was 'just right', but eventually realized that I'd be stuck in the 9-5 forever if I didn't just take a leap of faith.

I haven't looked back since 2003!

Gee ... I lived without a couch for several years ...

2009-11-20T18:36:09.605-05:00

Gee ... I lived without a couch for several years when I was just starting out ;)

BG, I'm guessing you'll be fine. Time (and compounding) is a big help in savings/investments. And you're young enough that you'll be able to benefit from an economic upswing (which will come along eventually.)

It is depressing, you're right. But it should mak...

2009-11-20T16:27:13.146-05:00

It is depressing, you're right. But it should make a lot of difference for you to retire debt-free (no mortgage) and with an income stream (rentals). With your lifestyle, even social security should go a long way.

That's what I'm counting on myself: our house is paid off, and when the four kids are out of the nest a) expenses will go down drastically b) the "nest" can be much smaller, i.e., we can sell this paid-off 3000 sq ft house and buy a much smaller one, hopefully with significant cash left over.

But many a slip 'twixt cup and lip; who knows if SS will be around?

Anne

In MA, I found health insurance a relative non-iss...

2009-11-20T16:23:26.166-05:00

In MA, I found health insurance a relative non-issue when I decided to strike out on my own. If your income is over the threshold for subsidized insurance, it will cost you a few hundred dollars per month, but it shouldn't keep you chained to your job any more than housing costs would.

Forgot to mention in the post. The WSJ article ma...

2009-11-20T12:13:30.210-05:00

Forgot to mention in the post. The WSJ article makes a big deal of high salary earners from big cities on the coast moving to low-cost areas to make their escape.

Unfortunately, I have no desire to leave my high cost east coast city, so that advice does not help me. Also, I am not a high earner or part of a dual-earner household (both types have an easier time banking lots of cash).

I do have the benefit of being childless and having had steady employment for most of my adult years. Those two factors have so far enabled me to slowly retire debt, build assets, and generally get ahead financially.