Seriously, a couple can live well on less or $1500 a month. In what some would consider “extreme” cases it’s claimed possible even in San Francisco. Based on those terms, you could obviously do it other parts of the United States. However, the particular claim I’m referring to comes from expats who live in Cuenca, Ecuador.
So here’s the FIREHack. One of the fastest ways to FIRE (Financial Independence with the option to Retire Early) is to move to a place where the cost of living is cheaper. You could move from a big city to a suburb. Move from a sprawling suburb to a smaller town or rural area and you can save even more. It could also be as simple as moving closer to work so you can walk or bike instead of drive, or even downsizing your house and moving into a smaller one. Many of us think our homes are too small when in fact they are too big. You don’t have be so extreme to live well on less, but the more extreme you will be the faster you can increase your savings rate and the sooner you can retire. So move. And then start living well on less.
Some of the locations with the lowest cost of living are in Central America. You can definitely live well on less there. I know this particular kind of move is unlikely, but stick with me if for nothing else than to expand your world view and give you a sense of what’s possible. If you’re bold enough to do it, a plan to move to one of these places will have you quitting your day job sooner than you might think. If you only have to spend under $18,000 per year for a couple, you would need about $450,000 in your nest egg to take the plunge using the 4% rule.
Live Well on Less in Cuenca, Ecuador
So what would your life be like in Cuenca? Here’s a typical budget for you…
- Rent for a 1200-square-feet modern apartment near the city center would run you about $475 per month. There would be no HOA fees or property taxes to worry you.
- Transportation would cost you roughly $60 per month. You wouldn’t need a car because you could walk or use public transportation just about everywhere. So no fuel costs, maintenance costs and no car insurance either.
- Utility costs for things like natural gas for cooking and electricity would cost about $35 a month.
- Phone and internet would cost you $65 per month. Remember, you won’t need cable because you will already have internet. The antenna option might not be as robust a choice here, but you should do fine without it. Should you choose to do cable it would add about $30 a month. Google Fi would work here for mobile phone service, and it would replace the need for a need for a landline. However, it would increase your costs by about $20 for a couple.
- Entertainment would cost you about $250 and includes eating out and other fun activities. This cost is kept low because many of the events and cultural activities are free.
- Groceries would cost about $300 a month and would include fresh produce from an authentic, open-air market.
- A middle-of-the-road private healthcare policy would cost about $300 a month for a couple. Ecuador has recently ranked in the top 25 countries for healthcare according to Bloomberg. Compare the US at 40th!
- Total = $1420!
- Splurge even more with these “upgrades.”
- Full-time housekeeper: $220 per month. (Really? You’d need this for 1200 square feet apartment? Are you a slob?)
- Owning a car including insurance, maintenance and fuel: $145 a month. (Why would you do this?! Don’t! Buy a couple of bikes and use the public option.
Are You Able to Live Well for Less than $1500 a Month?
I bet you’re spending way more and getting less wherever you are. You’re probably thinking that this exercise is ridiculous because you’d never move to Central America. Sure, that’s the case for most. But some will take this option into consideration. It is definitely on the list of possibilities for the FireHackerOne family. In fact, I could do it now. Why don’t I? Great question. The short answer is that we are considering it.
The arguments of safety, healthcare (mentioned above), infrastructure, education, etc, go out the window for many outside-the-US options when you really do an apples to apples comparison. Many countries outrank the US in all or most of these categories.
At any rate, you should work on your expenses right where you are so you can raise your savings rate and decrease your yearly costs. You can start with a few simple FIREHacks that you can find on this site. I hope you make it to financial freedom sooner than later.