Can one survive on US$ 500 a month?

Oct 1, 2015

- By Bill Bonner

Bill Bonner
Paris, France

We took the Eurostar back to Paris last night. In our wagon with us was a whole group of Chinese businessmen. Drinking, laughing...they were a bit uncouth by European standards. But they were having a good time.

Taxi drivers in London were remonstrating against something - Uber, we suppose. A dozen cabs must have passed before one stopped to pick us up. Arriving at the Gare du Nord, we feared something similar. We've never seen a line of people we wanted to join. The long file waiting for cabs was another of them. So we walked across the street to have dinner at the famous "Terminus du Nord." This proved a good choice. The old brasserie must be one of the best in the city...lively, bright, with good service and good food. And by the time our dinner was completed - oysters followed by magret de canard - there were plenty of taxis and few people waiting for them.

We made the same trip every week for more than 5 years. But we moved back to the US four years and left the Paris-London commute behind us. Now, as T.S. Eliot put it, we returned to the place where we began and knew it for the first time. The trip was a pleasant novelty.

This morning, we sit again in the Cafe Poussin reading the Financial Times. Yesterday, we noticed that practically everyone writing in the FT, or whose thoughts were reported in the 'pink paper,' was a moron. We're disheartened to say so, but it appears that a night's sleep has done them no good.

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On page one, we find that the "FBI seeks to hire teenage cyber sleuths..." We need to read no further. This is a program that is doomed to wash up. The teenagers' personalities are still unformed. As they evolve, with their security clearances in hand, they will encounter sex, drugs, and republicans...and inevitably be led into lives of radical crime or honesty - both of which are verboten to the feds.

Over on page two, we discover that the European Central Bank has learned nothing over the last quarter century. "Deflation raises prospect of more quantitative easing," says the headline. Haven't they been watching? what happened in Japan? Apparently not. The Japanese have been fighting deflation for 25 years - with quantitative easing, ZIRP and other claptrap. And what are consumer prices doing in Japan today? Falling! QE doesn't work. But that doesn't make it unpopular...especially with the bankers and cronies who get the money.

And on page four, we find Christine Lagarde in the news. The IMF chief is probably a good bureaucrat. She may even be a good lawyer and a nice drinking companion. A pity she knows nothing about economics. Yesterday, she told the world that "the rapid drop in commodity prices is posing problems for resource-based economies." The crowd must have fallen silent, each person wondering if she would be able to find something even more obvious, well-known and banal? As it turned out, she warned about 'volatility' and 'decelerating growth.' Speaking for half an hour, in Washington, she managed to come up with not a single spark of insight or information worth reporting.

One of the most incredible stories was not in the FT but in Global Mining Observer. The source tells us that Glencore insiders are planning to poke naive shareholders in the eye. This is a story that explains why Wall Street is no place for innocent mom and pop investors. Glencore cronies took the company public in May 2011 at $59 billion...loaded it up with debt... used the money and the time to fix themselves up with huge bonuses, payouts, fees, options...and now, according to GMO, having enjoyed the choice pieces of meat, they are planning to dump the carcass.

"What a colossal piece of black-hearted chicanery," says colleague Dan Denning. This will go down as "one of the greatest pump and dump schemes ever."

The insiders are now planning to take Glencore private again. Having sold at the top, they will buy back the assets at what appears to be the bottom.

Meanwhile, back on the editorial pages of the FT...the opinion molders are still talking about how Henry Blodget was able to humbug Axel Springer, selling 'Business Insider' to the German giant for $390 million. This deserves comment...from us! Electronic publishing is something we actually know something about it. But it will have to wait until tomorrow. Today, we promised practical advice.

We are still getting letters from readers who have suffered fender benders - or serious accidents - on life's financial highway. More than any other single factor, divorce seems to leave the pavement slick and treacherous. Now, readers report that they are at or near retirement age...with few resources. What should they do?

You will not miss the irony; your editor is not a poor man, far from it. What expertise has he in this area? But he remembers with fondness the poverty of his youth. And he uses his imagination to think about how he might recapture the poverty, if not the youth.

But first, he put the question to his team of crack researchers. What if you wanted to live well on $500 a month? What would you do?

We take $500 as a starting point. Most of the readers we've heard from report struggling to live on around $1,000 a month in income. We will aim to live on $500...and save $500. In 5 years, we will have $30,000 (the significance of which will become apparent later on.)

Nick Rokke responded quickly:

    Here's what I found for living on $500 a month. There is nothing conventional about it, but it could be done...

    It is impossible to live on $500 a month in the U.S. the way we are accustomed to living. Forget about renting a place. Even if you had a roommate in a 1-bedroom apartment, you'd each pay $385 on the average. Add that together with an average $71 cell phone plan and you only have $44 left for food.

    I believe the best way to accomplish this is to buy a used motor home. I found a 1998 Fourwinds Windsport available for $14,500. You can finance that over 12 years at 5% interest for a monthly payment of $135. You can get cheap insurance for $65 a month.

    House expenses equal $200 a month.

    One little known fact is some Wal-Mart stores allow you to park your RV in their parking lot free. They think you will become their best customer if you live so close.

    This solves two problems: 1. Where to park your home (trailer parks run upwards of $200 a month for a spot) and 2. Transportation costs to get necessities. If you can't purchase something at Wal-Mart, you don't need it.

    Now that you're Wal-Mart's #1 customer you should be able to buy some of their past expiration food for a discounted price. By eating cheap, I think you could reasonably feed yourself for $150 a month. Include a multi-vitamin if you're worried about malnutrition.

    Total house and food expenses: $350 a month.

    You are going to need a bike to get around to places. You can't take your RV out for leisure rides. This will be important for little errands or visiting friends...Or to use a different bathroom to avoid getting funny looks from Wal-Mart employees.

    Other odds and ends:

    $50 a month for RV & bike maintenance.

    $25 a month for gas - that will get you 10 gallons of gas or about 80 miles in the average motor home. More than enough range to get to a different Wal-Mart if the current one kicks you out.

    $10 for gym membership (need to shower somewhere).

    $10 for prepaid phone through Tracfone.

    $0 for internet. Go to the library or other public area. Use data services like Skype or Google voice for most of your calls.

    $10 for batteries to power things at night in your motorhome.

    $10 for soap and toiletries

    $35 miscellaneous expenses.

    Notable things you are not getting: Health insurance


Well, there are not many dinners at the Terminus du Nord in this budget. But we're making progress. Tomorrow...container houses...gypsy wagons...and more!

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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