Have you ever stopped to think about what it would be like for your family to live on less than $10,000? For a family of four that comes out to less than $7 per person per day. What would you have to sacrifice? Our California family is finding out for ourselves. We are currently living in a small Bolivian village for a year. Here’s what it’s like living on $10,000.
Living On $10,000 Per Year
Bolivia is a whole country that is used to living on $10,000 – or less. A good professional salary here is about $8,000 – $12,000 per year. That’s considerably less than the U.S. federal minimum wage! And there are plenty of families that make much less. But, without much money to go around, it means the cost of living is much lower here too.
And Bolivia isn’t anything unusual, either. There are over a hundred countries where the per capita income is well below $10,000. An estimate from 2013 says worldwide median household income was just under $10,000. So, that means that half of the world’s households are living on $10,000 or less! Compare that to the U.S. median household income of about $60,000. Did you know how insanely rich you are?
But what’s it really like? What do you have to give up? How much do you suffer living on $10,000?
In terms of housing, I don’t think there’s much sacrifice at all. The housing here is just damn cheap. With nobody making much money, you don’t see San Francisco prices. You can rent a nice two bedroom house for less than $100 per month in our village – a bit higher in the city. In the city, $100,000 would get you a nice big house in a safe neighborhood.
Like anywhere else, there are good houses, and then there are GREAT houses. And most people can’t afford the GREAT houses. Houses are smaller, on average. And there are more people sharing rooms.
In the U.S. in the 1950s, a typical family house was less than 1,000 square feet. Over the last several decades, as Americans started making more money, they bought bigger and bigger McMansions. Americans plowed their money into bigger houses and racked up mortgage debt, when they could have been saving and investing for their freedom instead. Now we think living in a 3,000 square foot house is somehow normal…. but I digress.
Here in Bolivia, people living on $10,000 still live in modest houses, like America in the 1950s. It’s not suffering.
If you live on $10,000, you probably don’t own a car. If you do, it’s practical and probably helps you make money in some way – a taxi, a truck for hauling, etc. You’re not going to plow scarce resources into some overpriced mobile sofa with a built-in stereo just to go a few miles a day if you’re living on $10,000.
But the good news is that it’s easy to live without a car here. In fact, few people have cars. And that means there is a ton of demand for public transportation. Taxis are everywhere, and they’re super cheap. If you want to save even more, you can take a “collectivo” or a minibus filled with a dozen other friendly passengers for about $0.25.
It’s hard to have new car envy when there are no new cars driving around. In America, you are what you drive. Here? Nobody even thinks about it. Sacrifice? Not at all.
If you’re living on $10,000, the main thing about food is that you buy fresh and local. You don’t buy overpriced semi-prepared or packaged foods or microwave dinners. You buy basic ingredients, and you cook from scratch. Its funny that fresh and local is often considered upscale in America. Not here. Fresh, local, basic ingredients are how it has always been done for people on a budget.
Eating out? Forget about it. Americans spend nearly half of their food budget eating out. But when you go to a restaurant, the cost of the food is only about 1/3 of what you pay. The rest is the cost of the service, overhead, and profits for the restaurant. If you’re living on $10,000 you can’t afford to pay for all that – at least not very often. Eating out is a luxury. Cooking at home with your family is the way to go.
You might view this as a sacrifice if you’re used to eating at the latest hot spot, or even if you just eat out a lot because you think you don’t have the time to cook. It’s especially a sacrifice if all your friends continue to go out while you sit at home. But, when everyone you know eats fresh and local at home, perhaps you won’t mind it. In our town, there are only two restaurants, and they each serve the same thing. Eating at home is the only option.
Entertainment, it turns out, is something that doesn’t have to cost much money at all. No, people here don’t have access to upscale movie theaters, mouse-infested theme parks, DJ mix masters, or celebrity chef restaurants. Hell, there’s only a couple of restaurants in our town, and they don’t even have menus. Without a doubt, entertainment options are limited here.
Limited, that is, if you want to spend any money. But, the best entertainment doesn’t come from spending money at all. It comes from having good times with good people. And that is in vast abundance here.
Living on $10,000 means you don’t go out to expensive entertainment. Instead, you just hang out with your friends with good food, good drinks, and good conversation. You can have just as many laughs and moments of joy as people with more money. In my book, that’s not a sacrifice at all.
Splurging on $10,000 Per Year
We all have the urge to splurge. And living on $10,000 doesn’t make that any different. You just slurge differently. You do it with less money. Probably the most common splurge people enjoy here in our village is hosting a big party with lots of friends. And with lots of meat.
This is about $150 worth of meat. That’s a lot of money for someone on such a tight budget:
As long as we’re doing food pictures, here’s another one. Meat, meat, meat.
People still splurge living on $10,000. The splurges just cost less money.
Living on $10,000 per year, you’re probably not going to have access to a great education, at least not in Bolivia. This is one area where sacrifices do happen. The public school system in this country is pretty shitty. There are some great private schools in the cities, but you generally need more money to attend them.
Our kids are attending the local school in our village a couple of days per week. Sometimes, I’m shocked to hear what they do academically each day. But we keep our kids in the school for the social and language aspects, not for book learning. We homeschool our kids a couple of days per week to keep them advancing academically.
Homeschooling is virtually free of charge. We use various internet resources that are available to the entire world (assuming you have internet access). You just have to know about them – and you have to speak English. It’s proof to me that a great education doesn’t need to require much money. This gives me hope that even the kids in our village will one day have access to a great education too.
Health and Healthcare
Health is absolutely not something you have to sacrifice living on $10,000 a year. What I mean is that lots of people living on $10,000 have outstanding health. They live healthy lifestyles. They eat healthy food, they get plenty of physical exercise, and even see the sun on a regular basis (unlike so many cubicle farmers in America). Obesity and diabetes are diseases of affluence. A healthy lifestyle doesn’t cost much money.
But unfortunately healthcare does. If you get sick and you’re living on $10,000, you probably won’t have access to the best healthcare in the world. In Bolivia, everyone has access to free clinics. But they seriously suck donkey balls. If you want GOOD healthcare, you need some money.
Not nearly as much money as you might think, though. My wife stayed two nights in a Bolivian hospital for under $1,000. On a U.S. salary, that should be no problem, but a $1,000 hospital stay on a $10,000 annual income sure does bite.
Health does not have to be a sacrifice living on $10,000. But healthcare does. People living on $10,000 can often afford basic healthcare such as generic medicines and first aid. But, more expensive surgeries and treatments are often out of reach. The key is to stay healthy.
It’s tough to save much money living on $10,000. Even if you have a fabulous savings rate, it’s going to take multiple lifetimes to become very rich on that kind of income. The average American has the opportunity to save $1M, but that kind of financial independence is not realistic here.
But that’s OK, because folks here have found a work-around for financial independence, too. I call it “financial dependence”.
What is “financial dependence?” It’s the family support system that’s so prominent in this part of the world. Basically, people here have got each others’ back. If your brother or cousin runs into hard times, you step in to support him. And vice versa, if you have family, it means you always have a roof over your head and food on the table.
It goes both ways – you depend financially on your family when you need to, and you support your family financially when they need you. It is an unquestionable bond. It is financial dependence.
So, while Americans are focused on their independence, folks here don’t even think about that. There is no such thing as independence when you have a large extended family to support. It’s not a sacrifice, it’s a different way of doing things.
Everything is Relative
So you can see there are a few sacrifices to living on $10,000 in a place like Bolivia. But when you’re surrounded by people making the same sacrifices as you, somehow they don’t seem much like sacrifices at all. Everything is relative.
Living on $10,000 in America would be rough indeed for a family of four. First, because everything is so much more expensive, your dollar doesn’t go very far in the United States. Housing? Transportation? Food? I’m sure it is possible, but it would be much more difficult.
Living on $10,000 in America is also tougher because you are surrounded by people who spend so much more than that. You’d need some serious will power to keep your expenses low when nobody else does. At the end of the day, we are social creatures, and we are influenced by the people around us.
What’s It Like To Live On $10,000?
So, to answer that question, I would say the answer depends. It depends mostly on where you live. For half of the world, it is perfectly normal. $10,000 is more than enough money to live a comfortable life in many places.
Life here in our Bolivian village is not full of suffering and sacrifices. People live their lives. They are occupied by the same types of daily thoughts about money, work, health, and relationships as people in America. It’s mostly just normal life on a less extravagant scale. It’s a different way of doing things.