### How Much Does It Cost to Live?

April 3rd, 2011
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The Basic Economic Security Tables Index (BEST) is supposed to be a measure, in part, of a minimal cost of living broken down by categories. The idea is that if you can get a number for the minimum a household would need to live on, you can look at other numbers, such as projected job growth by salary, with more context.

Overall, as someone trying to live frugally, their numbers seem high. Living in boston, with one of the highest costs of living [1], our spending in pretty much all of these categories has been lower. I thought it would be interesting to look over categories and see why. I used their "2 worker" numbers, which seems to be for a couple living together, and I used our 2010 spending totals.

##### Housing and Utilities
• BEST: \$688 + \$149 -- \$837
• Us: \$1153
We were living in a studio apartment for all of 2010. This is one case where the boston area is pretty expensive. If you want to live in your own apartment, it's hard to get too much cheaper than this. We're now living in a bigger place with another couple, and our rent and utilities are about \$900/month. Rents are definitely something where boston is on the high side.
##### Food
• BEST: \$447
• Us: \$157
They calculate using the USDA's low cost food plan, which is their second lowest cost plan, the cheapest being their thrifty food plan. The main problem with these numbers is that they are calculated in a remarkably useless way. They group food into about 60 categories ("whole fruits", "orange vegetables", "whole grain cereals"), then assign costs and nutrition information assuming that people are eating from the category in the proportion people do on average. So if the "whole fruits" people tend to eat are 40% apples, 35% oranges, and 25% bananas, then the cost will be a weighted average of those three. Once they've assigned costs and nutrition, they run some optimization to figure out how cheaply one can get the needed nutrients. The problem with this is that they can't say "eat bananas to get more potassium" because the only knob their optimization thing can tweak is the "whole fruits" one. This means that if a category is not homogeneous in terms of either nutrition or cost, they'll not be able to optimize well.
##### Transportation
• BEST: \$977
• Us: \$72 (really \$131)
Our transportation costs didn't include the \$59/month bus and subway pass I would get as a benefit from work. So say \$131/month. This is much cheaper than their estimate because we don't have a car (or two cars). Our rent is higher because we live in an area with good public transit, but not by enough to make up for the high cost of cars.
##### Personal and Household Items
• BEST: \$346
• Us: \$76 \$330 or \$109 (see below)
Their category includes some things that we count in the housing category (soap, laundry) and doesn't include some things that we include in the allowance category (eating out, musical instruments). So that our allowance category is lower is even more of a difference. We don't spend much on clothes or personal care products, we buy furniture used when needed, we don't have life insurance, we don't have bank fees. They calculated this by assuming the "27% of a family's housing, utility, and food expenses" that the BLS's Consumer Expenditure Survey found people spending on average.

Update 2011-04-04: Julia points out that this number is a weekly number, not a monthly number. The monthly number for all of allowance would be \$330. This includes things that don't go in the BEST's personal and household items category. Correspondence with our categories is with the clothes, shoes, sundries, and tech columns (and some things (dish soap, paint) in the housing category). Counting just these allowance categories, we get \$106 (per month).

Overall, the biggest ways we save money compared to their index are not having a car, preparing food at home not following the silliness of the food plan, and spending less on miscellaneous items.

[1] Some website gives boston as being 129% of the national average.

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