Housing location & lifestyle question

outside the ring road is suitable location for you. your expected budget also proper for one year.

You can rent an entire building for $500 a month, possibly less. There are new laws and they seem to be a lot friendlier for foreigners, especially Chinese. I'm not looking forward to experiencing what happened in Madagascar with the Chinese coming in and stripping the beautiful land. But maybe it won't be like that. I think the Chinese have learned not to do that.

Yes, you can live pretty well on $1,500-2,000 a month. The long-term thing is the issue and working part-time. Nepali wages are really low. You'd be better off to get a business visa and a Nepali partner-you must have one.

You could easily do a social enterprise. I'd love to see someone do something with bamboo. You'd need to bring a machine to pulverize the bamboo to turn it into fabric. We have a lot of bamboo and using it will encourage more Nepali to grow it. It doesn't need fertilizers or cultivating so it will help to go organic.

Also, bringing technology to deal with our plastic situation would not only help immensely but it could be quite lucrative.

But the wages are really low and all you would be able to do probably is work in a school.

I hope this helps. If you need anything just send me a message. I love living in Nepal.

Securing a job in a school is a good suggestion, but not any school, and you might bear in mind that the further you ex out from the city limits, the less you are likely to find the type of school you would want to apply to, with a view to landing a decent salary from them. I think I would focus on international schools in Kathmandu exclusively. Forget nepali schools for that reason.
Also, do bear in mind that if you are planning to live in Nepal on a tourist visa, you are not authorized to work.
Therefore, I would suggest that you waste no time while still in your country in contacting the British School in Kathmandu, for example, to determine:
- whether they might have a job for you?
- and if so, apply to them.
After that, you might try other schools or other potential employers too. 
If your get positive feedback - and this is vital - see if can get them - your future employer - whichever one it might be to apply for and obtain for you a working permit for you for the next 2 years, say, that you mention.
You mention one million rupees a year and ask if this is enough for two people to live comfortably on? That's like $8,700 p.a. which at current exchange rate translates into some $700 a month, which is way short of the $1500/$2000 a month the lady contributor cited. So the point is that you will need 2 if not 3 times the sum you mention.
To conclude, I would therefore recommend that while your are still in Australia - and before you hop on a plane, you contact a school or some other potential/would-be employers in Nepal
- with a view to lining up a job with them
- securing a decent salary
- so that you can be working legally in Nepal, on a non-tourist visa  (but let them do all the work of securing it!)
In your shoes, As I said, I would  therefore strongly advise that you contact any number of future potential employers at the earliest possible moment, well ahead of your arrival in Nepal and get all this sorted out, as a matter of priority. If it all pans out, it'll save you a lot of time and expense, and visa application headaches, too!
After it's sorted out, you'll have a better idea as to where you want to live (with minimum commute/least polluted areas, etc) and how much you can afford to spend on rent.
Best of luck.
P.S. As for the other possible alternative of possibly going into business in Nepal, I would definitely not recommend it particularly if you say you are only intending to spend something like only 2 years in this country. Not worth it, too many Business Visa formalities, in my personal opinion. I don't see this as a viable alternative for that short term duration.

Agreed, for a short stay limited to 2 years in Nepal, simply not worth going through all the hassle, time and expense of trying to set up a business here, having to meet all the stringent DOI requirements, etc. This way, no need to apply for a business visa, and no need to recruit a nepali business partner, which personally I would never recommend to anyone.  Instead, working for an international organization like a Kathmandu school for example, makes a lot more sense to me. Kool, good pay, no worries.
Best way I know to hold on to the freedom of mind, freedom of movement you mention, which has no price. Why get bogged down?

Alison, another way to work only 5 or 6 hours a week instead of 50 or 60 hours, and earn extra money, is for you to become a buying agent of nepali handicrafts for account of australian buyers in Sydney, to whom you would then ship to from Kathmandu. You could carry out this extra curricular activity totally legally during your 2 year stay here on a tourist visa without the necessity of having to get a business visa, and here again no need whatever to have a nepali partner, which is better. I know several people who do this. You retain your freedom, can do your buying of products as and when you feel like it and prepare group shipments of handicrafts to send to the buyers in Australia that you've lined up, say one or more times a month. You can save loads on shipment costs by grouping your shipments and, say, ship to one address, instead of sending the goods individually to each separate buyer. NO need to set up a nepali company. To achieve this, perhaps you could have someone in your family member or a friend agree to act as receiver/addressee to represent you in Sydney, who would then re-distribute and deliver the products to each individual buyer "in situ" in Australia. Up to you to decide on the kind of gross profit margins you want to charge your buyers but I would think anything anywhere from 15% to 30% depending on the nature of the product. Even after deduction of shipping costs, it should leave you good money, net. Over a period of time, you could considerably increase your margins, and save, by shipping by sea, instead of by air, as shipments by boat are far far cheaper than by air, even if it takes longer. 
To implement this, here again, be best for you to line up your prospective buyers in Australia, while you are still in Australia, BEFORE you leave. Try and determine before you go the exact nature of the asian products they specialize in and focus on those. Call on them now, and chat with them.  As I was in this handicrafts business for many years, I think I can tell you that the nature of the products you can find in Nepal and which should be popular in Australia are the following:
- Homemade incense. Many leading brands.
- Candles of all types
- T-shirts - preference to white ones. Avoid possible color problems.   
- Small pure wool carpets, or a combination of 80% wool and say 20% silk, all hand-loomed.
- Prayer wheels and small statues of Buddha, White and Green Tara and other deities ( preference to 6in, 8 in and 10 inch, in bronze or copper (not silver)  As soon as you get to 12 inch statues, far too expensive, and too heavy to ship too. 
- Pure wool products like scarves, gloves, etc.; but direct from producers.
- Cashmere but here again ONLY if you buy straight from the factory and NOT in Thamel where so often local shops will try to palm off "pure cashmere" products on you which are not cashmere - but rather synthetics - and so often made in China! Go to people like Everest Company and buy from their factory on the outskirts of Ktm to get genuine stuff. 
- Avoid the "pure yak" products too. ALL of those products sold in Thamel , without exception, are made of synthetics.
- Stick to genuine/quality products, and focus on proposing your prospective australian buyers good products for their money, which do exist, specially if you buy straight from nepali factories or producers, outside of Thamel shops, I must again stress.
Have a nice stay, learn the business and make some money to boot!!
- Stay away from so-called " pure silver" and "pure gold" jewellery, Bronze, white metal etc. are safe and good margin selling items.
Felt products in Nepal are excellent. Everest Fashion is very reliable producer, with slippers, gloves, etc.
This handicrafts business can both be fun and instructive for you, and I am sure your australian buyers in Sydney and elsewhere in the country should  be happy to work with you, to the satisfaction of all the parties.
Note: Always bill your buyer after he's made his purchase selection on the basis on the pro-forma advice you will have sent to him, and receive the money above board and within regulations by bank to bank transfer direct from Australia to Nepal. (Funds should not go by Western Union, Moneygram or other) You should always be placed in funds, before you ship the order, quite obviously. Use good shipping agent to declare etc. Capital Cargo or Speedway are good.  Never grant credit terms. If you did, you would then be violating nepali regulations. Avoid that problem. Stay legal.
A form of business for you to consider.

Hmm.. Yes you can live for $800 a month but maybe not that life you think you will. Dr's here make about $1000 a month for example but you are "not" getting the big house in Kathmandu on $800 a month. You "might" be able to rent a place with some rooms and airbnb them to foreigners for $10-$30 a night depending on location, amenities etc.

We have a place in Chitwan that is 2 bedrooms, nice kitchen and living room terraces etc. for $120. That does not include electric or AC.

Trying to live "the Western life" on $800 may be hard in the greater KM area. You may not get a job and it may be for a lot less than you think here. www.merojob.com has a lot of listings.

Theo has done what he is talking about and I have done import/export and it is a little harder than you might think. You have to have set up your buyers ahead of time, they have to have sufficient demand, and be reliable for monthly incomes.. Basically you start a wholesale business in AU and then move..

If you can do something online then you are probably in a better spot. But for that you need good internet. You could for example work as a VA for someone or answer phones/call center for a company like ours perhaps ( we outsource some things) but you would if working in the west be up all night working as the time is reversed.

$800 a month is not for travel outside of Nepal. The life you are talking about is a $2,000 to $3,000 a month life I think unless you scale back..

Yes. At current exchange rate $2,000 you cite is like needing 227,000 Nrs a month in round figures, while $3,000 would mean 341,000 Nrs.
This contrasts with a budget figure for two of 1 million Nrs for the whole year that AlisonDK quoted in her original query - equivalent to 83,000 Nrs/per month - which is something altogether different.

For that sum of money, I can live well in Europe, I know that.

huhm, sounds to me like Nepal not exactly the cheap country to live in it used to be.

Some things are cheap. Our house has about 50 rooms and yet utilities are $100 a month. As a couple we can live OK on $700 a month without a house payment. But others live OK on it just scaled down.