The Secret to Living Well on $40,000 a Year

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Its all about living within your means and accepting that we don't all get large salaries.
just use this site to get a generalized family budget.
http://www.debtfreedestiny.com/budgeting/recommended-budget-percentages-and-guidelines/
its likely that for 40k budget the needs get a little more to the high side and the wants gets little less.
for people living outside their means its sometimes hard to imagine the cut backs that might be required to achive savings.
my wife and I have combined salaries around 90k but we are using about 30% of our take home ammount to pay debts and save.
We have regular talks about how the $1800 a month we are not spending could be spent but we usually agree its better to get our debt down.
Hopefully when we have kids she can stay home with them.

dave 9:36AM November 16, 2011

Absolute nonsense! On top, the article really does not describe how they live off $40,000 a year. Anyway, if you want to learn to live poor and happy, study a single African-American mother. She can raise a dozen kids with $15,000/year and live good and debt free.

Ben thaty of IL 3:26PM November 11, 2011

Less than 20K a year for a family of two. I attend school with the help of financial aid and loans, and work, my husband unfortunately is confined to the house thanks to United States Immigration laws (Why? Because in order for someone to legally become a citizen they must complete a fairly long and expensive process, during which time they are not allowed to work without permission. We have journeyed 3 years and $3,000 dollars and are still not there). I am a 20 something that started my adult life at the lowest point of a weak economy. Jobs have been scarce and I am thankful that I have had jobs that have been a blessed relief. I cook at home and we eat a lot of rice (25lb bag costs just as much as a 10lb bag in most cases). I work overtime as much as possible and take advantage of the awesome day old bread at my grocery store. We share internet with a neighbor, use my mothers netflix account instead of having tv, and travel only as a necessity. We have the least expensive apartment in a 50 mile radius and generally only eat twice a day. Our extras include cigarettes, nutella, and the once a month red box movie. Still I find myself sad when I get my past due electric bill, when at the end of the month I am calling my mother and asking her for gas money, or simply trying to figure out how to make the last bit of rice last long enough til I get paid again. It is a struggle everyday. . .and yet I am wealthy compared to my neighbors. I know I live in the lap of luxury when I stop by the bus stop to give my neighbor and her son a ride home. I know I am better off because I eat everyday and I have a family that takes care of me. I am better off because I have chosen my place and I know that I am working to raise myself.
Some are not so lucky to have the choices that I do. Yet everyday people take for granted the blessings they are given, myself as much as anyone else.
I calculated my rank in Americas Economic percentage and I am part of the 20th Percentile. This means that 20% of Americans (62,501,700 people in the United States of America) have as much or less than I do.
I don't fight for the 99%, I fight for the 20%. I fight for those who lose job opportunities because their credit is bad. I fight for those who lose job opportunities because due to circumstance they have been unemployed. I fight for those who work 40 hr weeks and still live on the street because they are only earning minimum wage. I fight for those who are tired at the end of the day and yet find time to tell their children that they are loved.
I fight against the people who complain that $50k is not enough. I fight against the people who treat people below them with disdain. I fight against the people who wonder why their child misbehaves when they are carted from school to after school care to child care and then to bed without any interaction with their parents.
Sorry I started this to help people understand a situation, then I got angry and started writing. Rant!

Angela of NC 2:30AM October 28, 2011

I noticed that the author was a bit short on how he managed to accomplish his goals. That's understandable, as he is probably looking to sell books.
I'm in the same situation, and making a similar amount. 40K is a lot of money when you live in a rural area and have no debts. Your paycheck is essentially yours to do with as you please.
Other than staying out of debt, I did one other thing that would be of immense benefit to any young person. I joined the military straight out of high school and saved almost every dollar I made while I was in. So, I was able to buy a new car when I got out, and fifteen years later I had a nest egg that allowed me to buy land and a house with cash.
This path isn't easy in the early years; it is easy to get discouraged, especially when others are having fun at your expense. Luckily, I had a psychology course in high school where I was taught about time horizon experiments. This is a fancy way of determining whether an individual would rather have, say, a dollar today or ten dollars a week from today. The smart people were those who took the ten dollars later, and I decided I wanted to be part of that crowd. It works.

Matthew Dunnyveg of TX 5:17PM October 27, 2011

I became interested in this article when I heard this topic in the news the other day. We live on a $20k per year salary while both my wife and I attend school.
I agree that good judgment is always a must when spending things that you need and things that you want. We have lived this way for the last five years and with this mentality we have been able to pay our debt, pay our vehicles and make financial decisions for the future.
Here are some tips that we do:
We practice home cook meals and once a month we
go to a restaurant of our choice and treat the family. The internet is full of websites with great recipes.
Research any item before buying especially if it's over $100. We live in a society that "We wanted now and fast" so we go against marketing strategies that companies use. If we can get it new and cheaper why not?
DIY- I agree with the comment about learning how to do it yourself. We recently had a water leak in our bathroom and ruined our walk-in closet. If I would have hired a contractor it would have cost over $5000.
By doing research, buying our own supplies we did the job under $1000.
If your running vehicles work why buy a new one. Our suburban transmission went out 2 years ago and we just replaced it the transmission by going to the dealer guarantee of 100k.
Use the internet for free stuff, promos, coupons. We received a free steak card and a free toilet paper container.
I use to be a person that had to have everything new from the mall. I remember spending over $100 when I was young on jeans, shirts and shoes. As I'm older sometimes I go to thrift shops, second hand store, flea market, garage sales.
We live in Texas and have land to grow our garden. We plant green beans, squash, bell peppers, etc.
We rarely use the A/C and heater depending on weather conditions.
Sometimes we have to remember how our forefathers survived. If they did it why can't we survive?

Ed of TX 10:31AM October 12, 2011

Interesting.
I've lived on , essentially, one salary with a working wife for all my married life. Wifes salary was for extras and largely saved via my maxing out 401Ks from my job plus her funded 401ks and cash savings. Note that there are NO dollar figures stated as within the article for the wifes contributions.
However, note the states listed as NJ, IL, FLA, TX, OH, and the relative high cost states versus the lower cost to live states. NJ has higher costs, TX,FLA, OH lower costs. So, this clearly depends on where one lives. Higher cost states typically have higher wages for jobs and lower costs typically are lower wages. It also depends on the job you have in each place which could be high wages or low wages within each state. So, the low cost state with a high paying job equals one set of variables and the high cost state with with higher paying equals another set of variables. Housing cost is a large part of these variables and this varies in each state or areas of each state.
The comments reflect these issues and what is ridiculous to one commenter is reality to another.
This goes on to show that where you choose to live and what you get paid for your job drives this; living within your means is subjective based on these factors. Obviously we don't have all the facts in the article but my own expirence tells me that with the wifes income of at least 30K as a minimum this is a 70K per year situation and they could be saving a lot! The debt situation based on one income is a viable concept in some states, housing factor is critical as in mortgage and property taxes , income taxes all figure in to the equation. Lack of an income tax by the state is also a factor.
NJ costs for housing versus another place of lower costs does not mean one is living above thier means or within thier means! My point is that there are millions of possible combinations and areas that people live and work in. One single example cherry picked for its income of one person is designed to create wild comments and controversy.
Living in CA on 32K per year , retired and live in 2d/3d highest housing cost area of US. While working 2 incomes , wifes not figured in any debt such as mortgage, one salary paid all costs. Salary was double of articles noted amount, costs consumed 100% of salary. Wifes salary is not stated, housing cost not stated, lifestyle not stated. So, like the article; you basically cannot belive what you just read! No one is gonna give you ALL the numbers and even if they did you would not believe them. Each situation is totally individual.

ken of CA 2:20PM October 06, 2011

And you can live quite comfortably on less than 40k. The key is to separate want from need. His clear cynicism toward our manipulated consumerism is spot on. One just has to avoid following the crowd, something the great majority are incapable of doing.
1. Stay out of debt
2. Don't pay too much for anything. Take time to do your homework ($200 jeans for example-what are you thinking???)
3. Realize that most of the JUNK you accumulate will go mostly unused and eventually scrapped.
4. Always ask yourself if you can do without that new item.
5. Exercise the theory of "sweat equity." Learn how to do it yourself, including building your own house, fixing your own car, etc. (see "stay out of debt" above).

SM of NY 9:57AM October 06, 2011

read article.

J of NJ 9:43AM October 05, 2011

A very smart man and wonderful Father. A great teacher in every sense of the word. This is a good way for all parents to help their children to learn. I am 63 now and only wish I had gained all of my financial knowledge at a younger age to benefit for retirement. I am so glad to see the financial wisdom of this young man and that he is willing to share it. Granny.

Carole 11:55PM October 04, 2011

I've never made more then $40,000 a year yet I support two children, own my own home and car, travel regularly, have no debt (other then a modest mortgage), and have my children's educations saved for and my retirement assured. I've been very lucky, it's true, but I've also lived below my means, shopped carefully, avoided buying new whenever possible, traded, gardened, eshewed debt and generally lived simply if comfortably. I'm fortunate to live in Canada where we have healthcare and adequate social support systems. But this article made me laugh since I would never consider myself deprived on any level.

soco 2:40PM October 04, 2011