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Stress Free Money at $40,000 and below

 

I found an article this morning about how a family of 4 was living on $40,000.  It was titled ‘The Secret to Living Well on $40,000’.  Now I think this family is great and financially smart, but how can living on $40,000 be a secret?  This is above the poverty and welfare lines and includes tons of families in our country.  Shhhhh…. people all over the place are surviving on $40,000 a year.  

The key to simple, stress free money is that money coming in is greater than money going out.  That is it.  No matter what someone makes it is this where the peace/stress line is.   It is something that can be in balance even under $40,000 a year.  (gasp)

No matter what the ads say, your friends do, or TV portrays the median income in 2010 in the USA was $50,046 (and dropping) source.   That means that half of the families make and live on $50,000 or less.   In the midwest it is lower. In Nebraska where I live the median income is $47,357 source.   This means a large percent are living on $40,000 or less. 

Living on less money than comes in is key to living a simple, money-stress-free life.  It is huge in my life, and it is huge in most people’s lives (unless you are part of a very small amount of people who make so much you can’t spend fast enough…). 

I wanted to write-up the numbers of what our family does.  We are working on budgeting and cutting our bills back even more since we decided to simplify because we want to save up as money for the things we want as possible. (and we are trying to pay of the Prius)

Our family budget is about $2200 per month.  We don’t always balance but we have come out ok on the average on months when we aren’t traveling.   This is spendable income of  $26,400 per year (after taxes, contributions, savings).  This is how it breaks down:

Rent- $800

Food-$350

Car Gas-$175

Utilities -$75

Entertainment – $50

Misc (cloths, house stuff, etc) – $200

Savings pool for insurance (health and car), car expenses, school costs, medical costs – $550

Our phone and internet is paid out of our businesses. 

Since we are self-employed we don’t know what we will make from one month to the next so the less we have to make the less work stress we have.  We also choose to spend as little as possible for the ‘everydays’ so we can take longer vacations and having more money in savings.  It is probably possible to live on even less and still provide food and shelter for a family of 4. 

What I want to get across is, for the most part in this country, people have way more financial freedom than they often embrace.  Most of our money is spent for wants and not for needs.  It is a choice. 

It is perfectly fine to spend money on whatever you want.  I am not saying that spending money on wants is wrong.  I just get frustrated by people’s excuses and pity party based on money.  If more money is going out than coming in and it is creating stress, fix it.  If you want money for something specific and don’t have it, fix it.  If it costs too much to live in a specific area, city or state… move.    Get to the place where it isn’t a fight to finish the month in the black and life gets better. 

Money is a tool, not a barrier.  Simple, intentional, and even possibly minimalistic living really helps prioritize and make sure money is not a secret and not a stressor.   It is true in this society that there is always a push to spend more and the myth that families can have it all is everywhere.  These things do make it feel like living on $40,000 or less is hard. 

Another great recourse is Dave Ramsey’s program and teaching.  He is super motivating and entertaining and has practical, usable advice.

9 Comments

  1. Danielle Danielle

    Love Dave Ramsey!! We are debt free-eveytjing but the house!!! And working- on that slower than I’d like, but doing it. Love your blog!! Trying to simplify my life right now!! Cleaning out 1 drawer, cabinet closet etc at a time. It’s a freeing feeling. Your an inspiration to me!!!

    • Yeah!! So excited. We are debt free now too! (except the house, that we are now renting out because it is bigger than we need). We purchased a Prius last Aug which wouldn’t have made Ramsey happy but we just got that paid off. Now we are back to working on our savings again. The freedom in not having debt is amazing.

  2. I would love to see what you buy for groceries each month. I know you guys keep a vegan diet, which is what I am working towards in my family. I find it pretty difficult to keep to our $400/month budget for groceries for our family of 4, would love some tips!

    • We are not fully vegan either…. like you we are working toward it (me more than my husband :)). The big ones that I try to do as much as possible and see the most results (money wise) from are shopping once a week and planning our meals out a week in advance. Trying to keep a minimalist kitchen because I want to and I have to (our apartment kitchen is very small) has helped also because I don’t just stock the kitchen, instead I only buy for meals I am planning. Lots of things affect food budgets and $400 is still really good compared to what food budget averages are. I am posting on some of that next week. I think a thrifty food budget for a family of 4 with only small kids is still around $600 (according to some government board).

  3. Anne Chapman Anne Chapman

    Enjoyed this post, wants are not needs. I stopped buying women’s magazines to stop their power to create even more wants (and to save money!) it helps.

    Also worth reflecting that 2 billion people globally live on less than US$ 2 per day…

    Thanks for your great site.

    • Good to meet you! It is crazy to think about so many people with so little. Having money to have a computer and internet makes us some of the riches people in the world. … how can we be stressed about money like that 🙂

  4. Hope Hope

    We’re seniors living on a fixed monthly income. I find it’s hard to stay at $100/week for groceries. We live on a sailboat, so think very little freezer or fridge space. We use to do a lot of canning/freezing from our home garden when we were “land-lubbers”. I can’t imagine how you make out with what you allow for groceries…. Great going!!!

    • Wow! Living on a sailboat sounds awesome! We have a few good stores around me that are pretty cheap and I know where to go to get what. We also build meals on rice, beans, lentils, and other cheap (but healthy) staples. … I can see how it would be harder to do a bunch of that on a boat because it takes so long to boil 🙂

  5. Susan Susan

    Reading your book now at home and working through the stuff! Freeing as the recycling bins fill up!!

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