Who is able to live on $40,000 a year or less? (sale, prices)

[1brokegirl]

Economists say these days you should spend no more than 35% (net pay) on mortgage/rent (preferably 25%). Many folks are spending around 50% on that right now. I would be curious to know how much of our net pay would have gone to housing in the 70's, for example. Or the 50's. So rather than speaking in terms of dollars, we need to speak in percentages - and yes, it's a LOT tougher now.

However, with that being said, we also have more "toys" now. There is a computer and TV in nearly every room in many families, multiple cars, etc.

But as someone living on 24K a year (and working full-time), 40K sounds pretty awesome.

[Submariner]

It is crazy the way that prices / wages have gone up so much.

When I was working my income peaked at around $75k, and I thought I was making really good money.

Yes, you read about suits who make $500k, but honestly what percentage of our culture are they? Just a tiny percentage. I think.

But I see others who assume that $100k is a low income.

[modhatter]

Originally Posted by SifuPhil

Well, first of course you have to consider my wise-azz nature. But in fairness to the OP and to answer your question:

1. I'm in my mid-50's, so you have to consider the shock value of the OP's question to my still-fresh memories, where $40k would have been a king's ransom back in the '60's.
2. Seeing "$40k" in a Frugality thread is a bit of a shock.
3. I used to live in NYC in the mid-70's. For a large loft in downtown Manhattan I was paying $2k/mn rent; all other expenses were around $1k, so for about $36k/year I was living "high on the hog". Now, the same loft goes for $6k and total annual expenses would be more on the order of $100k.
4. Since I am now a minimalist with no family, no land, no house, no car etc. "$40k" once again sounds like a king's ransom.

I guess it all comes down to perception and to where and HOW you live. I wasn't laughing at the OP - I think I was laughing at the arbitrariness of the question and how it relates to my present mode of living.

Well, that's my point. It seems like only five years ago, I would have thought $40,000 enough for a single person the maintain a modest place, drive a modest car and pay their expenses. But inflation is an insidious thing.
It creeps up on you before you realize what is happening (other than health insurance)

Gosh, if we are going to look back. My first job paid $40 a week, and I lived on it. Of course at that time I lived in the YMCA, and I think my rent was something like $13 a week, utilities included. Now that is obviously dating me. I was just thinking the other day about when I first moved to Scottsdale, Arizona. (34 yrs. ago) I rented a very large 2/2 town home in a very upscale resort area for $200 a month. I am sure the rent there would be $1,200 or more now. So time changes everything.

So, I agree that posting "Can you make it on $40,000 Annually" may seem funny on the Frugal Living thread, sadly for many it is not.

I have found so far that some people who claim to live on much less are really not living a normal suburban type life.(Going to get comments on that sentence) They seem to be located in a somewhat remote area (nothing wrong with that) or live in a studio, or their parents house, or no house or apt (can't figure that one out) or restrict their life style so as to not use the heater in the winter or ac in the summer, and you can grow your own food and raise your own cattle. I understand you can save quite a bit by these measures. That's just not the picture in my mind. I would like a place where you don't have to take such measures. I would starve to death before I could slaughter any animal. Guess I'd turn into a vegetarian real quick.

So yes, I agree. It seems like yesterday that my original post might seem silly. But unfortunately for many today, it is not. So like a song, "things, they are a changen." (misspelled on purpose)

[ragnarkar]

Originally Posted by wawaweewa

I made around 41k last year. I'm single and I choose to live with my parents because this way at least I have something to show for my work. I pay rent of around $800/month in the form of paying for the households utility bills and I squirrel as much as I can of the rest away into savings/investments.

I ran the numbers and If I lived on my own, the most I could save while living like a monk and no emergencies would be no more than $500/month. What's 6k anymore? You'd be hard pressed to find even a good used car for 6k anymore. A broken leg or arm will run you at least a few grand. If you have any type of significant emergency you can kiss those savings goo-bye.

It's not the present that I'm apprehensive about. It's the future. If I didn't care about the future, I'd view what I'm making as a gold mine. In fact, many of my peers do.However, taking the future into account, 40k isn't going to cut it.

My share of the rent is only $600/mo..

My car (Honda Civic) was bought new and given to me from family 13 years ago.. it has 166K miles, and I plan to keep it to the low 200K's.

Even in a fairly wasteful month, I save about $1000. (After tax monthly is about 2700 for me)

My emergency fund is about $5000.. the rest of my savings I squirrel away into PRPFX

[Ol' Wanderer]

Since 2003, we (husband and I) have been living on his pension of 24K gross in Italy (owned home so no mortgage), then Charleston, SC with mortgage, and then on the water in SW FL with relatively high rent. Now, with added SS, it's 27K (still gross), we live in Southern CA with a small mortgage. Never once we had a roommate.

We live a simple but quality life, travel abroad (up until last year, we visited Europe twice yearly, but due to home renovations, we will not take one this year) and eat well daily. We also have a car payment (2011 Honda Civic).

[Gandalara]

I bring home, after taxes & other deductions, more than 40K
According to my spreadsheet, I lived on $15,240 last year
Single, Southern CA

Average monthly expense total $1270:
Rent or mortgage or mortgage free: $0, home paid off
Home Insurance $44
HOA Fees $0
RE Taxes $132
Electric $82
Water $50
Heating (Natural gas) $33
Sewer & garbage - Septic tank, free, $20 for trash pick up
Lawn maintenance under Repairs/Maintenance
Truck Insurance $54
Truck gas & maintenance $144
Cable (if you have TV) $15 for DishTV
Telephone see internet below
Internet $38 for landline and DSL
Health Insurance $0 Single, employer pays
Prescriptions and co-pays $0 - Didn't get sick,
Food/Sundries/Cigarettes/Alcohol $327
Repairs/Maintenance $112
Other $219

I don't feel 'deprived' or poor at all.

I can't believe what some of you are paying for cable, phone, and internet! Ouch, ouch, ouch!

[creeksitter]

restrict their life style so as to not use the heater in the winter or ac in the summer,

Modhatter, I know this was directed at Chris, rather than I, but I could probably have a very conventional energy usage for less than an additonal $50 a month average. My house is not suburban but it is in a safe neighborhood with a 50 x 150' lot in a 600K metropolitan area.

What helps with the savings is I like oatmeal for breakfast, cook a lot, Don't care for processed food, don't buy sodas or desserts at restaurants, drink tea as much as coffee and always at home. Little stuff. Paid for vehicles helps.

It's only Chris that takes the frugality to extreme but I think for him it's a hobby. For a few others its a necessity but that is under 20K.

[modhatter]

Originally Posted by Gandalara

I bring home, after taxes & other deductions, more than 40K
According to my spreadsheet, I lived on $15,240 last year
Single, Southern CA

Average monthly expense total $1270:
Rent or mortgage or mortgage free: $0, home paid off
Home Insurance $44
HOA Fees $0
RE Taxes $132
Electric $82
Water $50
Heating (Natural gas) $33
Sewer & garbage - Septic tank, free, $20 for trash pick up
Lawn maintenance under Repairs/Maintenance
Truck Insurance $54
Truck gas & maintenance $144
Cable (if you have TV) $15 for DishTV
Telephone see internet below
Internet $38 for landline and DSL
Health Insurance $0 Single, employer pays
Prescriptions and co-pays $0 - Didn't get sick,
Food/Sundries/Cigarettes/Alcohol $327
Repairs/Maintenance $112
Other $219

I don't feel 'deprived' or poor at all.

I can't believe what some of you are paying for cable, phone, and internet! Ouch, ouch, ouch!

I can't believe you pay $38 for landline and DSL
Here, land line with no long distance is $37. DSL, I believe can be had for $40 for lower speeds. I have cable 6 mg, and it cost $64. mo.
Dish TV $15. What the hey??? Lowest entry package here is $49.99.

As to my comment on heating and cooling, I did not mean any disrespect at all. I was just trying to compare apples to apples, and since I unfortunately find temperature comfort a necessity for me, it would not be a good barometer in comparing those costs with someone who is more adaptable than I.

Also, can someone give me a brief lesson in selecting portions of someones post that you want to respond to, as opposed to selecting the whole thing. Do you just have to go in and erase all that you don't want to address, or is there another way?

All the responses have been very interesting.

[Submariner]

Originally Posted by modhatter

I can't believe you pay $38 for landline and DSL
Here, land line with no long distance is $37. DSL, I believe can be had for $40 for lower speeds. ... .

Around here; a landline with DSL broadband is around $38 - $40. We dropped the phone service and now only have the DSL which costs $18.

[creeksitter]

Modhatter, copy the part of the post you refer to, highlight it, then hit the little cartoon baloon on top of the message box.

My point was that for an extra 50 added to my budget you would be comfortable and not have to futz with the thermostat. I do that because its a hobby. I thought I'd clarify that the heating and cooling is not a huge expense when you live in a temperate climate with a insulated and weathertight house.