My name is Ralph and I’m a retired US Patent Examiner. I have five kids, all of them in their fifties. Since retiring, I’ve developed a prize Angus cattle herd. I’ve also bought and sold real estate that I’ve held title to, sold timber from time to time, and leased my land for shale gas prospecting.
I’m not sure if my strategy for living on less than $40,000 per year will be of much interest to some of you, since it depends on a defined-benefit retirement payment that is no longer available to most young people these days. Even so, the heart of my story remains true to the spirit of this series: “A debt-free 82-year-old living in a low-cost, rural location with an assigned benefit pension of $40,000 and Medicare, is living comfortably with no financial problems.”
I’ve always been financially responsible, but I’ve never pursued wealth for its own sake, and I’ve never focused on increasing my net worth. Today my net worth is probably $2 million; most of it is in real estate.
I built my net worth by only investing in that which can be enjoyed during acquisition and throughout life, as opposed to papers in a drawer like stocks and bonds. In our case, that meant buying, on time, a large block of cheap, mountainous, forested real estate, where we built our home and enjoyed life there while the underlying asset (the real estate) appreciated.
A big benefit of real estate is that management strategies remain entirely in the landholder’s control, unlike paper investments in enterprises managed by others — and I’ve experienced many surprising episodes along the way.
One example: After I learned a neighbor was selling his timber “on the stump,” I walked out to my boundary line with him to see where his crew was cutting and, in the course of conversation, the crew chief told me he could see valuable timber over the line on my place. So I had a local sawmill assess it and the estimate was for $125,000 dollars! Ultimately, it brought $140,000 and that allowed us to pay off our mortgage and all other debt. I also bought a 1995 4X4 Dodge diesel pickup and 1999 4X4 GMC Suburban for cash, which I still own and which will last me the rest of my life.
I’ve been debt-free ever since.
My Household Expenses
To be honest, I don’t track my expenses. I manage my finances on the computer, mostly. I use tax preparation software and I bank and pay all of my bills online.
I have no rent or house payment. I’ve lived here in my private Eden for 36 years and the mortgage is long since paid off. Here in rural West Virginia property taxes are quite low — I pay about $800 per year for the house and 700 acres of land. My homeowners insurance, which includes a million dollar all-risks rider, is $120 per month.
We are independent of public water and sewer services, so our only utility is electric power, which averages about $350 per month. I pay $310 per month for satellite television, 4G Internet, and cell phone service.
I don’t keep track of the grocery bill. I just watch the checking account balance and if it gets below a few thousand dollars, I cut back a bit, or draw down from one of our three deep freezers.
As I previously mentioned, my two vehicles were bought with cash, so I have no car payments. I drive each vehicle less than 10,000 miles per year, and they’re very low-maintenance, so the car expenses are treated in same way as my grocery expenses. I pay $224 per month for auto insurance.
Of course, I have no life insurance now — although I did carry it while my kids were growing up. I have Medicare and Government-wide Blue Cross and Blue Shield supplementary health insurance.
For entertainment, my wife and I play bridge twice per month with a bridge group in a neighboring town. I visit with my children and grandchildren, walk on my property, watch TV, and listen to music (I enjoy most kinds, but I’m partial to Baroque music). I also enjoy commenting online about current events, going out to dinner, and taking occasional trips in a 1986 Scamp trailer that I tow behind the pickup.
Closing Tips and Thoughts
Like everyone, I’ve made my share of mistakes in life. If I had to share just one with you, I’d say that in pursuing my goals, I was often inconsiderate of other people’s feelings. There was no need for rudeness and I regret it.
If I had to list my five most important pieces of advice that I’ve learned over my 82 years, I’d offer these for your consideration:
- Pay attention to your government and do what you can to make it represent you.
- Marry and stay married to a steadfast, reliable partner.
- Have children, if God gives you and your spouse the gift of them. They will be a joy and a trial early — but pure joy late in life.
- Buy “investments” you personally control, and use and enjoy them as you go through life. It could be a small business; but in my case, it was rural real estate. Avoid “certificates in a drawer” that represent enterprises controlled by others.
- Stop leveraging to acquire these investments as early in life as you can. Don’t be greedy — it’s important to know when enough is enough.
If you’re a household CEO who is successfully making ends meet on roughly $40,000 per year or less, I’d love to hear from you. Contact me at Len@LenPenzo.com and be sure to put “$40,000” in the subject line. If I publish your story, you’ll get a $25 gift card!
Photo Credit: Ralph