How I Live on Less Than $40,000 Annually: Calin from Romania

flag romaniaMy name is Calin and I am a professional blogger living in Romania. Next year I’ll be celebrating my 30th birthday with my beautiful wife and our newborn son. Yes, we still party, even though we live on less that $15,000 per year. (And no, I didn’t forget any zeros there!)

So how can a family of three live on such a laughable income, especially compared to US standards? Well, first of all, the cost of living in Romania is the main ingredient: It’s not uncommon for a person to make ends meet for around $1,000 per month, and I’m living proof that a family of three can live a great life on about $1,250 per month! It also helps to have responsible financial habits: like budgeting, cutting expenses, buying in bulk, and being careful to avoid spending money on stuff we don’t really need.

I haven’t always been too interested in this whole personal finance thing, but once my wife got pregnant, I got serious about tracking and reducing our expenses, and saving for my family’s future.

Here are my secrets for keeping our annual expenses under $15,000:

  • We don’t have any debt. This is extremely important. We don’t live a perfect life. We would love to have our own place, but right now getting into debt isn’t an option, so we live with my mother and grandmother in the same house. Thankfully, we have our privacy because the house is divided by an entrance hallway. Our side of the house is 807 square feet and includes one bedroom, one bathroom, a small kitchen and a small living area that we’re using for the baby’s nursery. Next year, depending on the cost,we plan to add at least one extra bedroom — but preferably two.
  • We rarely eat out. The fact that I am working from home gives me a lot of time to cook. Home cooking is not only much cheaper than eating out, but it’s healthier too. Now that we’re used to it, we prefer our dinner at home instead of at noisy, greasy restaurants.
  • We rarely drive our car. We live in Drobeta, a small Romanian city of about 80,000 people. We’re lucky to be in the city-center, where everything is within walking distance. Walking more has also helped me lose weight. Plus, our newborn loves it! Although I own a Romanian 2006 Dacia Logan, we generally drive it only a couple times per month when we need to stock up at a hypermarket. In case you’re wondering, gas prices in Romania are about $6.34 per gallon right now. My car insurance is inexpensive — I pay just $71 per year.
  • We make a budget and stick to it. After tracking our expenses for the first time, we were shocked to see how much money we wasted on junk and other stuff that we didn’t need. Tracking expenses and budgeting has helped us understand that most of the things we thought were “needs” are actually “wants” that we can happily live without. Still, we don’t live an extremely minimalist lifestyle; three years ago we bought a big screen TV, and I own a decent smartphone.
  • We rarely buy brand items. After some testing, we discovered that cheaper generic-brands are just as good as the big-name brands. So now we buy local and less expensive food and household products.

As an example, here are our monthly expenses, on average, over the past two months:

  • Food: $240
  • Utilities: $180
  • Gas: $40
  • Car insurance: $6
  • Fun & Entertainment: $80
  • Health insurance: $100
  • Kid expenses: $80
  • Household items: $30
  • Misc: $150
  • Total: $906

An unfurnished two-bedroom apartment can be found for as low as $200 per month, excluding paid utilities. However, since Drobeta is not a renter’s market, there are few such apartments available, and they’re usually small and far from the city center, which would increase our gas costs and other expenses.

We expect our child expenses to increase, as well as the winter utility expenses, but everything else should remain about the same.

Our Savings

Anything that’s under our budget of $1,250 per month goes towards saving. We have an emergency fund that currently covers eight months of expenses; but we’re trying to bring it up to a full 12 months. We’re also injecting $1,500 into a fund for our kid’s education. That may not sound like much but, in Romania, education is free — including college — so it should be just enough.

Like most Romanians, I don’t own life insurance. I’m considering buying a policy, although there are still a few other things on my priority list I need to get beforehand.

There aren’t a lot of retirement options in Romania. There are no 401(k) funds or Roth IRAs so we keep our savings in the banks, as lame as that might sound. I’m looking for ways to invest; the stock market looks like my best choice here, but our savings are still low by Western standards and we need some extra meat on the bone. I’m also considering buying rental property to generate some passive income.

Closing Tips and Thoughts

You can make ends meet with a really low income. The trick is to cut out the junk, keep a budget, stick to it, and make sure you always save — no matter how little you earn. And if all else fails, you can always move to Romania where you’ll get a lot more for your dollar!

If you’re interested to find out more about me and living the Romanian Life, you can check out my blog over at Romania Experience.

***

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: Cristian Stefanescu

Comments

  1. 1

    Gina says

    Calin, thanks for sharing your story. I really enjoyed it. If you were earning $40,000 per year, what would you change? WOuld you live in a bigger apartment farther from town, or would you buy a house. How much more would that cost? How much would you be able to save for the future?

    • 2

      says

      Hello Gina,

      I’m glad you enjoyed the story. I am sure that I would be able to keep the expenses just as low from earning $40k per year and save all the rest, which would allow me to pay down for a house in the city center in just 2-3 years. A house in my city could be on sale for as low as $60,000 although a really good one would be around $100,000.

  2. 3

    Edward says

    Nice!! Thanks for the story, Calin. I was over in Romania this past June hanging out with some friends in Sibiu. I loved the beer, food, and hospitality of the people. (Everyone I met was extremely nice. …Except for the taxi drivers.) Speaking with locals, I understood that the most ridiculous cost of living was groceries and produce. Since the EU trade rules took over the cost of food there is ridiculous compared to wages. The price of food has gone up hundreds of percentage points. Local farmers aren’t allowed to sell produce at stores anymore because of EU contracts. Bananas can’t be sold in a store unless they have the proper degree curvature and colour. Romanians (and I find) it ridiculous that they can’t sell local tomatoes but have to import them from France or something. Food regulation as tight as it is in the EU is ridiculous.

    Thanks for sharing!

    • 7

      says

      Hello Edward,

      I am glad you have enjoyed Sibiu, it really is one amazing city!

      Regarding the local stores, things are not really that bad since local farmers rarely sold their products in stores and instead went to farmer markets (which are still very popular here). During the season, supermarkets can’t compete price-wise with the farmer markets, which are always full. And all the big markets are now selling as much locally grown produce as possible so things are not really as bad, although we do import too much in my opinion.

      But it is true, the cost of produce and groceries compared to the wages here in Romania is really high.

  3. 8

    Spedie says

    Calin: Car insurance is $6 per month?? If I lived in Romania, I would want the name of your insurance agent!!

    Congrats on being financially responsible. It is always a good thing to hear how others in other countries live.

    –Spedie

  4. 10

    says

    At my previous job we had an engineering team in Romania, so I’ve visited Bucharest and some of the surrounding cities many times. Great place, and great people! I just wish they didn’t smoke so much.

    Thanks for sharing your expenses. Given the current health insurance chaos occurring in the US right now, it’s nice to see your health insurance costs are doing better than ours!

  5. 11

    says

    More and more people stop smoking and fewer younger people start smoking so there are some improvements in this area.

    For many people living here, the health insurance cost is very high compared to how much people earn so still many people are unhappy about it.

  6. 12

    KIM says

    This is a great reader post! I’ve been passively looking for my ex-pat site. I don’t have Romania on my short list (right now it’s Belize, but that could change as the years progress and the politics change), but it does exemplify my ideal. As an American, who has tried and done everything right, I think it really is best to have a Plan B and understand the cultural/economic possibilities to make the “Benjamins” last the long term while enjoying them to their fullest. I’m married, 42, no kids, and don’t expect to have sandwich generational parental obligations in my future (ahem, but will oblige if I do, since I have no kids). I have managed to save one million plus on my own, I don’t count my husbands since he wants to work forever (collegiate). It’s tuff, since he is a professor of American History–where do you teach that other than America? Ha! I’m in healthcare. I can find something anywhere. This is a good post. It allows the brain to expand and the mind to remove. Thank you! Cutting ties with America will be really difficult, but a probable need.

    • 13

      says

      I think that getting to know a new culture and experience a new way of living is worth all the trouble. Don’t expect these cheap countries, including Romania, to offer the same high quality of living as you get in the US, but you won’t be in a land of crime either, and cured by local shamans. Maybe it would be best to visit a few of your options before deciding where you’d like to retire. Personally, if I were to choose between Romania and Belize, it would surely be the latter :))

  7. 14

    says

    I’ve been to this part of Europe many times, and there are a lot of people living on a lot less than $15,000 a year.
    In Slovakia for example – minimum wage is $400 a month
    I wonder what the minimum wage (if there is one) in Romania is?

    • 15

      says

      Romania is second to last in terms of minimum wages in Europe with wages just a bit over those in Bulgaria. The minimum wage in Romania is just 171 Euros (about $230). However, with that amount it’s insanely difficult to live.

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