• About
  • Mortgage Basics
  • $40K Challenge
  • Aunt Doris
  • Grandfather Says
  • Privacy
  • Archives
  • 100 Words

Len Penzo dot Com

The offbeat personal finance blog for responsible people.

How I Live on Less Than $40,000 Annually: Ruth from Kansas

By Guest

With financial discipline, a family with four kids and a stay-at-home-mom can live very comfortably on less than $25,000 per year in Kansas.

My name is Ruth and I’m a stay-at-home mom for our four kids. When our first child was born, I vowed to stay home as long as we could afford it. It’s been 16 years and three more kids since then, and I’m still here.

I was always very frugal, living within my means, avoiding debt and dabbling a little with mutual funds. Most of this I learned from my frugal, prosperous parents who have never flaunted what they have. I was fortunate in that my parents paid for my undergraduate education, so I was never strapped with student loan debt. When I moved back home from college, I started my first job with only 41 cents in my checking account — but I had no debt.

My husband, who works as an electronics technician, was the youngest of seven children in a very poor family. As I understand it, his mother probably could have fed an army with little more than dirt. When we met, his only debt was on his car, which he paid off around the time we got married.

We’re currently debt-free.

Our Household Expenses

Seven years ago, we paid off the mortgage for our very-average four-bedroom house on one acre, in one of the best school districts in the state. Property taxes and insurance run us about $240 per month.

Our electricity, gas, water and telephone are approximately $300 per month. We also pay $120 per month for Internet, cable and house-phone service.

I’ve really let our grocery expenses go lately; they currently run between $500 and $600 per month. (Oh, the days of being able to feed our family for under $250.)

On average, we spend about $100 per month on gasoline. We’re a one-vehicle family, sort of. We have a minivan that I drive most of the time. We paid for it in cash, of course. We are very fortunate in that my husband’s employer provides a vehicle for him to use for work purposes, including driving to and from home.

Our oldest child is learning how to drive and we’re considering buying another vehicle in the near future, when and if we find the right deal.

Our family health insurance through my husband’s employer is $65 per month. It used to be zero, but we have absolutely no room to complain. Most of our doctor visits have a $15 co-pay, and we pay 20% of bills up to the deductible. Our highest out-of-pocket health expense is for eye care, since four out of our family of six wear glasses. So far, our family has been blessed with good health.

We also contribute money each month towards our savings and retirement accounts, as well as our kids’ Educational 529 accounts.

Between our checking and savings accounts, our emergency fund adds up to about $55,000. This is probably more than it should be, but I like to feel comfortable with a nice cushion.

Overall, our household expenses run somewhere between $20,000 and $25,000 each year.

Entertainment

We are a family of mostly introverts, so we don’t get out that much for entertainment. About a year ago, when our Internet connection desperately needed upgrading, we finally caved in and got cable TV with one of those package deals, but I’m not impressed with it.

My kids play more video games than I want to admit.

We’re active in our church, which includes many camps for the kids and the whole family.

A few years ago, while my husband was a reservist stationed in Florida, we spent several weeks of the summer with him and did the rounds at all the big amusement parks. Yes, it was expensive, even with the generous discounts for military. Most of the time we take weekend road trips closer to home.

Managing the Finances

After our first child was born, I started reading about frugality and personal finance. Okay, I did a LOT of reading. I think I read every book in the personal finance section in the library, and then some. This helped me to hone a lot of skills related to both reducing expenses and investing wisely. Now I write about it at my own blog, Mother Frugal.

As far as managing our household finances, my husband has no interest in it so he lets me run the show. He determined an “allowance” that is automatically withdrawn from his paycheck to his account — the rest goes to my account from which I pay all of the bills. We still have the same checking accounts as before we met. For estate planning purposes, we’re both listed on these accounts, but we each manage our own.

Most of the time, our accounts are fairly equal after all has been paid. If they become really uneven, we’ll do a transfer, but that has rarely happened. It works for us.

We’ve never really had a formal budget, but I do keep track of nearly every penny we make and spend on a spreadsheet, so maybe there is an implied budget there. When you know where you’ve been and where you are, it’s pretty easy to know where you’re going.

***

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: Roy Montgomery

July 31, 2013

Comments

  1. 1

    Cindy L. says

    Ruth, I loved your story! You are doing a wonderful job!

    Isn’t amazing how much we can get for so relatively little if we’re willing to live within our means? 🙂

    • 2

      Ruth says

      Cindy, Thank you!

      Yes it is amazing. We did without a lot while paying down our mortgage, but we never felt like we were suffering, either. Now, it feels like the sky’s the limit.

  2. 3

    Gene says

    It just goes to show, a big part of living large (relatively speaking) on a small budget is location, location, location.

    Keep up the good work.

    • 4

      Ruth says

      Gene, there is no question about it. Part of our success is that we live in one of the most affordable areas of the United States. Kansas is really a great place to live and raise a family.

  3. 5

    Pepper says

    Hi Ruth! Thanks for sharing your story. How long did it take you to save $55,000 in your emergency fund. That is a lot of money!!! I’ve got $3000 in mine and it seems like it has taken me forever to get there.

    How old are your kids? ALso, how old is your minivan and did you buy it new?

    • 6

      Ruth says

      Hi Pepper! Our mortgage payoff seven years ago left us with about $4000 in our emergency fund, so it has grown to what it is since then. A big chunk of our savings happened while my husband was deployed and our income was temporarily increased. Our expenses stayed about the same, so we just padded the emergency fund.

      Our kids are 15, 13, 11 and 7. How dare they grow up so fast…

      Our minivan is a 2008 that we bought in ’09. We bought it from a reputable salvage yard. The previous owner reported it stolen, collected the insurance money, and then the van was later found, completely unscathed. Because it is still considered a “salvaged” vehicle, we saved about $10,000 on it. We plan to drive it until it drops, just like our previous one.

  4. 7

    Jon Jon says

    You mentioned you read a lot of financial books. Which ones would you recommend?

    • 8

      Ruth says

      Jon Jon, thanks for asking this! I hope to write more about this in my blog sometime.

      The two books that absolutely influenced me the most are “Your Money or Your Life” by Joe Dominguez and Vicki Robin, and “The Complete Tightwad Gazette” by Amy Dacyczyn. These books were first published in the nineties, so some information is outdated. The philosophical stuff, however, is timeless.

      There are sooooo many other personal finance books out there that I also like, but probably don’t have enough room to include here. I don’t agree with everything that everyone writes (including the ones I mentioned), but each book has contained something worthwhile to consider. Just take what tidbits of information you think would work best for you.

      • 9

        Jon Jon says

        Your right. There are a lot of books out there it’s hard to know where to begin. Have you read “The Millionaire Next Door” and if so what did you think of it?

        • 10

          Ruth says

          “The Millionaire Next Door” is an excellent one. It gives a big slap-in-the-face to how our society perceives wealthy people, by giving empirical evidence of how they REALLY live. It’s not so much of a “how-to” book, but eye opening nonetheless. Yeah, I’d recommend it!

  5. 11

    Anna says

    Ruth: Congratulations on managing your finances so well! You are truly blessed to be able to live as you do on so little money and still be a stay at home mom to your kids.

    • 12

      Ruth says

      Anna, thanks so much. Yes, I feel truly blessed to be able to be a stay at home mom!

  6. 13

    krantcents says

    Great story! It shows that anything is possible.

    • 14

      Ruth says

      Thanks krantcents! You’re right. With some discipline and luck, anything is possible.

  7. 15

    Winston O Boogie Jr says

    $55000 in emergency savings is VERY impressive. Are you still contributing to your emergency fund, or have you stopped?

    If I were in your position I would take the money I was directing toward the emergency fund and spend at least some of that on discretionary stuff.

  8. 16

    Ruth says

    Thanks Winston. Since we live well within our means, our “contribution” is just whatever remains after all has been paid. So in a sense, I guess we are always contributing to it. We do have a few large expenses that we anticipate in the near future, like the car I already mentioned, a replacement for our 20+ year-roof, driveway repairs, and such. I would like to be able to pay for things like these while still maintaining a nice cushion.

  9. 17

    Barbara Friedberg says

    Len, I love this series!!
    Ruth, the details really flesh out the reality that it is possible to live a “wealthy” life for less than $40K. Although living in middle America makes it a bit easier.

    • 18

      Len Penzo says

      Thank you, Barb, but I owe it all to my very responsible readers. I mean, come on … Ruth is on fire! Four kids, a stay-at-home mom, owns her own house and does it all for $25k or less? Amazing!

      OK, I guess I should use this as an opportunity to ask anyone else who would like to share their household CEO skills with the rest of us to please send their story to Len@LenPenzo.com.

      Thanks, everyone! 🙂

  10. 19

    JD says

    I enjoyed this very much, but I had a question: Did I get this correctly? Insurance is $65 a month? Mine (employee + spouse)is almost $400 a month, with a $25 copay for doctors, $40 for specialists, $30 per cheapest prescriptions, $750 a person deductible and this is through work — private insurance is higher than that, and we can’t get it privately anyway. The highest deductible plan offered at work was still over $300 a month, and would have been a poor choice for us as I have a spouse with a chronic condition . Was that supposed to be $65 a week?

    • 20

      Ruth says

      JD, I had to relook at my hubbie’s pay stubs, just to make sure. We pay $30 per bi-weekly paycheck, which calculates to $65 a month. Having heard so many nightmare stories about the costs of health care and insurance, I realize how fortunate we really are.

  11. 21

    david says

    yea I got a question….. I net 980 every two weeks and my wife nets approximately 700 a month we have 2 children 4 and 7 how the heck are we supposed to make ends meet? rent is 800/ groceries are 200/week, insurance 170/month, oil heat during the winter… approx 400/ month, electric 200/month…. and so on and so forth… had some debit/obligations prior to getting laid off then found my current position. and due to credit problems and such it is nearly impossible to find a cheeper place to live let alone come up with the security/first months rent!!!! sooo lost and confused.
    dave

    • 22

      grannyfrugal says

      David, did you read the entire article? How can you and your wife (and two small children) spend $200 per week on groceries when the author of the above article is spending a maximum of $150 per week for a family of 6 including two teenagers? Looks like your your grocery bill could use some serious trimming. The fact that you are reading this website is a good start.

    • 23

      Jared says

      Not just groceries, but your utility bills as well. My wife and I live in Buffalo NY, and just bought a house, moved in on January 1st. It is a 950 square ft cape cod built in 1953, with subparagraph insulation in the attic (which will be a project this spring). Nonetheless, we are averaging $104 a month for gas, and $49 a month for electric. February was the coldest month in Buffalo history, and we paid $108. What do you keep your heat at? Ours is at 60 when we are at work and when we are sleeping (which most sleep specialists recommend anyway), otherwise 68. We only have lights on when we are in a room, and keep electronics unplugged when not in use (most modern day stuff sucks power even when off). $600 for heating and electric seems really high.

    • 24

      Nathan says

      David,
      If a goofy guy from Oklahoma like me can do it I know you can too!

      Last year (2018) I spent 10k more than I brought home and this year I was introduced to the idea of financial Independence. My wife and I decided to make some simple tweaks and changes to our spending habits along with some hard to swallow ones. We started tracking every dollar we spent and focused on what really made us happy in life. We cut the cable, changed cell phone carriers, cut all of the little monthly subscriptions and quit racking up credit card bills. We are now on track to saving 25% of my annual income most of which is going back to pay off the debt we’ve been building for years. We are a family of 4 and our monthly cost for food is around $300. We now shop at Aldi’s for most of our groceries and only eat out on rare occasions and actually eat more healthy now than we used too. Its amazing how much we have changed in 8 months and I cant wait to see what our future will look like now. Before it was definitely headed to a bad place. Keep your chin up and do some deep digging around on the internet for any and all things related to financial independence. You will eventually run into a page you can relate to. If you don’t like reading try listening to some podcast (aka streaming audio files) I found this site lenpenzo.com from listening to the Stacking Benjamin’s podcast. here are a few of my favorites: ChooseFI, Whats up next, afford anything, Bigger pockets money, Financial independence (mad Fintest), listen money matters, paycheck & Balances just to name a few. The list could go on and on and its all free and all of them have great websites that will allow you to dig deep into the world of person finance. I hope the best for you and anyone else in the financial ruts of consumerism.

      Oh and way to go Ruth! If my calculations are correct It should take me about 4 years to get out of my deep debt hole and maybe I can join you on the list of living on 40k or less a year wall of fame. 🙂

Trackbacks

  1. The DQYDJ Weekender, 8/3/2013 - DQYDJ says:
    April 13, 2019 at 8:38 am

    […] Len Penzo’s “Liviung on $40,000” series is the most refreshing thing in Personal Finance since, well, Personal Finance blogs were invented.  This week’s entry: Ruth from Kansas. […]

  2. Black Coffee: You Can’t Eat Federal Reserve Notes (But Spinach Is OK) – Len Penzo dot Com says:
    April 10, 2021 at 8:34 am

    […] How I Live on Less Than $40,000 Annually: Ruth from Kansas […]

The Question of the Week:

Do you think credit unions are safer than traditional banks?

View Results

Loading ... Loading ...

Recent Posts

  • The Big Advantages of Natural Gas Appliances
  • Is a Master’s Degree in Education Worth It? 7 Key Questions to Ask
  • Comparing the Flat Tax, Fair Tax, and Progressive Tax Systems
  • Are Energy Efficient CFL Bulbs Worth Paying More For?
  • Black Coffee: Pushing the Panic Button
  • The Continuing Chronicles of Elaine, Part 10
  • 3 Ways That Make Credit Cards Vulnerable to Fraud
  • Common Financial Mistakes in Manufacturing (and How to Avoid Them)
  • Blind Taste Test: Does Bottled Water Really Taste Better Than Filtered Tap?
  • Black Coffee: Banking on the Future

Disclaimer

This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice. In fact, making investment decisions based on information published here, or any other website for that matter, is more than unwise; it is folly. This website accepts advertising in the form of monetary and other compensation; as such, topics of discussion are occasionally influenced by these advertisers. Sometimes, an article may also include affiliate links, meaning, at no additional cost to you, this blog earns a commission if you click through and make a purchase (for example, as an Amazon Associate I earn from qualifying purchases). Remember, you and you alone are responsible for the decisions you make in life, so please contact an independent financial professional for advice regarding your unique personal situation.

Sign up for the weekly Len Penzo dot Com newsletter
Len Penzo dot Com Delivered Weekly
Join more than 40,000 readers and fans who enjoy personal finance and macroeconomics with an offbeat twist!
Invalid email address
Thanks for subscribing!

Popular Now:

  1. 1. 18 Personal Finance Facts About US Presidents
  2. 2. Credit or Debit: Which One Is Actually Better?
  3. 3. Why Buying Gasoline in the Morning Can Save You Money
  4. 4. Why Paying Off the Mortgage Early May Be a Big Mistake
  5. 5. What Defines True Financial Success?
  6. 6. A Georgia Teacher Shows Why It Always Pays to Read the Fine Print
  7. 7. Debt Elimination: The Pros and Cons of Dave Ramsey’s Baby Steps
  8. 8. Home Repair Scams: Here Are the 9 Biggest
  9. 9. Historical Gold & Silver Benchmarks for Wages and Commodities
  10. 10. 4 Good Reasons Why Some Quarters Are Painted Red

All-Time Most Popular:

  1. 1. 19 Things Your Millionaire Neighbor Won’t Tell You
  2. 2. Dear Friend: Here Are 41 Reasons Why I’m NOT Lending the Money
  3. 3. Why Your Expensive Luxury Car Doesn’t Impress Smart People
  4. 4. If You Can’t Live on $40,000 Annually It’s Your Own Fault
  5. 5. 21 Reasons Why Corner Lots Are for Suckers
  6. 6. 4 Smart Reasons Why College Isn’t for Everyone
  7. 7. 18 Fast Facts About Social Security Numbers
  8. 8. My Ketchup Taste Test: Upset! Guess Which Brand Topped Heinz
  9. 9. Why I Prefer a Spreadsheet to Track Expenses and Manage My Finances
  10. 10. Here’s a Simple Trick for Getting Credit Card Interest Charges Waived

Copyright © 2023 Len Penzo dot Com · All Rights Reserved · Designed by Nuts and Bolts Media

© Len Penzo dot Com 2008–2023