My 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 $1000 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.
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