How I Live on Less than $40,000 Annually: Evan from Pennsylvania

My name is Evan and I’m a 31-year-old equipment operator living in Pennsylvania. I’m married, with a two-year-old daughter, and another child on the way!

My wife and I have always been savers. Both our families value thriftiness, and promote a mindset of saving and investing. We’ve always equated money to security, rather than what we could spend it on.

We really don’t budget too much; much of our savings are pre-tax, and we know what our necessities cost. Everything else can be purchased pretty inexpensively.

I give all the credit to my wife on the purchasing side. Our home was furnished by the nearby auction house, most of our clothes come from secondhand stores or yard sales, and our food primarily comes from a discount grocery chain or our garden.

We buy almost everything with a rewards credit card, which we pay off in full every month.

Our Income and Expenses

My gross compensation from my regular job is $55,000 per year. However, after deductions for retirement, health savings account (HSA) contributions, and taxes, my take home pay is $2420 per month, bringing the yearly total down to $29,040.

My wife stays home to watch our daughter and works on a myriad of side businesses and ways to help us save money, like growing a garden.

We have two other income streams as well, and while they don’t provide any significant cash flow, they do provide long-term capital appreciation. The first is a rental property; we bought a home about four years ago. Originally, we weren’t intending to rent it out but, three years later, an alternative living situation presented itself and we decided to move. It currently rents for about $250 a month more than the associated expenses.

The other business is part of the family farm: We produce and sell hard cider! We started planting apple trees about eight years ago, and started selling two years ago. We’ve sold our entire cider inventory both years, and continue to increase production. My wife and I run the tasting room on weekends and don’t take a paycheck; every penny goes back into the business to buy more equipment.

We currently live on the family farm in a 180-year-old farmhouse in exchange for our labor. There is no insulation in the walls, every floor slopes, and sometimes the rain gets in. It feels a little like camping sometimes. We decided to move from our comfortable ranch house for several reasons:

• We’re closer to my parents, who get to see their granddaughter all the time
• We’re closer to the cider business
• We save a ton of money by exchanging work for a place to live

Here is a summary of our monthly expenses:

Food includes things like paper goods, diapers and dog food; pretty much whatever you can purchase at a grocery store.

Our heating oil and propane may appear a little low, but the propane only runs our stove and clothes dryer. And the heating oil is heavily supplemented by a wood stove, which we run pretty much continually from November through March.

If we take into account what the principal, interest, taxes and insurance (PITI) is on our house, then we’d pay an additional $1100 per month for housing, bringing our yearly total expenses to $27,744. The property taxes on our rental house are $3300 per year, although that’s covered as part of the rent we receive, so I don’t really view it as an expense.

We own two cars, which we paid for in cash; a 2003 Subaru Forester, and a 2006 Honda CR-V. The Subaru was an upgrade from a 1993 Honda Civic which we paid $1000 for and owned for nine years!

We don’t have much time for fun, believe it or not! We both really enjoy working behind the bar selling cider; you get to meet so many interesting people. We usually enjoy a restaurant dinner twice per month, and we go swimming or do yoga at the Y regularly. We cut the cord a few years ago and have never looked back. We share a Netflix account with my in-laws, so we have access to two separate platforms. I also enjoy splitting wood for our stove and working in the garden with my wife.

Our Savings

We save a bunch of money for retirement, mostly through a 403b through work, which we almost max out every year. My wife has a Roth IRA which we partially fund. We also max out the HSA through work to get the most out of our pre-tax dollars.

We currently have a high deductible health insurance plan through my employer, allowing for the HSA contribution. They help fund the HSA to the tune of $1500 per year which is great! We have a group life insurance plan through work as well; we may get our own life insurance plan in the next few years.

Our emergency fund is about six months of expenses, split between our checking and savings account. Any extra funds that build up in the checking account are redistributed quarterly into the IRA, a 529 plan for our daughter, or used for vacations or other large expenses.

Closing Tips and Thoughts

Here are a few tips I try to remember:

• Your time is the only real resource you have
• Wait 48 hours before you purchase anything; if you still feel like you need it’s probably a worthwhile buy
• Doing things yourself is always preferable to paying someone; it’s easier to pay someone else to do things, but most people are capable of changing their own oil, heating their home with wood, and fixing a leaky faucet
• A strong defense is the best offense; if you can’t control your spending you’ll never be wealthy. How many stories do you hear about lottery winners who blow it all over a few years?
• “Money can buy many things, but nothing more valuable than your freedom.” — JL Collins

Finally, take time to be happy with what you have. Sometimes I get down when I get too focused on saving or investing money — but in reality we’re doing more than okay! Spending money on things that are important to you is worthwhile.

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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 or an American Silver Eagle!

Photo Credit: Courtesy of Evan