Jason and his dog, Sadie.
My name is Jason, and I live in beautiful Plymouth, Maine. I’m 29 years old with no wife or children; I live a very comfortable life with my dog on less than $40,000 annually.
I’m what many people consider frugal, some call cheap, and others call smart. I’ve always strived to limit my monthly expenses. I’ve also always maintained a positive monthly cash flow.
Growing up, my favorite part of the weekend newspaper was always the personal finance section.
In 2011 I graduated college with a degree in business management. I worked multiple jobs the entire time that I was in college, striving to pay the tuition bills with cash instead of loans. I graduated with a total student loan debt of under $3000, which I’ve long since paid off.
My Income and Expenses
My gross monthly pay is $3033, which includes $350 monthly from a rental property that I own. The breakdown of my expenses is as follows:
The largest line item in my budget is my truck payment. In 2017 I bought a new pickup truck. What a stupid idea! Im currently negotiating its sale to my employer, and once things are finalized I’ll pay cash for something more affordable.
My food budget of $200 monthly includes pet supplies. I find this to be plenty, and could easily cut it back closer to $120 monthly should the need arise, but hey, what’s life without some level of luxury? I don’t typically eat out, though a few times a year I might order dinner on a Friday.
I heat my house primarily with wood, with an electric heat supplement. I’m fortunate enough to be able to cut firewood off of land that friends and family own, and heat my house nearly for free.
You might notice that I don’t have an entertainment budget. I belong to several community organizations that get me out of the house a couple evenings per week for almost nothing — if not free. Additionally, through these groups I’m able to participate in projects that help make my community a better place.
Overall, I find what some may consider a tight budget actually allows for several luxuries. For example, it was only recently that I found myself in a financial position that allowed me to have internet service at home. Prior to this I used free wifi from different locations when I needed. The internet service was followed shortly thereafter by two streaming services. These are fantastic ways to waste a Saturday afternoon!
My Savings
My sinking fund is used to save up for the $1825 I owe in property taxes each year. I also use it to save for other bigger ticket items like tires for my vehicle, and a new riding lawnmower (because push-mowing my two-acre lawn was getting old). I’m currently using both my sinking fund (in excess of my anticipated tax bill) and house-project money for a tile-surround for my wood stove, as well as a new tile shower in my bathroom.
I keep my sinking fund money in a bank in the next town over. I don’t have a checkbook or debit card for the account, so I actually have to go into the bank when I need this money. That considerably reduces the temptation to spend it on things that its not intended for.
I also make monthly contributions to my Roth IRA. In addition to this, there’s a pretax deduction from my paycheck of $303, that goes into a traditional 401k. My employer is kind enough to match $91 of that, bringing my total monthly retirement contributions to $791.
My Housing Arrangements
Jason’s house.
Very astute readers will notice two things in my budget. First, there isn’t a line item for a personal mortgage. That’s because I don’t have a mortgage on the house that live in. I also don’t make a profit on my rental property. This is for two reasons. First, I mortgaged the rental property to purchase my house, financing the loan for 10 years; I view this as being no different than had I financed the house and not had a mortgage on the rental. Second, I have a fantastic tenant who takes care of the place and pays his rent on time, every time. I don’t mind accepting a little less for someone like him.
In 2015 I purchased the fixer-upper that I currently live in. I’ve been improving it and making it as nice as I can afford to. The pay-as-you-go plan certainly takes longer, but I don’t mind. I find that having the extra time allows me to plan exactly how projects will progress, and think through any problems that I might run into.
Closing Thoughts
My financial life is really nothing spectacular; I never had any sort of inheritances or lottery winnings.
I’ve made some stupid money mistakes — but who hasn’t? For example, I recently bought a pickup truck that cost way more than what I should have spent. I was in a position where I didn’t have a working vehicle, and a few of my coworkers had just purchased new trucks. I was a little envious and bought a brand new truck for myself. From this I learned that its easier and cheaper to not pay attention to what other people have, and be happy with what I have.
I made my first big money mistake in 2011; I had a small retirement account of about $3000 invested entirely in an S&P 500 index fund that I cashed out during a period of hard times. I didn’t clear $2000 after taxes and penalties. Since then, the S&P 500 has gained quite a lot of value. From this I learned several things. First, I learned the importance of having an sufficient emergency fund. I also learned to look for other sources of money before cashing in invested assets. Most importantly, I learned about the power of compounding. Assuming a 6.5% annual return, that decision will end up costing me $48,000 by the time I retire.
Everyone has their own priorities about money — and I try not to judge people’s priorities — but I often find myself thinking to myself when some people I know make fun of my financial choices: Weren’t you complaining about not having any money last week?
I’ve chosen a lifestyle where I live within my means, contribute some to my future self, and spend a little today on luxuries.
***
If you’re like Jason — a household CEO who is successfully making ends meet on roughly $40,000 per year or less — then 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!
Photos: Courtesy of Jason
You are voluntarily frugal, Jason – outstanding and greatly respectable, particularly in one so young.
Don’t bother regretting the past. Did you enjoy the pickup for even a day? If so, it was what I call a blessing, in my life. Many such blessings were modified by later experience but I have so far avoided ever saying to myself “I wish my life had been different, this-or-that way …”.
Like you, I live in a low population density place, heat with firewood backed up by electricity and live similarly to you in many ways.
Our way of life seems to flow naturally with the local culture, doesn’t it?
Thanks for the kind words!
I prefer to live in a low population density area. All of my siblings moved to cities across the country. I do not mind visiting them, but I’d hate to live there.
I think you’re correct in that our way of life flows naturally with the local culture. I think if more people lived a slightly slower, less stressful, more frugal lifestyle, our country and our world would be a better place.
Jason, thank you for sharing your story. You are going to find that you will continue to make the occasional money mistake throughout your life. There are just so many decisions to be made throughout your life that it is impossible NOT to make them here and there. The key is to make sure you avoid the BIG mistakes. I will argue that those ARE avoidable if you are actively looking to avoid them. In any case, when you do make a mistake, it’s important to learn from them, and it is clear you make an effort to do that.
Jason,
Don’t put all your retirement eggs in one basket. Both your Roth and 401k are going into (I assume) dollar denominated instruments (stocks/stock funds, bonds, etc).
The history of the dollar over the last 100 years is one of decreasing purchasing power, and savers trying their best to find something with enough return to beat that loss.
Odds are the last bit of purchasing power of the almighty dollar will be gone in your lifetime, given your young age…….meaning there is a reasonable chance your retirement savings won’t buy much, if anything, at retirement.
My advice would be consider taking some of the Roth money (since you’re fully funding it with no matching) and buy some physical silver held by you.
I second this Andy.
Also I would add, buy some useful land and make use of it.
Thanks for the advice guys! In the past I have put some money into physical silver (admittedly not enough). Recently I’ve paused that, as the money that was going into silver has been going into fixing up my home, but I agree wholeheartedly that having everything in dollar denominated investments isn’t the best idea. Once my house is more or less finished up, I look forward to reallocating that money to purchasing silver again. As for working land, I think that would be a great move for the future, but I’ll have to save up some more before I’m confident enough to make that leap.
Nice Jason! $40K per year you spend about 30% less than the average US household spend of $57k. The average household income in the USA is about $74K. This means you could save a lot and invest a lot. When I hit my financial independence, I’ll never forget how great it felt. Now I get to write about it, share some of that with others, and do all kinds of adventures. Best of luck on the journey
Thanks for the support! I just cruised over to your place and read the “Obligatory How To Get Rich In One Blog Post Blogpost”. I feel richer already : )
Hi Jason! Have you thought about what kind of car you’ll get after you sell your truck? I assume you’ll be buying a used car (instead of another new one)?
Hi Jennifer,
I’ve put some thought into it. I prefer to have a pickup truck, so that is definitely a priority. My current truck is Japanese, and I’ve been very happy with it, so I might just find an older used version of what I have now. I suppose it all depends on what’s available and in my price range.
I am thrilled that Jason is working to make his community a better. I know that I am from Tennessee, and we may have a different culture. However, around here even those who are not religious tend to have a “charitable giving” category in the budget. Am I missing something? Our community is VERY dependent on a healthy network of nonprofits.