{"id":1283,"date":"2017-04-10T05:15:54","date_gmt":"2017-04-10T12:15:54","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=1283"},"modified":"2025-12-27T11:20:26","modified_gmt":"2025-12-27T19:20:26","slug":"if-you-cant-live-on-40000-per-year-its-your-own-fault","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id1283-if-you-cant-live-on-40000-per-year-its-your-own-fault.html","title":{"rendered":"If You Can’t Live on $40,000 Per Year, It’s Your Own Fault"},"content":{"rendered":"

\"fault\"<\/a>Awhile back I described ten common characteristics of debt-free people<\/a>.<\/p>\n

In that article, I specifically asked my readers to consider this question:<\/p>\n

“Why is it that there are families out there with household incomes under $40,000 comfortably making ends meet and saving for retirement with no debt on the books — or at worst, a single mortgage payment — while others who make <\/em>millions per year like Sinbad, Ed McMahon, Mike Tyson, and Stephen Baldwin have trouble keeping their financial heads above water?”<\/em><\/p><\/blockquote>\n

While that list was met with general acceptance, I did manage to start up a minor debate between the readers as to whether or not it was really possible for the majority of folks here in the good ol’ United States of America to make ends meet on $40,000 per year. Keep in mind that I originally published the article in 2010 — so, after adjusting for inflation, that number is equivalent to $45,000 in 2017 dollars.<\/p>\n

Even so, how can I make such a claim?<\/p>\n

Well, I live in Southern California; it’s one of the most expensive places to live in the United States. In fact, according to the Council for Community and Economic Research, Los Angeles currently has the seventh-highest cost of living in the US, behind only New York City, San Francisco, Washington D.C., Boston, Seattle and San Diego.<\/p>\n

Even so, there are still millions of people living here right now that are making ends meet on $45,000 or less.<\/p>\n

I know if I had to, I could make it here too on that amount of money — and if I can live on an annual income of $45,000 here in Southern California, I’m certain I could make it most everywhere else in America, where the cost of living is significantly<\/em> cheaper.<\/p>\n

How do I know for sure? Well, if you’re a regular Len Penzo dot Com reader, you know that I’ve been meticulously tracking every penny I’ve earned<\/a> since 1997.<\/p>\n

Although I have a much more detailed breakdown, here is a top-level summary of just my key household expenses in 2016:<\/p>\n

\"\"<\/a><\/p>\n

Remember, most of these expenses should be considered conservative. Why? Because if I was making only $45,000 per year I would certainly work much harder to cut some of those costs down — starting with kicking my two teenagers off the auto insurance policy, which would reduce that bill by more than half.<\/p>\n

You can also bet I’d be much more vigilant about limiting our gasoline and utility bills. Likewise for the retail purchases. However, the biggest area where I could really cut corners is the grocery bill; although we do plan our dinner menus<\/a> to save money, we rarely take advantage of coupons. We currently eat lots of steak and other expensive cuts of beef too, so I’m quite certain that I can easily cut our grocery bill by at least 25%.<\/p>\n

But, Len, what about the mortgage?<\/em><\/p>\n

Well, my mortgage payment<\/a> is a bit less than $640. And although I bought my home almost 20 years ago, there are still places in Southern California where you can find a place to live for $1000 per month.<\/p>\n

With that in mind, if you add everything up, those basic expenses come to about $45,000 annually.<\/p>\n

Yes, I realize I still haven’t accounted for federal, state and social security taxes. But I’m certain I could offset whatever taxes would be deducted from my paycheck with the savings I’d get by reducing my other bills.<\/p>\n

Would my family be living like kings and queens? No.<\/p>\n

But we would<\/em> be living in a respectable and comfortable home in Southern California, with four insured cars in the garage, and presentable clothes on our backs. We’d also go to bed each night with full bellies. Unfortunately, the downside is that there would be little money left over to put away toward my retirement, or an emergency fund in case my water heater broke<\/a>.<\/p>\n

I admit, it’s not ideal. Clearly, it is a no-frills lifestyle; but it’s certainly not poverty either.<\/p>\n

So if you and your family are blessed with good health, but you find yourself still having trouble making ends meet on approximately $40,000 per year — and are truly serious about living within your means — I strongly suggest you reassess your situation and see where you can cut back on your expenses. After all, as these testimonials<\/a> show, there are plenty of folks in America who have been able to live comfortably on less than $40,000 annually.<\/p>\n

Otherwise, you’ve really got nobody to blame but yourself<\/a>.<\/p>\n

One Last Thing …<\/strong><\/p>\n

I completely understand that households earning less than $40,000 have to work extra hard to ensure they have enough savings in retirement — which is why it’s still important to invest in the stock market, no matter how little the amount.<\/p>\n

Investing in stocks is a great way to increase your annual household income. With stock market research, you’ll learn the art and science of buying and selling to attain successful outcomes.<\/p>\n

Here are some benefits of investing in stocks:<\/p>\n