{"id":49429,"date":"2018-07-02T04:15:52","date_gmt":"2018-07-02T11:15:52","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=49429"},"modified":"2022-01-22T13:04:17","modified_gmt":"2022-01-22T21:04:17","slug":"how-i-live-on-less-than-40000-annually-john-from-maryland","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id49429-how-i-live-on-less-than-40000-annually-john-from-maryland.html","title":{"rendered":"How I Live on Less than $40,000 Annually: John from Maryland"},"content":{"rendered":"
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At the beginning of this year, John and his wife, Abi, were $44,000 in debt. But they were able to pay it off in five months after becoming more frugal and using a portion of their savings.<\/p><\/div>\n

The name is John Steiner and I live in Southern Maryland with my better half\/muse\/wife Abi. I’m 27 and Abi is 25; we’ve been married since December 2015 and have no kids.<\/p>\n

I’m the CFO for the family, but Abi is the household CEO<\/a>.<\/p>\n

At the beginning of 2018 we had more than $44,000 in debt<\/a>. We wanted to become financially independent and were able to pay it off in five months. To do that, we became more frugal and also depleted some of our savings.<\/p>\n

In my younger years, I wasn’t always financially responsible; I used to spend a lot of money at bars and restaurants. But when Abi and I married, a new sense of responsibility fell upon me. I thought that if I were to drop dead tomorrow then I’d be leaving her with many financial problems.<\/p>\n

Now that we’re debt free and financially independent, I have the peace of mind that if I were to drop dead tomorrow, then she’d be left with no financial burdens.<\/p>\n

Our Income and Expenses<\/strong><\/p>\n

I’m an engineer and make $66,000 a year, and Abi is a per diem nurse and makes roughly $58,000 a year. We have a combined income of roughly $124,000 a year — but we live on a budget that is less than $40,000 a year.<\/p>\n

Since the start of our marriage we decided to live on a single salary to get into the habit of living with less; the $40,000 budget was a happenstance of this behavior.<\/p>\n

We’re currently living on $35,341 annually. Let’s look at the monthly expenses:<\/p>\n

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We’ve cut costs by only buying certain things new. For example, we buy new underwear, but we started buying all our other clothing from thrift stores for a fraction of the price. As a result, we reduced our clothes expenses in the first five months of this year by half!<\/p>\n

Abi and I promised to never take out a car loan, so our 2005 Honda Civic and 2010 Ford Focus are paid in full. We do plan on replacing a car in one or two years, but our goal is to have only one car to reduce our insurance costs.<\/p>\n

We rent our home and therefore have no property taxes. Maryland has fairly expensive housing and we’re paying only $200 per month more for our three bedroom townhome, compared to our initial one bedroom apartment. The only reason we got a bigger home was due to an understanding that we’d need the space in the near future.<\/p>\n

I also have a life insurance policy in the event of my untimely death which would allow Abi to move close to family, take some time off of work, and pursue any dreams that she may have.<\/p>\n

We don’t pay for cable or satellite services. Unfortunately, we had a hard time finding a good Internet provider in Southern Maryland; the best price that we found was with Verizon for $40 per month.<\/p>\n

For entertainment, I read aloud to Abi, and we also use our Amazon Prime Student membership for television. We also do a lot of trail running, biking, swimming, and hiking.<\/p>\n

We limit ourselves to only seeing six movies a year in theaters. When we do go out to eat, it’s at restaurants where dinners typically cost less than $10.<\/p>\n

Our Savings<\/strong><\/p>\n

The extra income that we do have we are allocating to building our wealth for an early retirement. I have set personal and financial goals to achieve those ends.<\/p>\n

I contribute 10% of my salary to an employer match 401K and also cover health, dental, and vision insurance for our family. By August 2018 we will have enough saved in the HSA account to begin investing that as well. We have a Roth IRA with Abi’s previous 401K money that we rolled over and are now contributing to monthly. We also have multiple brokerage accounts to invest in the market.<\/p>\n

Since we live well below our means we are able to save a lot of our income. I save 15% of my paycheck instantly to a savings account and use the rest to cover our expenses. From my base pay, after all deductions, contributions, and taxes are taken only 55% of my check goes into a checking account. All of Abis earned money gets allocated to our different investment accounts.<\/p>\n

We have less than $10,000 at a time, usually $8000 to $9000, saved in a traditional savings account because most of it is being allocated to investment accounts. However, part of the reason for a smaller nest egg is because both Abi and I are educated and work in completely different fields. If I were to lose my job, she would be able to work and support our family and vice-versa. That current flexibility allows us the freedom of not needing such a large nest egg. Even if we were to be blessed with children I could still be a potential stay at home father.<\/p>\n

Closing Thoughts and Tips<\/strong><\/p>\n

Since becoming financially independent we’re no longer stressed about money, but we do have lots of goals that require money to achieve. I spoil Abi rotten, but luckily she doesn’t like to spend a lot of money!<\/p>\n

Finally, here are a few tips:<\/p>\n