The answer to that question is Yes – if you agree with Len Penzo, who wrote an article about this very idea.
Now – keep in mind – Len is not actually making it on 40,000 a year – he just says that he could if had to. And he has tracked everything he’s spent and earned for 12 years – so he’s obviously got a pretty good grip on his finances! (Note: After reading some further posts, I think it actually may be his wife doing a good chunk of the tracking! )
So, what’s he basing this on?
- Len lives in southern California. His mortgage is 640 a month. And, keeping in mind that prices have gone up, he found a 3 bedroom family home that you could rent for about 900 a month in his area.
- Including all of his other expenses (which are covered in very pretty charts here), he spends 36,000 a year in total (not including taxes).
Sorry I can’t provide more detail, but his posts are don’t provide a lot of specifics on the dollar amounts spend – more just the total household amount of money spend on each category.
So this got me to wondering – could I make it on 40,000 a year? Well, if it was just me – or just me, hubby, and Kelsey the cat, then probably. It wouldn’t be easy, but I think we could make it. I know my husband was making less than that when he got his first job, and a few years back, when I was utterly miserable at a job and considering just quitting, I did the math, and determined we could get buy on just my husband’s salary.
I think the biggest thing to keep in mind would be transportation. My husband and I both commute to work via train and that runs us 600 a month (yes, I know that’s high, but the only other option would be to drive, and parking is very expensive and the stress would kill us!). Presumably, if we dropped down to 40,000 a year, only 1 of us would now be working, or we’d both just have low paying, local jobs, where we wouldn’t need to commute at all. So, we’d be looking at a big decrease in transportation costs, either way.
The other thing is – we don’t have kids. I honestly don’t know how much it costs to raise children – some folks seem to be willing to spend every last time they have on them, and some find a way to keep expenses to a minimum.
Could you make it on 40,000 a year?