Could you live well on $30k a year?

One of the two couples I interviewed in my latest MSN Money column has an adjusted gross income of $30,000 — and is raising kids and paying for a home on that sum.

The other couple is doing the same thing on an AGI of $36,000.

Could you?

How to live well on $40,000 or less” shares details on how they make their limited funds work. It’s inspiring reading — not because I wrote it, but because they’re living it.

And yes, I know that plenty of people earn less than $40k before taxes. I did that myself, as a single mom and more recently when I went back to school. But these couples are living in decent-sized cities (Albany and Atlanta metro areas), not accepting food stamps, paying for health insurance and even saving for retirement.

Obviously it means that they don’t buy into (as it were) an ultra-consumerist mentality. But they’re not exactly deprived. One couple has satellite service and a 50-inch HDTV. Both have cell phones (two of them prepaid) and both manage some travel each year.

During interviews I noted that they have the same mentality as I do: Save where you can so you can spend where you want. Having an at-home parent is important to one family; for the other, having time for artistic pursuits is more important than huge paychecks.

As I noted in the column, “Savvy spending and a certain amount of sacrifice let them live in ways that mirror their personal values — and they do it debt-free.”

I’d be interested in hearing your feedback.

Related reading:


35 Comments

  1. Did OK last year on just about that. Wasn’t much fun, though. ;-)

    And I sure couldn’t afford a cell phone & pay TV. Or a kid.

  2. We did back in graduate school in an expensive city (where 50% of our joint income went to housing in a cruddy apartment), though there’s been some inflation since then. I much prefer living on more money. I really like not having to think about things so carefully and not having to stress out about every penny or feel guilty when I make a mistake we can’t really afford. I could probably go back to it, but I’d prefer not to!

    • Donna Freedman

      @Nicole: Amen to that. While I still live very frugally, I know there’s a certain amount of money coming in every two weeks. I no longer have to cobble my rent together with a mix of work-study, babysitting and freelancing. Much less stressful.

  3. Living in the DC metro area I really am not sure if anyone, especially with kids, could live off of $30k. Maybe if they weren’t saving for retirement or saving anything!

    Obviously it isn’t easy, like you said in the original article, one of the families even forages for food, but I think it does show that with some ingenuity people can survive and actually live a comfortable life, on far less than what most of us can imagine!

  4. Anything4ABuck

    Donna:

    I live on less than that because I fully fund my 401(k) and Roth IRA (including over-50 catch up).

    This is kid stuff. Please consider reading and commenting on the recent web article about people making $250,000 a year who are in the red.

    Then I can comment about those around me who make that and aren’t doing as well as I am.
    :o -)

    • Donna Freedman

      @Anything4ABuck: I don’t agree that it’s “kid stuff.” The couples in question are funding their retirements, paying mortgages, maintaining two vehicles and raising children in an increasingly expensive world. That ain’t hay.
      I’ve gone through my own “anything for a buck” phase, twice: once as a single mom years ago, once more recently when trying to go to school, pay for a divorce and support a disabled adult child. I can say that it isn’t easy to live that way, but it is very satisfying to reach one’s goal whether that’s getting a degree, playing over-50 catch-up or simply paying the rent and child care.
      Here’s the thing about both of us being over 50: We tend to forget how expensive it can be to raise kids. Even if you’re not giving in to the catered birthday parties and consultants who teach you how to get your kids to sleep through the night, you’re doing things like:
      1. Constantly replacing clothes and shoes they grow out of them. Even if you do this at thrift stores, it’s still going to cost you — and you have to plan for it or you wind up paying retail. Contrast that with single-and-53-me, who will wear a pair of thrift-store jeans until they fall apart, and who is still wearing shirts that are a dozen years old.
      2. Going to the doctor a lot. Ear infections. Immunizations. Booster shots. Roseola. Playground accidents. Whatever it is, each probably requires a co-pay — that is, if you’re lucky enough to have insurance. And don’t forget to count the extra cost of insuring two more people, month after month for 18 years or more.
      3. Going to the dentist. Two cleanings a year times two kids, sealants to prevent cavities, maybe braces. Co-pays again, if you’re fortunate enough to have dental coverage.
      4. Feeding the li’l scamps. When they’re young they don’t each much. But they do eat. Heaven forbid one of them has a food allergy or celiac.
      5. Including/excluding them in anything you want to do. There’s plenty of free entertainment out there, but suppose you want them to know their grandparents/extended family? That’s four airline seats, please, if you can’t drive there. And if you and your spouse want a little alone time? Ideally you’ll have extended family or a reciprocal agreement with other parents. If you don’t? Babysitters get $10 an hour where I live.
      6. Birthdays and holidays. A smart shopper will be able to do this cheaply by shopping clearance tables, thrift stores, deals of the day et al. But it is an extra annual cost, times two — and as the kids get older and are invited to birthday parties, the cost goes up. You can meet the costs of those gifts in the same ways, but you do have to meet them.
      7. Lessons. If your child has a talent for music or chess or whatever, it’s great to encourage it. You might be able to get around this inexpensively; for example, one of the couples I interviewed barters for piano and clarinet lessons. But again, you have to pay for it somehow, and you have to pay for it weekly.
      These are just a few things off the top of my head. The day-to-dayness of raising kids adds up to a lot more, testing even the most frugal of parents to keep the books balanced.
      Incidentally, I have commented about people making $250k. Check out “Think you’re broke? You probably aren’t”:
      http://www.donnafreedman.com/2010/10/06/think-youre-broke-you-probably-arent/
      Thanks for reading, and for leaving a comment.

  5. I can’t wait to read it. Another winner by the wonderful Donna Freedman.

    • Donna Freedman

      @SonyaAnn: I happen to know that you could live on $30k a year, because you’ve done a financial fire drill.
      And thanks for your kind words.

  6. Jennifer

    I have an AGI of $28k, raising a 16 year old, own a home, and save for retirement. No, it isn’t easy. I pinch every penny. We go camping for vacation and I haven’t bought a piece of clothing that didn’t come from Goodwill in the past 2 years. Thankfully, someone in my town gives very expensive clothes to Goodwill in my size! :-)

    • Donna Freedman

      @Jennifer: Score! on the clothing. I, too, shop at Goodwill and Value Village and the St. Vincent de Paul. When I bother to shop at all, that is. I’m very fortunate in that I don’t need a “work” wardrobe. I can work at home in sweat pants and a T-shirt that I got at a free movie preview.
      Stick to your guns. Living debt-free is not what I would call deprivation.
      Thanks for reading, and for leaving a comment.

  7. ANything4ABuck

    Donna: When I said it was “kids stuff”, I didn’t mean children. I meant for those of us who live thoughtfully, trying to live within certain dollar limits is basic to our lifestyle, whether we are successful at it or just get close. Being in the metropolitan NYC area, it’s not easy to be “thoughtful”.

    I’m fully experienced with the cost of children, pets, elderly parents, relatives and friends who need assistance, plants that demand water, charities, Uncle Sam and a car that for some reason won’t go very far without gas. And this is all before MY needs.

    But thanks for the treatise on the cost of raising children. If I can get Barbra Streisand’s voice singing “Memories” out of my head I’ll be able to go on working today.

    Like I said, kid’s stuff!

    • Donna Freedman

      @Anything4ABuck: I, too, was referring to intentional living. These days it’s not “kid stuff” to buy a home and maintain two vehicles on $30k. That takes some thought and organization no matter where you live.
      If you live in the NYC metro area, you’re certainly facing financial challenges. I applaud you for setting limits and sticking to them.

  8. I read it, and it’s a great article. The trick is to *really* be happy with what you have and understanding the difference between wants and needs. It’s too easy to rationalize a want in to being a need. The money saving tips were great. Thanks!

  9. We did ok in Richmond while my husband was in school. We were renting in a nicey-nice neighborhood within walking distance of his school and rocking the single car lifestyle. (Location choices were nicey-nice and super-scary.)

    It wasn’t easy, but we were able to do build up some meager savings and do some inexpensive travel (but no retirement savings). It was more of a struggle because we had some vastly different priorities, so neither of us got exactly the budget we wanted, but we made it through ok! Now we’re living in a much more expensive town (Denver) with more income but not a hugely higher standard of living. A lot of those early lessons stuck.

  10. angelika

    I think it’s awesome that people are sharing their experiences. I find it inspirational. One of my favorite books right now is “tightwads’s Gazette by Amy Dacyzyn (I hope I got her last name right). Anyone pursuing debt free life should read it.
    On some forum once I read a comment by russian woman. She said that in their community it is acceptable to talk about money matters so people learn and help each other with advice. I aggree.

    • Donna Freedman

      @Angelika: I got my copy of The Tightwad Gazette II at a rummage sale for a quarter. Amy would approve. :-)
      Thanks for reading, and for leaving a comment.

  11. jestjack

    Donna, AMEN to your reply at 4:43PM about raising kids. DD1 blessed us with our first grandchild over a year ago. And they have had a heck of a time with his health…let me just say….Thank goodness for health insurance!
    While chatting with SIL this past weekend while contemplating DGS’s second B-day ,I shared with SIL that the two happiest days of my life were when the “girls” came off baby formula and disposable diapers…LOL. Those things were expensive and I’m sure it hasn’t gotten any better. IMHO the folks in your article are doing a “stellar job” in the economic enviroment of today

    • Donna Freedman

      @Jestjack: I think they’re doing great, too. They’re doing what works for them in order to meet shared goals. There’s a lot of peace of mind in that.

  12. If I ever do make that much money, I’ll definitely manage it carefully. I’ve heard stories of rich people who spend their money like there’s no tomorrow, and then they end up racking up a bunch of debt and losing more than what they started with. I always just wanted to be able to earn enough to support myself and have a little bit left over to put in the bank; earning $40k would definitely make that possible. I think it’s mainly a matter of figuring out what your priorities are and what you’re willing to live without.

  13. Nancy from Mass

    we have been living on much, much less for the last 5 years. hubby quit his high-stress job at the end of ’05 making a nice, comfortable 6 figure income. (bosses were doing things that my husband felt was financially illegal (they were) and left so he wouldn’t get caught up in the mess). since then, we have been living on 33 to 48% of that income. (it varies because hubby has not been able to find full time jobs due to the economy. his main job right now is 32 hrs and he is getting a part time job for another 16). The mortgage is always paid, the food is always on the table, our son just made Black Belt in December, the bills are always paid and the house has heat. We have received NO assistance at all (my small salary actually brings us over the limit by 200 dollars). family and friends understand that we will not be going on expensive vacations with them or buy everything because it’s new (we never did anyway). we have pay as you go cell phones (25 lasts me 3 months) and are very frugal. No we dont live on processed food, I cook almost everything from scratch except for the occasional mac n cheese or can of soup for hubby. As soon as the weather warms up, the laundry is hung on the line. The only drawback i see, is that we cannot donate to everyone we want to, we give of our time even more now, but sometimes I would like to give a nice check as well. We are living proof that you don’t need a 6 figure income to survive!

  14. Donna, you are exactly right. It is all about saving where you can so you can spend where you want. I think that is the whole key to frugality–mindful spending. Cudos to the people who have figured that out and are making it work!

  15. Yes, I can and do. My husband is disabled and on dialysis. I work two part-time jobs and gather botttles from the neighborhood bars to cash in. This nets me an extra $ 30.00 per week. The jobs are within walking distance of my home so I do not have to worry about transportation costs. Luckily, his family all moved back to the carribbean, so we are able to share the family homestead with his niece and her daughter. Our share of the expenses is less than the cost of a one-bedroom apartment, which runs about $1,300 a month. We use coupons, rebates and winnings from contests to make ends meet and make a dent in his ever growing pile of medical bills.

    I miss the money that came with my high pressure job, but not the long hours (70+ per week) and the office politics. I am less stressed even with the outstanding bills and am able to spend more time with my husband. Most of all I am proud of how resourceful we have had to be without relying on money. It’s not the life I expected to be living at this point in my life, but it is a good one.

  16. Michele

    I find I can for the most part because I try to limit my spending by extending my haircuts and maybe stay in one weekend night. I also try to shop around for products/groceries, use coupons and stock up on sale items when appropriate. The budget killers though are housing and energy costs.

  17. I do every day!

  18. Christine

    I was able to lead a good life when I was working full-time making $18-28k a year living alone and childless. I owned a home, car, emergency fund and retirement. I traveled some and took enrichment classes to keep my career skills competitve.

    When I developed health problems and had to get on SSDI, things were much more difficult with the home and vehicle repairs and pet expenses. Even the medical bills and health insurance made it worse at the sliding fee clinics. Being required to be on medication that could ruin my physical health and left me physically disabled and experiencing the price gouging for something that didn’t improve my disability was excrutiating.

    I live in a very low cost of living area. I find it impossible to think a family would be able to even live in the midwest and support children on $30k a year without applying for govt assistance. The kids would be on reduced school lunches, reduced school fees and receiving SCHIPS health insurance. I think of these things as government assistance.

    • Donna Freedman

      @Christine: The family that clears $30k a year lives in upstate New York and they’re very careful with funds. They live simply (but well) rather than indulge in consumerism; low housing costs and being able to garden make a huge difference. They don’t get any government assistance.
      I’m sorry to hear about your health problems. My daughter was on SSDI for a while but was fortunate enough to find a job she can do at home. Making ends meet is pretty difficult on SSDI and dealing with the rules/regs/bureaucracy is tough, too. As she once told me, “It’s a full-time job to be sick.”
      I wish you well. Thank you for reading, and for leaving a comment.

  19. I made about $12,000 (gross pay-before taxes) and paid child support for 3 kids that live in NH…and I live just fine at the Grand Canyon National Park,AZ.

    The closest Wal-Mart or big grocery store is about 1 & 1/2 hrs away, so I don’t have the option to go shopping every time I get bored.

    • Donna Freedman

      @Sunshine: It’s definitely possible to live on less if you don’t shop compulsively/competitively, if you have cheap housing (do you?), if you can get by with casual dress at work (me, I haven’t bought much new in years except for a nice outfit to wear to my daughter’s wedding), if you have simple tastes in food and living.
      Good to hear from someone who’s doing it.
      Thanks for reading, and for leaving a comment.

  20. Yes, my rent is flexible here. It cost .40 for every hour you work, which comes out to $64 a month IF you work 40 hours every week. That also includes my utilities in this dorm building (which is our employee housing here at the national park.)
    I wear a uniform to work which didn’t cost me anything. Only thing I have to buy for work is my shoes. I do have to much other clothes though and need to weed out my closet.
    I don’t have a car, but there is a free shuttle bus that takes me to work here.

  21. Matty

    I think it depends what you are willing to sacrifice or not. Last year I got laid off and my journey since has been wonderful. I went back to school and have found that many of my “needs” prior were really only wants. I make way less $ now but live a much richer life. I get to spend more time with my 3 year old, cook from scratch, and not be in a constant state of stress. You just find a way to adapt to the new income, appreciate it, and make do.

  22. I don’t have kids, and live quite happily off of 18k a year. 30k a year would be AMAZING. I wouldn’t know what to do with it all!

    @Sunshine: I’m looking to be a park ranger, and if those are the perks you get at GC, I may just have to rethink my aversion to snow!

  23. Michael Young

    Of course you could live well making 30k a year.The problem is people LIVE BEYOND THEIR MEANS.Back in the day families lived by necessities and not all of this want nonsense.We all strive to make more money and live the American Dream but after seeing people living in poverty in the inner city making $600 to $1200 a month at minimum wage to about $9.50 an hour 30k a year is great.Consider yourself blessed because your situation could always be worse.

  24. Jennifer

    In Vancouver, Canada where I live, the short answer is no, unless you own your home outright. Rent for studio apt. will run you $800 plus, one bedroom, $1,100 plus. To buy,a 650 square foot condo starts at approximately $200,000… you get the picture. However, if you live about an hour’s drive outside the city (50 miles or further)the prices drop dramatically, and does become possible. In short, I can do it, because I bought modestly many years ago when prices were reasonable, and used the equity to upgrade to a two bedroom apartment.

  25. Hungry Mom

    I am 42 with one daughter 11, who is not doing any extracurricular activities at present. I make about 40,000 a year but bring home about 30,000 after taxes and insurance. I have medical and dental and vision insurance, the premium is 183/mo. I am a state employee and have been for 14 years. The benefits are good, but my pay has not changed much in 5 years. When the legislature votes on a 3% raise, the insurance premiums go up 7% so I deal. I have a 3/2 house and my mortgage is 995/mo. My car is paid off. I only receive 240/mo in child support. We have no cable, just internet and netflix. My bills total about 2000/mo and my income is about 2700.00/mo. I shop for my clothes at goodwill mostly but I do my my daughters clothes at walmart or target or jcpennys. I try to buy annual zoo and park passes to entertain my daughter and myself :) . I manage, but some days I want to sell everything and move in with my aging parents. I just might someday soon.:)

    • Donna Freedman

      The just-barely-making-it life can be wearying. One unexpected expense (and it doesn’t have to be major!) can change the entire game. Thanks for reminding us what it can feel like.
      You’re doing a good job managing such funds as you have. May I suggest you read frugality blogs and keep looking for ways to trim expenses while keeping a decent quality of life? Some of these sites also offer giveaways of gift cards, books and other items that would not only shore up your budget but represent a birthday/holiday gift. (I have a giveaway of my own every week. Sign up!)
      Again, thanks for reading, and for leaving a comment.

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