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How I Live on $40,000 Annually: Jason from Maine

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.

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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 [email protected] 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

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