Loading

wait a moment

How I Live on $40,000 Annually: Ryan from North Carolina

After steadily increasing his monthly retirement contributions over time, Ryan is very close to achieving his multi-year plan of reaching his retirement fund maximum contribution limit.

My name is Ryan and I’m a 38-year-old teacher. I’m married to my wife, Louise, who is in retail management. We have three kids, ages 2, 7 and 9.

I manage the majority of the finances, but communicate with my wife about financial planning because you need a partner’s support.

I’m big believer in saving for retirement; I’ve always been a long-term thinker, but really got serious about retirement planning three to four years ago. I’ve been consistently increasing my savings since then and now do it monthly.

Our Income and Expenses

After taxes, deductions, and retirement savings, my wife and I combined live off roughly $40,000 per year. I do occasionally teach an adjunct course or two, and those financial windfalls help boost savings and allow us to travel some.

Here is a summary of our basic monthly living expenses:

Our home was inherited from Louise’s grandmother, and even though it’s small, it’s paid for, so that’s a blessing. We could use a larger space, but I’m delaying making a larger home purchase to focus on retirement saving first. Our plan is to buy a house in five to 10 years, but saving for retirement is our bigger goal right now.

I firmly believe in buying used cars; we have a 2006 Toyota Camry that’s paid for and a 2004 Toyota Sienna van that we pay $170 a month.

After we pay our “core bills” we have a little money leftover for usually one to two more expensive trips out to eat, such as a steakhouse or Olive Garden. The rest of our money goes toward groceries and gas.

We don’t buy a lot of extra stuff like clothes and consumer items on a month to month basis. We usually buy those throughout the year when we have extra funds.

For fun, we normally go to the beach for two to three nights in the off season. You can get a much better rate and use the extra money toward dining or other events. We also go to some local free events.

Our Savings

I currently put 14% of my income into a teachers retirement pension (6%) and the rest in a separate 457(b), which is similar to a 401(k). I’m working on a multi-year plan to reach the maximum contribution limit. In short, I increase my contribution every month by $15, of which my check goes down $11.25 due to it being pre-tax and with factoring in raises only feel roughly a $75 decrease annually. But, this decrease is well worth the long-term retirement benefit; and since I do it gradually, I really don’t notice it.

I also have a $1000 emergency fund.

Closing Tips and Thoughts

The advice I would offer probably echoes your own, but here’s a brief top ten I’d throw out to folks to help with retirement/financial planning:

  • Greatness requires sacrifice. Period. Whether you’re starting a business to make extra money, starting a second job, or reducing your paycheck to go toward retirement, you’ve got to commit and put in
    the work.
  • Eduction is key. Not just formal college education; educate yourself about retirement and financial planning. No one is looking out for you and your family the way you are, so you’ve got to dial in. A library card is free and offers so many great resources, both in print and in digital form.
  • Have a plan. Start small, but start. Being organized with a rough monthly budget can save you time, stress, and heartache. Use a cash-based system to help track and manage your spending (channeling Dave Ramsey).
  • Don’t compare yourself to others. This is tough because there’s always going to be people out there that are — seemingly — way ahead of you. But, there are so many more behind you that haven’t even
    started.
  • Figure out a way to make more money. I know, easier said than done. But, there are tons of opportunities for part-time jobs that can add a few more dollars to your bottom line each month. The question is: What are you willing to do to create multiple incomes streams for your present and future financial security?
  • Be adaptable; things change. No plan is perfect. No plan is permanent. Just because you thought of something doesn’t automatically make it the best option. Vet your ideas and be willing to shift direction if you need to.
  • You don’t have to be rich to feel rich. Assess what you really value in life and work toward more of that thing. For example, I place a higher value on time and family than I do money. Yes, we need money to live, but without time, family, and friends what kind of quality of life can we truly have? Having time to spend with family makes me feel very fortunate and rich.
  • Time is your friend. Compound interest is a magical thing. I could write a book about this one alone, but the sooner you commit to a retirement plan, the sooner that compound interest will work in your
    favor. Google “compound interest calculator” from MoneyChimp and just play with it. You’d be amazed at what’s possible.
  • Buy assets, not liabilities. Say $1000 drops in your lap, and you think: Hey! Found money. I can drop this at the mall and have a great time!But then the money is gone and you’ve likely got nothing to show for it but some depreciating consumer goods. Instead, you could have taken most of that cash and invested it.

Finally — and most importantly — choose happiness. You have a lot of control over your life, even though it may feel out of control at times. Choose paths that lead toward your ideal lifestyle. Fearlessly pursue your happiness. No one can give it to you. You have to go after it. And you know what? It’s worth it.

***

If you’re a household CEO who is successfully making ends meet on roughly $40,000 per year or less, 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!

Photo Credit: Courtesy of Ryan

cfd trading tips