25 answers

Family of 4 Able to Live on 40K/year Salary

We struggle to live off my DH salary which is twice as much as these families make a year. This article discusses 2 families that live off of 40k/year and still save for retirement! Okay, their mortgage is way cheaper then ours so that is something we need to change. We still save for retirement but besides that we spend the rest. Yes some months we may have a little left but then that goes the next month when we have some unexpected expense. I need to figure out what we are doing wrong! Any of you guys think you can live off of 40k/year? That still seems so hard!


Tracy and Danny Kofke, an at-home mom and a special-ed teacher, live near Atlanta with their daughters, ages 3 and 6. Adjusted gross income: just over $36,000.
Amy Halloran and Jack Magai, a freelance writer and an arborist/choreographer, live near Albany, N.Y., with sons ages 7 and 12. Adjusted gross income: about $30,000.

Where to find coupons online

A lot of people live on less than that. In fact, both families are still well above the current federal poverty guideline of $22,350 per year for a four-member family. I chose them because they live in or near large cities, rather than in the deep (and cheap) countryside.

Donna Freedman
If you can own a home and raise kids in metro Atlanta on $36,000 a year, as the Kofkes do, you obviously have something to teach. And even though Halloran and Magai lucked out with cheap housing, their annual income is slightly less than the federal minimum wage for two people.

Savvy spending and a certain amount of sacrifice let them live in ways that mirror their personal values -- and they do it debt-free. Here's how the two couples make it on a lot less than some people think you need to survive.

Strategy 1: Know where every dollar is and where you want it to go.

The families chose to live on less -- the Kofkes so that Tracy could be home with their children, and Halloran and Magai so that they would have more time for family and artistic pursuits.

The biggest tool in their frugal arsenals is careful attention to spending. Danny Kofke clears about $2,200 each month. Major monthly expenses include:

Mortgage: $850
Food: $466
Roth IRA: $250
Internet/TV/phone: $160
Utilities: $150
College funds for their daughters: $100
That leaves about $200 a month for everything else, from gasoline to new shoes. The Kofkes are OK with that.

"We may not have it all, but we have enough," says Danny, 36, the author of "How to Survive (and Perhaps Thrive) on a Teacher's Salary."

Amy and Jack have similar expenses:

Mortgage: $900
Food: $400
Retirement: $833
Internet/phone: $170
Utilities: Heating and cooking are wood-fired

When the Kofkes want something special -- a 50-inch HDTV, two diamond bands for their 10th anniversary -- they tighten their belts, save up and pay cash. Both families manage some travel to see relatives. Amy and Jack own cellphones and iPods. The Kofkes have satellite television service for that HDTV.

Tracy, 39, earns money here and there by painting murals and banners, providing child care and teaching art classes. Half goes to savings and half shores up the budget. But since that income is unpredictable, they budget to live on Danny's salary alone.

"We know where every single dime goes," Tracy says.

Strategy 2: Start with cheaper housing.

Housing is generally the biggest drain on any budget. After two years of teaching abroad, the Kofkes bought a home in Florida. A couple of hurricanes later, they moved to Georgia. They bought a three-bedroom place: less house than they qualified for, but big enough for their needs and small enough to be affordable. A 15-year mortgage helps them pay it off faster. (Assume that's always better? Read "The 15-year vs. 30-year mortgage debate.")

Amy and Jack left expensive Seattle in 1999 and headed east in search of a duplex with some land, figuring that a tenant and a garden would lower their costs. They found an old triplex set on three-eighths of an acre for a scant $38,000 -- and financed only $18,000 thanks to a generous first-time homebuyer grant.

Their original mortgage was $125 a month, far less than the property taxes. That changed recently when the couple took out a home equity line of credit to do major renovations. (See today's home equity rates.) The mortgage is now $900, but two tenants kick in a total of $550.

Inexpensive housing is a must for people with irregular income. It also lets the couple divert one-third of their earnings to retirement accounts.

Strategy 3: Get creative about meeting needs.

The books stay balanced thanks to a mix of old-time and modern frugality:

Tracy gets a ton of children's hand-me-downs from friends. She makes some of her girls' clothes and all of their Halloween costumes, and sometimes does a little sewing for pay.

She watches sales carefully and estimates she saved $1,600 last year by using coupons. Danny carries his lunch to work every single day. The family will enlarge its garden plot this year.

They hang on to their vehicles, a car bought new nine years ago and a used minivan they got when Tracy went back to work briefly in 2005. Both will be driven until the wheels fall off.

Jack and Amy buy only used vehicles, including one truck for work-related tools. His arborist business provides all the wood they need to heat their home, a huge advantage in their cold, snowy region. Most clothing comes from thrift or consignment shops. They buy health insurance from a state program that offers coverage for small-business owners.

The family has a large garden and supplements it with fruits and vegetables from an Amish produce auction. (Sample price: butternut squash, 50 cents each.) Sometimes Amy stops by a farmers' market at the end of the day to propose a trade: the couple's unsold strawberries or bok choy for some jars of homemade jam or kimchi.

The couple forages (with permission) from fruit trees in their area, pressing their own cider and cutting up and dehydrating apples. The older son, Francis, taps trees and produces up to a gallon of syrup per year. Weasels killed off the family chickens, but they plan to buy more.

Amy cooks from scratch -- including bread, yogurt, ketchup and chutney -- and cans and freezes excess produce. "We eat fairly high on the hog (because) we can get great ingredients cheap," she says.

The way they live is the way that I (and perhaps you) grew up: Most clothes handed down through cousins and then my two older sisters; two pairs of shoes a year (bought a size too big so we'd "grow into them"); a few toys at Christmas, but never during the rest of the year; a garden that yielded many summer meals and whose surplus was frozen or canned for winter; all meals prepared from scratch and eaten at home.

Everyone I knew lived that way. That's probably why I was able to cope as a broke single mother, washing diapers on a scrubboard because I couldn't afford the quarters for the laundromat -- and again when I left my marriage and returned to college, packing the same bagel-and-apple lunch each day.

Both couples have a more modern frugal hack as well: the rewards credit card, which both use and pay off in full each month. The rewards are taken as cash, naturally, and funneled back into their budgets.

Strategy 4: Get even more creative about meeting wants.

The Kofkes are fans of their city's recreation department, whose benefits include tumbling classes for Ava and Ella, free entertainment such as magic shows, and of course the library for books and free DVDs. Tracy is about to start a two-day-a-week preschool teaching job that includes free tuition for 3-year-old Ella.

They rarely eat out, but once a week the girls spend the night with their grandmother. That's "date night" for their parents: a dollar movie rental and a sub sandwich from the grocery store.

Amy and Jack barter their skills to get music lessons for the boys. They get a lot of useful items for free thanks to word of mouth, discards left by the side of the road (the source of cabinets and a sink for their kitchen remodel) and The Freecycle Network.

They've also developed their own network of like-minded individuals interested in reducing, reusing and recycling. Almost any need can be met within the group.

"I don't like to see useful things going to waste," says Jack, 47.

Strategy 5: Stay true to your goals.

Living this way is not easy, but it is satisfying. Amy sometimes tires of spending so much time hustling for jobs (the freelancer's curse), and occasionally wishes she could travel more. Even so, she's very happy with her life.

"It's not like I want other, better things," she says. "I don't feel deprived."

In recent months, the Kofkes have had to deal with a major auto repair, the medical co-pay for Ella's tonsillectomy and a furnace breakdown on a Sunday (much more expensive than on a weekday). Money siphoned out of the emergency fund had to be put back in.

And then there's the occasional "what if?" moment, such as watching a flashy car zoom past your 9-year-old beater.

"Of course I want it," Danny says.

But to get it, he'd have to take a second job, or his wife would have to go back to work and put their younger daughter in day care. "So far, there has been no item that has been worth (the trade-off)."

Tips from the pros
This lifestyle cannot succeed without a budget: Lower earnings mean less margin for error. Start with the absolute minimum you need for food, shelter and utilities. Finding out how little you need is actually liberating, says CPA Sally Herigstad.

"You have a lot more options when you're not a slave to high living expenses," says Herigstad, the author of "Help! I Can't Pay My Bills!" and a frequent contributor to MSN Money.

New to budgeting? The "50-30-20" plan is a useful framework. Financial management sites such as Mint and Bundle let you easily track spending.

That budget should also include irregular or unpredictable expenses (class pictures, traffic tickets). "Leave some room for that so you're not putting your income all the way down to zero," says Kimberly Palmer, the author of "Generation Earn: The Young Professional's Guide to Spending, Investing and Giving Back."

A few more suggestions:

Stuff happens. An emergency fund is vital. For tips on setting aside cash, see "9 sneaky tips for saving more," and "8 quick ways to slash your bills."

Planning a change? Start saving now. The Kofkes chose to start living on Danny's salary even before Tracy stopped working. The trial run proved they could do it and also yielded an emergency fund.

Think outside the mall. Brainstorm ways to meet needs for little or nothing. When relatives ask what to give the children as gifts, Tracy suggests things like ballet class. Jack and Amy visit a nearby university at the end of the school year, when students discard everything from bookcases to canned goods.

Educate yourself. Personal finance sites like MSN Money's Smart Spending blog, online urban homesteading resources and plain old library books have plenty to teach.

Look for extra income. Neither couple relies on a single paycheck. "Diversity is the name of the game if you're not going to have one big funding stream," says Amy.

Remember what frugality gets you. "Time to spend with your child, or the freedom to start your own business," author Palmer says. "If you love your life, it's worth any $200,000-a-year job."

Save money today

Charged up: Want to get more life from your D-cell? "7 ways to make your batteries last longer" can help.

School days: Public universities can be a great deal, but you don't necessarily have to stay close to home. "10 best colleges for out-of-staters" offers some of the best education values.

Safe at home: Want to keep your family and your valuables safe? Check out "A master thief's home-security tips."

Donna Freedman is "living 'poor' and loving it" as a freelance writer in Washington state. You can find more of her writing here, on our Smart Spending blog and at Surviving and Thriving (motto: "Life is short. But it's also wide."). Click here to find Freedman's most recent articles and blog posts.

1 mom found this helpful

What can I do next?

Featured Answers

Wait, you mean 40k a year PER family member, right?


Anyone can live on ANY salary when they HAVE to. It's all relative.

But us? No way, 40k a MONTH would be nice though!


6 moms found this helpful

$80k is just about three times as much as we make as a family of five.

it's what you choose as important. Nobody really NEEDS a house that is over I'd say 2400 square feet, just more to heat, more to clean, more to go wrong.

Nobody needs a fancy car, nobody needs fancy expensive clothes, and so much more.

$80k is a LOT of money the more money you have typically the more expensive taste you have.

6 moms found this helpful

I did by myself...in college...in 1984!!! Kudos to those can do it and make it work, I see many expenses missing out of this however.

It is not how I choose to live and plan though but not everyone is the same.

3 moms found this helpful

More Answers

OK--first of all--I couldn't get through all of that--but I would suspect the basic idea is supporting a family on an annual salary of 40K. And is it possible, yes?

You say "that still seems hard."
"Hard" is a relative term.

"Hard" might mean "I have no food to eat" or it might mean "My life is less cushy now."

The overall concept to apply, I think, is that we need to be the hamsters powering the exercise wheel, not the hamster trying to keep UP with the moving exercise wheel.

Could I do it? Absolutely.
Would it "look" different? Yes.

At the end of the day, you've gotta ask yourself "Who are you working for?"
If the answer is your mortgage company and GMAC, then something is wrong.
If the answer is for a safe, cared for family...then you're on the right track!

And saving for retirement, college, etc HAS to be treated as a bill. If people aren't able to do that, then they're living beyond their means...they just wouldn't admit it.

8 moms found this helpful

I didn't read all of it.. but most of it.

We are a family of 7. Neither of us have a college degree and work blue collar. With both of our incomes we have never made over $35,000 a year.

Granted the cost of living doesn't cost an arm a leg in our area, but it still costs! We go from check to check and have to save up when we can for Aug- Dec. 3 of the kids have birthdays in Aug plus go back to school ( Aug kills us each year!) then we have one birthday in Sept. Halloween. Thanksgiving dinner, then Christmas.

What we do to stretch our money is we have never bought a new car. Just new enough to where we can ( usually) get it paid off and be payment free for a year or two with out major repairs. All meals are home made. Eating out once a month is a big treat for our family! We have cable and internet. The kids have two game systems and we get new games for them at the pawn shop or a used game store... its new to them! We never buy what we dont need. Are there things we would like, of course! But it comes down to how bad to we want them. Every once in a while we splurge and get things but its not very often. Garage sales and used clothing stores have great deals on nice clothes! The way kids grow ( imo) its a waste of money to buy new all the time. We do buy them all new clothes for school. We have never had a credit card. All of our bills ( except food) cost us less than $1,500 a month. That is including our house and van payment. I can feed everyone on $100- 150 week no problem.

How we save for our future is we take 1/2 of our tax return and put it in the bank... then forget its there! Its money already taken out and we aren't missing it. Then the other 1/2 goes to house repairs or what ever needs attention at the time. We also try to go on a small family vacation with it.

Sure more money would be great, but it can be done comfortably on lower incomes.

*** Someone PMed me and asked how we can go on vacation with 7 people and not spend alot how much is 1/2 your return? Well not that its anyones business how much we get back, I will say its not an extreme amount! We go on a small vacation easily. We love to camp! We pick a different camp ground each year with in a 4 hour drive from our house. We can camp with a tent for a week under $100. Then the food and gas. When you have all the camping gear already, its really easy to go on a small vacation for under $300. It usually doesn't cost that much but you never know so we plan for $300 each year.

6 moms found this helpful

Wait, you mean 40k a year PER family member, right?


Anyone can live on ANY salary when they HAVE to. It's all relative.

But us? No way, 40k a MONTH would be nice though!


6 moms found this helpful

I couldn't get throught the whole thing. They lost me at the crazy low numbers for mortagage & groceries. They are not factoring in for caring for the house and appliances and who spends $150 a month on ALL their utilities (electric, gas, water, garbage collection)? I love the wood burning for all heating and cooking??? Please, while possible that's not realistic and where I live WOOD COSTS MONEY!!!
Finally the elephant in the room is health care costs. Next their going to say they pat $75 for their whole family to be covered with a $5 co-pay an no deductible.
This is just not realistic from my point of view and I think we should all keep in mind that $40K a year is a few times the minimum wage at least. Let's face it the American middle class standard of living is dropping like a rock.

6 moms found this helpful

$80k is just about three times as much as we make as a family of five.

it's what you choose as important. Nobody really NEEDS a house that is over I'd say 2400 square feet, just more to heat, more to clean, more to go wrong.

Nobody needs a fancy car, nobody needs fancy expensive clothes, and so much more.

$80k is a LOT of money the more money you have typically the more expensive taste you have.

6 moms found this helpful

We are a family of 3. We live off WAY less then that!! We are very comfortable and are able to save. We do live in Texas, where the cost of living is much less, I'm sure that has something to do with it. I am naturally a frugal person, because I grew up poor. Not cheap, but I know how to save money, so that we can spend it on what we need and want to.

Our expenses are less than all the families you have listed. (except college funds, and the other big expenses they leave out. Insurance, etc. We spend more on those things, but we consider them bills.))

5 moms found this helpful


It's all in the mind set...you can do anything you want...achieve anything you want. You just have to want it.

Their mortgage is cheaper than yours because you might not be in the same location as them...you might have bought when the market was high and they bought low.

If you get rid of the credit cards. live within your means. is it easy to give up credit cards? for some - yes. for others no.

Can I live off $40K a year. Yes. Would it be tight? Yes. I would sell my home and buy another one for cash - however - that would mean leaving my area as Washington, D.C. isn't cheap.

If you want to find out where your money is going? keep a journal for up to 6 months - on EVERY penny you spend. EVERY PENNY. you will be surprised at how much you waste.

Start shopping at 2nd hand stores.

Go through the house and get rid of things you don't need or haven't touched in six months. Have a garage sale and use that money to pay off a debt...

Think outside the box. use coupons. make lists. make menus. start saying NO to things you WANT versus what you NEED. There is a HUGE shift in mentality when you start THINKING about your purchases...and the want vs need.

Oh yeah - move your link to the SWH so it doesn't get pulled!

5 moms found this helpful

Hi C.,

Although I see and understand your point - don't these people want to have any fun, or go on vacation or do any sports? Since my daughter has begun Kindergarten, I have written more checks then I ever have in ly life.

I think that if you are happy in a small house with a small budget, then great! But to only shop in thrift stores and have old used cars? Ugh, not for me.

4 moms found this helpful

1 / 3
Required Fields

Our records show that we already have a Mamapedia or Mamasource account created for you under the email address you entered.

Please enter your Mamapedia or Mamasource password to continue signing in.

Required Fields

, you’re almost done...

Since this is the first time you are logging in to Mamapedia with Facebook Connect, please provide the following information so you can participate in the Mamapedia community.

As a member, you’ll receive optional email newsletters and community updates sent to you from Mamapedia, and your email address will never be shared with third parties.

By clicking "Continue to Mamapedia", I agree to the Mamapedia Terms & Conditions and Privacy Policy.