How to Live on $44k Per Year (Almost) Debt Free

Check out this piece on a family who lives (almost) debt free on $44,000 a year. A few highlights:

• The family’s total Christmas shopping bill this year was $90 for 27 gifts.

• Breaking down their budget to 19 categories, they paid off their first house in nine years on an average income of $33,000 a year. Their second home, which they estimate to be worth more than $700,000, was purchased for more than $200,000 and is almost paid off.

• They plan every meal before going to the grocery store, building their menu around specials and coupons. The monthly bill to feed a family of seven is $350.

FYI, they also have a blog.

A few comments:

1. I guess $40k is all you need to be happy after all.

2. These people have learned the secret -- you don't need "just a little more" to make ends meet.

3. Funny how this family of seven can make it on only a fraction of what others can't make it on.

Comments

[Strick]

I don't know FMF, this family seems like quite the marketing campaign here. Family with a pretty average income, spending responsibly, so great example of average Debt Free living, but not exactly "America's Cheapest Family". How about "America's Happiest 'House Poor' Family". Pretty sure America's cheapest family wouldn't buy a home that is worth 5 times their annual income. And not sure how paying off a mortgage in 11 years is that great when you immediately go out and buy a bigger home and get another mortgage. If they upgrade one more time they'll be making their mortgage payments plus those "extra" mortgage payments for longer than someone with a 30 year mortgage makes their normal payments.

That said, because of what the house payments must suck up, they must have some great ideas on how to make the remaining money go far.

[ekrabs]

I agree that it is possible, and that's a very important point to make.

So, when it's all said and done, it basically boils down to what you really want to do out of life, how determined are you to achieve it, and also what you're willing to sacrifice in order to get it.

[Brian]

How did they purchase a second home that is estimated to be worth $700,000 for only $200,000? Did they buy this house before the housing boom and then calculate its networth at the height of the boom?

[Katy McKenna]

I'm assuming their first house appreciated well. I'm also assuming that when they sold it, they put the whole amount down on the new house, keeping the payments on their new house as small as possible. I imagine they are also on a fast track to paying off the second house.

It would make NO sense for people with this intense of a frugality ethic to have purchased a house they could not afford. It wouldn't be consistent with their character. Their salary might be average, but that doesn't mean that their down payment was average----or that their house payments are big!

[dogatemyfinances]

The math is very fishy. Around here, property taxes alone on that house would be 15K a year. Sounds like somebody really wanted to be on TV.

[Sarah]

I wonder how they're planning to meet college expenses for all those kids.

[thomas]

Happy for them for what they have been able to accomplish, but like some others have said something just isn't right. My guess is that while they are living on a low income, they may not have as much saved for the future.

Their site also makes me feel like I should be buying something for two easy payments of $19.99.

[thomas]

Happy for them for what they have been able to accomplish, but like some others have said something just isn't right. My guess is that while they are living on a low income, they may not have as much saved for the future.

Their site also makes me feel like I should be buying something for two easy payments of $19.99.

[guest]

You sound rich. Seriously.

[debt relief]

That's not alot of money in this day and age. I suppose if you live in a smaller home, buy from thrifts and never enjoy a movie or dinner out it can be done.

[arizona auto insurance]

Back in the 60's and earlier people lived on less b/c they did not have credit cards. They saved and saved. They used layaway. It was a better time, financially, in many ways. The mindset of citizens were to be less in debt back then.

[crashdamage]

Does anyone have a link to something that actually details their annual expenses and revenues? I did a google search on them and all I'm finding is a bunch of ads hawking the crap that they are selling and fluffy personal finance media articles with little more than folksy tips and unsupported , undocumented claims. Call me a skeptic, but I want to see some hard core data first before I bestow any admiration on them.

[Money Minder]

The have a book, too. I borrowed it from my local library several months ago. I think it's called "America's Cheapest Family gets you right on the money". They give examples of how they budget and how they use guerilla frugality to save money. They don't disclose much about the income they earn from their website and related products - they must earn money from their book, newsletters, website, speaking engagements, right? Is this the $44k per year they are referring to?

[Studenomics]

Sounds a bit fishy but I don't want to speculate. I make more than $44 grand a year while living at home and I don't think its enough. Well maybe that's because I'm greedy and I enjoy shopping.

[poor boomer]

I'm living on less than $1,000 per month AND I am paying down my student loan debt $100 per month. (And $650 of that pays rent for a room in a house with nine people.)

I'm pretty sure that I do need "just a little more" to make ends meet.

[Cruncher]

There is definitely some fuzzy math at work here. I would love to see an example of their monthly average budget including prorated payments for property taxes, insurance, auto repairs, house maintenace, and any money they may be either spending or saving for school tuition payments. While I fully endorse the concept of living frugally, I find it hard to believe that a family living in Scottsdale Arizona only makes $44K per year.

[Gary]

My wife and I are retired at age 63. Our combined retirement income is just over $47,ooo. We each take 4 0r 5 prescrition medications and the only insurance we have is the wife's Medicare, due to being dissabled.
We have no debts and own our own home. We are able to live very confortably and do not want for anyathing.
The key to living a comfortable life is getting debt free as early in life as possible and staying that way.
With seven family members I think these people have a secret that no one is aware of.

[Margo]

Note it says their average salary over the past 26 years is 44k. That either means they're earning a LOT more than that now, and/or they've really grown their paychecks over that time frame.

For perspective, my dad was earning around $7-10K/year as a new college graduate in 1970.
In the same area, today, you'd expect about $40-45K/year with the same degree.

I'm guessing they were earning maybe $28-30K in the early 1980s and are in the $60-65K range now, to arrive at that "average" of $44K. I ran a quick check in Excel...if you assume a constant 3% annual increase, $30K in 1980 comes to $65K in 2008, and the average of the individual years is $45K.

If you take a non-linear approach, it still works because more dollars earned in the 80s had higher value...allowing them to save up for the house and prep for the future.

Still impressive, nonetheless, but the article misleads you into thinking they do it on $44K now.

[Bill M]

While its not hard to live on 44k a year which averages about 3k a month if you don't pay rent and stuff. But its extremely hard to do with 7 kids and live on a 700,000 house, you figure each person eats about $5-6 a day in food. Thats about $1500 a month, taxes on a 700,000, will be around 8-9 thousand a year.

bah, just more publicity for book and web site.

[Dibs]

Keep in mind, they don't pay any taxes. With all the exemptions and child credits, I (and other taxpayers) are paying them a stipend each year in addition to paying for all the gov't services they use.

Living on $44k really isn't that big of a deal. Yes, for that many people, it takes a little work. Most Americans adjust their spending based on their income, but it is not necessary. I've had co-workers who make $100k and have less than those who make $25k due to spending habits.

And what's with the comments on saving for college. Those kids will be able to get an almost free ride from the gov't due to the financial state of their parents. Therefore, saving for college is a waste of money. If the gov't doesn't step in for most of it (the younger ones will feel this pinch), I have always found that those who pay for it out of their own pocket are the ones who learn the most.

[Sarah]

Those kids will be able to get an almost free ride from the gov't due to the financial state of their parents.

I take it's been twenty years or more since you went to college?

[Russ]

My question is how much am I paying for?? What subsidies etc, do they get from the government? Do they qualify for free school lunches? Do they get a tax refund when they have not paid in a dime? (earned income credit) Do they qualify for food stamps or other assistance? Do they qualify for low interest financing on their house that is subsidized by the government??? What is their real income when you figure in all these benefits.

[F]

I agree with Margo that the $44k figure should be replaced with $60k. Still, they're doing a great job because they're focussed and organized.

[Ms]

I did find their book in my library because I was really curious about their house payoffs. Turned out they bought a tiny house for around 60 or 80k(can't remember) in the 80s and quickly paid it off, nothing wrong with that but they always seem to hide that fact that the house cost them so little. Even in a down mkt there are no such houses anywhere in most of Calif. And they seem to have bought another cheap small house again. They made the admirable choice of buying smaller houses and the rest of the book is the same advice every pf blog does to death.They also mostly buy used clothes, cars etc.
There is no big secret to living within our means and this family is doing the same what every other pf blog is doing. Selling the same old thing. For frugal people leading simple lives these tools/ideas are a waste of time.

[Mule Skinner]

My family of four gets along on about $44K. This is possible in part because the house is already paid for (and we have no plans to upgrade). Three cars are paid for. Also there are no other loan payments of any kind. We buy what we can afford within cash flow. We have no country club memberships, spend nothing on professional sports, don't go to bars, have no boat or RV or snowmobile, avoid casinos or other gambling. On the other hand, we do send our kids to piano lessons, theater camp, language camp, figure skating lessons. We get entertainment from the public library (movies on DVD, and books; I also read the newspaper there occasionally). Another source of entertainment is the constant availability of concerts, plays, and lectures at two local colleges. I am convinced that I could squeeze down to 3/4 or even 1/2 of $44K if I had to.

Ninety bucks? Wow, I sure could take some lessons from you. We save throughout the year to have adequate money for Christmas. We save better for that than for retirement unfortunately it seems.

[AAI]

90 bucks for that many Christmas presents? Dang! I think I spent that much just on my brother and sister alone! I have heard about this family, they have been getting a lot of publicity lately. I wonder how much they are getting paid by the media and sponsors to be an example of how to live cheaply ha.