I’m living on about $13k (or about $1,100 a month), which is just slightly above poverty level.  Before that, I lived on about $22k/year for my two years of graduate school (2008-2010), and I lived fairly comfortably yet still cheaply.  Having lived on a stipend for the last 3 years, I feel like I have a great sense on how much the minimum is that I can live on without major sacrifices.  The whole experience has been difficult, but I’ve been able to do it without amassing credit card debt and still maintaining a happy and enjoyable life.

Living on about $1,100 a month is no easy feat and certainly requires some sacrifice.  Here are some things that I know I can’t afford to do:

– Eat out for dinner more than once a week (and I never eat out for lunch).

– Buy “things” like DVDs, iPhones, or other gadgets.  I’ve basically eliminated these things from my budget, and only make one or two purchases of “things” a month (and sometimes I make none).

– Do just about any sort of traveling.  Weekend camping trips can fit into the budget here and there.  Flying to Europe definitely can’t.

– Implement any significant savings or investment plan.  I still have automated savings accounts, but they aren’t funded at the levels I would like them to be.

– Live alone or in an expensive apartment.  Right now I pay $400/month for a modest apartment with 2 roommates, but I can’t imagine affording more than that.

– Try to get by without a budget or without tracking my spending.  I know I need to be very aware of my spending and where I’m at with my monthly budget.  I work with this for at least a few minutes on a daily basis.

– Not fall back on my savings here and there.  Car ownership is virtually impossible, especially with unexpected costs. I’ve had to rescue myself with savings a few times.  I hate having to do it, so I avoid it at all costs.

Yikes! Looking at that list, you must be thinking “that kinda sucks!” But I can honestly say that I don’t notice it much in my day-to-day life, and I’m genuinely happy.  Is it sustainable long-term? Absolutely not, and I don’t plan to try to make it so, either.

What I do think like about this level of income is that it’s forced me to be really frugal and has given me real life experience of what my minimum income level is (and what living in poverty is like, too).  I would say my realistic minimum wage is probably more like $17k, but clearly I could get by on a little less if I absolutely needed to.

After my service work ends in August, I’ll undoubtedly be earning more than $1,100 a month.  Envisioning what things will be like then, I feel like just about everything I earn above that sounds like a bonus to me.  For example, say I double my earnings with my next job and earn a still-modest $26k a year. That kind of salary sounds like the high life to me right now!

Despite the fact that I really can’t save much currently, I’ve had time to plan for the future when I will earn more.  Let’s take a look at where I would put my money if I’m earning a “great” salary of $26k:

1) Donate 10% of what I earn ($2,600)

2) Long term savings 10% ($2,600)

3) Invest 15% ($3,900)

Remainder = $16,900

So even with these better-than-average financial goals (at least in terms of % of earnings), I would still have $16,900 ($1400/month), which is about 27% more than what I earn right now! Even at those numbers, I think I could live a very good life.  Can I drive around in Mercedes? No. Can I go out for fancy dinners several times a week? Doubtful.  But that isn’t the point.  I don’t want to do those things anyway.

Just to be clear: I’m definitely not striving to make $26k a year for the rest of my life or even next year.  I’m really just looking at these calculations because:

a) This should be an easy level of income for me to obtain no matter what money earning path I choose,

b) I could live at this level of income for short periods (a year or two more), if needed,

c) I plan to maintain a degree of frugality similar to where I do now, and

d) I don’t have to panic about going out and getting a high-paying ($50k+) job if I don’t want to.

If somehow my life goes terribly wrong, and I end up back at $1,100 a month, I know I’ll be able to handle it.  That is a very reassuring feeling.

What’s the minimum you could live on? Can you survive on $13k?

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photo by: Casey Serin