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Surviving (and Thriving) on $12,000 a Year

This article was written by in Family and Life. 12 comments.

I really enjoyed Donna Freedman’s recent article, Surviving (and thriving) on $12,000 a year. While it contains some great tips on conscious spending, it’s also tremendously inspirational, making me feel that anything can be possible if you’re willing to have some tradeoffs.

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As I read more and more about others’ net worth online, I start to feel like everyone else’s savings are racing ahead of mine. I’ve studied hard, earned my Masters degree, work hard and now earn a nice salary. Still, I suffer from very high “overhead” costs in my life due to commuting, etc., and occasionally I despair, feel like I’m backsliding, like it’s hard to earn enough to ever get ahead even when I’m working as hard as I can fathom.

And then I read about a woman who is living a lean life, but still in some ways a rich life, on $12,084 this year. And still contributing monthly to her charity of choice, and helping out her grown daughter! It sounds unbelieveable. Surely, if that’s her budget, I have plenty of room to keep cutting costs and increasing my own savings. I feel like I’m down to the wire, but case studies like hers make me realize I’m not even close.

What seems to be the critical success factor is that she’s able to rationalize her sacrifices, and assigns a time period to them to make them more bearable:

Make no mistake: I’m poor by choice, because I needed to change my life. I chose to leave my marriage, and I chose to become a student. I can live this way because I know it won’t be forever. I’ll have my degree in two more years, and I’ll go back to work.

She writes about a past filled with jobs stacked atop jobs, trying to balance college amidst very little free time, and enthusiastically announces her new focus:

This year I’m dumping most of the part-time gigs. I’ll still freelance and baby-sit, but very selectively. My new school means tough classes, a long bus commute and lots of reading and studying. More to the point, it’s a great opportunity, and I’d like to take full advantage. So I’m choosing to work less in 2007, focusing instead on getting healthy and getting my education.

That means careful money management and a fair amount of sacrifice. I’m willing to do both.

As I read further, I’m reminded that her tale seems somewhat familiar, and her rationalizations equally so. A conversation comes to mind from several years ago, when two good friends of mine, a couple, were chatting with me about money. They’re serious travel buffs, and have spent nice long spans of time in gorgeous areas across the planet. I love to travel as much as they do, but was lamenting how I’d not been able to do so in ages.

“You just have to sharpen your focus and cut out everything else that diverts you from your goal, ” one of my globe-trotting friends said.

“We have time to travel because we keep our expenses to the bare minimum so we can afford to work less. We know how much we need to make in order to live the way we do, and we question every single purchase in order to get there. We’ve argued over whether to spend 50 cents on a hot dog. There’s nothing we ignore–everything counts, because everything moves us towards or away from our goal.”

One of the duo had just paid off her student loan in full, and moved on to dutifully amass $25,000 in savings. “The two of us can live off that for two years,” she said.

I listened, but was full of mixed feelings. I was glad that they were about to embark on a an extended journey across the world – France, Spain, Morocco, and more exotic locales – but jealous that I’d be spending that time toiling away in a cubicle, far from the sun and the wonders of those cultures. Even more, though, I was inspired, because now I knew that what they had was completely attainable – it just came at the price of certain daily sacrifices.

$12,500 a year to support two people, living right alongside me in a populated area on the East Coast. It certainly wasn’t easy for them. Most of their friends, myself included, were among the 9-to-5 crew, going where and doing what they liked. We’d marvel when they’d come out with us, but share meals, deciding together what to get, share a beverage, even. You could see them tallying the sum in their heads, deciding whether a given purchase was worth it. The first few times, it boggled my mind that they even paid attention to the bill. And yet our decisions so clearly impacted our results, the world tour which was out of reach for me becoming a reality for them.

I’ve learned a great deal from these two friends, and much of it resonates with Freedman’s own mantras:

* It’s not what I have, but how much of it I can keep. As in the article, my friends’ every purchase is a question of necessity – “Is having this worth being without this money, being that much farther from our goal?”

* How can I get it free, or almost free? If they do decide the expense is justified, they are incredibly resourceful in getting the best possible deal. They belong to all the local Freecycle groups and keep an eye out for anything they might need. If a friend can lend or share something, they choose that option over buying the item outright. And all purchases are the result of much careful consideration, never on impulse. I am constantly amazed by what they’ve gotten on sale, and how they’ve achieved economies on expenses I still hardly think to consider. Even when traveling, they carpool or bike everywhere.

* Enough is as good as a feast. Like me, my friends are foodies, and enjoy high-quality and organic foods. Buying on sale, exercising portion control and supplementing these foods with less costly ingredients like rice and pasta have helped them to save, as has buying larger quantities and splitting them with friends. They’re always willing to spend a night in cooking versus dining out, and we’ve had some wonderful evenings enjoying great food and wine together. The more people, the greater the economies of scale.

* Every day is casual Friday! Although they’re frugal with their clothing spending, my friends are never underdressed. Nor are they slaves to fashion or trends. They’re always up for a visit to the secondhand shop or yard sales, and tend to stock up on clothing that way, then save and take good care of what they have, even reworking certain garments on the sewing machine. But the next item Freedman mentions is the key to their success in dress.

* Announce my intentions. As word travels and more people have gotten to know them, my friends have become frequent beneficiaries of clothing, furniture, you name it. There are more worn-once castoffs in my circle of friends than I’d like to admit, which means this couple never suffers from a shortage of clothes. They’ve always got an eye out for opportunity, and often are willing to exchange their work for reduced rent. Sometimes it’s just a matter of asking and searching.

As you might be able to tell from reading this, I’m not yet making as many sacrifices as I could be, but I am gaining a fuller awareness of my spending and how it affects my goals. Whether the ultimate goal is a college degree or a globetrotting lifestyle, daily decisions and motivation can make it possible, even when earning a salary many would consider a pittance.

I am deeply inspired by these individuals’ success in achieving their dreams while still spending on the things they consider important. They help me realize that I don’t necessarily need to wait until I’ve achieved some elusive, grand salary to have the things or life I truly want, that “getting ahead” can result from moving not upward, but inward.

Surviving (and thriving) on $12,000 a year [MSN Money]

Updated October 21, 2015 and originally published October 11, 2007.

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About the author

Along with her partner, Sasha owns and manage six residential rental units. Sasha endeavors to support the causes and organizations she believes in through more conscientious spending practices. View all articles by .

{ 12 comments… read them below or add one }

avatar 1 Anonymous

having a masters in no way correlates to how much you will earn. knock on the doors of your local well-to-do new construction subdivision and ask how many have masters, what there occupation is, and if the house is paid for. i bet you will find that most are electricians, dry-wallers, and such and that their houses are paid with money in the bank.

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avatar 2 Anonymous

In regards to how you feel about others’ net worth online, I imagine many of them are mildly or extremely exaggerated, whether on purpose or by accidental omission. People do tend to try to put themselves in a positive light.

And I firmly believe also, it’s not what you make, it’s what you spend! She has the right idea about handmedowns. People throw away perfectly good stuff all the time, and a keen eye can get great stuff for very little money.

Although on a side note, I would be pretty crushed if my wife abandoned me because she “needed to change her life”.

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avatar 3 Anonymous

Thanks. The timing of this article is perfect for me right now.

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avatar 4 Anonymous

I think life has become about learning to be frugal. Prices for everything are becoming so high that it is a necessity now instead of doing it to be a penny pincher. I am so glad to hear that it is possible to do it…the extra boost I needed to hear. Thanks. :)

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avatar 5 Anonymous

I think frugality is great, and there are certainly things we could all do without, but I refuse to glorify this woman who gets praised for leaching off of everyone.

If only we could all get paid alimony because we refuse to get a job or if only we were all comfortable stealing food from starving children via the food bank maybe we could all be as frugal as her. She even mentioned that she would get food stamps if she could. It seems almost miraculous that a system which allows people to misuse it so regularly found a way to at least not shoulder her fake burden on society as well!

This woman is an example, certainly, of how you can try to put a positive spin on the most dispicable of activities.

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avatar 6 Anonymous

My heated comment is in regard to Donna Freedman’s article. The rest of the wisdom you have collected and posted is sage and should in no way be tainted by her activities.

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avatar 7 Sasha


Well, that’s it, then. I’m going to write to the University that granted me my Masters and ask for my money back, in that case. I was promised riches, chalets in the Alps, potential love interests falling at my feet…. They failed to deliver on all accounts. =)

Actually, to be frank, I planned to be a college professor originally, and increased my earning potential by choosing another career path in the corporate world. Had I spent the extra years and $10,000s to get my Ph.D. as I’d originally wanted to do, I’d probably be earning even less now. I’ll count my blessings, I suppose.

You’re right about contractors, although an important thing to remember since my partner happens to be one is that it’s almost like a career in rugby–it’s hard on your body, harder still to get insurance or disability coverage, and at a certain age you need to find another field. It’s a career path with an expiration date.

I’m quite curious what you do for a living now, by the way.

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avatar 8 Sasha


I ended up cutting my thoughts on toeing the line between accepting “charity” and sponging off of others out of my entry since it made things too longwinded, but your points are valid and worth addressing. I’ll put my response in a new entry, since it’s an interesting springboard for discussion.

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avatar 9 Anonymous

I am in my mid 50’s. I have two College Degrees – One in the Agriculture side and one in Business from a well known University. I started an MBA

I have had good jobs that paid well, with company cars and expense accounts. And they came with Freedom and Power. And Travel.

I have owned my own successful business that yielded up to $200,000 per year.

I owned prime property and had a net worth over $500,000.

It does not matter what you have had or what you want. It can all be taken from you very quickly. You can get Sick. You can go through a nasty Divorce. Or Mother Nature can take away your Investments.

You fall off the middle class merry-go-round and it is hard to get back on. You are a walking wounded. And you find many others around you in the same condition.

Today I am living on about $12,000 per year. I have Health Insurance and do not have to rely on any handouts or Government Services. I am happy driving a 20 year old car. I have less Stress and call my own shots. And I feel that I am just taking a break and developing a Passion for the next Major Undertaking of my Life [as of yet undetermined but just brewing under the surface of my being].

So to those who are striving to be where I have once been – continue to do so. Do so with a Passion that burns in your gut and makes you feel more than a Cog in someone else’s Wheel. Do not do a bunch of what-ifs, just do.

You may never get a bloody nose like I did – but whatever you do, you will have no regrets.

Just be prepared to have it all taken away from you in a blink of an eye! Some things and events are uninsurable.

And remember that your goal in life can and WILL change many times in your life. But you will have an edge everytime that was not present before – Experience!.

Also, one does not need a lot of “Stuff” to enjoy life. And the stuff one owns, does not need to be the newest and greatest.

So after reading the article and comments, my advice is to establish a Passion, a Passion that burns in your gut. A Passion that does not have to be measured in Dollars, but something that defines yourself to you and to others.

Even though I struggle with the feeling that I have been hit with a bad luck stick [there are some significant health concerns I must deal with], I remind myself that I have a lot of Experience locked up in me that will be valuable in my next venture/s.

Thanks for the article – it stirred some thoughts in me.

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avatar 10 Anonymous

You know, I’m going through the same thing, and on top of that I constantly have to pay my parents back through our emergency Western Union Transfers. I actually wound up finding a better service called Obopay than only charges fifteen cents per transfer. I set up the account through my Citi account. They gave me a pre-paid debit card and sometimes I use that as a temporary savings account.

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avatar 11 Anonymous

I disagree with anyone who says that life is about the amount of money you have and your job title. I have personally found that after earning 2 college degrees in business administration and art that I have always been happier having less things and more time to do what fullfills me. I live very well with my 1060 social security and part time host job making 500 a month. I feel it all has to do with what you see as being important to you. Being willing to settle for less for awhile to reach a larger goal is not humilation but developing a willingness to work for your goals and patience to wait for the rewards. I have noticed that the people who tend to critique anyone who sees things differently than someone else is usually a very unfullfilled and jealous person anyway.

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avatar 12 Beauxdean

Yeah? Well what about people like me and other underpaid handymen? I made $12,550 in 2015 and $12,850 in 2016. That means that I had to live on a little better than $1000.00 a month. Now….let’s just figure out how much it takes for a guy like me who works for a cheapskate millionaire trailer lord to live each month. He (the cheapskate) pays $12.00 an hour part time. We’ll just consider the poorer handyguys that have to pay rent and consider that they live in the lowest rent possible of $450.00 a month (just above living in a tent). Then let’s remember that we gotta have that $50.00 phone bill that we MUST have or cheapskates can’t call us for work. Let’s also put $50.00 a week on ramen noodles which comes to $200.00 a month to eat. Then let’s figure that $150.00 electric bill that you can’t figure out why was so high. Then let’s figure $200.00 or so for gas to put in your truck that’s on it’s last leg. Then let’s figure the $60.00 a month for auto insurance that you MUST have or they will take you to jail. AND if you have health care insurance which obama made a MUST ‘else suffer the consequences at the IRS’, then you are definitely in the minus. Fortunately, I bucked health care so I could buy strings for my guitar and a piece of candy for my little girl. Now…. friend…. What do you have left for a beer? Are we a happy modern slave yet???

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