How to live well on $40,000 or less

Related topics: family, budgeting, frugal, spending, Donna FreedmanAn MSN Money reader took issue with one of the couples I profiled in "How to become a one-income family." The couple had lived on $30,000 for a while but were now bringing in as much as $70,000 because of a successful at-home business."Please write an article that shows what a real family living off of $40,000 a year can do," the reader scolded.So I did. In fact, I'll show you two: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 onlineA 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 FreedmanIf 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 Rosetta Stone Outlet 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: $850Food: $466Roth IRA: $250Internet/TV/phone: $160Utilities: $150College funds for their daughters: $100That 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: $900Food: $400Retirement: $833Internet/phone: $170Utilities: 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.

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