I have always thought it would be easy to live on $40,000 per year.
A catastrophic health care plan with a $5,000 deductible will have a cost of between $300-350 per month for a healthy 40 year old. In Northwest Indiana you could easily rent a 1 bedroom apartment for $550 in a safe neighboorhood. The apartment would include heat and water and broadcast televison (WGN,3- PBS stations, FOX, ABC, NBC,CBS). Electricity would run about $50-$75 per month depending on use and assuming $100 per week for groceries and supplies. Budget would appear:
Rent 550.00
Groceries/Household supplies 300.00
Electricity 75.00
Phone 35.00
DSL Internet Access 35.00
Car Insurance 50.00
Gasoline 75.00
Car replacement 150.00
Car Maintenance 50.00
Healthcare Catastrophic Policy 350.00
Healthcare personal exp 300.00
Income taxes 450.00
Total Basic Expenses $2,420 per month.
Tax Calculation: First $8,700 of income is exempt from Federal taxes. Your next $11,200 is taxable at 10% the remainder of $40,000 income (assuming all taxable) is taxable at 15%. This leaves the Federal Tax Bill @$4,135 per year and state Taxes $1,200 for a total tax bill of $5,350.
This leaves $900.00 per month for personal preferences.
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That sounds fine, but does the "healthcare personal expenses" include optical and dental? There is also the question of whether you would want long term care insurance, which would be approximately another $100 a month.
Also, I wouldn't count on rent remaining stable at $500/month. Utiliites either. But that's kind of beyond this exercise, I suppose.