saving money

How to Live on ONE Salary in Today’s World, Day Two

/ lovizmytrio / Leave a comment

So, $1200 per month to pay the remainder of the bills for a family of four with two stubborn girls still in diapers? Well, it’s not so hard really if you’re willing to sacrifice a few things. For one, neither of us had a cell phone, gasp! I mean, what is the purpose of a cell phone, really? It’s to communicate during emergencies, and in that case, Bruce could just call me at work. Since then, we have purchased cell phones, but even now, we only use pay-as-you-go phones, paying probably less than $10 a month, TOTAL.

Also, we were not paying for cable TV and at that time had dial-up Internet, which I know isn’t the greatest, but it still worked. These are all simple ways to cut costs: think about what you REALLY need. MUST you watch HGTV or have the highest connectivity, or can you make some sacrifices?

Without those expenses, we still easily spent $500-$600 per month on groceries, but cut our food expenses tremendously by almost never going out to eat, a habit that was admittedly difficult to drop, as we had been accustomed to that lifestyle for six years of marriage. But you have to do what you have to do. Part of that also includes switching stores, though it’s tough to give in to this, and primarily shopping at Wal-mart. Their prices are easily half, and at the very least thirty percent, less than a typical grocery store. Once I discovered this, I knew we had to make that choice, grievances aside.

Back to the diapers… we used cloth diapers, so we weren’t spending $60 a month on diapers. Our water bill may have been a bit higher, but it has always hovered around $60 a month.

So where does that leave us: $540-640… Because of our good driving records and having old cars (yet another benefit of not buying a new car), our car insurance is less than $40 a month. Yes, that’s right people: LESS THAN $40 a month!! Some things, however, are out of our control, such as the energy bill, which can easily rise to $240 in winter months. We have always tried to balance this out by paying $150 every month, therefore crediting our account, even when the bill in the spring or summer is as low as $80. This is just another simple way to cut costs: look at the whole picture and make it work by balancing things out.

Assuming that we had an expensive grocery month, that leaves us with $350 for everything else: phone, clothing, trash, gas, insurance… and tomorrow, the great insurance debate… in my words and ever-so-bold opinions…

How to Live on ONE Salary in Today’s World, Day One

/ lovizmytrio / 2 Comments

I am going to write for several days about a question that I often encounter from many people who tell me, time and again, that they think it is impossible for their families to live on one salary. To me, after so many years of hearing this, I find it almost offensive when I hear people say that. If it is possible for us, why can’t it be possible for other people? We are certainly not wealthy by any means. I make $50,000, but when we started doing this, my salary was just $37,800.

So many people are losing their jobs now that this might be something they not only have to consider, but have to live with. So these few blog posts will be about how we do it.

In 2005 I was happily staying home with my two young children and taking care of another little girl for $550 a month while my husband worked full time earning about $40,000 per year. We had a comfortable life, filled with vacations, and were able to save a little money every month. Then he received the news that his job would be coming to an end within six months, and I knew what I was going to have to do: go back to work. As much as I hated the idea of working and leaving my then-two-and-a-half-year-old and nine-month-old at home without me, I didn’t want to lose everything we had. Part of that everything, as a personal and VERY important choice for us, was keeping our kids out of daycare. Bruce never went to daycare growing up and had a very close relationship with his mother. I, on the other hand, spent my childhood with various babysitters, and have too many negative experiences to count (nothing horrific—just neglectful). So that was one of the many priorities we had in mind when we were faced with this challenge.

We made a plan. The first part, as difficult as this was to accept at the time, was to eliminate all debts other than our mortgage. Unfortunately, the only way for us to do this was to completely drain our $12,000 in savings. We paid off the rest of my small student loans, our credit card debt, and a loan we had taken to put siding on our house. This brought our bills down by $230 a month, which may not sound like a lot, but it can make a huge difference.

One thing that we did not have, which most people do, was a car payment. Both of us had cars and both were long paid off. I think this is the single most important factor determining a family’s ability to live on one salary. In my opinion, there is almost NO reason to ever have a car payment. What is the purpose of a car? It is to get you where you need to go. There is no reason that I can imagine why anyone should ever buy a new car. And if you need to upgrade to a larger car, as we found out later that same year, expecting baby number three, that we would need to do, find a way to make it work! We used our tax refund ($4000) and sold our old Explorer ($3000) and bought a minivan with cash.

So, to return to my story, the only debt we had, and more or less still have, is our mortgage, which in my mind hardly counts as debt. Another thing to consider is where you live. We certainly don’t live in a fancy house in the most beautiful neighborhood around. We live in, gasp, Aurora!! Ghetto central, right? Come on, your home is what you make it. We have never experienced any crime that I know of. We don’t lock our doors—car or house. We live in a quiet cul-de-sac that our kids play out in with the neighbors’ kids just about every day of the year—similar to any other cul-de-sac in any other suburb, but without the fancy HOA or whatever it is that makes people feel so special about where they live. That being said, our house payment is around $1400 a month.

When I first started working, I was bringing home $2600. Ouch. Do the math. That left us just $1200 for all the rest of our bills. Much higher than the 51% or less of the take-home income that you would get approved for if you were applying for a mortgage… But we did it… and if you read tomorrow’s blog post, I will tell you how.