If you recall, I put a shout out in my quick takes a few weeks ago to get guest posters for a series I wanted to run. I have my first guest post, so here it is! The premise of the series is seeing how people live off of their income, whether they thrive or barely survive! I'm hoping to get various incomes, various cost of living locations, various family sizes, etc. To those of us (me, hi!!!!) who will be starting a family in the future, it can be intimidating thinking about making ends meet, so seeing how it works for different families and different situations is both fascinating and helpful! If you want to contribute, email me your post at buttercup419@gmail.com. I will post as many as I get! Though it's subjective, classify your area as either a low, medium, or high cost of living to give our readers an idea of how far your income stretches. Our first post is anonymous and she classifies her area as a medium cost of living. Without further ado, here is the first installment of....
Our Scenario:
We are a family of four, soon to be a family of five. We
live on one income, and I stay at home with our children. My husband and I both
earned our Masters degrees and are currently paying off student loans. Our
children are not yet school age: we have a three year old and a one year old. We
are also dealing with a temporary (hopefully) salary cut of 10% as my husband’s
company is experiencing some financial issues.
These figures are after taxes are withheld, life insurance,
health/dental/vision insurance and 401-K contribution.
Income
Yearly Take Home: $64,972.96
Monthly Income: roughly $5,414.41
Savings: $11,912.41
Fixed Monthly
Expenses:
Rent: $1200
Student loans: $685
Utilities: $564.91
Car Loan: $474.75
Car/Renter’s Insurance: $144.90
Tithing: $130
The Breakdown:
Rent: We recently moved and have chosen to not purchase a
home at this time as my husband’s job is not as stable as we would like it to
be. Most of what is in savings is from the sale of the home we owned before the
move. While trying to avoid it, we have been slowly depleting our savings since
the 10% salary decrease went into effect in April.
Student loans: This is probably the biggest reason we have a
tight budget, given my husband’s salary. We have chosen not to consolidate loans
as long as our budget allows in an effort to pay them off more quickly. We will
be paying them off until approximately 2020.
Utilities: I have included electric, water, cell phones,
internet and cable into this category.
Car Loan: We made a decision that, in order to avoid massive
car repair amounts, we have two fairly new vehicles. We paid off one a year
early with money from savings that was a $600 a month payment (roughly the
amount of the salary decrease) traded in another for a larger vehicle in the
event that we would add to our family, reducing nearly $1,000 a month in car
payments to $475.74. We have solid credit ratings, and are paying virtually
nothing in interest. We chose to make
vehicle reliability a priority.
Car/Renter’s Insurance: We pay the renter’s insurance once a
year, and the car insurance is taken directly from our checking account twice a
year. We have full coverage on both vehicles and clean driving records.
Tithing: My husband is not Catholic, and long before we were
married we talked about tithing. We made the compromise that I would tithe with
my income. Now that I am at home, we still tithe based on what I was making
before staying home. My husband currently attends Mass with us, and we have not
made the decision to change this amount much, but we do also participate in
other charitable activities as a family. Tithing is something that is important
to our budget.
Other expenses: While we have an actual budget that outlines
our spending in every possible category, we have honestly not been sticking to
it lately. We budget for about $150 in groceries a week, and have separate
limits for baby items, household items, gas, entertainment, gifts, prescriptions,
clothing, haircuts, dining, etc. Food is a tough issue for us: we like it! I try
to cook mostly whole food items and keep things nutritional, but dining out is
definitely a budget weakness for us.
We also have made the decision to hire a maid service to
help clean the house once a month for deep cleaning. While I stay at home, with
two little ones it is really difficult to find the time to do the deep
cleaning, and my husband typically works 12 hour days. On the weekends for the foreseeable
future, we prefer to spend that time as a family rather than one of us cleaning
the entire time.
We also try to plan for a few visits to see family every
year as we are states away from them.
There are still things that seem to pop up, and we are not currently
saving on a regular basis, though our plan is to begin replenishing savings
once the salary decrease is no longer in effect.
One big help for us has been to invest in Quicken software
to track all of our accounts. It has improved our spending habits considerably,
and provides us with easy access to all our financial information.
We seem to have been in a constant state of change since our
oldest was born, but it is easier to flex our budget when we have a clear view
of what is happening. My degree allows me to have some assurance that if I need
to find some part time or full time work to fit our needs, I am able to do so
(provided there are jobs to be had). I
am confident that we will always find a way to connect the dots as long as we
clearly communicate our priorities with one another.
Our income may seem high to many. We also have had the
luxury of flexibility in making some of our budgeting decisions, but that means
that we also have room to cut expenses if our situation changes. While I was
pregnant with my son, I was going to school full time and working part time and
my husband was laid off. He spent nearly eight months unemployed. We were
smart, and planned every last expense.
We laid out our tight budget counting unemployment income, my income,
and the rather small amount we had in savings. We knew down to the day when we
would run out of money and not be able to afford our necessary expenses! We
spent two years recovering from that financially, but it was worth all the
effort. We may very well be preparing to go through it again, only this time we
will have two kids and pregnancy!
My advice to anyone reading this is to know your realistic budget. Be honest about what you spend and
where. Track your spending, at least
at first to get a handle on where your money goes. Also, know your budget priorities and weaknesses. Just being aware of all
the nuances in your spending makes you financially smarter!
Ugh, the student loan debt is killing them. We are in the same boat, but in about a year, I think it will be all paid off....finally!
ReplyDeleteI am behind in blog posts so forgive my late comment.
ReplyDeleteI really struggle with setting a budget and then sticking to it. I've been trying to find budgeting software for months. I keep changing. I think I might need to try using Quicken. I'm not too happy with ibank or mint.com lately and have heard good things about Quicken.