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 firstname.lastname@example.org. 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....
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.
Yearly Take Home: $64,972.96
Monthly Income: roughly $5,414.41
Fixed Monthly Expenses:
Student loans: $685
Car Loan: $474.75
Car/Renter’s Insurance: $144.90
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!