Can Two Live as Cheaply as One? The Final Update (or, “When Our Only Job Imploded”)

Welp, we finally called it: After six months in a row of spending more than we brought in, Mr. Vega got a part-time at our favorite grocery store. That few hundred dollars a month goes a long way, and his employee discount has also helped to lower our grocery expenses. Most importantly, he loves his job, his co-workers and customers, and even after spending 8 hours on his feet, he comes home happy and energized. What a far cry from his previous career in high-pressure sales, which caused him constant stress and anxiety! 

I think that what we were really trying to do should have been called “Can Two Live as Cheaply as One Under-Earner?” because the significant pay-cut that I took in order to work a “full-time with benefits” job sure didn’t help the situation any! What we’re doing now could be categorized as “Two can Live as Cheaply as One and a Half,” which seems appropriate to our Post-Recession 21st Century economic climate. 

Over the past several months, there were some radical changes in my previous employer’s company culture. I tried my best to adapt, becoming increasingly uncomfortable as the changes mounted. But with Mr. Vega in school full time (and doing very well, I might add!), the pressure of being the sole earner in our household had me feeling somewhat trapped. And I was reluctant to leave the group of truly remarkable people I worked with each day… It’s no exaggeration to say that I’ve made some friendships there that will be lifelong. 

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First Day of School!

Eventually, though, I came to accept that working where I felt that I was being treated unfairly was taking too great a toll on my health and relationships. On the day I tendered my resignation, so did my direct supervisor and about 1/4 of my colleagues! I’m not wishing the company any ill will, but it was validating to see so many people make the same decision I did. That was a rough week at our little hippie house, made rougher still by the reality that I had just walked away from our only steady income and our health insurance. 

We went to www.healthcare.gov and selected a gold-level plan that would be accepted by most of our preferred providers, and that would give us an amount of coverage we felt comfortable with. It isn’t cheap, but it is something we believe to be more important than many other expenditures that we consider optional.

Throughout my career, whenever I have taken the leap of faith to leave an unhealthy job that I thought I “needed,” luck has been on my side, employment-wise, and this time was no exception: Two of my part-time jobs suddenly had a greater need for my services, and I was all too happy to oblige. One of them also instituted an across-the-board pay raise, the first in eight years. Those two jobs gave me enough work for the Fall that I didn’t have to look anywhere else. Because the work is at colleges, and employment during school breaks can be scarce in my field, we revived our practice of re-distributing that income by putting 1/3 of each school check into a “Summer Fund.”  While that makes for a little less spending money now, it also means that we won’t be scrambling to pay the bills later. 

While your mileage may vary, our takeaway lessons from our year of living on a single (reduced) income are these:

  • The Emergency Fund is Everything: although we were able to manage on one income during “normal months,” the unexpected expenses would have sent us deeply into debt if we hadn’t had any savings. Fortunately, all that saving we had done in the past kept us afloat when things got difficult, and we are now able to add to and rebuild the fund.
  • “Normal” Months are Pretty Rare: One month it was a tax bill that we hadn’t forecasted accurately, another was an large medical co-pay, and then there were car repairs and home repairs to be made. As one of my favorite old radio commercials used to say “Expect the Unexpected.”
  • Equitable Division of Labor Keeps us Healthier and Happier: While Mr. Vega was very willing to take on all of the housework duties, and I was very willing to shoulder all of the responsibility for earning money, dividing things up that way made us miserable! He is an extrovert who thrives on human contact, so that much time at home wasn’t good for him. Conversely, I am more introverted and truly enjoy homemaking, and being gone for so long each day left me too little time to enjoy the home we worked so hard to buy. Our current arrangement allows him more time around people, and gives me more time at home, making us each much happier with how our days are spent.
  • Be Willing to Seek Help: My husband has a diagnosed learning disability that qualifies him for assistance with his post-secondary education through our state’s department of Vocational Rehabilitation. When we made the decision for him to return to school and pursue a different career,  we knew we could afford tuition, but we didn’t anticipate just how much his textbooks and welding equipment would cost. His willingness to explore the support available to him is allowing us to remain debt-free while he completes his degree. And because Texas is in desperate need of welders, they are happy to support his training in the field, making it a truly win-win situation.
  • Work Where you Spend, if you Can: Taking on a grocery store job saves us not only a small percentage on our grocery bill, but also an hour or two each week by eliminating that errand from our schedule. Two birds, one stone!
  • Underearning is as Stressful as Overspending: We are strong proponents of living as far below your means as possible. We avoid car payments by driving used, sub-compact cars, keep our computers and smartphones for as long as there is software available to support them, our house is half a century older and 1/3 the size of the average American home, and we have never taken a trip that wasn’t to visit family. We know that many people don’t have the option to seek higher-paying work, and are already working more hours than they should have to in order to make ends meet, and we are grateful to have the opportunities we do. And there are a few things like craft beer, high-quality shoes and occasional nights out that, while they are absolutely possible to live without, make us happier when we have them. So we’re willing to work a little more in order to keep those luxuries.

There are so many factors that go into deciding how a household operates best, and we are lucky to be able to experiment with different ways of doing things. It’s been a challenging year, but also an invaluable experience in learning more about ourselves and about what constitutes balance in our particular situation.

What lifestyle changes have you tried making? How did they work for you? 

Review: Your Playbook for Tough Times, by Donna Freedman

I first came across Donna Freedman’s writing nine years ago, when I stumbled on an article called “Surviving and Thriving on $12,00 a Year.” I was experiencing a personal Upheaval that year, and this brave woman’s proclamation to the world of how she planned to address her own unstable circumstances looked to me like a letter from a supportive friend: “Things may be bad now,” she seemed to say, “but we can make them better if we hang together.” I can’t tell you how many sleepless nights found me re-reading her article, just to know that I wasn’t alone. I’ve read pretty much everything she’s written since then, and played the at-home game of the financial tips and tricks she’s tried in her own life, and do you know what? Things DID get better. Little by little, I managed to pay off all my debt (twice! I’m a slow learner), begin to save, and eventually get to a place of peace regarding my finances. During that time, I met and married my husband and moved halfway across the country where we bought our first house together and figured out a way for him to quit his job and return to school full-time. I even got to meet Donna in person and share a couple of meals and good conversations with her when she came to our new home town of Austin, Texas… Something my scared and overwhelmed Past Self could never have imagined in 2007!

So when her book Your Playbook for Tough Times came out, I couldn’t wait to get my hands on it! Fortunately, I didn’t have to: I was lucky enough to receive a copy to review. 

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One of the things that I have always loved about Donna’s outlook is her firm belief  that frugal living– even when things are at their tightest– doesn’t have to be miserable and that in fact, it can be quite lovely. Her book promises to show you what she’s learned about living on less whether you’re presently in dire straits, anticipating financial difficulties soon to come, or simply trying to squeeze the most out of your current lifestyle.

And she delivers on her promises in spades, with literally hundreds of solution-oriented tips, offering ways to find more budgetary breathing room that hit from all angles, such as how to earn more, how to spend less, and perhaps the most radical idea of all: how to live happily with less altogether.

The Great Recession of 2008 marked the beginning of an exciting time for the personal finance genre. Whereas historically, books on finance have been written by economists and titans of business, Post-Recession financial bloggers and authors are people from all walks of life,  sharing the daily unfoldment of their personal setbacks, life experiments, and successes. Donna Freedman is a shining example of this New Breed of personal finance writer: Just about everything she suggests in her book is something she has personally tried and found worthy of suggesting. Because learning the principles of real estate investing or restructuring corporations may be interesting, but sometimes, you just need someone to tell you how to keep your electricity on or make sure that your kids get dinner.

The book is an easy read, almost like an e-mail from a trusted friend. It’s peppered with personal anecdotes and loaded with concrete resources,  from money-saving websites to resources for healthcare and housing, to suggested scripts for negotiating better prices on purchases. If you need to streamline your financial situation today, this book can help you do it, because Donna has done a tremendous amount of thorough research for you so that all you have to do is get online or pick up the phone to start making your life better.

Overall, I think it’s a terrific resource for anyone looking to wrangle their financial situation into something more manageable. It’s the sort of book you’d want to keep around, so you can implement some of the suggestions and then come back for more once those have been mastered. And it would make a wonderful and sensitive gift for anyone facing some kind of financial upheaval.

The book is available as a paperback or an e-book, and over at Amazon, if you buy the paperback, you can get the Kindle version for $1.99, which makes it nice for sharing.

If you read it, I’d love to hear what you think… please come back and share in the comments!

 

Can Two Live as Cheaply as One? An Update

IMG_0720About five months ago, Mr. Vega left his career in sales to become a full-time student. In addition to giving him an escape from burnout and a way to experience  himself and the world in completely different ways, it’s also given us a chance to see if we could really walk our financial talk. We’ve taken great pains over the years to design our life together so that we could manage on one income, but we never had to before.

A full-time position opened up unexpectedly at one of my part-time jobs, so I tossed my hat in the ring for it. I was a little surprised when I was offered the job, which meant taking a 17% cut in my hourly rate, but as with my previous full-time employment, we felt that the stability and benefits outweighed the slightly smaller paychecks.

Several months and a few sleepless nights later, it seems to be going well (except for the normal challenges I seem to experience with full-time work). We’ve reduced our spending and savings rate, averaging about $1300 a month less than we did in the six months prior to my husband leaving his job. We go out less than we used to, and we haven’t been clothes shopping in months, but that’s all right. Like most Americans, we have much more than we need.

Before starting school, Mr. Vega built a raised-bed garden, and screened in our back porch. There are also rain gutters in the garage, waiting to be installed, but whenever he’s been free to start the project, it’s rained! It turns out that being a full-time student is a full-time job, so he hasn’t had the time he hoped he might for projects around the house, but Spring Break just started, so those gutters might finally go up this week… if he’s not too busy partying with his new college friends!

We had a weeklong visit from my husband’s parents over the holidays, and we let them know ahead of time that we wouldn’t be exchanging gifts…. honestly, I think they were relieved! Our holidays were filled with food, laughter, and inexpensive sightseeing around town, so we didn’t miss spending lots of money.

Although we’ve had to reduce our savings rate, we are still managing to contribute 10% of our take-home pay to our emergency fund, which is more important than ever now that we no longer have the luxury of two incomes. Currently, we have enough to go about five months with no income at all, but I’d like to grow that to a year’s worth. We have never had to use our emergency fund, and if that trend holds, when my husband finishes school and returns to work, we would be able to reduce the emergency fund again and have our bathroom professionally remodeled… and maybe take a long weekend away!

So far, it’s all pretty okay. I guess all the work we had done to live beneath our means is paying off… literally!

Have you ever had to– or chosen to– live on a much smaller income than you were accustomed to? How did you handle it?

 

It’s Time: The Grocery Price Book

I first read about grocery price books over at The Simple Dollar, years ago. Not being into spreadsheets… or math… or shopping, it didn’t seem to me to be a terribly sexy project. The other ways in which I managed to trim my expenses were successful enough that I usually had enough room in my food budget to buy whatever I wanted whenever I wanted without much thought. When Mr. Vega and I began to focus more on whole, real, organic foods, our grocery bills went up, and I just felt happy that we could afford to eat the way we wanted to. After all, we were debt-free, saving for a house, and even had money left over for travel and fun.

Since my husband traded his full-time sales job for life as a full-time student, however, we’ve had to tighten our belts a bit. In January, we managed to wrestle our food expenses down to just over half of what we’re accustomed to spending… mostly by eating out much less than we had been. Also, one of my favorite bloggers, Brandy over at The Prudent Homemaker, is diligent with her food expenses: She keeps a detailed price list of food she buys to feed her family of nine, and her monthly shopping lists are terrific guides to seasonal low grocery prices. Simply following along and stocking up on some things when she does has been tremendously helpful!

But each home is different, and no one solution works for everyone. Our household in Austin, Texas, comprised of two adults with full-time outside commitments, two cats, and a nascent garden, is quite different from hers in Las Vegas with seven children, a work-at-home spouse in addition to a full-time work-outside one, and an abundant home garden that is the result of several years’ worth of effort. And both her home and mine will be different from yours, with your brand-new baby, or giant dogs, or busy travel schedule.

And so the time has come for me to buckle down and invest a bit of time and energy into learning exactly what our most-purchased items usually cost, what a good deal really looks like (because fifty cents off sounds great, but what if it’s normally sixty cents cheaper at the store down the street?), and seeing how much more space we can get in this recently-contracted budget of ours.

I’ve sorted through our shopping lists, and created a spreadsheet on Google Drive listing sixty items we purchase regularly (conventional wisdom suggests starting with a list of 15-20 things, but once I started, I kept thinking of more!), and I’m actually looking forward to learning where the best prices are and seeing how much money we can save. Grocery store sales generally run in 8-12 week cycles, so I reckon it will be Spring by the time I have a good handle on this, but check back and I’ll share how it’s going!

How do you keep track of grocery prices in your area? What patterns have you noticed?

 

Our January 2016 Budget

I created my first budget about ten years ago from a template I found in Dave Ramsey‘s book The Total Money Makeover, and after years of practice, it’s become habit for me to make a new budget every month.  I get asked on a regular basis to help people set up their budgets. I’ve been able to sit with a few friends, but time and distance prohibit me from helping individually every person who asks. Every household is different, so every budget needs to be different, too. Also, it’s important for me to say here that I am not a financial planner or adviser, and that everyone needs to be accountable for making informed choices about their own money. That said, since it can sometimes be helpful to get an idea of what other people are spending on and saving for, we have decided to share our budget. I’m showing where our money goes as a percentage of our take-home pay, both to maintain some privacy and also because it’s more practical: Regardless of the dollar amounts, it’s a good idea to try and save some money each month, meet your basic needs, have a little fun if you can afford to, and return something, however small, to the communities and organizations you care about.

Here’s how it breaks down this month for us:

  • Giving 3%. This category is on the small side this month. Not being religious, we don’t tithe, and we only have one gift-giving occasion in January. The balance of this category will go into donation boxes of non-profit institutions we visit this month. We also make an effort to contribute to charitable organizations and relief efforts throughout the year, and volunteer some time to causes we support. 
  • Emergency Fund 10%. Our Emergency Fund is currently big enough for us to survive for about four months with no other income. While that felt comfortable for us when we had one spouse with a full-time job, and one with several part-time and freelance income streams, now that we are down (for the time being) to one partner with one full-time job and a very little bit of part-time work, we are working toward having a year’s worth of expenses set aside for emergencies. By my calculations, at the rate we are able to save, it would take us about six years to reach that number! Because we anticipate returning to our 2+ income status in a couple of years (thereby returning to a smaller Emergency Fund), we’ll probably never hit our temporary goal, but we’re aiming to set aside 10% of everything we bring home in the meantime. 
  • Tax & Insurance Fund 10%. We maintain a separate account where we amortize our annual term life and auto insurance premiums, and set aside money to pay taxes on any 1099 income. 
  • Mortgage 25%. Our only debt is this 30-year fixed-rate loan, and we made a 20% down payment to avoid PMI. If we don’t pay anything extra, the payment (including principle and interest as well as escrow for property tax and insurance) is a quarter of our current take-home pay. We REALLY wanted a 15-year mortgage, but if we had done that, our currently reduced income would be more of a crisis than an inconvenience, so I guess we made the choice that was better for us. Still, we’re planning to get it paid off just as soon as we can.
  • Utilities 3%. This includes electric, water, natural gas, sewer and trash pickup. We are constantly looking for ways to reduce our usage, and hope to continue to see this number go down.
  • Mobile phones 3%. Our mobile phones are recent-release smart phones with high-usage packages. Admittedly an indulgence, we switched providers last year to save about $250/year over what we used to pay, and this expense would be the second cut we made in a financial crisis (the first is coming up below).
  • Home Improvement 2%. The Home Improvement Fund is one of the last budget categories we pay into right now. We are making continuous minor improvements at the Little Hippie House, and hoping to save enough to replace the aging roof, remodel the bathroom & kitchen, tear down a load-bearing wall, and install new floors. That all could take quite a while, but we’ll keep chipping away at it, as our finances allow.
  • Cable/Internet 2%. Cable would be the first thing to go in the event of a financial crisis, and I suppose our internet would have to slow down a lot if things got tight (or maybe not: Google Fiber is slowly making its way into our neighborhood). But it’s another indulgence we’re comfortable with for now.
  • Transportation 1%. Our transportation expenses will be ridiculously low this month, in part to one of us being a stay-at-home spouse, and the other one working just a few miles from home. Having paid-for cars that won’t need servicing, inspections, or registration in January helps a lot, too! (Remember, though, that our car insurance falls into another category… this number would double if we included it here)
  • Food 11%. Food is the big budgetary challenge for us this month, but we’re determined to make it work. When our income is bigger, we normally spend about double what we’ve allotted for January! This month, we’re planning to minimize meals out, work our way through the frozen holiday leftovers, and take advantage of our upcoming small winter garden harvest. In addition to feeding ourselves this month, it’s my hope to use 5-10% of our weekly food budget to build our home food store… I really love going to our little chest freezer for a gallon of milk or to our garage for a jar of peanut butter instead of having to run to the market when things run out!
  • Pet Care 1%. This category this month consists entirely of canned food for our two cats. We have more than enough kitty litter and dry food to get through the month, and their annual veterinary visits aren’t until March. 
  • Clothing 2%. We aren’t planning any clothing purchases this month, but we’re setting a little aside so we can do a Big Shop in the Spring. 
  • Entertainment 3%. Entertainment is the one area where we consistently  underspend! Every month, it’s a challenge to get ourselves out to the movies, a play, or to hear some live music. We’re still working on that, for the sake of balance.
  • Personal Care 9%. Our Personal Care budget should really be called “MY Personal Care budget,” as Mr.Vega gets an inexpensive haircut every other month or so, and is in the process of growing an Epic Beard, so we no longer buy him razors or shaving cream. Because I’m in the process of Changing Looks, hairwise, this month, this category is more than double what it usually is.
  • Education 6%. Even community college costs something, at least for now: there are a lot of political promises being made on the campaign trail to change that. That will be lovely if it happens, but in the meantime about 6% of January’s pay will go for tuition. 
  • Vacation 7%. Last summer, we went to a five-day music & arts festival that we just loved. It’s time to buy tickets for the next one, and because it’s an out-of-town camping trip, we count the tickets as a travel expense, rather than “entertainment” (and this part is a little weird, but because the event is limited-capacity, tickets are sold lottery-style, with each person allowed to request a maximum of two tickets. We each put in for two, and if we get all four, we’ll sell the extra pair at face value and recoup half of our expense. But we’re sending payment for four tickets in January, so that is what we have to budget for).
  • Professional Development 2%. My new job will reimburse me for this training after I complete it this Spring, but registration is first-come-first serve, which is why I’ll be paying for it this month.

So there you have it: our January budget, with every dollar accounted for. There’s plenty of room for improvement, but we’re not unhappy with it. Feel free to share in the comments how different it is from (or similar to) yours… I’m always curious to learn how other people are doing it.

Frugal Tuesday: Check Your City’s Webpage

Many cities and utility companies have money-saving programs that residents are unaware of. In Los Angeles, we were able to find free mulch and compost, free large-item pickup tags, discounted worm composting bins (in exchange for attending a 2-hour class). Here in Austin, discounts on composters are also offered, as well as free paint, mixed from people’s hazardous-waste drop-offs! We have taken advantage of numerous opportunities for rebates offered through our local electric company, and just this past weekend, we got a couple of free shade trees for our Little Hippie House through an energy-company partnering with TreeFolks.

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Take a few minutes to browse around and see what your city or utility company might be offering that you can use… you may be surprised by what you find!

Skinny-Fat Finances

We’ve all met those people who are model-thin without effort. They eat whatever they want, they rarely exercise, they drink and smoke, they seem to live on a diet consisting mostly of fancy whippy coffee beverages, and still everything they wear looks good on them. Some of them even struggle to keep weight on when life gets stressful. But a deeper look into their medical charts might reveal hidden health problems such as heart disease, liver dysfunction, or diabetes. While many people work hard to maintain their healthy weight and fitness levels,  there is a portion of the population who look healthier than they are: the “skinny-fat.

Financial health is no different than physical health, in that what can be seen from the outside doesn’t always represent what’s happening behind closed doors. And in exactly the same way that Western society places a higher value on being thin than it does on being healthy, we are all also encouraged to look rich, rather than to be financially stable.

 

Both Mr. Vega and I were raised in skinny-fat financial households. Our Baby Boomer parents were the first generation of Americans with access to the easy credit we have all become so accustomed to. “Low monthly payments” must have felt like a godsend to our young parents, who wanted so much for their children to have the best of everything. They would have had no way of predicting that their resulting financial stress would affect us much more deeply than going without some luxuries might have.

We don’t remember what we got for Christmas or our birthdays every year, but we remember clearly the bills that came in pink envelopes. We remember the way our parents tried to ignore the telephone’s incessant dinnertime ringing, and the occasional times we had to bathe in cold water or to get ready for school in the dark because the utilities had been shut off for lack of payment. I, for one, will never forget coming home from school one day  in my teens to an IRS lien notice stuck to my front door, and spending the afternoon at a friend’s house, because I felt certain I would go to jail if I went into my house (everything got sorted out, and we got to keep our house, but that was a terrifying day for me).

As we approach the gift-giving holidays, we are bombarded with TV commercials showing children’s faces lighting up as they open their”perfect” presents on Christmas morning. Images abound of delighted spouses peeking into tiny jewelry boxes, or leaping around brand-new beribboned vehicles in the driveways of their lovely suburban homes. Who wouldn’t want to inspire that sort of joy in the people we love?

What those commercials don’t show is those same parents fighting over money in January (and February, and March…) when the bills arrive. We aren’t seeing those same children being told to “Tell them I’m not here” when the debt collection agencies start calling. The visions of happy families road-tripping to visit Grandma never reveal the expired insurance policies hidden in the glove box.

Here’s the thing: if you can afford a house with a yard for your kids, and a nice Compact Utility Vehicle to drive them around in, good for you. If designer clothes, annual vacations, and weekly mani-pedis are within your means, then party on. Nice things are… well, nice! We want to have them, and we want you to have them.

BUT (there’s always a “but):

If you are buying holiday gifts on a credit card that you will not be able to pay in full when the bill comes, you might be suffering from skinny-fat finances.

If you are considering a large purchase and your main concern is the amount of the monthly payment, rather than the total cost of the item, you might be suffering from skinny-fat finances.

If you bought and strung a million twinkly lights outside your house last weekend, but couldn’t make your rent or mortgage payment Tuesday, you might be suffering from skinny-fat finances.

We are here to tell you from personal experience that a little less stuff, a little less sparkle, a little less bling isn’t going to hurt anyone, but that getting it when you really can’t afford it could actually cause lasting harm. Living in a smaller home, driving an old-but-paid-for car, opening fewer gifts on holidays… none of that is so bad if you get to eat your holiday meal with loved ones who aren’t fighting, if your heart doesn’t pound every time the phone rings, if you aren’t afraid of the mailbox.

Anyone who has been there can tell you that being healthy is so much better than simply being skinny. And financial stability– freedom from debt, carrying enough insurance, and having enough money on hand to weather emergencies– feels so much better than looking wealthy, but worrying constantly about when it’s all going to fall apart.

If your finances are skinny-fat, just like with your body, you can’t heal them overnight. But you can begin to shift how you navigate life. You can refuse to put even one more non-essential purchase on a credit card. You can begin to record your expenses and get a clearer idea of where your money is going. You can begin to cultivate contentment and seek happiness in experiences instead of things.

And if you keep at it, before you know it, you will find that you have everything you need, and maybe more of the things you want. Before you know it, you’ll be looking back and thinking about how much better you feel than when you were over-extended and stressed about money all the time. Who knows? You may even be able to afford that shiny new thing you’ve always wanted… with cash!

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