Today’s post is long, but I think it’s worth the read. If you want to change your life, pursue a dream job, or protect your family from a layoff or massive pay cut, then take 5-10 minutes and learn how we were able to survive losing $70,000.
Picture by winnond
When I originally started to draft this post, I felt the need to explain to you just how much $70,000/yr (or $4,000/month in take-home pay) is.
I wanted to make sure you were able to comprehend that $4,000 a month could buy you (1) a 5-day cruise for 2 in the Carribean (including airfare), (2) front row tickets to your favorite concert or KU basketball game (assuming they’re not playing MU or K-State), and (3) either a nice $1500 camera, HD TV, laptop, three Ipad 2s, or any other combination of technology gadgets that may tickle your fancy.
I also gave some other examples of what exactly you could do with that kind of money each and every month, but my guess is that you realize $70,000 is A LOT OF MONEY – regardless of who you are.
Confession
I want everybody to know that handling a $70,000 cut in pay is possible.
Before I move forward though, I want to let you in on a little secret.
In light of the Quitter giveaway, and my recent posts about pursuing your “dream job,” I need to tell you that I knowingly, willingly, and happily took the pay cut. ‘Uhhh…what?’ you ask. So, I must apologize for the picture being a little misleading…I did not lose my job.
One of the reasons I started WorkSaveLive was so I could have a platform to help people pursue jobs they LOVE – but do it in a way where they don’t put themselves, or their families, in financial distress. Today’s post, along with the Quitter giveaway, are two tools that will help you in that process.
Lastly, I hope today’s post will help people and families safeguard themselves from the “unexpected.” The fact is you probably won’t always be employed at the place you work today (maybe by choice or force), and there are some specific things you can do to protect yourself against being laid off, downsized, or fired.
4 Keys to Surviving a Massive Pay Cut
Holly and I certainly didn’t wake up one morning and have this awesome idea about over-hauling our lives, flipping things upside down, and sacrificing merely for the sake of it.
We’ve done all of those things because they’re necessary; necessary to accomplish the goals we’ve set for ourselves, our family, and our lives. They’re necessary because you can’t keep doing the same things you’ve been doing and then expect something to change.
As you read through the rest of this post, I just want you to keep in mind that change takes time. The key is getting started. Once you’ve gotten started, just focus on taking one step in the proper direction each day, and eventually you’ll find that everything about you (and your life) has changed.
Key #1. If you live without it, it’s as if you never had it
Prior to the time of this transitional period (okay, “transitional period” may be an understatement. Something like “flip-your-life-upside-down-shake-twice-don’t-stir-throw-it-off-a-cliff period” could be better suited there), Holly and I decided we were going to start working our way out of debt.
The only way to get out of debt with gazelle-like intensity is to live on substantially less than you make and throw all of your “extra” money towards debt every month. So, while we were making around $140,000/yr, we were living on less than $40,000 of it.
By doing that we were able to pay off substantial amounts of debt in a short period of time, while also paying cash for a car (new to us), wedding rings, honey moon, a vacation, and half of our wedding.
Before I just brush over this step, I need for you to carefully read it again…because it’s very important. Living on less than you make is extremely difficult. It’s one of those easier-said-than-done things. What typically happens in this country, regardless of income, is that we spend EVERYTHING we make (and most of us go into debt beyond that). I’ve coached people that make minimum wage, some that make $20/hr, and others that take home $10,000/month. And that statement applies to all of them. Everything is relative. Income and lifestyle adjust in the same direction.
The fact is, regardless of your income, you MUST learn to live on substantially less than you make. Doing that will allow you to take a lesser-paying job in the event that (1) you want to pursue your dream job or (2) you get fired/laid off and can only find work that comes with a reduction in pay.
Key #2. Changing Lifestyle
This is the area where you you can take some tangible steps and it really is where you’ll be able to make some progress on key #1.
- Accept hand-me-downs – Never be ashamed of using worn items (be it from family or a place like craigslist). I made this realization a couple of months ago, but if you look through our house, there is literally not a single high-priced item that we bought new from the store. Seriously.
Our beds, kitchen table, silverware and plates, washer/dryer, couches, TVs, coffee tables, and cars, were all used. They were all hand-me-downs from family members (except the washer/dryer and cars).
Now, of course I want to buy new items. But, I’d rather pay off debt first and get my family on a sound financial setting before I do that. I just have to consistantly remind myself that my day will come, it’s simply a matter of time.
- No Eating Out – ever – So, “ever” may be a little strong. But Holly and I remain on a relatively strict monthly budget and it doesn’t include a lot of eating out.
If you’re trying to get out of debt, or you’re struggling with money, then Dave Ramsey loves to say that “you shouldn’t see the inside of a restaurant unless you’re working there.” Well, when we first got started on our journey 5 years ago, I took that advice a little too literal.
Holly and I had been dating for a little over a year and Valentine’s Day rolled around. She asked me if we were going out that evening. To be fair, I didn’t really expect that to come from her because she KNEW I WAS ON A MISSION. We had agreed not to buy each other things, so the question caught me a little off guard. So, I told her “no.” She then proceeded to ask me if we could at least buy a DiGiorno frozen pizza – apparently she was tired of eating Pasta Roni every night. What she didn’t know was that I had already spent all of my grocery money for the month (and there was no eating out money at that time) and had loaded up on my Pasta Roni, Ramen Noodles, and Totinos pizza. So, I told her “no” again.
You see, when I first got started on my plan I was a serious about it. There was no such thing as eating out. There was only progress to be made, debt to pay off, and goals to accomplish. I had gotten to the point that I was sick and tired of struggling with money and tired of working a job that I dreaded, so I was going to do whatever was necessary to change things. So, to Holly’s chagrin, we ate Pasta Roni for the 3rd night in a row. Sorry, Toots. True story though.
- Get on a Strict Grocery Budget – to this day Holly and I plan out our weekly menu and make a grocery list accordingly. Early on our budget for groceries was about $40/week but now we’ve bumped that to $70. We literally take our grocery list, pencil, and calculator into the store and tally everything up before we hit the register. It was a little embarrassing to start, but I quickly got over it. I’d rather be embarrassed and making progress each month, than fit in and be going into debt. We don’t use coupons often, but we do buy off-brands on a regular basis. We rarely buy name brand products and it has saved us a significant amount of money over time.
- No Cable Television – Frankly, cable is a great thing to cut (unfortunately it is where I get major resistance from my male clients). It’s a complete waste of time and money. We throw away our lives, opportunities to grow, and precious time with family for the sake of plopping ourselves on a sofa cushion to rot our brains for 28 hours (on average) each week.
I really did miss cable when we first got rid of it but I’m really thankful we did. It’s amazing how much more productive you can be without it. It’s obviously up to you, but we did go ahead and subscribe to Netflix. We canceled the streaming because it still provided us the opportunity to waste too much time (my self-discipline sucks), so we just have (2) DVDs mailed each week.
- Decrease Cell Phone Package – This is a category where most people can cut back on. The question is whether or not you’re willing to. Holly and I were: a little over a year ago we decided to get rid of internet on our phone – blasphemy, I know. Our cell phone package (for 3 phones) is only $115/month.
- Have Proper Amounts/Types of Insurance – I’ll have more posts about this topic and about types of insurances down the road, but this is definitely a place where I see people get taken advantage of and spend unnecessary money. Not because insurance salesmen are bad people, but more-so because the buyer is just ignorant and lazy.
Holly and I shop around our insurance products to ensure we are getting the best price with the best companies out there – you shouldn’t do it all the time, but once every year or two is certainly a great idea. We only have liability insurance for both of our cars – which saves us quite a bit of money each year. Our cars aren’t worth much and we have enough savings in place to buy a new car if something were to happen.
We have the cheapest health care plan that my wife’s work offers (which is good for us since we’re relatively healthy – well…it was supposed to be good for us before we had a collasped lung and a broken hand this past year); we have term life insurance, which is the cheapest form of life insurance there is. Lastly, by reviewing our home owners insurance documents on an annual basis (when they get automatically renewed), I was able to spot that our insurance company hiked rates up last year because they ‘assumed the value of our home and personal belongings went up.’ So, I challenged them on their increase, and got them to knock our coverage back down to where it should have been. No reason to pay for insurance on $90,000 of personal property when we only have about $10k worth of “stuff.” That’s literally a waste of money.
Always know what type of insurance you have and the coverage it provides. You may very well be massively over-insured or are paying high rates simply because you’ve been with a company for a long time and they don’t believe you’re going anywhere (I see it the most with people in their 50s and 60s).
- Limit Luxuries – a few years prior to the major pay decrease, I kind of lived like a rock star. Front row concert tickets, eating out/going out every night, etc. Well, needless to say if you want to make financial progress, you probably can’t do those things (unless you make a ton of money).
Holly and I rarely go on vacation – maybe once every couple of years. And even when we go on vacation we try be “smart” about it by looking for deals. We also rarely do things that cost money; we certainly love spending time with each other and going out, but we don’t go to movies, sporting events, concerts, or anything else that involves Hamilton, Jackson, Grant, or Benjamin Franklin.
For some of you that may sound miserable, but I’ve found that having fun and enjoying things doesn’t require money to be spent.
- *Clearly Define Needs & Wants* – this is probably the biggest lesson I’ve learned and the key to our ability to make the $70,000 change in our life.
Americans’ views of needs and wants differ greatly by social status and income, however the definition needs little interpretation or argument.
I’ve had other people be so kind and tell me that I need a new car, washer and dryer, TV, and other various appliances. Heck, I tell myself that sometimes. But I don’t. Society lets me know that we need cable, internet on our phones, a smart phone (which I don’t have), and an Ipad 2, Xbox, PlayStation, BlueRay, and/or Wii. But we don’t.
We have everything we NEED. All of our “stuff” works. Maybe not perfectly, but 95% of the time they fulfill their purpose.
Learn to clearly define your needs and wants and you’ll take some great steps towards financial freedom.
Key #3. Pay Off & Limit Debt
I didn’t sit down 5 years ago, have a goal that involved taking a $70,000 pay cut, and create a way to make that happen. While that would have been pretty awesome, it’s just not how things work. So, without really knowing it, one of the things we did which allowed us to handle the massive pay cut was to eliminate (and limit) some of our monthly debt payments.
So, obviously one of the things you can do to prepare yourself for a layoff, downsize, dream job opportunity, or pay cut, is to get rid of debt!
- No Car Payments – Dave Ramsey firmly believes that the middle class will greatly struggle to build wealth if they have car payments. From everything I’ve seen (personally and coaching), I’d have to agree with him.
Fortunately for Holly and I, we’ve never had car payments. I’m not really sure how we’d manage if we had them. I’m not proud of it, but I’ve driven some “beaters” in my day: (1) a ’93 2-door Cavalier, (2) the wonderful 1988 2-door, baby blue, Mercury Cougar was probably the best one, and (3) my current car that I bought 3 years ago – a multi-color 1997 Honda Accord that has serious water-damaged paint from sitting after an accident for a couple of years. That one I named Dave, in honor of Dave Ramsey. Thanks Dave.
- Paid off Student Loans & Credit Cards – Holly and I started with $110,000 in total debt (not including mortgage). Wow…I know. And you thought your situation was bad. But before taking the pay cut we paid off nearly $50,000 of that total!
Doing that drastically lowered our monthly debt payments and it allowed us to handle the eventual decrease in pay. So, one of the best things you can do for your family is to get your financial life in order! Pay off as much debt (medical, personal loans, credit cards, student loans, car payments, etc) as you can and get those payments out of your life forever!
- Reasonable Rent or Mortgage – (along with a decline in interest rates) there has probably been no greater deterrant to Americans’ ability to save money than the massive rise in housing and rental prices. The Amercan Dream requires that every person own a home – a big home too. I’m not just talking about a roof over your head; I’m talking about 3 bedroom, 2 bath, a kitchen with stainless steel appliances and granite counter tops, 3 car garages, and a finished basement complete with a movie room or “man cave.”
Fortunately for Holly and I, we didn’t buy more than we could afford. We limited our monthly house payment and it allowed us to not have our hands tied when I wanted to make a change in my career.
Most don’t realize this but a larger house also means higher property taxes, home owners insurance, utility bills, and house repairs. A 3000 square foot house doesn’t just have a larger monthly payment than a 1500 square foot house; it comes with about $700 in added monthly expenses.
Key #4: Contentment
Most people look at us and think we’re crazy for all that we’ve given up. Let’s be honest here, I even wonder if I’m crazy sometimes.
There are two sides of me: the person that loves stuff and comfort, and then there is the person that wants to stand for something, have a purpose in life, believe that God would want us to work jobs we love, and be happy and have everything we need in the process.
The change in pay hasn’t changed my want for stuff. I still want to go on a vacation to Fiji and stay in a 5-star resort, I want a new flat screen TV, and a vacation house in Colardo. I still want a new bed, couches, cars, an Iphone, Ipad 2, and a bar-b-que grill.
But what I have learned is that I can live without all of those things and still be happy. I have all that I really need.
Although my want for things will always be there, my view of life and stuff no longer defines who and what I am.
What I can do with my career is no longer dictated by my lifestyle and financial obligations. I can go work full-time at McDonald’s and make ends meet if I need to.
Dave Ramsey believes that having Financial Peace involves having wealth. My definition is different: having all the things that we need, never worrying about paying any of the monthly bills, while working a job I love in the process.
Maybe “Financial Peace” isn’t the right phrase. Maybe something like “FREEDOM” would better describe how I feel.
Redefine the American Dream.
Provide Hope. Inspire Change. Be sure to tweet about or share this story on your Facebook or Google+ page (click buttons below).
About Jason
So, we have cut cable completely and our cell phones plans down as well and I can honestly say I don’t miss them one bit. It helps that we have an HD antenna so that we still get HD local programming for free! Lots of good ideas, if only people would listen to a couple of them.
I like your definition of Fiancial Peace:) Freedom
I’d like to know how you could shave off the grocery bill… mine runs around 250-300 a week.. i have five children ages 2-14 soyou can imagine their stomachs and their hunger. I try not to buy processed garbage and go for fruits veggies meat milk, of course ihave to buy tp and still trying to train my 2 year old so i do need to buy diapers and wipes for the overnights but my children can really eat up the food.. any advice on that we live on 50,000 a year with our five children we have outgrown are small 3b 1 bath house.. 1 bath is killing us we’re all jumping around waiting to use the bathroom you think we ‘re all on timers.. trying to scrimp and save to move .. not sure how will do that either.. trying to cut back everything.
Hi Victoria, I have six children ranging in age from 3-15 so we are in a similar boat! I also try and go for healthier foods. I am not an all organic or no-processed-foods-at-all person, but we do eat salad and fruit on a daily basis and have lots of whole foods.
I use coupons and our budget is $120/week. This includes pull-ups and wipes for our little one and we also feed a 90 lb. dog w/ this too! I think one of the main fallacies of “couponers” is that we only feed our kids hamburger helper and fruit snacks.
Here are some items that I regularly use coupons for and can get for around 75% off or even free: soy milk, yogurt, olive oil, nuts, canned tomatoes, beans, frozen veggies, whole wheat bread, hummus, cheese, bagged salad, whole wheat pasta, pasta sauce, vinegar, turkey products (bacon, sausage, ground, etc.), tuna.
And then all the toiletry and household items like shampoo, deodorant, toothpaste, toilet paper, cleaners, etc. that we are all using whether we are healthy-minded or not tend to be close to free most of the time!
Here are a couple of sites for you to check if you are interested to see if couponing could work for you: moneysavingmom.com, southernsavers.com, commonsensewithmoney.com
Hope that helps!
Thanks for the great reply, Joy! It’s great to have other members than can speak from experience and share ideas.
Victoria,
Thanks for your comment and visiting the site!
First, I would highly encourage you to get Crystal’s new book, The Money Saving Mom’s budget. It is the only book I’ve read thus far that does a great job detailing how to cut down significantly on your grocery bill. Crystal talks about couponing and the various stores/ideas that she has personally implemented.
Secondly, I think the place you must start is learning to plan menus, meals, and a grocery list. The biggest grocery expense I see with most families is the “junk” food/snacks. I know how hungry kids can be, and frankly I’m not sure how my mom managed with my brother and I growing up (we literally ate everything in sight), but if there is food around the house that doesn’t have a purpose it is going to be eaten. If there isn’t though…typically they will learn that they can’t just eat everything and anything they want.
Holly and I also rarely eat meat which saves us a significant amount of money. I’d say we eat meat once or twice a week – and when we do it’s typically chicken or ground turkey (we rarely eat steak…maybe once every 3-4 months). Not only are we trying to be wiser with our health, but it does also help us manage the budget. Dave Ramsey loves to talk about a “beans and rice budget,” and those are very inexpensive and relatively healthy foods. We eat various types of pasta, bean, and rice recipes. The carbs probably won’t hurt the younger children as they’ll burn it all off, and they’re extremely cheap and filling meals. You can get creative with them too…they may not be as boring as you’d think.
So, if you haven’t tried to start planning out a menu, I’d encourage that as a first step (it’s really a must to living on a tight grocery budget). Secondly, be selective with where you shop. Be sure to check coupons and ads at your local food places. Lastly, as you try to manage, you may just have to alter what you “typically” eat for meals. Meat is great and in America it is the standard for most meals, but it will also kill your budget.
If you’ve never planned out a menu, or you don’t have a lot of good cheap meal ideas, then I’d encourage you to check out http://e-mealz.com/ (E-Mealz). They provide a menu for various size families, and they have some plans specifically designed for a couple different grocery stores around the country. It costs $5/month (maybe $6 now) to subscribe. The great thing about it is they give you the meals, they tell you what you need to buy, and they’ll show you how much the entire menu will cost at that designated store. You don’t have to use every meal they say, but it will give you some great ideas.
Without being able to specifically see your shopping habits, it’s difficult to give you a bunch of ideas…but I hope this helps a little.
*No, I don’t have any affiliation with E-Mealz and I do not get any compensation if you were to subscribe there.
Hi Victoria,
I have 5 children also, ages 16 months to 14. My grocery budget is $600 per month. This includes diapers and all toiletries. We also try to stay away from processed foods. I would say the key to keeping the cost down is planning. I use coupons on some items but don’t have the time to shop multiple stores every week for the best deals. I plan everything we eat – three meals and three snacks per day per person. When planning, I have the store’s flier open and plan my meals based on the current sales. When I get home, I divide all the snacks. For example, I don’t put a box of crackers in the pantry. We have what we call the “snack bin.” I put individual servings of the crackers into snack sized baggies and organize them in the bin. The kids choose one sweet, one salty and one fruit snack each day. This seems to work well for us. If one of the teen boys is extra hungry, the option of a PB&J is always available. For suppers, I have a $10 per supper guideline. You’d be amazed at the number of healthy meals that can be made on a budget. Best wishes!
A great article! I too have an older paid off car (2000 volvo) that we bought last year after attending Financial Peace University. And yes, we call it the Dave car. I cant imagine ever having a car payment again. You are so right-my husband and I still want things, but the feeling we get by paying off debt and not having a car payment is sooo much better! We are finally “getting it” in our mid 40′s. Only wish we had been smart about our money when we were younger.
Karey,
I’d encourage you to not beat yourself up about the past. There isn’t anything you can do about it.
Regardless if you’re 40 or 20 years old, everybody can look back and regret what took place. However, you wouldn’t be who you are today and the lessons you’re learning wouldn’t have the same impact if you hadn’t gone through trials and experiences that got you to this point.
Like your story. Wow, that Valentine’s Day story got me though, you have a good woman! I’m super frgual, but I’d have been like, “screw you, I’m getting a DiGiorno!”
In reality I am the spender of the family. Much of why I started coaching and advising people a couple of years ago was because I personally struggled so much with finances. It helps to have somebody that is on the same page. I don’t know what I’d do if she was a spender.
My husband and I are dealing with a $30,000 pay cut. He was diagnosed with chronic pancreatitis 4 months ago and had to stop being a fireman. He has actually been hospitalized since 9-28-11 and remains so today. We have 3 kids of our own and adopted our 3 grandchildren. It has been tight, but you can do it if you have to.
Kim,
I’ll be praying for husband and your family.
You are right though: you can do it if you have to. I always tell people just focus on doing the best you can. Make sure you’re spending a lot of time with your kids and your husband, and focus on what you can control (which isn’t much).
Just came over after Crystal @Money Saving Mom linked to your post. Good stuff and congratulations!!
I wanted to throw this out there in case you haven’t heard of it – Page Plus Cellular. We have been with most of the cell phone companies over the years, most recently Verizon. While we loved Verizon’s coverage, they totally lost us a year ago when they told my husband that he HAD to pay an extra $30/month if he had a smart phone (which he used like a PDA). He started doing some research and finally discovered a month-to-month cell company called, Page Plus (www.pagepluscellular.com). They use the Verizon network (so we get the SAME coverage), but they don’t require a contract. My husband chose the $29.95 plan (no taxes, no hidden fees – he pays $29.95 period) which gives him 1200 minutes, 3000 SMS (he never used texting before, now he does since it’s already paid for), and 100 MB of data (which means that he can now access the internet too when there is no Wireless available). They offer the option of setting up a monthly payment plan (i.e. you give them your credit card, they charge you $29.95 a month until you cancel), or you can simply go online and buy a pin number each month.
Then there’s me – I NEVER use my cell phone, but we both wanted me to have one in case I needed it. A plan is totally wasted on my cheap, flip phone, but Page Plus offers a $10 card that gives you 100 minutes and lasts 120 days. If you don’t use all the minutes before the 120 days are up, you just buy another $10 card and the minutes roll over (plus you have 100 more). By switching from Verizon to Page Plus, we cut over $50 off our monthly cell phone bill.
And before you ask if I’m in any way associated with Page Plus, no, I am not. I’m just a VERY pleased customer who was happily waving good-bye to Verizon and their multitude of fees for services that I didn’t want.
There are always ways to cut corners, even when you think you’ve done it all…that’s what we learned.
Carrie,
Thank you for your comment and coming to check out my blog! I certainly hope you return.
Thank you for letting me know about Page Plus; I’ll absolutely look into that!
It sounds like a pretty amazing deal and it could be something that would help my clients (as well as our family).
We have saved my not having a cell phone with all the bells and whistles. I can’t text with my job and when I get home who has time anyways. I’m always telling people to lose the fancy phones and you can save at least $50 a month with fees alone.
We occasionally use a cell phone (prepaid) and only turn it on IF we are expecting a call & away from home…ex., if my hubby is on-call or know someone needs to reach us if we aren’t at home. We have been using Virgin Mobile…$20 for 3 months (which gives us 200 minutes at 20 cent a minute, if we leave the $20 as cash). When the 3 months is expiring, we can purchase additional minutes which extends the time & rolls the cash/minutes over. I’ll have to check out Page Plus. Is there a way I can tell them you referred me? so, you get credit (hopefully a bonus of some kind
I want to apologize to everybody about the server problems. Being that this blog is relatively new, I’ll admit that I haven’t had any traffic like this.
Thank you so much for your visit – I genuinely appreciate it. I hope you can be patient. If the server is being slow and giving you trouble…then I’ll just have to pray you come back another time.
Thanks so much to Crytal! If you haven’t purchased her book, The Money Saving Mom’s Budget, I’d highly encourage that you do! I just finished reading it last week and it is awesome! I’ll have a review and giveaway here in two weeks!
I hope you come back!
Thanks again,
Jason
Very intresting article and I do like the face you mention you wanted a goal of never having to worry about making a huge salary again.
I am curious, I don’t see any mention of any children, it looks like you don’t have to worry about those expenses right?
Chris,
That is correct. We do not have any children as of this moment. My only “baby” is my 150 lb Bullmastiff, Gunner.
After I posted this article a few nights ago, I got a call from a family member and we did talk about the kid aspect. Having coached families, I feel that I have some idea as the financial costs to raising children.
Raising children doesn’t add the enourmous financial burden that most people make it. There are ways to live on a tight budget and still raise children; people do it every day. What I’ve found though is there is a serious inability to tell kids (these days) “no.” Rarely do I find a couple that has the ability to teach their kids that they cannot do and have everything they want. Parents today want to give their children “the life they deserve” and a life that we didn’t have when we were growing up. Of course, not falling into this trap is one of those easier-said-than-done things and I realize that.
Crystal mentions this in her book, The Money Saving Mom’s Budget, but they used cloth diapers as a means to significantly lower their monthly “baby” expenses. You can make your own baby food. Buying furniture can be done at garage sales, on Craigslist, and in consignment shops.
So while we do not have children, I have little doubt that we would have been able to handle the same pay cut if we did. There might just have to be some additional sacrifices that would need to be made. As Kim commented earlier, “you can do it if you have to.”
I like Key #4 Contentment… Just last night at dinner, my 7 year old said, ‘You know. Some people only have family, that’s all they have. And really, that’s all you need.”
So innocent and so wonderfully said…if only we could learn from them.
This sounds like a very good beginning for you two Jason and Thank You for sharing your story(I came in from Crystal@Moneysavingmom) …I wish you both well on this journey but just throw a caution to the wind…men and women think differently when it comes to finances and though you work hard at this by taking the reins do not forget each other in the process…investing in your relationship is worth it even more so…tc
*LIKE*
Sheeba,
I’m glad that you say that! We don’t really throw caution to the wind much around here. We’re very thoughtful in our decision making progress and we try to go where He leads us.
Men and women are certainly different when it comes to money, but Holly and I are certainly on the same page. We wouldn’t be able to make the progress and sacrifices without that teamwork.
We do focus on our time together every moment that we get. We try to be creative with utilizing it too…cooking. I’ve been known to do some yoga and spin class to try and squeeze out all the time we can get.
So no worries there.
Thanks for taking time to comment!
I thoroughly enjoyed reading this post (found it from MSM)! You and your wife (my name is Holly, too, btw) sound a lot like me and my husband. We are currently working on paying off almost $50,000 in student loans from 3 years ago and Lord willing, next month we will be down to $20,000 left. We both work full time at this point, but we live on my husbands income only. I am such a tightwad when it comes to the family budget, because I want to be out of debt! Thank you for this great article!
Thanks for your comment Holly! I’m glad you liked the post.
Congrats on the wonderful progress! That is truly amazing (and impressive you’re living off of 1 income).
I wouldn’t say you’re a tightwad…I like to think of it as being determined and willing to make the necessary sacrifices to achieve the goals you’ve set.
Collapsed lung?? My 27-year old husband had a collapsed lung this fall and had to have surgery. It has been our biggest financial setback on our debt-free journey thus far.We went to our in-network hospital that was supposed to be covered 100%, but the surgeon was out-of-network and he charged 12k above what our insurance considered usual and customary. Yikes! We are trying to get the surgeon’s medical group to lower the bill, but we’ve yet to come to a resolution.
I sure hope you had a less crazy experience than us!
Hi Amanda!
Same injury and same age – craziness!
That is a tough situation! That’s pretty frustrating that your hospital/doctor didn’t give you an in-network surgeon. Very strange. I’d almost try to throw that $12k overage back to at the hospital and claim you had no idea (which you didn’t). I’ve dealt with that a little bit and you may not get anywhere as they might say you should have been the one to verify. It might be worth a shot though…
Our situation did go a little smoother. Although my wife walked around with the collapsed lung for 7 days before she went to see the doctor (and yes, I did urge her to go prior to that…she’s stubborn).
(joking)
I’ll talk about this a bit in the post on Monday, Our Journey Dec 11 (year in review), but we only had to pay around $2500 for her surgery. Regardless, medical bills were a big setback for us this year.
If you end up having to pay the bill you can always negotiate a relatively small monthly payment. Or if you have the time to sacrifice, you might look to get an extra job…it would be nice to get that thing out of your life.
Let’s hope that 2012 goes better for both of us! Good luck!
In effect, I survived a $40,000 / year pay cut by doing many of the things you described above. I became a single mother and through that process lost that amount of income to our family income – exactly half what it was before. But we did it! We have survived and even thrived! Yes, cutting cable has been a huge blessing in disguise (although I do miss some shows at times).
Anyway, it’s possible and I appriciate the encouragement. Thanks!
Hi Missy June!
I miss shows often too…but it is worth the sacrifice. Handling that pay cut as a single mother is pretty impressive!
It sounds like you’re well on your way to providing a wonderful future for you and your child.
Keep up the great work! I love hearing success stories.
Came over from MSM. Thanks for the article, it was a nice reminder why we’re living the way we are. We also took a rather large pay cut almost 8 years ago when my oldest daughter was born and I gave up practicing law to stay home with my daughter. Sometimes it feels like we’re swimming up stream. In the past 10 years my husband and I have paid off our credit cards and cars. For the last 2 years the only debt we have is our mortgage on a modest house (some would call a starter home) which in hindsight we wish we hadn’t bought, but at least we can afford the payments while we ride out the housing market. So glad we didn’t listen to the mortgage broker and realtor about what we could afford and ran the numbers ourselves and came up with a budget that worked for us. It’s hard to stay the course sometimes when you see other people who are younger, less educated, etc., living what from the outside appears to be a much more lavish lifestyle. Then I remind myself that they’re likely carrying heavy debt with them. We survived my husband’s layoff several years ago because we’re living below our means. I was feeling a bit of frugal fatigue lately, but blogs like this remind me, we’ve chosen to live this way and it’s way better than not being able to pay the credit card bills.
Danielle,
It is certainly exhausting sometimes to try and continually stay disciplined. Everywhere you look and everything you see is a consistent reminder of the sacrifices you make.
What I’ve found to work best is simply being thankful for all that you have. I’d encourage you to check out the post i wrote: http://worksavelive.com/2011/11/are-you-truly-thankful/
It’s also important just to remind yourself why you’re living within your means. Having a goal, reason, or purpose in mind provides the needed reassurance in times when we doubt our actions and what we stand for.
When my husband and I married, we decided that each time either of us got a pay raise, 75% of that would automatically go into savings. Over the course of 10 years, that decision has enabled us to build some nice savings while also providing moderate lifestyle increases. Then my husband lost his job last year. Fortunately, he was able to find another position with a salary just a bit lower than his old salary. But, the new job required us to move and I had to give up my job. I made about $10K more than my husband at the time. However, all of this happened after our second child was born and I was really struggling to balance home and work demands. Also, I wasn’t passionate about my work as he was about his. It actually was a no-brainer for us to give up more than half of our income so he could pursue another opportunity. Part of what made that decision easy for us was that we had lived on less than our income for so long. The main difference I see in our lifestyle now is that we rarely eat at restaurants. Rather, it feels to me more like we aren’t saving as much versus not making as much money. We have been so blessed and I feel like this change has been wonderful for our family.
Some may look down on the choice my family made to help cut expenses after I lost half my yearly income due to down sizing,but I took out a personal loan(paid off within a year),and bought a newer mobile home,and had it moved for free to a park that pays for our cable,internet,and trash. My wife coupons which helps tremendously since we have 2 little ones at home. We wash clothes&dishes in cold water to save on electricity(it is the soap that cleans&sanitizes,not water temp). I have cc debt from before I met my wife,so our main goal is to eliminate that totally which will enable us to live comfortably even if I am down sized again.
Congrats Tom! Great story and example of being willing to make the necessary sacrifices to take care of your family.
While I don’t know you, I’d have to say I don’t look down on your choices. You sound like a man that leads his family at the time they need it most.
Well done, sir. Thanks for coming to my blog…I certainly hope you return.
Jason I enjoyed reading your article, I do agree with your premiss that we tend to spend what we earn. I have seen friends who should be able to live comfortably on their 100,000 + salary struggle to make ends meet month after month. It is all about choices and values. Beyond a certain point more income does not equal more security or happiness. For years, the only cable tv we had was the lifeline cable. It is the one below basic. It was 10.00/month. One it was cheap and two I didn’t have to monitor the tv as closely for content I didn’t want my children to see. Our children are grown now and we have eliminated the cable altogether and got playontv for 40.00 for the first year and a Netflix streaming subscription. It’s not any cheaper but we do have a wider selection of tv choices now.
I remember when I was helping a friend who had 4 children and not enough food. I not only gave her food for several months I also taught her how to coupon. Her teenaged daughter was surprised that I would coupon when I had plenty of money. I choose to coupon because there are other places I would rather put my money. When our children were little most of our vacations were to visit family who live 10 hours away. We valued education for our children very highly so we put all our money into that. It was important to us that our children graduate debt free so we took on the responsibility of paying off any education loans they incurred.
Now we can afford to to do what we want. My dream was to travel to more than grandma’s house and an occasional trip to Disney World. We were able to take our children to Hawaii for our 35th wedding anniversary. Next, I want to take the family to China.
However, there is a big difference between planning to downsize your income and suddenly losing your job. You and Holly made the choice to change your lifestyle and so you were emotionally prepared to do it. You also probably purchased your home with your plan to reduce your income in mind. When you lose your job it can a huge blow to your self esteem. If you are in a 1 income household you also lose your health insurance, Cobra is extremely expensive. Imagine how stressful that collapsed lung and broken bone would have been with no insurance. I currently have 1 child who is single and is unemployed and a homeowner. Fortunately, he has no debt except his mortgage and has money in savings. He had 1 roommate prior to the job loss and has acquired a second roommate and is looking for a third one. The roommates reduce his expenses and give him breathing room as he searches for another job. In this economy when your income has dropped to 0 and you are on unemployment it is like a ticking time bomb.
Great post. Saw it over at MSM and had to read it. Good for you for making that decision. I think the biggest help in my leading my debt free life is to have a partner with similar goals. When we first married we made a committment to pay off our home and cars so we could breathe a little. By being in it together it made it easier to say no to those ‘wants’. I never felt like I was sacrificing b/c my husband was participating with me and not against me.
April,
You’re exactly right! It’s impossible to win financially if both spouses aren’t on the same page.
When we decided that I wold stay home with the kids, we took a $70k pay cut as well. That’s what my salary used to be. And at the time we took that (voluntary) pay cut my husband’s salary was only $57K. Talk about life style change! But before that we prepared like you by paying off our debt. No car payments, no credit cards. Now its been five years and we’ve had two more kids (three total) and we are still just fine! In fact, we get to do fun things again as we even have some discretionary income once again.
Actually, I think that you are doing pretty well to live on an income of 50,000 with a family of your size. You probably qualify for the EIC and some forms of government assistance. So while you might be able to shave a little off your grocery bill, there’s only so much you can do. Enjoying your kids and training them to be responsible is time well spent. Extreme couponing, on the other hand, can really burn a parent out.
I wanted to add, I found your article, through MoneySavingMom
Thanks, Priscilla! Crystal has sent a lot of traffic this way and I’m grateful that she mentioned my blog on her site – she certainly didn’t have to do that.
I also want to thank all of her loyal followers for coming. I hope that you all return.
Hi,
I was wondering if you (or anyone else) would be willing to share your inexpensive/free ideas for entertainment. I am looking for things to do for dates with my husband, but also things to do with children (ages 4 and 13). Thank you very much for all your ideas!
Hi Amanda!
Thanks for visiting and taking time to comment.
You know…I won’t say that we have brilliant ideas for cheap dates; everybody is different and everybody finds happiness in different things. With that said, we’re pretty easy-going and enjoy simplicity.
To spend time together on a weekly basis, we may cook together (which we enjoy doing), go on walks, or just talk with the TV off.
For more date-like evenings, we may go to the zoo, museum, and we’ve been known to “fake” shop quite often. We really like to walk around stores and just look at all of the things that would be fun to buy. On days like that, we’d probably go out to a dinner too.
There are some nights at home that we plan a special meal and will cook it together – no noise other than some music playing. Like I said, we’re pretty simple…you just have to find what works for you.
For kids it is never a bad idea to have game nights. All TV’s off, just the family around the table playing various games (might be a little tough with a 4-yr old…but that might be able to happen relatively soon). My wife mentioned having a “theme” movie night. For instance, watch Mulan but make it a big deal and cook chinese that night too. Seems simple for adults, but kids would love it.
I hope that helps. Hopefully a few other people will see your comment and throw in some ideas.
Thanks for the ideas! I love your wife’s suggestion… and you are absolutely right… the focus should be on togetherness, rather than the venue.
I too have a large family – 6 kids. Newly divorced mom living on child support only. Our food budget (which includes all health & beauty plus pet food) is right at $350. For 2 months, it was only $250 a month because that’s all I had to spend. You really CAN live on whatever budget you choose. Whether YOU choose is the key here! I coupon like a crazy woman but we still eat very healthy. Fresh fruit & veggies every day. Lots of yogurt and beans. Yes, we eat meat too – it’s more of a flavor enhancer (LOL) than the focus of the meal. (Casseroles, stir fry etc.) What keeps me going is thinking about folks in other countries who live on pennies a day, scraping by on a scoop of rice. We, in America, no matter what our financial status, have it SO GOOD compared to people around the globe. Keep your eyes on the focus and remember, you can’t take ANY of it with you.
Great points, Melissa! Thanks for taking time to comment and share!
GREAT post! More people need to live like this–me included. I’m still on Dave’s baby step #1 and it’s been years…..Thanks for the “you can do it” boost!
You’re welcome, Lisa! Keep working towards that goal. I hope you can get past BS #1 soon!! I’d encourage you to try and get it done in (3) months. That’s only $333/month. That may sound like a lot, but it really isn’t.
Think of things you can sell. Don’t eat out for a few months. Cut back on the grocery bill a little.
There are tons of things you can do.
Good luck!
I’m finding that if you’re married the most important thing to have when trying to get out of debt is a spouse willing to make the sacrifices needed to get out of debt. It absolutely can’t be done when one spouse is spending everything you’re trying to save. If I were to cut cable I’d have a fight on my hands…he’d be fine without the cell phone maybe…not sure. I just keep making small changes like grocery budget and throwing what small amount I can at our debt. It might not be gazelle like intensity but I’m praying we’ll get there eventually.
I read your post and thought it interesting, but I was too distracted by some basic mistakes. This mistake is not unique to you, others make it all the time, but this is the first opportunity I’ve had to offer feedback. “For Holly and I” is WRONG! For is a preposition. According to the rules of grammar that were hammered into me too many years ago to admit, prepositions are ALWAYS followed by objective case pronouns. It should be “For Holly and me.” Would you say “This is for I” or “send it to I” – I can only hope that you realize both are wrong. Adding Holly to the sentence does not change the case of the pronoun. Whether is is for me, for Holly and me, or for Holly and the neighbors and Congress and me – the number of people does not matter.
This is too common a mistake. Have you ever watched The Bachelor? It seems like every other contestant is talking about “the connection between he and I” OR “the looks he was sending to I” or whatever. Please don’t take this as an attack on your frugal topics – but please, check a book fo grammar if in doubt. Ask an English teacher! Do something! Any time you use a preposition and follow it with a pronoun, you must use the objective case. Failure to do so does not have any grand consequences, but it does make me trust the knowledge/experience/advice of the writer less.
Betsy,
I’m sorry! I know I’m terrible with grammar, puncuation, and my writing style is confusing.
English wasn’t my subject in school…I’m a math and science kind of guy. The 2nd post I ever made here was laying out what people could expect on this site simply because I knew that was one of my weaknesses.
Even thought I acknowledge that, I know that I must get better and eventually I’ll get around to it!
Sorry again and thanks for the corrections. I’ll start paying closer attention.
P.S. Shamefully I’ll admit I’ve watched ONE episode of the Bachelor. My wife made me do it.
Hi Jason,
What device or system were you using to stream Netflix to your TV?
Thanks.
Hi Scott,
We originally used a Wii but now we just have the DVD’s mailed to our home.
Jason,
Sorry for my reading problems, but can you clarify some stuff:
1) $70,000 pay cut, but still have the same job, or different job?
2) What is the job if it is a new job or old job?
3) You write we made $140,000… so does that mean you guys make $70,000 combined now? If so, what is the income split?
Sorry if this is explained already. I read the post a couple times and couldn’t figure out the originations of the pay cut. I agree with all your other points.
Thanks,
Sam
Thanks for the comment, Sam!
I left out many of these parts but I don’t mind sharing with you!
1) Totally different job in a totally different industry. I left everything I knew to pursue something I cared about.
2) I am currently a financial planner, investment advisor, and also help people with budgeting/getting out of debt (Dave Ramsey style)
3) We indeed make around $70k now. Split is around $25k/$45k. I am the $25. That will be changing a bit now that I’m 100% commission, but that’s what it was last year.
The pay cut was simply due to being miserable doing what I was doing. I was tired of working a job that meant nothing and the only value it added to my life was the financial gain.
Gotcha! So I wasn’t losing my mind, as I couldn’t figure out those details. Sounds good Jason. If you’re doing what you enjoy, you will naturally work harder and do better at it in the long run.
$70,000 is still not bad. Where you based?
I’m about to give up much more…….. and I don’t really mind b/c I want to do something else. And, the severance is looking to be good! Ever thought of engineer your layoff (another post I have http://www.financialsamurai.com/2012/02/06/dont-get-fired-or-quit-get-laid-off-instead/)?
We live in Kansas City, MO. Very happy with the cost of living.
I did read your post about engineering your own layoff! I found that extremely interesting and a unique concept.
What job do you currently have that you’d be giving up?
Nice.. that must be very cheap to live there! $70,000 is plenty!
I could tell you, but I would have to kill you. Sorry.
Kill me? Samurai style? lol.
Life is too short to be miserable. A $70k paycut is a lot to give up, but still a small price to pay for a happier life.
I’m also getting close to giving up a 6 figures job and I can’t wait for that day.
Joe @ Retire By 40 recently posted..No one ever gets rich by being frugal
I agree on the miserable part.
$70,000 was a lot of money to pass up. It’s not to say that I won’t make that much again, but at the time it was an unknown. I love my job and I would NEVER change any of the decisions I made. Stress/unhappiness from work affects so many other parts of your life. I believe it’s extremely important to work a job your love!
Good luck with your transition!! When is it coming??
Jason,
This is one of the best articles I’ve read in long time. It hits the nail right on the head for anyone who wants to have peace with his/her money. What I love about your writing is that you are focusing not only on the money aspect, but also on contentment or personal growth. They both are alter ego. I love it. Thanks for writing such a thought provoking post.
Shilpan recently posted..10 Life Lessons for My College-Aged Daughters
Thanks, Shilpan!
I believe that there are two sides to managing money well: behavior and knowledge. That is why I often write about personal growth and contentment. Unless you’re a high-income earner, you will never have wealth and financial peace if you don’t have contentment.
70% of Americans spend everything they make each and every month. Sure, some of it is because they don’t make enough money, but much of it is because they’re not content with their lives and have bought so much junk that they have too many monthly payments to handle. If you don’t learn how to say no and find contentment then you’re bound to a life that will be eventually be miserable one you reach “retirement.”
I’ve been in banking and fianance for 13 years. I started as a part time teenager. Kept working hard and getting promoted. Even became an officer. Was very unfulfilled. Whatched the industry morph from a service industry to a sales industry. I was even good at sales. But my heart wasn’t in it. I have a passion for animal care. I have a chance at the type of position… but its litterally HALF my salary. I’m terrified but have such support that it will all be ok. It will be an adjustment but it will be ok. I have no debt. Car is paid for and no credit card debt. But no real retirement to speak of. I just don’t know if the financial sacrafice outweghes the sacrafice of being miserable and cranky b/c I don’t enjoy what I do anymore. I’m 28 and feel I’m on the cusp of being too old for a career change. I have no husband or children. If I start over with my career that will push back any family planning as well. I just would like some insight.. as this decision is tearing me up.