Living on Less Than $28,000 A Year: How our family of six survives (and even thrives) on an income that is less than half the national median income, and what the government calls “below the poverty line” (less than $29,990 annually) for our family size. [Read other posts in this series here.]
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To get things started I’m going to share a money management technique that helps us to stay on track with our budget. There are many ways to manage your finances and many online resources, I am simply sharing what works for us. The key to managing your finances well is to find a system that works for you. (By the way, if it’s not the way I do it, you won’t hurt my feelings.)
(If your eyes just glazed over you may want to wait for the next installment in which I will be talking about something less math-related. 
)
First of all, let me say that growing up was financially confusing. I had a father who was a super spender, had more credit cards than photos in his wallet and left us with quite the load of debt when he divorced my mother. My mother on the other hand was super frugal. That woman could do miracles with a dollar bill and she loved to save them. She always had a rainy day fund.
Fast forward to my adult life. I decided the spending route was more fun and ended up in several thousand dollars worth of debt before I was 22 years old. Thankfully I married a man without any debt, but neither of us had any financial training.
Click here to see all Cheapskate Books
After having four children in five and a half years with no real financial plan, I realized we were in trouble. While researching on the internet I stumbled upon The Cheapskate Monthly newsletter (now Debt Proof Living) and immediately signed up for a subscription. Mary Hunt rocked my world with a little concept called the ”Freedom Account.”
The Freedom Account is a separate checking or savings account that you set up for irregular expenses. Mary Hunt’s idea is to calculate your irregular expenses (the ones that aren’t monthly) like car insurance, clothing, medical expenses, car maintenance, Christmas, etc. and then divide the amount by 12. That amount is what you should be depositing into the Freedom Account each month (you can divide it further if you are paid weekly or biweekly). She suggests automatic withdrawal from your paycheck so you don’t have time to decide if you are going to spend it on something else.
[Click here to read about the FREE checking account we use which earns money and is recommended by Dave Ramsey.]
When it’s time to pay a bill from one of those categories, the money is there in your second account and you don’t have to use credit cards to pay that “surprise” bill. (If we’re honest, we knew that the bill was coming, we just didn’t want to think about it.)
I liked the idea, but because I tend to look at the checkbook balance and spend whatever is there, I had to adapt her plan. Here is what I do:
Each week on pay day, I have a morning money appointment. I write the direct deposit amount from my husband’s check in our checkbook register and subtract our weekly gas and grocery money (I will take the grocery money out in cash before shopping.). (You can see my weekly shopping here and my $100 Budget Weekly Menus here.) [UPDATE: We have increased the budget to $125/week. You can see the new $125 Budget Weekly Menus here.]
I then transfer the remaining money into our second checking account. As an example, let’s say I transfer $376 from each paycheck from now until the end of March.
I note the deposit on my spreadsheet and update each category with the new amount. (You can see a larger view and read all the gory details here.) You can use something like Excel or Quickbooks, but I like a paper and pencil version because I’m just nerdy like that.
If there happens to be extra money (my husband gets some sales commission and has a part time job that he can work a few hours a week when work is available), we have a quick meeting to discuss where the money is going. If there are multiple needs, we prioritize (daughter #1 needs a hair cut, but that will have to wait because daughter #2 just out grew her shoes).
If you look closely at the spreadsheet you will notice that we are only funding the first four categories with this month’s paychecks. As extra money comes in we will add money to the other categories, but right now I don’t sweat it. The priorities are rent, utilities, food, gas and insurance. We don’t have an emergency fund right now {UPDATE Jan. 2013: We now have a $1000 Emergency Fund!}, but if we had an emergency we would take money from the account that has the farthest due date from today, so hopefully we would have time to replenish it before the bill is due.
On paper, it sometimes looks impossible. I will talk more about that in a future post, but let’s just say we realize we are on the edge and we have to trust that until we can increase our income everything will work out.
By using the Freedom Account in this way, we can see exactly what is going on and have a little bit of a backup plan without resorting to credit card use. (We don’t have any by the way.) We truly have to discern what is a need versus what is a want and I’m not always good at that, but I’m getting better.
PRACTICAL APPLICATION
If you are a great money manager and a whiz at Quickbooks, this entire post probably seems ridiculous. But then if you are a great money manager, maybe you aren’t reading this post.
If your current system isn’t working and this idea seems like it might work for you, here’s what you need to do:
1. Take a look at the spreadsheet and explanation here.
2. Set up a separate checking account. We have both of our accounts at the same bank so we can easily transfer the money once our check is deposited. Perkstreet has free checking accounts (read more here) that are easy to set up and you can get cash back for debit card purchases.
3. Print out the blank Freedom Account Page here. Fill in a few categories. If you want to just do irregular expenses, make an educated guess as to how much you spend on each category for the year, then divide by 12. That is the monthly amount you need to deposit (divide by 2 for bi-weekly paycheck, 4 for weekly paycheck).
4. Make a pay day appointment with yourself and write it in your calendar.
5. On payday, make the transfer to your Freedom Account (or set it up to transfer automatically).
6. Fill in your spreadsheet (use Quickbooks, an Excel spreadsheet or print my form here). If this is too overwhelming, you could sign up for mint.com, which many readers have recommended.
6. ONLY spend the money from the Freedom Account on the designated categories. (Do not look at the balance of $300 and say,”Oh goody, now I can buy that expensive pair of designer shoes I have been wanting.”)
If this post overwhelmed you, don’t panic. Think about the concept for a little while and decide if you might like to try it. You can also check out my Financial Resources Page here.
What tools do you use to help you manage money? Leave a comment and let us know how it works for you.
next post in this series: Diapers and Swimming Pools
Click here to read other posts in this series.
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I would love to hear more about how you got out of your twenty-something debt. Do you have any good tips or tricks for that? I’m a twenty-something with a lot of student loan debt from college and a little bit of credit card debt. The student loan debt has been a heavy burden. I’m not a heavy spender and I do pay on it each month but I only ever have enough to pay the minimum payment. Any suggestions??
Hi Kelly! I would really keep an eye on your spending. You might be surprised where you can cut corners and put extra money toward that debt, especially in eating out. You could also get a part time job to supplement your income for a little while. My husband has done pizza delivery in the past to increase our income. Hope this helps.
Hey Kelly, I’m in kind of the same situation as you right now. 25 and lots of credit card debt and some student debt. The trick for me is to cut down on extras as much as possible then pick one account (maybe the one with the highest interest) to start with. Pay all the others minimum payments and the special one as much over the minimum that you can while still surviving. It’s tough but $20 extra a month adds up and eventually you will be out of debt. I read this awesome book “I will teach you to be rich” by Ramit Sethi that is geared towards 20somethings. It can help you balance things and not have to work hard at it.
I actually was 21 with about 8K of credit card debt (and a minimum wage part time job). I actually did the opposite and paid down all my smaller balances as quickly as possible & then put all my efforts towards the big one. I learned the power of eating in, which has made my shopping/eating habits a lot healthier, and I’ve taken a genuine interest in food, from production to consumption. I agree that there are a lot of corners that you can cut without feeling like you’re being deprived of anything.
I worked a second job once a week. It gave me variety and the cash went straight to loan payments. Making those extra principle payments sure help cover a lot of ground in the long run.
What I found to help me so far with student loans and credit cards is to look at exactly what the interest rates are on each and figure out exactly how much of my payment is going to interest and how much to principle. I would also suggest really checking your student loans because if you have federal direct loans you can have a different interest rate for each disbursement and you may find that you have a smaller balance that you can pay off quickly just by adding a few extra dollars to that one payment. For example I pay around $200 a month for all of my federal loans but the smallest balance is around $1000 and the payment is only around $30 half of that goes to interest so by adding just another $15 a month to that specific payment (you can allocate how the payment is made by choosing how much you want to pay on each loan grouping) I’m paying it off quicker and when i do I will reduce the total payment by $30 which i can then reallocate to the next lowest balance in the loan grouping. I hope that’s not to technical and that it helps.
Thanks so much for sharing this information!! I chose to use mvelope.com to create a monthly budget. I just started a new job and will be making almost double what I did before, but would like to keep living and budgeting as if I wasn’t making anymore money. I want to take this extra money and put it into a savings account and another account (probably a Roth IRA) to begin setting aside money for a long term/retirement saving account since I don’t have one through my job.
Thanks so much for ALL you share on your blog!! All of the information is very helpful
You are very welcome Eryn!
I just absolutely love your website!!! I am going to try my best to implement these into my daily schedule. I am a little concerned over saving money in the food department. There are not many coupons to be had for fresh foods! So…do you have any suggestions? Since September of last year, we have completely changed our eating habits and I do use coupons when I can. The one area (food related) that I know we can cut back on is “eating out”. I have talked to my husband and is definitely on board! I am just soooooo glad to have found your website!!!
Have you read my free e-book Michelle? Here is a link to the description of it with download instructions: http://thepeacefulmom.com/2011/08/19/free-e-book-save-more-clip-less/
Eating out can take a huge chunk of your paycheck, so you will definitely be able to save by cutting back in that area. Good luck!
Not to but in but if you have an Aldi supermarket near you they have excellent deals on fresh produce each week. May not be exactly what you are looking for but they get what is in season and what would be the best deal to the consumer without the super markup :0)
I usually only shop at Alid’s, unless I need something they don’t carry. But I buy the bulk of my gorceries there! I haven’t had a problem with anything that I’ve gotten there!
My weekly grocery bill is around 80-100 from buying there, for the 6 of us!
We are a family of 6 but soon to be 8, we are adopting 2 special needs kids from China, so I watch very closey what I buy,etc… We do have a bit of debt, but almost out. I make a monthly meal plan, then shop once a week. Amazing what you save by making a menu!
Sorry, didn’t mean to butt in either, but wanted to put my 2 cents in about Alid’s! LOVE that store!!
I shop at Aldi, for my family of 4 and I can keep our weekly groceries under $50, most weeks I average $30.
If you have a little space you could certainly plant some veggies. If your just stuck with a patio. Zucchini and Tomatoes do great in containers and super easy to take care of.
I use mint.com to track all my spending- was a HUGE help to see where all our money was going…and it’s FREE!
Thanks Keisha. I didn’t realize that it’s free, that’s great.
I absolutely LOVE mint.com. As a college student it helped me to realize where all my money was going. Once I realized how much I spent on eating out, I was appalled (especially when I have a meal plan for on campus meals). Mint really makes it easier to stick to your budget, and having the app right on your phone so you can see your balances and budgets easily gives you fewer excuses to go over budget. I’ve even got my mother to use it, and she loves it too.
My husband uses mint.com for our budgeting too! We are 25 and 26. mint.com has been a big help, because we both had school loans (his are all paid off and my are almost half!), we also bought a house Dec. of 2009 we are also 2/3 of the way done paying it off! Mint.com helps us keep track of what we have left and you can make your own categories. I am in a direct sales business and we can label the categories whatever we want…this also is helpful around tax time.
The best part about mint.com is of course that it is FREE to use!
I should also tell you all that we both have full time jobs at a university (we walk to work) and we also don’t have any kids and only have one car. We have never had credit cards and don’t intend on ever having them. We know we won’t always be able to pay off things the way we have been, which is why we are trying to do so now (I know kids will cost a lot of money if the Lord allows us to have children) Anyway, just thought you should know those things also…we are just trying to do the best we can with what we have, where we are in our journey.
I have used YNAB (youneedabudget.com) for years. Unfortunately I have used it the way it’s meant to be used (having a one month buffer of expenses) but at least I know where we are financially at a just a glance. I do set aside money for the expenses that don’t happen every month but again haven’t always left the money there. I like your idea of a freedom account. I think I will put that into place. Thanks for your post.
My husband and I have a bank account with ingdirect.com that we use for the savings that you are talking about with the Freedom Account. It’s been a great tool for us. Our favorite benefits: 1. great interest rates! 2. You can create categories within the same account and name them however you want. 3. You can transfer $ for free and easily to other major bank accounts. 4. the security is great. The transfers take about 2-3 days, which helps with any impulse buying! We transfer money each paycheck and put it into the categories we have designated such as car insurance, registration, vacation, etc… we also have savings for a few other expenses we know will come up in the next 5 years, such as a new car. This bank has really helped us to save with intention and keep on track with our goals!
WOW! I am so thankful to you and your example. You are definitely an inspired woman, and I hope to glean some ideas from you and implement them myself. I would love to call myself a savvy saver one day, and I am glad to find your blog and learn lots from you! Thank you for your inspiration!
Thanks Julie. I’m just sharing some things that have worked for us and it’s good know that you are finding them helpful.
I love your ideas…but I live from paycheck to paycheck, spending every bit I have on bills and living. How am I supposed to set aside money into a separate account for “The Freedom Account?” As usual, I just need more money!
Julie, if you will follow along with my new weekly video series you might find some money you weren’t aware of. Here’s a link: http://thepeacefulmom.com/category/living-on-less-video-series/. Also I have some ideas in this post for making some money quickly: http://thepeacefulmom.com/2012/03/16/reader-question-how-do-we-start-changing-our-finances/. You can also check your insurance coverages (like car ins.) to see if you can make some adjustments. Hope this helps!
It’s not about making more money to create the freedom fund but to PLAN for it. Instead of getting to your 6 month insurance payment and fainting, it’s putting the money away each month and when it gets there not being stressed. The freedom fund is mostly for things you are paying for but doing it in a much more mindful manner.
Yes, but some people don’t make enough money to put any aside so they need to get a little head start.
Your website is great. I love Mary Hunt’s books. I’m just saying for motivation sake and sanity, it’s nice to realize when you are done building the freedom fund you can make what you were making before – because you are only rearranging your payments so you have the money ahead of time.
Julie, there are almost always ways to cut back on your spending. A lot of people who live paycheck to paycheck (not necessarily YOU) would be surprised to see how much money they are wasting/nickel and diming, and that they could free up if they had to. I know that when push came to shove for us we were surprised at how much we could cut out!
Julie, I’m 20 years old and the best way I can recommend starting out in a paycheck to paycheck situation is to tithe: give one dime of EVERY SINGLE dollar you earn or receive away to your church (if you attend one) or to a charity of your choice. I was taught to do this practically from birth and if you make it a habit (give that 10% away first, not last!) you will be truly blessed. Whether you believe in God, Karma, or just plain “I should be a good person,” you will be blessed…promise! Suddenly the money will stretch and you’ll have more than enough for your daily needs. Also, my grandmother always taught me to keep a change jar: start emptying your loose change into a pretty glass jar every time your wallet starts feeling a bit heavy and it will add up.
Thank you so much for sharing this! We have been trying to get ourselves onto a budget, (baby #3 on the way and my husband wants to go back to school) but nothing has really been making sense to me. I love the idea of dividing up each paycheck and to spread it out evenly. When I looked at the details on your spreadsheet it all clicked. I am very excited to try this technique! Thanks again for sharing.
Yay!
This is great. I have recently been doing something similar. We havr a larger budget to work with but it did not matter how much we had we could hardly pay the bills. I added up all our regular monthly expenses and set up a ‘bills’ checking acount. On average we have to put 350 each week to ay all bills but i have been putting back 400 when possible and the extra has been enough to cover unexpected expenses and birthdays. It has been a load off i would rather be broke all the time and know my bills are payed!!
I just love this series!
Thanks Erin!
You show “irregular” expenses on your freedom account page….where and what are your “regular” expenses? I would think rent would be a regular expense? What about groceries? Maybe I have missed how you handle that. I am just so excited to do something and I really like the pen and paper concept. My husband rolls his eyes at me, but really, it just seems so much more clear to me. Thanks!
Hi Joanna!
The original use of the Freedom account by Mary Hunt was to make an account for irregular expenses (car maintenance or car insurance if you only pay it every 6 months for example). We use it for everything except gas and groceries, which we leave in the primary account. You can read more here: http://thepeacefulmom.com/click-to-print-freedom-account-page/
Let me know if you still have a question.
I do it the opposite way that you do, but it’s essentially the same thing. I figured out what my regular monthly bills are, divide by 2, and I have them direct deposit into a separate account from the rest of my money, then I draw the rest out in cash and that’s what I have for 2 weeks (I get paid bi-weekly). Bills are on auto pay, so I’m never late and never get late fees. Works well, either way I think it’s essentially the same thing.
I also have a $500 emergency fund in a separate account, hoping to increase to $1000 soon!
I am a single woman who lives alone. What I do with my expenses I have is at the end of the month I pull out my wall calendar. For the upcoming month I write down when bills are due, the amount due, and which ones are automatically withdrawn from my checking account. (I also denote when I get paid) That way I know what bills I have to pay with what pay check.
Even though I haven’t missed a bill by doing this I also am not saving any additional money. So when I have a “surprise bill” I often have to cut things very tight with my money to make sure bills are paid.
I am thankful that a friend of mine pinned this on Pinterest, I really hope to learn something from you. I live on a gross income of about $28K a year, so if you can do it with a whole family I’m sure you’ll be able to give me pointers!
Thanks for your honesty…it’s nice to hear about other people who are trying to live well on a modest income….without racking up tons of credit card debt. My hubby and I also had thousands of credit card debt before we married…with debt consolidation it is now gone. We thought we would never own a credit card again and paid cash for everything. A couple of years ago we decided to get one of those “double miles” credit cards, with the logic of making our money work for us. And I can joyfully report it has worked. By using the credit card for as many things as we can and paying off the ENTIRE BALANCE each month we have earned 4 plane tickets and a rental car. All of our family lives in another state so this has been a huge blessing. I know credit cards are not for everone and can be dangerous…but we are very happy we decided to try using one to earn miles. Once again thank you for your advice and honesty. My best to you and your family.
I’m thinking of going the travel card route. For many years we used a card that allowed us to choose gift cards at certain retailers. Since my hubby likes electronics and I have never been attached to them, each year before thanksgiving we’ve been turning in our points for gift cards at an electronics store. On black Friday he uses the cards to get a group Christmas present for the kids. It worked well for us. Now that the kids are older and we have plenty of electronics, I’d like to take them on more trips.
This is basically how we budget. My husband is a self-employed carpenter and I stay at home with soon-to-be 5 kids. I don’t know what we would do without such a strict budget! We have a bills account that we deposit enough money in every week to cover all our bills, monthly or not. Its so nice not to stress about being able to pay bills on time! Then we each get a certain amount in cash to cover our expenses for the week, and to spend on whatever we want after diapers, gas, etc are covered. $100 is also our grocery budget (although sometimes I use some of my spending money to buy extra groceries). Anything extra goes into one of our savings accounts, for emergency, house savings, etc. So far this has worked for us!
Do all of you on here with THAT many children and living on THAT little of a budget really believe you’re providing them with a fulfilling life?! I would have been disappointed with my childhood and resented my parents had we grew up this way. Just.. wow. I assume most of you are anti-contraceptives and pro-life which is how and why you have so many children getting ONLY the bare minimum out of life. This is 2012. The world and our society is what it is, whether you like or approve. Your children will be judged. And they will feel underprivileged. Not a great way of life.
Hi Lindsay! Thanks for taking the time to comment. I can appreciate your point of view, but I have to say that seeing our children as “underprivileged” depends on your values and what you mean by that word.
It is hard to tell from reading one or two posts, exactly what our life looks like, and if you are picturing skin and bones children dressed in rags who never get to do anything, then I would have to agree with you–they would be underprivileged. Our children, however, have great clothes, get plenty to eat and have had many wonderful experiences including participating in a local swim team, going to Disney and traveling out of the country to work with TRULY underprivileged children in a third world situation. They have a Wii, Ipod, mp3 players and a Nintendo DS (one has a 3DS), but they worked to pay for part of the cost and therefore appreciate them more. They go to see movies, go to the beach and have friends.
They also have many things that money can’t buy: good relationships with their parents and each other (most of the time), peace, creativity, entrepreneurial skills and intelligence (and that is not my opinion, but what objective tests have shown). They understand the value of money and know that, while money is necessary, it is never more important that what is eternal. You can certainly have money and all of the things I mentioned, but just because we don’t have a lot of money doesn’t mean our kids are missing those things.
You are most certainly welcome to your opinion and welcome to raise your children in the way that you see fit. We have chosen to have less money for now in order to spend more time with our children and to be actively involved in their lives. I guess we will see in the end if we have made the right choices and whether or not they resent us. In the meantime, I will keep doing the best that I can to be the best parent possible to them and to teach them to be respectful, loving, kind people who understand that money is a tool, not the end goal of life.
Thank you for giving me the opportunity to speak to something that other people may be thinking as well. Have a Peaceful Day!
P.S.-By the way, I am not anti-contraceptive, but I do believe that every life is valuable and eternal and should be treated as such.
What an absolutely classy reply!!
Thanks Molly.
“…they worked to pay for part of the cost and therefore appreciate them more.”
I WISH my parents had not given in to my every demand and had me work for something I wanted! I had horrible money skills when I moved out from under their roof. Thank you for giving your children skills to succeed in this world!
Oh, and I forgot to say, “and me!” My husband and I are trying to manage our money better and I’m so glad I found your blog on pinterest because I really think it will help!
I’m glad you’re here.
Thanks Diana. I hope my children will thank me too! LOL!
Very good response.
My children too have “more” than what others would perceive as possible given our income…3 computers in the house, we have cable and smart phones, xbox360, playstion 2 and a WII as well as Nintendo DS….a nook.
My kids participate in dance and any sports of their choosing (currently dance and basketball), shop for clothes with brand name tags on them.
We get to eat out, enjoy movies and a family vacation each year ( 2x this year – once to Oklahoma and once to Texas).
We also enjoy our time together and with friends…and have cars, motorcycles and up until this year a motorhome.
Neither I nor my family are underprivileged, we just prioritize differently.
Oh dear! Underprivileged! Is that what people were saying while I was growing up? My parents met, were both divorced each had 2 children so when they got married and then had me there were 5 of us under one roof. Did I mention this was a 2 bedroom house? I have 3 sisters and a brother. Through saving and budgeting, planning their weekly meals my parents were able to not only pay of their home but to add an extention too. Our parents taught me how to use money wisely, drummed into me that credit cards should be avoided if possible, turn the light off when you leave a room. Nothing I resent them for… We all had everything we wanted whether it was Nintendos, mobiles, game boys, horses, pets, name brand clothes, fancy jewellery the list goes on! We had chores, ones we were paid for. I love to budget. Spending every last sent of your household pay? Well that doesn’t appeal to me very much! My husband and I only have one child at present and live off ONE wage. Had my parents and my husbands parents not taught each of us how to live on a budget and how to handle our money we could never survive on a single wage. liindsay is right! This is 2012!! Its a difficult task to live in a major city, pay bills, save money, live well. Hence why budgeting is so important! I dont understand how children would be judged for having frugal parents? I had friends whose parents obviously didn’t budget. And how do you think society judged them when debt collects came? Yes I’d rather have my children judged for having parents who count every sent that children whose homes are taken away.
Years ago a woman wrote to a columnist (I believe the columnist’s name was Marilyn Vos Savant). She said that her family did OK financially and probably a little better than many of those they knew. She said she was writing because her children had recently asked whether they were rich and she wanted to know how to answer them. The columnist said to tell them that they live in the United States of America so relative to the rest of the world– yes, they are rich. That answer has really stuck with me. Over the years we’ve bounced around from at the poverty line to below the poverty line several times; now we’re well above it, but every time I’ve caught myself worrying about our kids I remember her answer. We live in a nation with public libraries, free education for children, and programs like Medicaid and WIC, where all adults can vote their mind. There are so many nations today where families still live huddled together in one room with a rusty metal roof, where they have to stand in long lines just to get water for the day, where they barely have hope to feed and clothe their children let alone educate them. We are all truly wealthy in comparison to the rest of the world and I’ve tried to help my children understand that.
First world problems vs third world problems….I am trying to teach my children the difference
Well I for one am glad to see how many dedicated and hard working parents there are out there! It’s good to see a generation of children being raised to be responsible, loving, and understanding. Unlike the obvious spoiled brat above who’s parents clearly failed at that.
Liinday, maybe you should read part 1: http://thepeacefulmom.com/2012/02/20/new-series-living-on-less-than-28000-a-year-2/
Perhaps you will see why she is doing what she is doing.
The only person I see judging here is you. One day you will realize life is not all about what people think of you, and a person has to do what works for them.
We were introduced to Dave Ramsey’s methods last year and have been following his Baby Steps to Financial Freedom ever since. We’ve paid off several bills and are on our way to be completely debt-free in about 10 years (including mortgage), pending any major life emergencies. We are adjusting ourselves to move from duel to one income soon so I’m always looking for more tips and ideas. Thanks for your blog! Also, my husband and I both downloaded a smartphone app from eebacanhelp.com. It’s a real-time envelope budgeting system so if I spend $100 on groceries, I plug it in and we can both see how much we have left in that envelope for the month (he gets paid monthly so this is the safest way to go for us). He’s a spender and I’m the saver so this solution has been the best way for us to solve the financial communication issues (i.e. “Do you have any receipts for me today?”). It’s working for us! We have a complete picture of our monthly financial income and outflow and it gives me peace of mind knowing all $$ is accounted for.
Thanks Heather. That is a GREAT idea.
Wow, Im definetly going to study all of this. I feel horrible and wasteful after reading some peoples posts, and know now for sure I can do better. Im in my mid 20′s and its just me and my husband no kids and never have extra money to put into savings. My student loans just started up and took a huge new chunk in our budget. We are military and live on pretty much the exact amount you talk about so I know there has to be something somewhere in our budget that I can cut back on. Thank you for sharing all of this with the world, after crying and worrying every pay day this is amazing to come across.
Hi Rachel! I’m so sorry that you have been crying and worrying about money, but I hope that you can find some encouragement and hope here.
Do you currently include tithing in your monthly budget? I go back and forth on this question for myself. Do we honor the directive to tithe even when tha t means it will take us longer to meet our financial goals? In the last 3 years my husband has become physically disabled due to an injury, a car accident shortly after back surgery, and other factors. We had an independent disability policy that really made a difference, but that benefit ran out in February. We are now a one income family. Fortunately my earning ability is more than enough to meet our family’s needs…except for major medical expenses! We are hopeful that he will be approved for permanent disability, but in the meantime we pay his medical premium out of pocket. Due to his history and current condition, we must keep his coverage. If we ever let it lapse, he will be uninsurable.
For us, I have maintained tithe in our budget. We do spend on more conveniences than I would like to. With me working long hours (I’m a school principal) AND trying to manage all aspects of taking care of our family and household, we resort to more costly shortcuts than I’d like. My husband is not able to help with anything physical (cleaning, laundry, mowing, grocery shopping, cooking, etc.) so often things don’t get done unless I pay for help. I feel that if I find room in our budget for those things, I can’t justify NOT keeping regular tithing in there! My goal for this summer when I have a few weeks off is to put some of your ideas to work! I hope that will let me keep a few conveniences in place AND maintain regular tithing without being tempted to take it out of our budget.
Thanks for taking the time to comment on the blog. As for tithing, we feel that giving is very important and take the view that God owns all of our money, not just ten percent of it.
For many years we gave 10% right off the top of our paycheck to our local church, no matter what. Then a couple of years ago I started feeling like it was just another bill and actually started resenting it. My husband and I began to research tithing and to pray about what we should do because we knew that God wanted us to be cheerful givers (2 Corinthians 9:7 “Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”) .
We came to the conclusion that for our family we best honor God by being open to giving whatever He tells us to, not just a specific automatic percentage. At times this means that we give much more than we would have given if we didn’t pray, but God is ALWAYS faithful to provide exactly what we need when we need it. We do our best to give what He wants us to give, not giving because we think it’s a good idea or because it would make us feel better to give.
I know this is a controversial topic with many views, and each side has their own Biblical documentation to back up their view. Rather than get into a theological discussion, we just quietly do what we feel the Holy Spirit is leading us to do.
I know that some people would say that our not tithing causes us to make less money, and perhaps they are correct. I personally think that they are missing the bigger picture. We have a relationship with our Heavenly Father and we don’t need to follow a rule or a law to get Him to bless us. He is a good Father and gives us good gifts. Out of love and appreciation for His love toward us, we are happy to do whatever He leads us to do with our money trusting that He will take care of our needs as He has always done. For us, it is the difference between religion and a living relationship with God.
Of course, you should do your own research and pray about what is right for your family.
Thank you for this. It is something we struggled with for quite awhile also.
While we are not regular Sunday church goers we have a strong faith and had to pray and talk long and hard about the best way for us to give back. I also do not think a straight 10% is the way to go. I look at tithing the same way as I look at raising my children…fair is relative….fair to our family is not the same as equal but rather giving each what is needed at the time/in the moment. So whether it be giving in the collection basket, volunteering my time, helping with Sunday school, fixing meals for shut ins, preparing a funeral luncheon or organizing Bible school, we all give in our own way and what is “fair” for us.
Spend less than you make and don’t be greedy. It’s a simple concept. Vanity and greed are the reasons people are in debt. If you want to live that lifestyle you have to put in the work. If you do not have money for child number 3 do not have child number 3. We don’t need more welfare clients. Children that do not socialize with others, IE homeschooled children tend to have poor social skills, may be why your youngest has behavioral issues. Get a job and socialize your kids! Teach your children to be hard working members of society and we won’t have as many issues in the future.
Paula I am amazed at your comment. I am shocked at how rude and ill informed you are. 1. You are grossly misinformed about welfare clients. Their are many people who could afford their children and lose jobs. I guess you have not been reading or are aware of how the economy is. Also you are GROSSLY wrong about children who are home schooled, many participate in church activities and sports within their community or school. Her youngest having behavior issues has nothing to do with it. Honestly we have so many problems in society because of ill informed idiots such as yourself who feel they are high and mighty. Why don’t you get an education and stop throwing rocks when you live in a glass house.
Hmmmmmm, Paula, I have to say that if this comment is an example of the “wonderful” social skills that you learned in school then I think I would rather take my chances with the “unsocialized” homeschooled kids. Just Saying.
I am just starting to read your series. I must say that I am thoroughly impressed that you can manage to live on this much $$ with a family of 5! A couple of years ago we changed our fininacial managment using the format recommended by a Canadian financial wizard (her website http://www.gailvazoxlade.com) and it totally changed the way we live. We now have no debt (other than a mortgage) and it feels wonderful. I highly recommend checking out what she has to say.
This is perfect! I have an excel spreadsheet I’ve been using for a few years to manage my auto-deduct payments for each paycheck as well as ‘normal’ monthly bills…but this Freedom Account is like the missing link for me.
I’m excited to implement this. Being a single mom and the only supporting income, this is truly a gift, thank you for sharing!
Also, I homeschooled my son for 2 years (7th & 8th grade) and know both homeschool and non-homeschool kids and there is no social difference. You seem to know what is best for your family & kids and that is commendable!
Thanks Sarah. I’m so glad that the post helped you.
This post is great. It’s amazing how nobody teaches you this stuff! I can’t believe nobody has mentioned SmartyPig (www.smartypig.com) — it’s how I learned to think in terms of setting aside things for what you call “irregular” expenses that can be planned for, instead of using credit cards to manage that cash flow problem. I use it sort of how you use your second checking account, but it’s not quite as flexible and designed for slightly bigger things. I think it would be amazing to combine smartypig with your system.
SmartyPig is an online savings account that allows you to set up savings “goals” for upcoming needs. You can have it automatically pull the needed money to reach your goal on time out of your account every two weeks or monthly, or you can manually put the money in when you have time. (or both!) When you’re ready to close out your goal, you cash out everything in that particular goal, and you can put it on (heavily discounted) gift cards, onto their debit card, or just right back into your bank account (that’s what I do). Plus, you get like 0.75% APR. (Used to be higher than ANY other bank, but has recently been reduced.)
I have gotten through my periodic $900-1200 expenses in graduate school this way, and managed to find money to fly home to see my parents without paying rent late.
Right now I have a long-term (think 5 year) goal for a downpayment on a house, a “transition” fund for the next time I have to move, christmas presents, 3 flights that i need to book this year, and a few other things.
Of course this only handles some of my budgeting needs – I cannot seem to manage a paper budget for my life, but I use LearnVest.com to get my feet back on the ground in terms of budget categories and where my money is going (similar to Mint.com, but LearnVest is just generally an amazing source of information for women who want to be financially smart).
I can’t wait to read your tips on managing food expenses… That’s a huge problem for me as an urban dweller with long, often 18-hour days away from the house!
Thanks for letting me know about SmartyPig Molly!
I also just want to say that people like you are so encouraging. I am the youngest of five, and my family was on a very small one-income budget for a very long time. Later things got better, but I have to say that because my parents were debt-averse and fastidious about their budgets, I not ONCE had the thought that we were “poor.” We had everything. I think my parents are miracle workers – I can barely take care of myself on twice what they raised 3 of their children with sometimes. But the thought that you are giving your children the same stable, content environment that I was raised in makes me so, so happy. Keep it up!!
Thanks so much Molly. That is a great encouragement to me.
I live on about $22k a year with both me and my fiance working full time.
There are 3 people in our family and we manage very well.
We even have a $700 emergency fund.
I notice most of the tips people give for money management, I already do.
I guess growing up poor made me better with money.
The only tips I really need are how to get your fiance to be frugal.
I am so glad I came across this. I have been struggling here lately with things. Staying way too stressed. Thank God I found this blog! PLease, PLEASE do not let their negativity get you down. You’ve done awesome things with and for your family. I hope I am 1/2 as good as you when I have kids!
Thanks so much Britt!
I use the Mint app on my iphone, it is especially helpful with sending reminder texts and emails. I am loving your freedom account idea…will have to talk to the hubby and see if he’s up to trying it! thanks!
This blog is very interesting! I love reading about other people’s financial success stories, especially if it’s one where someone is really trying and being patient with the financial game of spending money correctly. I hope you don’t mind if I share my story and some help that I had received when it came to the baffling topic of personal finances.
When I got out of college almost 2 years ago, I was completely lost as to how to manage my finances as well. I had no clue how to do anything. I didn’t have credit card debt, but I am working through student loans. My sister sent me into the world with a book, and through that I found myself completely enlightened in how to spend and save my money while reducing my loan amounts little by little, and with a quick and easy-to-read book. The book is:
David Bach’s Automatic Millionaire
He puts things into easy to understand terms, and you can finish the book in a day without becoming bored. He has steps and tools to use to determine the best decisions for yourself, and never tries to sell you on anything but what is best for you. After reading this and having my soon to be husband read this, I have no more worries about finances in my future.
Take a look, and continue to inspire people through your own personal story! Thanks!!
Thank you Bonnie!
I know one thing for sure… try to pay off old debts before having kids. I ended up being a single parent of a 2 yr old with lots of debt left on me from my ex. I moved in with my parents at the age of 32 so that I could pay off the debts and not have to work 3 jobs and not see my daughter. It was the easiest and hardest choice I had to make (who wants to move back home at my age!).
You never know what life is going to bring your way!
Wow! I feel like I just came across a gold mine of awesome help for me to figure out my finances and learn how to budget!! I also love that you write so clearly and understandably, Kimberlee, and how classy and patient you are with any negative comments left. I also like that you incorporate God and faith into your “living on less” plans. I have a really hard time with budgeting (I basically don’t!) and this summer is a time when I really need to learn to do this well and not shop like I want to, go out to dinner with friends like I want to (this one will be really really hard), etc. I am a single woman, almost 30, with a dog who is #1
I make sure she has everything before me (heartworm meds, food, etc) so I suppose I “budget” there, but I am looking forward to reading more of your blog and watching your video series. I have a difficult time with feeling like I have to be structured and follow “rules”, so I am sure it won’t be very easy, but I am hoping and praying it turns out well for me! Thank you for putting yourself out there to help others in this area!! 
Hi Jessica! I have totally been where you are. I was single until age 28 and I really understand the desire to go out with friends. I think you should have time with friends, but maybe you can find ways to do it more cheaply like going out for lunch, eating a little bit first and just having a salad or appetizer, drinking water only, etc..
I have hated budgeting and resisted it all my life until I made the connection between my everyday life and my long term vision. I think the important thing is to really pray about what your purpose in life is and to start determining what you want your life to look like. I started by cutting out pictures from magazines, sketching and writing in a journal, but I also like Pinterest because you can search websites and “pin” pictures to your board that represent what you want in life.
Once I had a vision in place, it was much easier to bring our finances in line. I still struggle and mess up sometimes, but we are at least able to keep me home which is the plan for now.
I don’t live on my own yet. I am 20 and live with my mother, step-father and I have two brothers, 16 and 2 1/2. We have a great household income, with my mother and step father working full time, and with me working full time I pay for most of my own bills: food (i rarely am home to eat), gas, insurance, most necessities, leisure, and building a savings. My parents still find plenty time to spend with my brothers. My 2 1/2 year old brother is tri-lingual, knowing not only English, but ASL (american sign language) and Spanish. He has a home sitter, who is a BLESSING. She’s basically his grandmother, since we have no blood relatives near us. I don’t think we could have asked for better.
Now, for MY tip to everyone. I’m not sure who all has done this, but my advise is COUPONING. Yes, we live comfortably, BUT we still have BILLS. With that said, my mother is a HARDCORE couponer. That woman can go grocery shopping and spend only 50-60$ on 130$ worth of stuff. The amount of FREE things you can get once you learn couponing is almost ridiculous, especially necessities. Toothpaste, deodarant, shampoo & condiditioner, body wash/soap, etc (she tends to keep us STOCKED). CVS, Target, Publix, Winn-Dixie (and only occasionally Walmart & Sams Club) are her main shopping spots because of the couponing deals. Its an art for her now, and she LOVES it. It saves TONS after you start adding up savings after the first two or three months.
Just remember to WATCH THE SALES ADDS AND COUPON OFFERS.
Our debt:income ratio is out of control. We are starting your plan by using the freedom account and dividing up the expenses to make sure everything starts to get paid monthly(before that wasn’t happening, not even on a good month). I also, just started watching your videos. My question is how do you allocate for bills that are behind like utility bills, phone bills, etc.? Also, how do you pay off the debt not necessarily credit card debt, but like medical bills, collection items, etc.? Any help/advice would be greatly appreciated. Thanks so much!
If you are behind, catching up should be your first priority. I would cut out all unnecessary spending (eat really cheap meals, no eating out, no entertainment, etc.) and try to bring in extra income through selling things, babysitting, house cleaning, lawn mowing, etc. until you can get caught up. Once you have everything current, you may want to continue the extra income to get the accounts a little ahead and then just make sure that you plan every paycheck so that you take out money to pay for food, gas, rent/mortgage and utility bills first before you spend on anything else. Does that make sense?
That does make since. Unfortunately, we don’t do any of those things. Rarely do we ever go out to eat, we don’t see or rent movies, etc. This has always been our major set-back and why we’ve never been able to stick to a plan. I have a ton of things listed for sale on craigslist, but I seem to run into the “I want something for nothing people” and can’t sell the items. Would taking a single paycheck and paying all of the things that are behind be smart? We’ll definitely have to look into trying to find a side-job for extra income. I really appreciate your advice/help. Thanks so much!
I would love to try this as I am trying to find a way to cut down my spending. When I’m bored usually that is when I get myself into trouble because I like to walk around the mall and then I get hungry and eat something there, then buy things and it’s just such a vicious cycle. I don’t necessarily feel any pleasure in buying things, sometimes I even get buyers remorse. So I would love to try this system. I’m great with Excel, but I know what you mean about writing things down. To see it written is more powerful to me than seeing it on a computer screen. I was just wondering how I go about getting started. I wanted to make sure I understood the steps correctly. The Freedom Account is used for what I need to save or what I need to spend the money on (i.e. my credit cards)?
Thank you for sharing this! I love bargains, maybe a little too much sometimes. Bargain shopping adds up if you do it frequently. So focusing on needs and wants is something i need to learn and it’s something my friend always told me about. I would just like to make a change.
The original intent of the Freedom Account concept created by Mary Hunt was to put money aside for future expenses that are irregular. I use my second account for every bill whether regular or irregular because if I see money in our primary account I will spend it on something I don’t “need”. Does that make sense?
I was $60,000 in credit card debit over seven years ago and
my game plan was to work 2 part-time jobs and 1 full-time job
and to use the envelope system every pay day to make sure
that I did not leave any money in my checking account that I could not spend. I also went through a good credit counseling service that helped me deal with the credit card companies.
I did not not use a credit card in 7 years and am happy to say that
life is much easier with out so much debt. It was easy getting here I had to make a lot of family time sacifices but the stress is no longer there. Wish there had meetings you could attend in your hometown to sure ideas but then again no one ever wants to talk finances until its to late. My advice it a system that works for you and don’t quit find someone who will listen when it is getting tough and you will see the light at the tunnel when it is all done.
Congratulations on paying off so much debt! I am so impressed! Great advice to find a system that works and keep plugging away. Thanks Lori.
It is so good to see someone who does not use credit cards!! My husband and I made the decision to avoid credit very early in our relationship and though we’ve suffered slightly in credit score, I feel that overall we are better off. I see so many of my friends, family and neighbors charging their entire lives and I cant wrap my mind around living that way. I have met a woman that uses them so much, she basically makes money off the bonuses- they swear they have no debt but I can’t do the math where 6K a month on one card and 2K a month on another equals 300 cash in a gift card and there is zero debt. We are also a frugal family on a low income and we live a comfortable lifestyle. Thank you for sharing, you have no idea how much it means to me to hear that someone else avoids credit also.
It’s good to know you’re not weird, right?
In response to Lori and Wendy about the Credit cards… here is something little that my husband and I both are doing. We both needed to build credit and were not keen on the idea of credit cards. I had had one since I was 15 but my parents held onto it for me, allowing a once a month purchase on it after I showed them the cash in hand. So taking that concept, my husband and I got a joint credit card… BUT… we leave the credit card on our dresser, it doesn’t go out with us so the temptations not there to use it. Once every month or every couple of months we go out to this little local bagel shop and have a morning date (breakfast prices are soooo much cheaper)! The total never goes over 10 dollars, for the both of us, and since we don’t ever eat out…this is our one little splurge and it takes care of our building credit issue as well(We pay this off almost as soon as it pops up on the account). Hope that is an idea someone can use! For us we kept running into problems of not having enough credit built up, so ideally credit cards wont be in our long term and have and always will be an ‘emergency use only’ kind of thing!
God Bless!
Thanks Jasmine.
This is great. Thank you for sharing. I just had my 2nd child and really need to re budget my self. I know this will help!
Also, I had around 5k in 20′s debt. One year I used my whole tax return. I called each company and asked for a discount if paid in full. Some worked, some didn’t. I saved 2k. Depending on your debt amount compared to your tax return amount you could make a decent dent. Hope that helps someone
That is such a good point Dana. The time you invested definitely paid off!
You are lucky you have a husband that works with you. When I got married my husband said my money is my money and your money is our money. I thought he was joking. twenty four years later I am struggling to pay the bills all by myself and I have no clue what he does with his money. It is a hopeless situation.
I am so sorry Dee. Have you tried marriage counseling? We have not always been in agreement, but through counseling and my choosing to communicate when things were not working in our relationship, we have come to this place. Marriage is a lot of work and even if your husband won’t agree to go with you, you could benefit greatly from going to counseling yourself. Another good idea is to read the book Boundaries by Dr. Henry Cloud. I think they even have one specifically for marriage. Good luck!
In addition to our Excel spreadsheet, we keep a dry erase board in a visible place in our house (to be hidden when company comes) that tracks budget items that we have complete control over: groceries, entertainment, dining, etc. It’s basically a checkbook log, and it helps us keep an eye on where we are in those categories so that a) we don’t go over, and b) we can celebrate when we are under in those areas.
That is such a good idea Shayne. Thanks for sharing!
I wanted to just drop and FYI for those wanting to know ways to get out of credit card debt. For the past 4 1/2 years I have been paying down just that. Due to my sons medical needs I was forced to put A LOT of the debt on my cards. The minimums were killing me and I was going nowhere. A pastor friend and his wife send me some information on a debt management program they were using and had just finished up their last payment of a large debt. Fast forward to present. In just a few days I will be making my last payment on a debt that was well over 20,000 in credit cards alone. I am in no way affiliated with this company but I sing their praises as often as I can because of what it has done for me. There are many debt management companies out there I just know from personal experience that this one is legit and works. The way it works is they gather all the information on ALL your credit cards including ones like Lowes and even furniture store cards. They call each one and negotiate a lower interest rate and payment. As long as they are a participating credit card company they ALWAYS negotiate. (They want paid as bad as you want out) Once they work out the details they call with the amount you will be paying monthly. It MUST be an automatic withdraw from your account and they manage the dispersing of funds. You choose the date you want the withdraw to happen from a group of date options they give you. They do ask for a small fee monthly as they make no money from this other than whatever we(the ones in debt) pay them. Based on your income and your debt management payment they suggest an amount. I personally couldn’t at that time afford what they suggested and it wasn’t a large amount.(I believe it was 20 or so?) They asked what I could pay and I said $10.00. They accepted that amount and it would become my fee along with my debt management payment per month for the next 4 1/2 years. Your payment for your credit cards will be significantly smaller than what you are currently paying and it will be one lump sum. When one card is paid for they choose the card that has the next highest interest and apply the payment to that card along with what was already being paid. When another is paid they do the same thing till you are down to one and then NONE! ;0) They even crunched the numbers to show you how long(just paying minimum) it would take to pay the debt and how much it would end up costing you. It was astronomical how much money I saved not to mention I would never have paid that debt off in this lifetime at the minimums. Those cards have all been cut up and tossed loooong ago and NOW, if I don’t have the cash for an item I don’t buy it. I do have my house and car but those are necessities to work/live. My sons medical needs/supplies also have to be prioritized choosing only the items he needs to survive and pushing all other items back till we can afford them. This was and still is very difficult to do especially since his needs are just that “Needs” but, by taking away all the extras that were just “wants” on my part and slashing every bill down to the bare minimum that we need to survive its working. I’m not finished yet though…My plan now is to take what I’ve been paying on my debt management and begin applying it to the principle on my car and house which will greatly reduce both their amounts in the next 2 years making those payments even more manageable. Our income will be going down quite a bit at that time so rather than the “surprise!” your income is less, I will be dealing with it along the way making the transition that much easier. It’s the best thing I have ever done and would do it all over again.
I am glad that worked out for you Trina. Unfortunately I have heard a lot of complaints in situations where that didn’t work out because the company took the money, but did not pay off the debt and when the person checked their credit report they had problems. For others reading this comment, you can actually negotiate with credit card companies yourself. Dave Ramsey has a lot of information about how to do this.
I love that you are taking the money and paying off more debt instead of spending it. Way to go!
One tool I LOVE is the Mint.com app on my smartphone. (But you can also use the website by itself) I set the kind of budgets that I am trying to stick to (gas budget, grocery budget, etc.), and every day it updates on all my accounts, and tells me when I am overspending in one category, or when I have a little wiggle room left. It can also offer investment advice. It’s a really helpful little app – I always know where every penny is.
I’m 21 and working full time, I’m going to college debt free but I haven’t finished by far. I just took on a car payment. What my parents taught me when I first started earning my own money was to budget. When I was in high school it was easier to do percentages. 10% of this 20% of that and so on. Now I do 10% for tithe (I know I could use that money for a lot of stuff but God has a place in my life and I have to trust Him), then i take everything that I need to buy/pay and figure out how much I’ll need per paycheck to make it happen. I still live with my parents so I don’t have to worry about rent or groceries so much. But I do pay my own phone bill (cuz I wanted an iPhone) and my car payment and for clothes and to take care of my dogs and stuff like that. I make about $1200.00 a month. I have an app on my iPhone called EZ Budget and its like an electronic envelope system. I divide my paycheck into it, then I know how much money I have where. I have enough money to save for car repairs and savings about 30 bucks each check. and 55 per check for car ins. my phone bill is generally 110ish there’s no way to lower it I’ve checked. i get 30 spending cash for however many days there are between the 15th and the 30th. my spending money is for any eating out, sodas or anything i want thats not in the budget. before my car payment i had 60 per check. I’m learning how to save and its painful but its goin. anyway just wanted to chime in, but i would recommend that ez budget app to anyone who has a smartphone. its 5 bucks i think but its totally worth it i think.
Thanks for the budget app tip Robin!
Hi,
I just wanted to share a great tool with you. I am not sure if you are familiar with Dave Ramsey’s Financial Peace University!!! Our church offers his DVD classes every semester….We did it last fall. It was very beneficial for us. We learned to categorize our money and are working toward building some savings for emergencies.
I still don’t have the hang of it and am struggling with our budget. We don’t have cable, barely go out, but we seem to come across lots of emergencies. Our biggest spending is groceries, and I need to find how to manage that.
Great blog. Thank you
I started using mint.com recently, and otherwise I use a number of different pen & paper methods.
This is an amazing blog. My husband and I are both college graduates and had fairly decent jobs prior to having children but were still living paycheck to paycheck due to frivolous spending habits. Since having kids ( 3 year old and 8 mos. Old) I have been a stay at home mom and we have been living on half of what we used to make and do not feel shortchanged or like we are missing out o anything. In fact by prioritizing we have managed to buy a house( in the bay area of Cali) paid off all CC debt and typically have money to do whatever pops up( date night,out of town trips) ) it really is about what is important for us it was about being there for our children and raising them instead of working to pay a babysitter and having a little extra money. We are extremely happy with our decision and would not trade it for the world. Oh and we too set up a separate account for expenses but just use it for the mortgage and for all other things use primary account. Plus a savings if tthings are short or something unexpected comes up.
I do something similar to the process you mentioned above…my husband works off of commision as well and I am a Stay at home mom as well…what i do is at the 1st of the year I buy a new $store calendar….I then take our monthly bills add them up and divide by 4 (weeks) I know that some of our bills arent entirerly predictable (water, house gas, electric…ect) so I use the average of what they cost during the year before and set that as my “payment”…I then arrange the bills in a weekly format on my calendar…I always pay the amount I show due even if the bill is less so that if the bill is ever higher i have a credit and can continue to pay the amount I show (big stress reducer)…now my husbands weekly pay is around 500-$700 so when I set up the calendar i arrange the weekly bills so that they are around $300-$400…some of the bills can be paid all at once and some have to be spilt into multiples (like rent) I then take the remainder of his check and split it in 1/2—half goes to savings half goes to “mad-money” (ie his lunches, maybe a movie night or something else that we may have planned)…we stick to this very closely….the other thing that I do is very strange to most people…when I write a check or use our debit cards (we have multiple accounts as well) I round the amount up to the nearest $ and then add a $ (I know this seems strange but let me explain) if i spend 12.25 i write in my registar $14 every 3-4 mos or as unexpected things arrise I sit down and figure the “cushion” money in our checking account often times just by doing this we will have $500 we pretended we didn’t have! this is an awesome help around birthdays and christmas and is the ONLY way our kids get to do extras like cheer and football! I’ve tried many times to explain the way I work our books to others and very seldom does anyone really get it…but i works great for us also as has happened in the past there are those pay weeks that for one reason or another are way below what I had projected so that’s another time when I can dip into the “cushion” fund and still keep our heads above water. Another thing I do is we only buy one car at a time and we use a “tote the note lot” where they do not charge interest so we pay a few $ extra on each payment and when we get our income tax return we take them the whole thing! By doing this it gives us a bill that we can occasionally put off paying because we have no balance due at that time…we try really hard not to have to do that, but when medical or car issues arise it really is nice to have that to fall back on…now I haven’t mentioned our savings much so here it is…we are avid hunters in our family and that is how we spend the majority of our “together” time…so we build up that savings account so that durring hunting season we know exactly where we stand and how much we can or can’t do…kinda like alot of people do with a nice summer vacation…we just stock our freezer with meat that has no additives and is healthier (debatable by many) which also cheapens the amount of money that we spend on groceries because we very seldom buy any meat other than chicken.( We are not trophy hunters we hunt to eat and enojoy sharing the process of life with our children. I say this because I realize that many people just don’t understand the reasonings behind hunting…this is ours) I really appreciate you sharing your financing methods and hopefully sharing mine may help someone else as well!
What would you say for someone who has just destroyed their credit and how to get it back? I have so much school debt it’s crazy.
Hi Katy! I think the most important thing you can do is take a realistic look at the entire picture (write down exactly how much you owe and to whom) and then make a plan to attack it step by step.
The most motivational way to pay off debt is to list your debts smallest to largest and start paying off the smallest while paying the minimum payment on everything else. Set goals for yourself (example: pay $500 extra this month on loan #1: pay loan #1 off in 3 months (or whatever is slightly shorter than you think is realistic).
Reward yourself when you reach a goal (within reason–don’t go buy something expensive on credit, but maybe treat yourself to something that you have sacrificed to be able to pay the debt.). I have heard of people keeping a thermometer type chart on the fridge so they can stay motivated.
I know it is a long road, but you can do it. The worst thing you can do is to ignore it or give up. Good luck!
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