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.]
______________________________________________________
Join me on Twitter or Facebook for instant updates or subscribe to my FREE e-newsletter to get posts right in your inbox!
______________________________________________________
Have you ever opened a bill and practically passed out from the shock of seeing the amount owed? That happened to us a couple of years ago when we opened our water bill and saw a $300 plus total.
It turns out that we had a leak in our plumbing and we had no idea that all that water was slowly dripping out of our pipes. While each drip hardly amounted to anything, the cumulative effect was gallons of wasted water.
Sometimes our budgets can have leaks too, but we don’t realize it until we receive shocking news. Maybe you open a credit card bill and suddenly realize that you are thousands of dollars in debt when you thought that you were just using the card here and there for “small” purchases. Maybe you had savings, but you slowly started spending the money on items you thought you needed and now you have nothing in the bank.
It’s important to fix leaky faucets, but even more important to fix the leaks in your budget especially if you live on a smaller than average income.
Pay Attention
Spending just a little bit every day can keep you from your financial goals and eventually increase your debt load. To put a stop to the drips in your finances, start paying attention. The next time you pull out your debit or credit card, ask yourself if you really need what you are paying for or if you are spending out of convenience or habit.
If the purchase is not something you truly need, put the plastic back in your wallet and congratulate yourself for stopping a leak.
Keep a Record
In addition to paying attention at the time you spend money, you can also stop leaks by keeping track of your finances over time. To take a look at your spending patterns, you can do a little experiment. For the next three weeks, write down EVERY expenditure. You can keep an index card in your wallet or make a note on your smartphone. At the end of each week, write down your total expenditures for gas, food, clothing, etc. to get an overview of where your money is going.
I personally keep track of our money by keeping my receipts in my wallet. Every evening (or every couple of days) I write my spending on a spreadsheet broken down into various categories and at the end of the month I can see where we spent money and where we need to cut back.
[Note: There are more high tech ways of keeping track of your spending. I just happen to like using paper and pencil.]
Plan Ahead
One leaky area for our family is fast food purchases. We try to avoid eating out as much as possible, but when life gets really busy, I find myself heading through the drive through.
Just last week I spent $4.00 on lunch at a fast food restaurant between appointments. If I had planned better, I could have packed a snack from home and saved that money.
$4.00 may not seem like a lot but it is a leak, a drip that if not stopped will result in a gallon of waste. Just five trips to the drive through this month and I will have spent $20-$30 that we could use to save for a car or spend on something more permanent than a cheeseburger or a chicken sandwich.
Maybe your leaks look like $3-$5 daily drink purchases or Saturday trips to the mall for a $20-$30 weekly clothing purchase. Find creative solutions to stop the leaks like taking water bottles or travel mugs with you or planning weekend outings that don’t involve shopping. Whatever your leaks are, find a cheaper alternative and change your finances.
Reverse the Flow
Instead of allowing those ones, fives and tens to slowly leak out of your wallet, why not reverse the flow and start saving those little bits of money? I know people who put their coins into a jar at the end of the day or never spend a $5 bill. Every time they receive a five, they put it directly into an envelope to save for something specific.
If you never use cash, you could round your purchase up at the register, get cash back and put the cash into a special envelope for savings. Just make sure to write down your purchases and balance your checkbook (or check your online balance daily) so you don’t over draw your account.
Find creative ways to start collecting those drips and drops. Put them to work for you instead of letting them leak out of your life and you will be surprised how much you can improve your finances in a short time.
What are the “leaks” in your budget? Leave a comment. 🙂
Books! Books are my biggest leak item that I don’t track well. I always seem to go into a bookstore for books for my children, myself or my husband. I found a Nook at a garage sale for $30. (Saving almost $60 of retail – what a deal!) but now I find that I will purchase the e-books (usually $1.99-6.99) rather than researching to see if the library has them in paper or in their lendable e-book library. sigh.
My mother suggested that I only fund my e-books with a gift card once a month so when I spend the balance then I am done for the month. So far this month that has helped and I still have about half my book budget left this month.
Ooh–I like the gift card idea Erika. Sounds like your mom is a smart cookie. 🙂
Do you belong to Paperback swap? That could help you save on books. Between that and my local library’s interlibrary loan program I can track down pretty much anything.
You might also look into the free ebooks that are offered. I know that with the sony ereader they used to offer the 1st in a series (I know to get you hooked) for free. Amazon always has free books and from what I understand is that if they are free on Amazon then you can usually find them for the nook for free. I realize these are first time or unknown authors but that doesn’t mean their writing is bad. =)
If you’re on Facebook, you can subscribe to Pixels of Ink or Ereader, which post free books several times a week. I get all my ebooks this way and have read some really good one!
E-books have been one of my biggest problems too. Most little purchases I’m ok with, since each week I take out $20 in cash as fun/incidental money and once that’s gone it’s gone. But I can’t pay for an e-book with cash.
What finally helped was removing my credit card information from Amazon. Now instead of impulse buying, I have to go dig out my card. For some reason (probably laziness), the act of going to get my card really cuts down on my e-book buying.
I really like the gift card idea too. I will try that.
I like that idea Catherine!
Check with your local library. Some have E-book rentals. When your time is up, you just loose access to that file. Cheaper than a book store, and no late fees (my leak) from the library.
Three words: Starbucks’s Mocha Frappuccino. I have a weakness for these guys and after a long day, sometimes all I want is to sip on a glorious cup of empty calories. But at almost $4 a cup, this isn’t something I can afford to make a habit of! To keep off the cravings, I’ve started trying to replicate the recipe at home, taking water bottles with me, and avoiding driving by the Starbucks when I can help it! Even if I only bought one every week, that’s $15-20 a month (depending on the # of weeks in a month) and $180-240 a year! WOW. When you look at it that way, that’s a whole months worth of groceries that I would spend on coffee! Tooootally not acceptable and I need to kick this bad habit in the patotie!
Good for you for finding alternatives Bethany! I especially like the option of avoiding driving by Starbucks. 🙂
I have a personal size blender similar to the magic bullet that I use to make my own. Just add coffee, ice, milk and chocolate sauce and you can make your own for wayyyyyy cheaper. 🙂
Thank you sooo much. I am a single mom with a daughter that has celiacs and stuggle day to day. Your website has been very helpful and amazing recipes for her.
Thank you.
Where can I find your book?
Cari
Hi Cari! I am so glad that the site has helped you. It is difficult to deal with celiacs and live on a budget. As far as the e-book, you can find it here.
My leaks definitely come in the form:
* the occasional fast food run when I’m busy (which I can’t even finish — so much food!)
* shopping online (and then having to return it because it doesn’t fit and pay shipping)
* Netflix (which I rarely watch)
* stupid mistakes (throwing my rubber slippers in the dryer grr, getting lost and burning a whole tank of gas)
* food at the grocery store that ends up wasting (usu fresh food or food bought on impulse)
I have the hardest time eating, for instance, a whole head of lettuce since I live alone and don’t eat very many salads; I waste at least $10 of food every week unfortunately.
Money is not tight for me, but I’m not proud of these leaks. I want to be a good steward of my money.
I know what you mean about wasting food. If we have a busy week, I sometimes have produce that goes to waste and I HATE throwing out food. As far as the lettuce, it might make more sense for you to purchase a small bag of salad instead of a head of lettuce–just a thought.
In my opinion, even if she wastes half the head of lettuce, she would be saving money instead of buying bagged kind, at least in my area. I HATE throwing out food, but find that buying a head of lettuce (around $1.25 – $1.49 depending on store) is much cheaper and provides more than a bag of salad which is usually $2 – $3.50 (depending on sale that week) I also find that if I chop up my lettuce into big chunks – think 4 big chunks (instead of shredding it right away) and putting it into a tupperware – really makes it stay fresh longer! I swear by this.. then i just tear what I need off of each cut.. 1 head of lettuce lasts us a week! sandwiches, salads, taco salad, flat bread roll ups etc.. =)
You may be right Michelle. I think it depends on what kind of lettuce you are buying and the prices in your area. Thanks for your insight. 🙂
I used to own a restaurant and I cut my head of lettuce up and put it in a bowl with a lid and a several inches of water in the fridge. It crisps the lettuce up better than fresh chopped and keeps for a week in the fridge, just change your water every few days. We usually eat it before the week is up, and we are more likely to eat a salad because of the lettuce being pre-chopped.
I buy a head of lettuce, cut it up, wash it and then put it in a ziploc with two paper towels. it can stay fresh and green for almost a week!!
Buy one head of green leaf or romaine, wash it and cut it up when you get home. Put it on your sandwiches, eat salad with dinner several times a week and eat it for lunch once a week. You won’t have any problems going through it before it goes bad.
Our leaks are much like yours fast food. Just today, its hot and I have spent all afternoon cramped in a bathroom we are renovating priming the walls for paint. I so badly just want to go out and grab a $5 pizza since it seems so inexpensive, then I realize I would need 2 to feed us so that is actually $10, plus gas to go there and back, not much but still gas I don’t have use. Instead it dawns on me I have a 16 year old son who loves making pizza. I have the ingredients, let him do the work, so I am! its a night off for me which is what I wanted and they are still getting fed.
I’m all for having those teenagers to cook–LOL! My 17 year old son makes the best quesadillas and my 15 yo daughter can cook almost anything. Love it!
I was able to kick my starbucks habit which took awhile since I have one that is in walking distance of my house. Mine is clearance clothes, this monthy so far I bought two dresses at different times each only $9 and returned them both. I have to remember even if they are a GREAT deal I don’t NEED them. Obviously this is a habit I need to break.
Our biggest leak right now is gas. My husband was just laid off at the beginning of the month (for the second time in four years) and we often find ourselves driving around to various places just to get out of the house and to try to occupy our little ones (ages 5 and 2).
First off: Thank you thank you thank you for creating this series! I love your frank honesty and advise!
One of my ‘leaks’ that I’ve realized while reading this series is letting food go bad. The saver in me refuses to by “single serving” packaged food if buying one big bag is cheaper (which it almost always is). I’ve realized though, I have a big problem with starting a bag of veggies, chips, or cookies and then leaving 1/2 the bag until its no good anymore, usually because when I’m grabbing my snacks as I head out the door I don’t leave myself enough time to package them to-go. Last week I started a new system. Anything I buy that is not already packaged as single serving gets divided up into tupperware or ziplock bags as soon as it is unpacked from the grocery bag, before going into the cupboard. Taking those extra couple minutes then leaves me no excuses when I’m running around in the morning. I can’t believe I didn’t think of this earlier!
Great plan Maya. I do that when we are going on trips so I don’t have to pay for individual servings.
Starbucks. I actually craved their coffee even if I was no where near one! Fortunately for my budget, about 5 months ago, my soy latte wasn’t made to its usual level of “ahhh.” Instead, I had an ah-ha moment and realized I just spent 5 bucks for not-so-great! I haven’t been back since.
My husband refuses to take his lunch to work and eats in the hospital cafeteria, which is over priced and unhealthy. Ironic, isn’t it?
Wasted fresh produce, and a strict 2 day rule in the fridge for left overs. I feel bad about throwing it away, so I’m trying to buy less fresh produce on the weekend if I won’t use it by mid week, and also make less food to avoid the left over waste.
I hate too waist food as well. I buy a loaf of bread and throw out more than half. I at least try to give my daughter half the loaf when I buy it so I don’t feel bad when it’s time to through it out. I love all of the different ideas because I’m going to be single soon and I need too be able to save as much as I can. Thanks and God Bless!
So glad you’re getting some ideas. You can freeze bread, by the way. 🙂
I know it’s probably strange but I’m still in high school and I’ve been reading your posts (I found you on Pinterest). I’ve grown up in a high income home and it was never surprising to see my mom pull out her credit card when she wanted something and I noticed I’ve become the same way with my debit card. After going into overdraft on my card several times I realized something needed to change but I’ve been having trouble with actually making it happen. But reading your blog has certainly helped! I’ve realized all the small $4-$5 purchases I’ve made on fast food/Starbucks/music/etc. have really been cutting into my pocket. I’ll be off to college in a few years and I’ve been trying to come up with ways to minimize as much debt as possible and a lot of your posts have helped! Especially this one (Are You Leaking) and the one about cutting out the microwave (I plan on sharing an apartment with friends rather than living in dorms because in some colleges it’s not always cheaper to live on campus).
You probably don’t hear from a lot of teenagers but thank you, this has really helped and I plan on working this into my own budget and putting it into action today (:
Hi Lauren! I am so glad that you are here. I actually have teenagers of my own and I will tell you a little secret. It makes it much easier to save money and avoid “leaking” when you have a long term vision for what you want to do (example: buy a car or buy horses to start a camp for children). You should allow yourself some eating out money, but just limit yourself in some way. For example, you could make Friday your “eating out” day once a week (or a day when your schedule is super busy) or you could take out some cash at the beginning of the week, say $20, and once the money is gone, you promise yourself not to spend anymore. Make a commitment to never buy fast food with your debit card and NEVER with your credit card.
It also helps me to have money immediately deposited into a second account to pay bills and things I know are coming up (to replace a pair of shoes that are wearing out or to replace the tires on my car). It seems like everything is great when you have a “big” paycheck and seemingly no expenses, but if you don’t have emergency savings then you will put those new tires on your credit card and pay about 20 times what the tires are actually worth with all of the interest you will be charged until you get it paid off.
I hope this helps. I am so proud of you for taking action now to insure you have a better future. I don’t know if you read this post, but it might be helpful too: https://thepeacefulmom.com/2012/05/24/living-on-less-than-28000-a-year-meet-future-you-pt-14/
I remember in a past post you said you keep snacks in the car for you and your kids to avoid those trips through the drive-thru. What kinds of things do you keep in there that won’t go bad over time or in extreme heat or cold? I live in Wisconsin, so my vehicle’s temperature can really vary and have an effect on things.
Instead of keeping them in the car I have started packing a little bag when we go out. Something that would probably be okay in the car would be dried fruit, nuts, pretzels and granola bars that don’t have chocolate in them.
Try shopping at Aldi’s supermarket/walmart for things that you only need a small amount of or parishables and for everything else use Costco or BJ. I also live alone and find great deals on, cleaning supplies, trash bags, toilet paper, facial and body products at the stores that sell in bulk. When it comes to fruits and bread I just freeze them.
I had a favorite Starbucks drink for about 8 years. I live in a cold climate, so these weekly splurges were extra rewarding for their warmth and creamy texture. Finally I thought about the price per bag of coffee from Costco and realized I could get a whole months’ worth of coffee for the same price as about 4 Starbucks drinks.
I later found a local coffee shop with daily specials for just about half the cost of what I used to buy, so I occasionally go there for a splurge. I just have to remember to stick to the specials, otherwise, with 3 children who often want somrthing too, it adds up.
Thanks for taking the time to comment Gina! It seems that coffee is a budget leak for lots of people! 🙂