In the Black

For  a little over a year, our family has been "underemployed".  After my husband got "demoted" from full-time to on-call in November 2012, we had to survive on 1/2 - 3/4 of what he was making prior to that.  At most, as an on-call staff, he could work 30 hours a week (and he didn't always get that).  This was barely enough to cover our monthly expenses, nevermind what we had to pay for my school and any extras (new shoes for the kids, birthday presents for all those parties the kids are invited to, drop-in yoga once a week).  We had to really stretch our dollars and give up some of the luxuries we were used to (Netflix, yoga, lunch dates out once a month, not going to every birthday party the kids were invited to).  Needless to say, we were never in the black.  Each month, I had to supplement our income from the savings account we'd worked hard to build up in the previous 5 years of overabundance.  It hurt my heart each month to take money out of those accounts, but I was ever so grateful we had them to fall back on.  But, in January, after 14 months of being in the red each month and having to withdraw from savings, we are in the black!  Not by much ($100), but what an awesome feeling it was to put that INTO the savings account rather than taking any out.  And, we even had some extras this month (my son's birthday and two out-of-town day trips).  My husband still doesn't have regular hours at work, but he's been working a full 40 hours a week (he is doing the same job, but in another county/state now).  This has made it difficult to budget, not knowing exactly how much income I'll have to work with, but we've managed to do it, and finally came out ahead!

We're already pretty frugal, but this past year was a challenge--even more so than those first two years of marriage, when we were living in Santa Cruz, CA (one of the most expensive places in the US) on a combined net income of $2500/mo (in which we accrued a TON of debt).  If we didn't have the savings account, we would have had to sacrifice what I consider to be necessary things (cell phones, internet, organic food).  We would have had to go on public assistance.  We might have even resorted to relying on credit again.  But, because of our frugal spending over the 6 years prior to that, and because we stuck to a savings plan during that time ($300 or more a month when into our savings account), we didn't have to do any of those things.  I'm pretty proud of that.  But, obviously, we didn't do it alone.

God has provided abundantly for us.  There have been crazy things like not having enough money to buy my school books and then getting a refund check from the car insurance company for almost the exact amount I'd need for them.  Or, when I thought we wouldn't be able to buy the kids any presents last Christmas, receiving $100 in the mail from an anonymous sender.  People inviting us for meals, giving us jam and salsa and other home-canned goods.  Hand me downs for the kids and clothing swaps for me to keep us clothed. We never wanted for anything this past year.  I'm grateful for the Lord's provision in this way, and in giving us wisdom on how to budget our money.

I've never been one to shy away from talking about money.  We've often been asked how we live so well on a pretty modest income.  So, how did I do it?  Here are a few tips to help you out if you're trying to get out of debt or want to learn how to budget:

• I strongly recommend reading: Financial Peace and The Total Money Makeover by Dave Ramsey. My in-laws gave us those books back in December 2005, just after we bought our house, and they are what inspired us to have a healthier relationship with money.  

• Track your spending for one month.  Write everything down.  Even that candy bar you got out of a vending machine last week (oh, maybe that was me).  EVERYTHING.

• Make a budget.  Sit down and write out all your expenses.  Start with the basics (house payment, utilities, groceries, cable/cell/internet, gas) and then add the extras.  Stay within your income and be sure to set aside money to go toward debt payment, savings, and charitable giving (I'm a Christian, so we tithe each month).  I use this worksheet every month to make our budget.  Dave Ramsey's books have good ones as well, with a lot more detail.  I like that this one is simpler.  I found it on the internet maybe 6 years ago when I googled "budget worksheets".  You can also just create one in Excel.  

• See what you can eliminate.  We started by cutting out cable and eating out.  Then, we stopped buying books and DVDs (for the most part).  Then, we started buying a lot of stuff, including clothes, used, with cash.  We don't drink coffee, but we know a lot of people managed to save a lot by brewing coffee at home rather than heading to Starbucks each morning.  We also cut out all the "extras" in our food budget (bottled water, ice cream, chips, juice).  We get ice cream now and then, but it's not always in our freezer as in the past.  In Portland, we saved money on gas by biking and walking a lot.  My husband was a bike commuter the entire time we lived there.  If that's an option, it can save you quite a bit.  Buy in bulk and use coupons, when you can.  We love our Costco membership, and the annual fee is usually gifted to us every year.  You'll find lots of other ways to save, I promise.  

• Use cash only.  Now, this is a tricky thing and you'll have to discern what works best for your family.  Dave Ramsey recommends absolutely no use of credit.  Peter and I didn't use our credit card for almost 2 years, except to buy plane tickets online (which happened maybe twice in that time).  We do use it now (we only have one, plus a Kohls card), for a variety of things, because we earn cashback and flight points on it, but we pay it off completely any time we use it.

• Really look at your debt.  Figure out a reasonable timeline to pay it off.  For us, we could only afford to pay $200 a month.  It took us almost 4 years to pay everything off (again, there was that year when we fell off track and actually accrued more debt).  But, we did it.  And now, we've been debt free for almost 4 years.  

• Come up with a Savings Plan.  We started with 1% of our income, because it was all we could afford with what were paying toward credit cards.  But, we eventually worked our way up to %10, which is ideal.  Our hope, once I'm working full time, is to save %20-25.  I just need my nursing degree first....

• We don't own a house anymore (that was a part of our plan--getting rid of a house we couldn't afford), but if you do, see if you can pay it off faster.  Getting rid of that debt will be HUGE.   My husband and I are hoping to buy a house by 2018, when my husband turns 40 (I'll be 41).  We're hoping to have at least 40% down and to get a 15 year mortgage, that way we can be truly debt-free again by 55.

• Get rid of your car payment.  We haven't had a car payment since 2007.  And we bought our last car used, with cash, in 2012.  It's nice not to have that payment.  And we plan to run our cars until they don't run anymore.

• Got kids?  Start saving for college. Student loans are awful.  I know, because I spent 6 years paying for them, before we decided to take a chunk out of our savings in 2008 and pay it off.  Start them out right but paying cash for school.  And don't forget about grants (Pell grant and state grants for qualifying families) and scholarships, scholarships, scholarships! 

That's all I can think of for now.  If you have any more questions about my budgeting strategies, feel free to leave them in the comments.  Or, if you have any strategies you want to add, feel free!  Wow, I started this post thinking it would be about gratitude for provision and it turned into a lesson on budgeting.  LOL!   My theory is that budgeting simply makes life easier.  And reminds us to be thankful for what we have each month, knowing there are others out there with less.  Here's to staying in the black and out of debt!