A recent comment on one of my posts has me thinking and trying to figure. While the commenter had definite valid points that there are usually cheaper ways to get things done, I'm still trying to wrap my head around trying to accomplish a couple other of his/her opinions regarding my finances. I'm always trying to figure out a better way to get where I want to be financially, so am trying to see if this opinion is viable and how I would go about achieving it.
Based on my income I should have tons of savings and paid for assets.
A little more history: I was a SAHM mom until my youngest (now 16) was almost 6. DH was self employed in a seasonal type construction industry and monthly income was very up and down. We got by with our personal expenses but running your own business with construction equipment is costly and everything he made extra went into trying to grow the business, rather than buying ourselves personal assets. At this same time I went back to work (10 years ago) DH started having his health problems, which made running his business and also working much harder. He struggled with it for years, cutting back to a size he could manage and trying to do the labor (as he'd always done) himself when he could. As he went through 2 years of doctor visits, every test there was and even a trip to Dallas to see a specialist, anything we had saved up went toward paying those expenses even though we had (and still do) insurance there was always a deductible and co-insurance costs out of pocket along with the travel expenses to Dallas.
As we went into the end of 2008 and into our usual slow season for work/income the recession also hit. When spring came and it was time to get busy again there was no work at all. The large construction company he had done most of his subcontractor work for had laid off 90 of it's 100 or so construction workers! They sure weren't going to use a subcontractor anymore and neither were any of the other 20 or so smaller companies DH worked for. We tried to keep it going, hoping it would pick up - and yep, you guessed it - there went any other savings we had and up went his business credit cards. By that summer he realized his business was over, along with the fact that his health was getting even worse.
Fast forward to 2 years ago and we had to file for bankruptcy. He was a self employed sole proprietor so we had to file personal bankruptcy. Of the debt discharged only $500 of it was from a personal credit card, the rest was business loans and credit cards. I think it's common when most people file for personal bankruptcy they of course get to stop making payments on all their debt and their personal monthly income available to save goes up. This wasn't our case. The bankruptcy did nothing to help our personal monthly outgo of money, except for the small payment on the $500 credit card. The rest that got discharged had been coming out of DH's business account and when the money stopped coming in his business had to stop paying the debt.
Our bankruptcy was discharged a little over a year and a half ago. We didn't have any savings and our personal assets were basically our house (which was now underwater after the real estate meltdown), 3 older paid for cars, our racing equipment for DS and our personal household belongings, along with a 401k/profit sharing plan I have through my employer.
So we basically started over less than 2 years ago. Up until last month (when I got a $280 net raise) our monthly net income was about $5330. While salaries are higher in this area compared to a less populated area, we also have the expenses to go with living here. We live in a very high cost of living area - housing is not cheap anywhere around here and it takes gas and lots of time to get anywhere. Just to get out of the city I live in from our house to the freeway (6 miles) usually takes 20-25 minutes because of the traffic. In order to make the salary I do I had to find a job in the main city. The job I had in my own suburban town prior to this job only paid $40k a year. I knew we couldn't live on that so I took the job I have now, 7 years ago.
Here's the breakdown of our expenses. Since some expenses aren't monthly I just averaged them to a monthly amount:
Home Equity Loan $400
Gas (cars) $250 (DD is now paying her own gas since she got her job last month, so about $70 less now)
Car payment $250
Auto insurance $295 (DS is now paying $50 of this)
Car maintenance/tabs $65 (annual registrations, oil changes, tires)
Health/Dental insur. $477 (this is the cheapest most cost effective plan I could find for DH and kids)
Chiropactor copays $20
Medicines $364 (this is what we have been averaging, but it keeps changing and was alot higher for the past 2 months)
Cell phones $45 (this will go down to about $15 a month soon as I switch DH to pay as you go plan)
Pest control $44 (spraying for ants - this is the only way that has worked to keep them away)
Food/cleaning supplies/pets/health and beauty $950
Comcast $138 (phone, tv and internet)
DH "allowance" $60
DD allowance $30 ($0 now that she has a job)
Garbage and water $37
Hair cut $12 (averaging mine and Dd's cuts)
Hair color $5 (I color my own hair)
Home maint/repairs $30
Clothing $40 (most goes to DD's annual school clothes shopping)
Lawn maint $20 (weed and feed, gas for lawnmower, etc)
Not to mention all the other little one time expenses that come up. DD's ASB and school parking, etc. That has only been leaving me about $1750 a year to save. Between a bonus, a tax return, and other scrimping and saving I managed to save $5700 since our bankruptcy was finalized 23 months ago. $2200 was used to paint our 20+ year old house that had never been re-painted, $1500 was use for a the retaining wall and the rest hs gone to the deductible and prescriptions for DH's medical expenses that we have had so far this year. Not much I can do about the medical and it's hard to anticipate year to year how much it will be. The past few years he had been in a mode of just living with it and we didn't really have any medical expenses, but when a year ago the pain got so bad he had to start going back to doctors and also added the prescription costs, which have increased last month when his health insurance dropped generic prescription coverage.
Sure, I can put a set amount into savings each month, but if something unexpected comes up (like the dr. switching him to Lyrica and that being $202 out of pocket two weeks after I had just spent the same for a different medicine) it's just has to come back out. That is why I just usually wait to see what I have left over at the end of the month and that becomes savings. As of now, with the salary increase, and the kids starting to pay some of their expenses I will start seeing a nice increase in what I will have available to add to savings. Whether my money is sitting in savings or checking, I don't worry about spending any of it on unnecessary things. It's just not in my nature to spend money on things I don't need. I hate spending on things I do need!
Other than the car I drive (which gets almost 10 mpgs more than the other car I was driving) and our home, we own everything else we have free and clear. We haven't financed furniture or appliances. Any furniture we've bought the past 2-3 years came from money DH got from gradually selling off tools and equipment he no longer needed. We had to replace the couch - the old one was literally falling apart. The recliner came out of our Christmas gift budget for each other. We had to replace the range - the 20 year old one died. I went for 3 months without one (luckily it was summer and I could bbq, stove top cook and microwave) until I could save to pay for a new range with cash.
Compared to most people I know, I hardly spend anything on myself at all. I don't get fake nails or tanned (neither does DD), I color my own hair, cut every 2 months for $15 (with tip), if I get Starbucks it's from giftcards I got as a gift or from Mypoints. My clothing budget is pathetic. My "treat" to myself is a monthly chiropractic adjustment ($20 copay) to keep myself aligned and feeling well after a car accident 5 years ago. Entertainment is books and movies from the library. We go out to a restaurant (low to mid priced) about every 2 months. We watch tv at home and enjoy the internet. All my magazine subscriptions are free from mycoke rewards points. None of us smoke or drink alcohol. Neither DH or I have fancy smart phones (the kids pay for their own phones).
So, there you have it. I'm still trying to figure out how to support 4 people AND add to savings and little by little I am finding ways. I don't feel I have my head buried in the sand or not facing reality when it comes to our finances nor am I out there trying to get credit cards again to charge up. If there are better ways I could be doing this I'm certainly open to suggestions, but I'm not going to live on rice and beans and I'm not going to cut out cable and internet, that is our entertainment budget and I need internet in order to work from home and do my side jobs, as well as DS, who does website work. I have been trying to get the food bill down, but it's been a gradual process as DH is a very picky eater. DS is on his way to soon being able to support himself and DD is about 4 years away. Her getting her AA degree while in high school will shorten her time of financial dependance on us by 2 years. At that point I should really have expenses cut down and be able to really amp up the savings. That's my hope anyway........barring anything like me losing my job or health issues..........that's the next post!