When you're pregnant, decide exactly when you'll stop working so you have a goal in site. If you have any credit card debt, try to pay it off while you still have those two pays coming in. If you only your mortgage to pay off when you stop work, you'll be in the best situation you can be in. If you stop work while you still have credit car debt, or other high interest debt, it might be wise to consolidate those high interest debts into your home loan.
When you stop work use the short amount of time you have before baby arrives to reassess how you shop and make some adjustments to help you save money. Sit down with your partner and make up another new budget. This will be the budget you'll live with for a few years, so think about it carefully. Both of you need to do it together. If you can save money on your grocery bill, you'll save a considerable amount as it will be ongoing saving. Read as much as you can about stockpiling and if you have the cash, invest about $200 - $300 in starting a stockpile. Buy those things that are on sale that you use frequently like toilet rolls, toothpaste, soap, bread, butter, canned goods, meat, flour, rice, pasta etc. And even if you don't add to the stockpile for a month, you'll save yourself going to the supermarket so much with your newborn.
If you have a second car, sell it.
Review your expenses - now is the time to be ruthless with your expenses and cut off all those extra monthly bills:
- Stop dining out and buying takeaway.
- Put expensive family holidays on hold for a few years.
- Stop buying so many gifts. Make up a list of those people you feel you must continue to give to and keep it at that. Start making homemade gifts. You might feel a bit strange at first but most people love receiving something you've made yourself.
- Stop buying magazines. Join the local library for a never-ending supply of books, magazines and DVDs.
- Do you really need a mobile phone? If not, get rid of it.
- Pay TV is a luxury you can say goodbye to until you're in a better financial position.
When baby is born, and if you're Australian, claim all the government benefits you are entitled to. I think the baby bonus is about $4000 now, make sure you claim it, and also look into parenting payments that will be ongoing until your child goes to school. Those readers in countries outside Australia, make sure you know what your government gives you when your baby is born, and after it in the form of family payments.
Remember that you'll only have real success with your new simplified life if you change your attitude to spending. You can't expect to live the way you used to, there are many things you'll give up. But I can assure you that after the initial shock of not having the things that used to take up your spare time and make things easier for you, you'll settle in to a new kind of living that doesn't rely on those things. And once you're used to your new life, I know you'll love it.
If you go back into the archives here, I've written about budgeting, emergency funds and change jars. They'll all help you save for your new lives. Don't be afraid of budgeting - it is the one thing that will organise your thinking about money as well as the money itself. And despite what a lot of people think, a budget frees up your money instead of taking it away. H and I have a tight budget, we do this voluntarily, and even though we live on the very small amount of $355 a week, we still save $150 a month, we still have holidays and we still have private health insurance. It can be done.
We made the transition, even down to one car. I gave up my subscriptions to magazines and stopped rewarding myself for going to the grocery each week by buying two to three more magazines.
ReplyDeleteWish I had known then what I know now! You pay more taxes and pay for more services, have a few more things when you work. You drink more lattes and buy things you wouldn't buy if you didn't have a job. But, you don't have time. No time to plan meals or shop correctly or at times even cook your own meals. Nope, it isn't Paradise, then again, it isn't the treadmill either! Yep, sliding into Chili's or through McDonald's isn't the way to live richly. It is how to live in the Fast Lane when your speeding by that soccer game or skating rink.
It sure sounds glorious, doesn't it? My backyard neighbor once commented to me, "I don't cook" And I felt both envy and repulsion. Cause at one time I didn't cook, didn't clean, it was done for me, including who raised my kids.
To me, working is the lazy way out. Staying home YOU raise your kids. YOU are the one who cooks and cleans and YOU are the one who makes the house a Home.
I'm the product of an executive mom and dad. They could send me to the BEST private college but they couldn't guide me when they should have. Kids...they are human and need care. I still get a LOT of pressure from my mom to work outside the home. Rude comments, ugly things. The way I see it, she wasn't there to tell me not to smoke pot behind the garage or in the trees in my backyard when I was home alone from the age of 8. Or to have manicures at home and teach me how to approach life solidly and to have self confidence. She doesn't need to be telling me today what to do.
It might be a shock to some, but it ain't all about money!
I have lived in the $100K income group. So I know. Fortunately I refused to sign papers for the McMansion when we could have. So we bought a $1000 mortgaged home. Life is a blur at $100K. It is lived quite well at $40K. We don't eat every meal out anymore and no one cleans my house. But I found the joy outside of money. And found my life.
The last few blogs have been so enjoyable. The stretchy tutti fruiti time and the link to duck herder blog was fantastic food for thought. It reminded me of the book "In Praise of Slow" by Carl Honore, which really has questioned how fast we are living. Living simply or downshifting is linked to our concepts of time and once we deconstruct our 'western' view of time then it is so much easier to say, "I am going to live a simple life" and live in the moment! Anyone I am rambling on but it is a good forum to do it...I must say that I enjoy equally the comments you receive Rhonda. There are always such open and honest comments with such a range of different perspectives. It seem like there is such a great community reading your blogs, all seem to have a need for greater understanding. I have liked Wildside's comments in last couple of days...it was good to get a perspective from some-one who also has no children...I related to her comments. Lenny also has written some amazing comments and this previous comment was also amazing.Bella
ReplyDeleteHigh five Rhonda Jean! What a great post. The best thing we ever did for taking the stress off of Christmas was to no longer exchange gifts for the adults. As a family we agreed that we all have eveyrthing that we need, and a lot of what we want, and that it was unnecessary and stressful to buy gifts for each other. So now we only buy for the children. What a burden lifted! We have done this for the last three years and it has made the holidays so much more enjoyable!
ReplyDeleteIf you're doing this and not lucky enough to have an independent (passive)income coming in apart from what you earn, I'd strongly recommend socking away the equivalent of three months of the main breadwinner's salary in an emergency fund too - in these days of retrenchment and casual/part-time/contract work, sudden job losses can happen and are very stressful if you're on a single income. I received this advice before moving from permanent work to contracting, and I was very glad I followed it. I experienced company "restructures" and takeovers in no less than four different companies. If you draw the short straw they can be a big shock. An emergency fund gives you some breathing space to consider your options if the worst happens. Building up the fund develops good saving habits too. (If you've practiced saving 10% of your income for investment for a while you will probably already have such a fund, and its bonus passive income.)
ReplyDeleteAlso, I'd be a bit wary of consolidating credit card debt into a mortgage - this can be a big expensive trap. If you do this, you MUST make extra payments to pay that part off quickly, over and above your usual payments, or you will end up paying heaps more interest by capitalising it and paying it off over the life of the loan.
I think some of us don't realise how much people we'd otherwise regard as quite sensible have racked up on credit cards - I was surprised to learn a little while ago that a friend owed $28,000 on hers! Consolidating this sort of amount without a strategy to pay it off could cost a fortune over 20 years.
I really appreciate everyone sharing their opinions and experiences here. Each and every one of us benefits from the words you contribute to this discussion.
ReplyDeleteOne good way to successfully live on one income is to never live on two. If both are working to pay off a mortgage before babies start arriving try to just live off one wage and put the other towards the mortgage. By choice and by necessity we have always lived on one wage, sometimes only half a wage. It was very important to us that we were the ones who loved and nurtured our children so we couldn't bear to use childcare. We were lucky that if we needed a hand my parents were close at hand. That too was a decision we made. We wanted our children to know their grandparents, aunts, uncles and cousins so we moved interstate to be close to them. We also moved to a place with affordable housing and even though interest rates got up to around 18% we managed on our one income. We made our own laundry detergent, we made our own pet food, of course we cooked from scratch for ourselves and grew a vegie garden, we used cloth nappies and used face washers for cleaning baby bottoms. I knitted and sewed the majority of everyone's clothes plus made the curtains, rugs, quilts and cushion covers that made our house cosy. My husband built furniture from recycled wood and serviced our car. We took care of what we had and bought the best we could afford when we needed new tools. We had chooks and fruit trees. we had lots of home grown fun with birthday parties, Christmas and Easter being big family celebrations. We had lots of picnics in our own garden and further afield. We walked a lot and really got to know our neighbourhood and town.
ReplyDeleteThis is truly a way of life because 20 years on and this is how we still live although my teenage sons won't wear homemade clothes and no one needs nappies anymore. This is not the way to become financially rich, though we have no debts.But it is for us the best way to be spiritually and psychologically rich. We have lived our lives our way and I think we are incredibly blessed because of it.
Some thoughts on gardening: if you're planning on saving money by growing your own, get this all sorted out before you go onto one income and especially before you have a baby. It's hard putting time into the garden when you've got a baby - you're tired and they might need to be held a lot. Both my kids have spent the first seven months either screaming or in the baby bjorn and this limits what I can do.
ReplyDeleteIt can also easily cost a lot of money to set up a garden especially if you've got bad soil or no garden beds. I suggest using no dig methods, starting compost heaps many months before you go to one income, and finding a free source of manure.
Finally, think about what will save money. I know it's possible to be self sufficient on an average backyard but it takes a lot of planning and it's hard to do - and I say this as someone who's gardened pretty much my whole life. Everything's yummier from the garden but if it's really cheap in the stores and you are gardening to save money, skip it. We find that growing greens - lettuce, spinach, silverbeet, rocket, etc - saves hundreds of dollars each year. You can use them for almost any meal and they cost so much from the store, with lots of wasteage. Tomatoes are good too because although they're pretty cheap tinned you can do lots with them in easy recipes and so you're not likely to waste them in glut times or turn to take out when you're tired and down. (Tomatoes + basil on pasta is a good quick recipe; I can face this even after I've been up most of the night with a crying child and have almost no energy at all.)
In short, I think gardening can save $$ but from my experience like everythng, it has to be planned out or it might be a waste of resources (time, money, thought) you can ill afford.
i love reading all the posts.. they are just great and it is so good to get some possitive feedback from others who think like this..
ReplyDeleteAnother excellent post Rhonda. It is lovely to see a lot of like minded people are reading and sharing on your blog.
ReplyDeleteHi Rhonda now we are in July 2015 are you and Hanno still living on $355.00 a week?
ReplyDeleteHi Jennifer, now we're spending just on $400 a week. How much do you spend?
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