29 December 2008

20 tips for living on one income

It was a strange Christmas in Australia. The expected shopping downturn didn't happen and people kept spending just like they always do. I know in the UK, in Europe and the US, Christmas sales were down, which I believe is a truer reflection of the economic situation than what we saw here in Australia. From what I read and see on the TV news and from what I see at my job, 2009 will be a tough year for many people.

There are predictions of job loses, hundred of thousands of them, as many countries go into recession. That will mean families who currently live quite well on two incomes will have to change and survive on one income. So what do you do if you need two incomes to survive and one of you loses your job?

Your main goal is to keep your home, feed your family and pay off your debt. It won't be easy, but you'll learn a lot and grow strong because of it.

When I closed my business down I didn't know if I could keep us going on what Hanno was earning but I was sure going to give it a try. We had already paid off our mortgage but we had a small amount of debt on our credit cards. I have to tell you now that my decision to close my business, although we were walking in unknown territory and had absolutely no clue about what would happen, was one of the best decisions of my life. It pushed us toward this beautiful life we now live. You may find you thrive living with less. So keep an open mind and remember it's not the end of the world. What I'm writing here is what worked for us, and still works for us now.
  • Start tracking your money so you know what you both spend. I have written about it here. Start that immediately because it will take you a month to know where you money is going.
  • Sit down with your partner and work out a plan. Both of you need to be working towards the same goal. Financial problems can break marriages apart, you'll have to talk to each other and stay strong. Promise each other that you won't use your credit cards. When you get through this, you'll be a stronger couple for it.
  • If you have children, depending on their ages, explain the situation to them. Work out ways they can help cut costs. The loss of income will effect them too, so respect them enough to talk it over with them and see what they can do to help.
  • You must continue paying off your debts but if this becomes difficult, go to your bank and talk about what you can do. There will be solutions, many other couples will be in the same predicament and your bank may already have programs up and running. Talk to your bank, don't hide, that will just get you in trouble.
  • Make up a budget, both of you, sit down and expect to take a couple of hours doing it. There are many posts on budgeting here. This will be your working plan for the coming months; both of you need to contribute to it, both of you need to know what it is. What you're hoping for with your budget is to cover all your expenses and have a bit of money left over. That's probably not going to happen so you'll have to cut your cost of living.
  • Get rid of everything that is not essential. Cable TV, phones, eating out, convenience food, downloading music and movies. If you have a second car, sell it. Be strong.
  • And keep talking to each other. Tough times bind people together. You will see each other's strengths and help each other with your weaknesses.
  • Have a look at all the accounts you have and try to get better deals on your phone, Internet, insurance etc.
  • Check every bank and credit card statement that comes in. Banks make mistakes, so make sure they haven't overcharged you.
  • You will both have distinctive roles to play. The person who goes out to work must take lunch, coffee and snacks from home. That person must not spend anything while they're at work, no matter how tempting the coffee smells that your colleague is drinking, don't buy one for yourself. That magazine only costs a few dollars, but you still can't buy it. Every cent counts.
  • The person staying at home has a very important job. It is their job to save as much money as possible at home. Check what food you have on hand. Are you a good cook? If you aren't, now is the time you'll learn. When I came back to my home I took great pride in being able to lay our table with tasty nutritious food that cost a fraction of what we used to spend. It can be done. There are many frugal recipes on my blog and millions of them online. Start looking for those you know your family will enjoy.
  • Make up a menuplan.
  • Get the flyers and work out the best place to shop. If you have an Aldi nearby that will probably be the cheapest supermarket. Don't reply on supermarkets for your fruit, vegetables and meat. Often the green grocer and butcher will have better prices. Check out all your options.

  • Try to cut down on the number of times you go out. Can you set up a car pool to get the children to school? Shop once a week, but try to go two weeks without grocery shopping. When you are out, do everything you need to do, like go to the library, post office, doctor, or whatever.
  • Learn how to read your electricity and water meters and use them to help you cut down your usage.
  • If you have the space, plant vegetables.
  • Learn how to make bread. Not only will your bread be healthier, it will be cheaper.
  • Forget brand loyalty and buying something because you always buy it. Buy generic brands, buy in bulk, buy whole foods. Find a farmer's market nearby and check out their fresh produce.

  • Organise yourself. Make up a home management journal where you keep all your new information.
  • Don't waste anything.
  • Rediscover your library. If it's been a while, you'll find a nice variety of media available like books, DVDs, comics, magazines, talking books, the internet, games and music CDs. This will provide you with some cheap entertainment.

I know my frugal friends here will have great tips to add to this, so come back later and read the comments too, they'll also help.

Tomorrow I'll write about preparing for the recession.

Where to buy Australia's cheapest groceries

Household survival tips - part 1
Household survival tips - part 2
Recipes and meal plans from Aldi products
What does cooking on a budget mean?

How to eat organic on the cheap (USA)
Saving at the Supermarket
Frugal Food - UK
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