Many people have asked how we live on half our income. I realize for some people this is impossible, but it is possible to live on less. As you know my husband is in the military, which provides a stable income for our family. Over the years he has promoted and received raises.
In 2003 he received a promotion that included a significant pay raise. We decided to take that extra money and use it to pay off debt. Through the years he has received other smaller raises and we have purposed to continue to live off his 2003 salary. Today we still live off of his 2003 paycheck amount even though our family has grown by two.
This would not be possible if we did not set financial goals for our family. Since 2003 we have focused our goals on being debt free, paying cash for everything, and building up our savings. It took us a while to dig ourselves out of the mess we created in previous years, but by 2007 we were completely debt free!
Can you imagine how much extra money you would have if you didn’t have any debt payments every month? The average car payment is $384 a month. We have not had a car payment for about 30 months. That equals $11,000 in payments we have not made.
This year our financial goals are pretty simple:
- Purchase 15 passenger van (cash) by April 2009 (saved $12,000 so far)
- Fund IRA
- Braces for child #3 half-way funded by end of the year (saved $1200 so far)
- Cut grocery budget by $50 a month
- Live on half our income/ save or invest other half (need to cut budget slightly to make this happen)
- Save for short term goals: vacations, homeschool materials, gifts
- Start commission system for the kids
- All extra money goes into house fund
Having goals helps us to say no to impulse purchases and frivolous spending. We could not live on half our income if we longed after many items prized by the world.
During 2009 I will post how we live on less as well as keep you updated on our financial progress.
For more financial updates visit Money Saving Mom.