Many people have asked how we live on half of our income. We are able to do this for two different reasons. First my husband has worked for the same company (US Navy) for 22 years. Whenever you work for a company that long you will receive raises and promotions, so plain and simple, he makes a decent amount of money. Second, we don’t have very many expenses. That is truly the key to living on less. You can make a million dollars a year, but if you spend two million you are poor. You can make fifty thousand dollars a year and if you live on forty thousand eventually you will be rich. An excellent book that talks about this principle in depth is The Millionaire Next Door
Ways we keep our expenses to a minimum in order to save more:
- No cable
- Less convenience foods
- More foods made from scratch
- Shopping at thrift stores and yard sales for clothes and items for our home
- Making do with what we have, instead of wanting the latest toy, gadget, clothes, etc…
- Eating at home
- Using the library for books and movies
- Using cash instead of a credit card
- Riding a bike to work instead of driving
- Menu planning, and utilizing leftover food
- Finding fun free activities in our local area for entertainment
- Shopping around for the best deals, when we need to make a purchase
This year our financial goals are pretty simple:
- Purchase 15 passenger van (cash) by April 2009 We bought the van WITH CASH on in March!
- Fund IRA – Researching some new funds to invest in, currently the money is sitting in our savings account. Last month I looked into the Thrift Savings Plan. This looks like it might be the best option for long term savings goals at this point.
- Braces for child #3 half-way funded by end of the year (saved $1400 so far)
- Cut grocery budget by $50 a month - Decided to scrap this goal, we already have a fairly low grocery budget and since we don’t need to save in this area I am using the extra $50 to purchase more organic foods.
- Live on half our income/ save or invest other half With my husband’s promotion last month, we are finally be in the position to save half our income. I am thrilled to have reached this point, but now I need to find ways to save wisely.
- Save for short term goals: We have our homeschool budget funded and will be spending most of it this week at the convention. Thanks to Swagbucks I have not spent any money out of pocket on gifts this year! We are taking a few small trips this summer so I need to budget our vacation funds so we can have a good time without going over budget!
- Start commission system for the kids Seriously, I need to just take this goal off the list, because I can’t seem to do it!
- All extra money goes into house fund Our plans have changed slightly over the past two months. While we thought my husband would retire from the military in two years, he has now decided to stay in for a while longer. We are now trying to determine what percentage of our income should go towards a house fund, since a purchase is several years away.
For more financial updates visit Money Saving Mom.
{ 16 comments… read them below or add one }
Sounds like you have a great plan that works well for your family.
Ours would work like that except you have to add in tons of medical bills (yes, we have insurance but it only covers so much).
Hopefully when we get those taken care of we’ll be on track too.
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Have you posted about whether you give your kids an allowance? We are just starting one with our oldest, but he is also going to be responsible for buying certain things for himself out of it. Budgeting for them, is the idea. I have wondered what your practice with your kids is regarding that.
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Oh, and I just read “Millionaire Next Door” this year. I wish I’d read it years ago.
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The biggest things that works for us is on birthdays or christmas is when you get those things mom or dad think are extravagent. We also like to buy our kids their sports gear and give it to them at this time. Families are usually great wanting to spend or grouping together to do so. The other is cooking mainly from scratch and having a freezer/pantry system. We have been affected greatly by the economy with loosing renters which is where we get most of our regular money from. Now after a 9 day stay in the hospital with a $500/day deductible I just accrued another bill also if we are out of network it will be 20% so much for good health which has saved us $500/mth for our insurance every month for the last 7 years which we pay ourselves. God will give us everything we need we just need to think and use it diligently.
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I really enjoyed meeting you and talking with you at HEAV. So great to put a personality with your written words.
Thanks so much for sharing your financial goals in this post. I’m always encouraged by how others spend and save wisely. I think we do everything on your list to keep our expenses at a minimum except riding a bike to work (although the picture in my mind of Van riding a bike to work wearing a suit and carrying his laptop case does amuse me!). Thankfully we are just a few miles from his office so the travel expenses are minimum. I think the only way we could live on half of his salary is to buy a cheaper house. Mmmm, something to think about.
Wendy
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I really enjoy reading about how others like you are living frugally and saving money. It inspires me to keep going in that direction! Although it means some short-term sacrifice, I believe it will be so worth it in the long run.
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Someone gave us that book when my husband opened up his office. It was so helpful for us at that time. It is a really good book. We both enjoyed it a lot.
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April, I didn’t see anywhere where Toni said she would become a millionaire or that anyone else would either. Just that by spending less than you earn, you can become rich. Everyone has differnet constraints on their income so it’s hard to compare ourselves to each other. I don’t have 7 children like Toni does. On the other hand, I live in a higher cost area. No two situations are equal! The key is to know your expenses, spend less than you earn, and save for emergencies. There will always be some situations, though, that no one can anticipate and high medical expenses with little to no insurance is one of them. We live similarly as Toni does. We only save about 30% of our income, though. On the other hand, our mortgage will be paid off in about 8 years. We try to live frugally and take advantage of free and cheap entertainment, limit how much we eat out, buget for vacations and other big expenses, and basically just live on less than we earn. I loved The Millionaire Next Door, too. I hope to be one someday!
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Great ideas. Some of these we do. I need to look more carefully at our budget. Thanks for your openness.
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Thanks for more great ideas.
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It is not possible for everyone to live on half of income. We also live on military income whihc we all know is not the best…but we do not live on base so we have a house to pay for and all that that goes with it.plus medical bills because again we do not live on base…The best thing for everyone to do is just keep cost down as much as possible but still be able to live…we are able to live (the 8 of us) on my husbands E7 salary and put alittle into savings every pay check but we still do live pay check to pay check…
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TheHappyHousewife Reply:
June 16th, 2009 at 3:53 pm
I am curious about your medical bills. We have not used military providers for over 5 years and our medical bills are extremely small. Are you enrolled in Tricare/ Healthnet/ or what ever they call it these days?
Toni
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The Millionaire Next Door is a great book. Our family has been lowering expenses in a lot of the same ways that you mentioned here, and it’s definitely working for us!
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I will have to check out that book! We read [and loved!] Dave Ramsey’s Total Money Makeover, and are doing our best at it! We’ve pretty much cut out everything we can, but we’re again in the red every month [because my husband took a 45% pay cut in February!] We’re again at the “desperate” level, and doing everything we can to further cut expenses [with 4 kids, homeschool, and one income] I read your blog daily almost, and have found it along with Preschoolers and Peace a GREAT source of encouragement! I do have a question for you: How are you benefiting from Swagbucks so effectively? I use it solely to search and browse, but very rarely win a SB… what is your trick? [Or since you have older children, do they help you in browsing?] I had one more question for you, Do you use any sort of planner like Motivated Moms, or MOTH? I’m looking for someone who’s tried and tested them to recommend one for a hectic [large] household! Thanks so much!!
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We have tricare prime remote….there are not many doctors or dentists that are a network provider with tricare so what they do not pay we pay….unless I wantt o drive over a hour to get to a doc or dentist that does….i already have to do that for vision which as you know glasses are not covered and we have 4 in the house with them….but I do make up for it in other ways….I sao miss being near a base….you are so lucky…
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TheHappyHousewife Reply:
June 16th, 2009 at 8:52 pm
Have you considered getting a supplement? I am not sure what the prices are now, but years ago when we had Tricare Prime Remote I was able to get a supplement for minimal cost and it saved us a ton. We had one child who spent the first 2 years of his life in and out of the hospital and doctor’s office. We still had some costs, but nothing compared to what it would have been without the supplement.
Toni
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no have not thought of that….it has only been a few years that we have had prime remote (we moved to vermont 4 years ago) in florida we lived right beside patrick airforce base and had the best care and no cost for anything. I might look into that to help with medical cost….thank you..
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We already do all of that and much more. Almost all of the kids clothes are hand me arounds – we don’t even buy much secong hand, we still buy shoes, socks, and underware since they are rarely passed around, except the sunday shoes. We haven’t had any hint of a vacation in 10 years. We live in the country so avoid outings other than church on Wednesday and Sundays to save gas, we couple that with big shopping trips and library. Most of the food is prepared at home – but we cannot avoid Sunday lunch eating out – our clunker car is small and the trunk won’t open, so there is no room to bring food along, but we found a tiny Chinese place that we can feed us all for $30, just a tiny bit more than fast food – and we get brocoli, beans, chicken, and fruit – buffet style. We avoid this expense when we can – but have not found a working solution to avoid it all the time and not have us hungry again in an hour. We’ve got to figure out some way to get a bigger car, as there is no room for our new addition in the old one. Extra’s are usually craft supplies that are used to couple with recycled items to make gifts – like flowers from egg cartons. Dh has been out of work (and looking hard) since March 2008 – he had a job during April, but was denied security clearence. It was just enough to pay the midwife, schoolbooks, and cover some expenses that we had been putting off but needed handled, as well as our AC and heater blowing yet another fuse. We make our own laundry soap and most cleaning supplies.
We are a family of 5, plus since my mom died last month, we also have one of my nieces full time that they were raising. So far we have avoided getting on very many of the government programs, like food stamps, but we do have unemployment and WIC. We try to keep Medicaid to pay for my daughter’s asthma meds, but we seldome use the rest of the benefits.
My biggest problem in controlling our budget is my lack of creative talent – I’m all thumbs when it comes to crafts, sewing, mending, ironing. But I’m a good teacher – and fortunately, my daughters seem to be much more talented and the oldest is able to read and follow directions easily.
After 19 years of struggling to make ends meet at poverty level income (dh does computers – programming – he’s a good programmer, but not a good scholar – does poorly on tests, so often gets passed over because there are so many to choose from) … anyway, I don’t see things getting any better around here. We put $70 into a garden this spring, I think we’ve saved maybe $8 on groceries so far – hoping the garden will at least pay for itself eventually, there are tons of tomatoes, very green ones.
We always have our basic needs met – just never anything extra. I can’t complain the kids have clothes and toys and a huge yard – we live on my parents “farm”. And there is plenty of love to go around.
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