Living paycheck to paycheck? How to stretch your income
Many of us can't even afford to live paycheck to paycheck. A few years ago, the mantra may have been paycheck to paycheck. Yet, today many of us have slipped into financial turmoil and are frantically trying to find a way out.
When the dot.com bubble burst in 2000, both my husband and I were holding down solid six figure salaries. You could say we were living the good life. There wasn't much that was outside our means. We were actually able to save and have a good time.
We ate well. We had toys we didn't use. We took vacations to five star resorts. We had every technology gadget in the house and every service you could imagine. We got incredibly fat. Our health deteriorated and our friends were loud.
Than 2000 rolled around and the world turned. Suddenly, both of us were unemployed. We had a mortgage that unemployment wasn't going to cover. We had toys to payoff. We had a mistake on prior taxes and had a back tax bill to pay. We could no longer afford the things we were accustomed to doing.
This was the first shockwave. Usually the first shockwave is the most stressful. For us, the first shockwave was mind-blowing. Our whole life revolved around our lifestyle. Entertainment was going to a five star resort. Entertainment was going to the theatre. Entertainment was going shopping and spending $1,500 on things we didn't need. Somehow, we had completely surrounded our life with external stimulus and had lost perspective.
In addition, we had bills! Every month the mortgage company wanted to get paid. The credit cards thought they should get paid. The phone company wanted their share. Uncle Sam was requiring his deposit. The cars sat in the driveway yelling, "Feed Me! Pay my bills!" And on and on and on.
I thought that the downturn in 2000 was just a blip. It would correct itself. We would be back to work and holding down our six figure jobs again. I mean, really, we were actually very good at what we did. Looking back, it didn't turn out that way.
To get through this short upset, we stopped most of our services. We turned off the cell phones. We got rid of the Dish TV. The lawn service, cleaning service, blackberries, satellite internet and every other service was stopped. You're probably thinking, "Wow, there was $400 to $700 a month" and you would be right.
I changed grocery stores. Instead of the high-end store I had been using, I changed to the low end store with dirty floors and customers who sneezed on you. My husband really had a hard time with that one. Yet, it saved us about 45% on our grocery bill.
We learned to turn-off lights in the house. How amazing! Just turning off computers and lights saved us about $60 a month. Turning off lights took us about a year to learn.
It took us about six months to find jobs again. We found jobs in information technology. They paid significantly less than what we were making. We were break-even when we went back to work and our savings was shot. We didn't start-up any of the old services except internet.
Things didn't go so well. We had taken jobs we didn't like. My company closed down six months after I was hired on. We were still a bit shell shocked from our last unemployment experience and we hadn't been able to rebuild our savings.
We decided to sell the house. It was a good time to sell. The last leg of the housing bubble was starting. We decided to sell in August when we had made the two year period to avoid any capital gain taxes. The house sold the second day it was on the market. What a stroke of luck.
We moved over to Washington to avoid the 9% income tax in Oregon. That was a significant pay raise when companies had become stingy with pay raises.
We were working at paying down the credit cards and changed our tastes in cars. The expensive cars that had loans outstanding were sold. Instead, we picked up a $6,000 Ford escort and a $7,000 Hyundai Sonata. We paid in cash and immediately changed our car insurance coverage. Between the two cars, we saved about $1,000 a year in car insurance.
We learned a little bit about inexpensive cars. The Sonata is much easier to work on than the Escort. We try to do all the basic maintenance ourselves.
We stopped going out to the top restaurants and stopped going shopping to kill time. Both of these changes were the most trying. It took us a couple years to really accomplish those two items. We'll still go out to eat sometimes. Yet, our bill for the two of us is $20 - $25 instead of $250 to $300. We became gurus at cheap restaurants in the Portland Metro area.
We were making it through. I had found another job through the good graces of a friend. The jobs in information technology were getting more stressful. Everyone was trying to move offshore. I was finding that I had to work with teams that I was going to lay-off at the end of the cycle. Jobs were already tough for IT in 2004. Knowing you were working everyone out of a job started to suck the life right out of me.
I became emotionally hard and callous. My work week expanded to 60-80 hour work weeks. My husband was averaging 74 hour work weeks. We never saw each other and could never do anything. Our marriage started suffering. Yet, we were able to save money!
We continued our process of downsizing and paid off the credit cards. Everything we bought was bought with cash. If we had to use the credit card, we only used it if money was in the bank for the purchase. We paid the card at the end of the month.
Then inflation started to really take off. When we had to go buy something, I would ask the clerk where they shopped for groceries or clothes. I learned a lot. I learned about the super discount stores. I was able to find groceries at 30%-60% less than the cheap grocery store I was using. I found out about outlets that were not at the outlet malls. I started buying clothes at the end of the season during the 70% off sales. I learned about buying shares of cattle and getting them butchered for a total cost of $2.75 a pound. We changed our vacations to fishing and clamming.
Then it happened again. I got laid-off. My husband was laid-off. Before 2000, neither my husband nor I ever went without working unless it was our choice. From 2000 and forward, we found that our jobs were extremely unpredictable. We also found that we had stopped enjoying going to work. Well, that probably doesn't come as a surprise to anyone. Working 80 hour weeks knowing that you and everyone around you is going to be laid-off has a tendency to kill any fun you're having in you're job.
Yet, we had figured it out! We had learned to live for pennies. Our phone service is $25 a month without long distance. Yet, I buy a long distance card for those times I need to call long distance. Cable is now an antenna. We have a cheap internet service. That's our services. We buy a quarter of a cow once a year. I help out in a community garden. We're diligent about buying anything we need on sale. Our vacations consist of camping. We learned how to cook and make a meal for the two of us for $2.50 to $5.00. We take walks; we go to free expos. We've lost weight. We're actually fairly healthy, now. Most importantly, we are rarely stressed.
It took us about eight years to get to this point. The first shockwave that we experienced in 2000 was the worst. I hated it. Not being able to go shopping. Or, we would go to buy one thing and see everyone else purchasing trucks of stuff. That was really demoralizing. It took me some time to realize that every item we put in the shopping cart meant another $100 we had to earn. Switching from our nice cars to Escorts and Hyundai's was another "swallow your pride" kind of thing.
I think the thing that is really amazing through all this is that I'm happy now. The last ten years of working in Corporate America was not a happy experience. Every job became tougher and more cut-throat. We were hand-cuffed to the jobs due to our spending habits. The companies were treating workers poorly. Everyone you worked with was unhappy.
We work today, but for a totally different reason. We work to pay our bills. But, our lifestyle ensures that we don't have to stay hand-cuffed to our jobs. We spend a lot of our time figuring out how to cut back on our spending, how to save, and how to invest. We are always finding new ways to purchase, and we're willing to work for something. Most importantly, we have time for each other.