With the Debt Movement picking up steam, I’m going to do my last budget review for the WSL readers. If you missed the first one and are looking for help on how to create a budget or where you can improve your budget, then check out Rock That Debt.
For this particular review, I hope that it helps you discover a few things: (1) being debt free and living frugally gives you some amazing freedom, (2) while it’s unbelievably challenging, you can raise a large family on a very small income, and (3) sometimes there is only so much you can cut out of a budget and finding other alternatives to increasing your disposable income is necessary.
Here’s a little about the family and their situation:
|In 2010 we decided it was time to tighten down our finances and work diligently at paying off our debt. Almost two years later, in Feb. 2012 we paid off the last of our debt totaling about $34,000 (the majority being student loans)! During that time we moved twice, had 2 more children and 2 major operations that required some time off work. We were defiantly blessed in our efforts. Since we have been married my husband has been striving to finish his degree Business degree with an emphasis in accounting.
Between moves, children and health problems it has been a long road. In Jan. 2012, with the debt about paid off, we decided to let school become the husband’s main focus. I have been a stay at home mom since we began our family. Now as a family of 6, with four kids ages 7, 6, 3, and 1, we live off approximately $2100.00/month. Although it is enough to get by, some months are less when he isn’t in school or when emergencies happen there is not much of a cushion.
Please help us stick with our goal to save money and not go further into debt.
I could go on about a number of different things, but I have to keep this brief for the audience. So, a few things:
With all of that said, I realize you’ve asked me to review your budget in hopes that I could give you insight on where you can decrease your spending. However, there simply isn’t any place in your budget that you can cut back on. I could certainly encourage you to cut out the fun money or eating out but that isn’t going to change the challenge you currently face.
Unfortunately, the most difficult part I’ve found in coaching families over the last 3 years is in situations where income is the problem. As you well-know, there are two sides to the financial equation: MONEY COMING IN versus MONEY GOING OUT. You absolutely are of a rare breed in that controlling your spending/lifestyle isn’t the issue. However, you face an equally challenging proposition in figuring out a way to increase your income over the next 12 months.
The most encouraging part is that they’ve learned to be disciplined and live on absolutely nothing. As that’s the case, if they can find a few ways to increase their income, their goals will be manageable.
There are generally 4 options for people to change their disposable income: (1) pay off debt, which they don’t have, (2) sell things with payments attached such as vehicles, (3) decrease spending, and/or (4) increase income.
As the first two don’t apply, that only leaves two solutions: INCREASING income and DECREASING spending. I’ve already mentioned that the latter is a challenge as you’ve learned to live on the bare necessities (which is in-fact all that we truly NEED). You deserve a pat on the back by the way. Despite that being the case, here are a few things I’d like for you to think through:
Having a father-in-law that’s a colonel in the Air Force, we use USAA and there is no beating them as they’re a non-profit company. The reason I believe you can save on your expenses is because we pay $83/month for FULL coverage on an ’05 Accord and ’11 Camry. With that being the case, we used to have older cars (such as you have) and carried full coverage on one while having liability on the other (our premiums last year – prior to buying the newer cars – were around $50-55/month). So, I’d encourage you to keep the full coverage on the Pilot but drop down to liability coverage on the Accord. Again, make sure you ask them for a quote on your home insurance as well.
Based on our email exchanges I discovered it’s unlikely the husband would be able to carry a job while going to school full-time (due to health reasons). With that in mind, I want to encourage the wife to consider working a few hours/week.
I fully realize that raising 4 children is difficult, challenging, and probably brings you to exhaustion at the end of each day. However, try to find 1 hour/day during naps or while they’re sleeping at night, OR work something out with your husband to watch them for a bit when he’s done with class. If you’re able to do that then that could free up some of your time to make some money. Increasing your income by $200-500/month will totally change your budget!
We live in an interesting world where a decent percentage of families struggle surviving because they don’t make a lot of money, whereas the other half have a decent income and struggle with managing their lifestyle. After looking through this budget, it’s easy to see that this family of 6 has done an amazing job of living off of $2100/month! To add to that, they’re taking tangible steps to resolve their income problems for the long-term.
The fact that they’re debt free is really the only reason living off of $2100/month is even possible, and it’s inspiring to see that they were motivated to eliminate their debt so that the husband could pursue his education (which will pay off down the road).
However, when it boils down to it increasing income is going to be the primary solution to accomplish their goals and ease their financial strain over the next 12-18 months. While I realize that there are some challenges with this for both parents (mainly finding time), if they can increase their income by $500/month they will be able to increase their emergency fund (probably to 2-3 months worth of expenses), and save up enough to move and do a few home repairs by the time the husband graduates.
Readers: what suggestions or words of encourage do you have for a family of 6 living off of $2,000/month? Also, if you know of any, please list any LEGITIMATE work-from-home options that the wife/husband may be able to pursue.
The articles are written by personal finance enthusiasts (not certified professionals) based on their personal experience. What works for them may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
In accordance with FTC guidelines, we disclose that we have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.
Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.