Living Below Your Means?

[oedipussy]

Well, I'll be moving into my new apartment over the next few days, and I've come to the conclusion that I'm completely screwed.

My problem: I've always been awful at managing money but that wasn't an issue until just recently. For the past three years I've been spending about 3x more than I actually earned and now my reserve is totally gone.

I have a steady job lined up that pays $2000/month firm and a possible contract job which ranges from $0-$2000/month (figure $1000 average) extra. $1200 of that goes to rent every month (utilities not included), which leaves me with only $800-$1800 for everything else each month. I can't see how I'm going to pull this off - I typically spend that much in 1-2 weeks. I already know I'm going to have to take a fairly significant step down in lifestyle but I still want to live comfortably; I've been very frugal these past few months and it totally sucked. Is it even possible for someone to live on $36K a year?

I used to have a guy for this stuff but I can't afford to pay him anymore. Any help? Maybe a budget? This really isn't my area...

[sera300]

Okay when all said and done; take your $800/month (never count on contract jobs ever...they are extra savings money). What needs to be purchased a month? Food? Figure you will eat much spaghetti & sauce...pretty cheap. If that is all extra (the 800) figure you need to save at least half. You spend 100/wk..and yes it can be done. First goes the etoh since you will be working much and too tired.

[dancingdoc2]

Much depends upon where you live. City living is going to cost more than rural with various areas of the country being in the broad middle.

I know a person here in Sacramento (admittedly, Calif. is not cheap) and I helped set up his budget a year ago.

Rent:
$450 - Studio Apartment w/water & util.

Satellite TV:
$50

Telephone:
$20 - Low Income plan (NO cellphone!)

Auto Insurance:
$ 75/mo.

Food:
$75/$100 - Wal*Mart (Veggies, TV dinners, potatoes, salad greens, etc.)
(Banquet brand dinners @ $0.80 & $0.44/ea.)

Fuel:
$20/wk.

Misc:
$145 = $35/wk.

Savings:
10% of X.

TOTAL NET INCOME = $1000/mo.

This does not leave much for an emergency fund, yet he can live within his means.

It sounds to me like you have talked yourself into biting off more than you can chew. Ego?

I don't know how you will get out from under the new apartment, however, you must plan on finding a roommate, less expensive place, becoming a roommate. Check into an efficiency apartment, renting a room in someone's home, etc.

Learn to cook and buy food that will make meals that you can freeze or refrigerate and have for leftovers on other days. There are cookbooks for making meals in minutes and on budgets. I suggest you go to the bookstore.

Get a sheet of paper and make out a list of expenses as above. With each paycheck subtract the amount required for each bill and enter each amount next to the item on the paper. Do the math! What is left over is your discretionary income. Place a minimum of ten percent in the bank and divide the rest by four.

Lastly, cut up all credit cards! Make arrangements with the banks involved to work out an arrangement to pay them off. If you must keep a card, keep a debit card and only use it in a pinch. Why? Because you are less likely to subtract expenses and enter them into your check register.

> Any help? Maybe a budget? This really isn't my area...

I just showed you how to make a budget. Fill in your own numbers. Figure out ways to reduce your expenditures and implement them. Live way below your means so you can put as much into savings as possible and not touch the money. You have to begin training yourself to live within your means and this will take a year or two. Live on cash. If you have the cash and it is not earmarked for the savings account or other things, then you can spend the money. Forget about credit cards!

Add to your budget items, a second savings plan and then set up an account for how much money you plan to spend during the week. BANK the remainder. DO NOT spend every dime you make. You'll never have money for the unexpected expense and you will not have money for your future.

You've essentially been spending money you do not have. How smart is this? You can say "not very", yet until you live within your means, feel the pinch, you will be out in the street in no time!

[cjb1981]

Odeipussy, I live in Wilmington NC, which is the worst by far when it comes to living expenses exceeding wages in North Carolina. I'd say it's got Raleigh and Charlotte beat by a pretty good amount. I don't know where you are, but you've got some crazy ass rent. I know that there are 3 bedroom houses for rent here that are less than $1000, with decent apartments for around $600 or $700. I'd say your best bet would be to find a lower rent place. I don't have roommates, or financial help at all, and I only made $20,000 last year. It sucked horribly, but if I can make it on that, I know you can do it with $36,000...lucky you.

EDIT:
$180 food.
$120 internet/tv/phone.
$900 rent and utilities.
$120 car gas.
$180 dinner/movies/etc...

[dancingdoc2]

I believe the message here is that you have to--

A) stop fooling yourself

B) stop putting on airs

C) stop fooling the people around you

If you want a new toy, save up the money and when you have enough go buy it. You'll appreciate it more. If you want to play, then set so much aside each week for recreation.

Do not "rob Peter to pay Paul" figuring you'll pay back the money for some bill, later. Human nature says it won't usually happen--and then what? Borrow from a friend or relative? Then what?

If you eat out, STOP. If you do cook, learn to shop better and find stores like Wal*Mart super stores and grocery outlet stores that sell products for less than the typical super markets. Prepare enough food for four or six meals and freeze the remainder for another day.

[Ducy]

Docs plan is pretty solid...

But you must also think about taxes...I believe another 10 precent would be towards tax. (only a guestamation since I would lose about 20 bucks off a 200 dollar check).

And yea lots of microwave meals, salads, and mac and cheese for dinner.

[cjb1981]

Originally Posted by Ducy

Docs plan is pretty solid...

But you must also think about taxes...I believe another 10 precent would be towards tax. (only a guestamation since I would lose about 20 bucks off a 200 dollar check).

And yea lots of microwave meals, salads, and mac and cheese for dinner.

10% hmmm, try 25% to 35% in our lovely state of North Carolina, assuming you are single with no dependents, and don't claim yourself on taxes during the year

[Brandye]

I think you cannot afford NOT to pay the guy who keeps you out of the poorhouse. Or find a cute accountant to date.

[curious_woman]

Oedi I lived on 20k a year. With two people. Anything is possible.

[sera300]

I figured my numbers based on NYS prices. I have another home which I kept and use as a rental. The estimated costs to run the house (tax bills on the house included was $500). I assumed you meant 2000/month was post state & fed taxes. If not as a single person, you are prob. at 28% tax bracket. Drop the cell phone. Shop as doc said; home made spaghetti sauce and home made chili go far. You can do much with this plus freeze it. Assuming you are not in an assigned risk category of car insurance? His figures are very accurate. I ran a full household on 900/month...with two of us having spending money weekly. Save every penny you can. When My ex & I split, I was in debt. I learned to bring lunch, eat cereal, and have pasta for dinner...Had to pay an attorney for a divorce. No extravagant costs...look for cable/phone/internet through VOIP plans. Fuel oil? Budget plan through the company. Water? Had a Well & Septic tank..no municipal facilities. FYI: Her rent is $1,100/month plus about $900 for additional costs such as car, food, etc. This is a whole house with several acres.