Could you do it?

[norsegirl]

Today on Oprah... Suze Orman's Recession Rescue Plan.

Step 1: Live on half
Prepare yourself for the worst by living on half of your income and banking the other half. This will help you to establish an emergency fund and help you to look at your budget and spending now, before something traumatic happens like losing your job.

I look at Jason's take-home pay and at our current expenses and I don't think there is any way we could do it. I mean yeah, if we lost the income and had to reduce we sure could, and I do have a plan if it comes to that, but it would be by giving up stuff that I'm not willing to give up now on a six month trial "just to prove we can do it" basis. Why do I say that? What would we have to give up? The house. If I add up just the mortgage, taxes, insurance and basic utilities (electricity, water and gas, not cable, internet or phones) and we're left with $65 less than half of his income.

It amuses (and somewhat scares me) that to live on half on an experimental basis we'd have to give up:
- food
- one of the utilities (electricity or water)
- the car (we wouldn't be able to pay the insurance much less the gas)

To hell with all the luxuries like eating out, new clothes and hobbies, we'd have to give up FOOD and we'd either have to live in the dark or stop drinking!?!?! Maybe in 10 years when Jason's income has gone up a little, and maybe I'm back working again, and the impact of the mortgage payment has been reduced by virtue of inflation we could do it. Heck, it might even be possible in 5. But right now, not a chance.

I'd love to know if there is anyone out there reading this that could do it. Could you live on half your income? Is it even possible for you?

Comments

[much-ado.livejournal.com]

live on half the *household* income? yes, absolutely. in act, that's *exactly* what happened when i quit my job to go back to school.we're managing, barely, and this year is going to be hard with no bonuses to cover the tuition fees on top of all the other expenses.

both of us living on half of matthew's current salary? maybe, but not with school costs. one car would have to go, completely. school would have to go. we'd have to rethink how we do groceries, but otherwise we got into the habit of living frugally and without a lot of luxuries and frivolities two years ago, now going into a third.

[eve-the-just.livejournal.com]

Touche. We are also now living on half of the *household* income because I had to give up my career for this move, so I guess in a way we've already done it too. And we were living on just a little over half (we lived on Jason's salary, which was larger than mine and put mine towards savings, paying off loans and that sort of thing) when we lived in Edmonton.

We're already down to one car (we never had a second) and I don't have tuition to cover, so I can understand how hard it must be for you. I can't entirely say we've been living frugally this last 6 months though as I've been spending like nuts to get all the things you "need" for a new house, like blinds, furniture, landscaping, lawnmower, vacuum and other tools and then there's all the baby stuff.

I wonder when the baby arrives if we'll spend more or less? More because there's another person demanding things or less because I'll be less inclined to go out shopping just 'cause and I won't be picking up any new hobbies or even have the time to pursue the ones I have.

Living on half

[firefred.livejournal.com]

I guess it would be doable, but it would be a big change. At least our house has been paid for. However, with those vet bills (insulin is 250 per month, plus diet cat food, plus all sorts of other vet bills), I would probably have to give up one car, going on vacation (we already do this this year), buying books, DVDs, going to a restaurant once in a while, the movies, etc. Again, that might be rather easy - but there's also the groceries. They are the major expense these days. I can't believe how expensive those groceries are these days. I am not even talking cigarettes and alcohol. In any case, it probably would not be very nice.

Do you also notice how expensive grocery shopping has become?

Re: Living on half

[eve-the-just.livejournal.com]

Do you also notice how expensive grocery shopping has become?

No, not really. I've only been doing it for the 5 years we've been married now. Before that I was living off my parents so I had no idea what anything cost. I just opened the fridge and tah dah, there was food. Or if I went shopping at my mum's request I'd just come home and hand them the bill.

Even now food is an expense I don't do much to track. I don't buy things on sale, and I don't pay attention to coupons. I buy what I want, when I want and try not to waste it. And I certainly don't do things like buying cheaper cuts of meat or non-name-brand products. I figure if I eat it all and I enjoyed it that it was money well spent. I do feel a little guilty if I throw out something that has gone bad. My mother is a bit of a tight-wad when it comes to the grocery store and keeps complaining about the things my Dad buys that she thinks are luxuries or that he overpays for. I guess I just take more after him. Food isn't just fuel, it's a source of pleasure. If I had to cut back I'm sure we could save a fair bit at the grocery store.

Re: Living on half

[firefred.livejournal.com]

Envious. I wish I could be like you and not pay attention to what I spend on groceries. Can't though. My priority has always been entertainment - be it the new stereo, new guitar, Cd, concert tickets, and so on and so forth. Fortunately all of this is still cheap (excluding the concert tickets). There's one thing I agree with you concerning groceries: I do try not to let anything go to waste. Also, once in a while, I do the "I want it, I don't care" purchase. Otherwise I think life would not be worth living.

Aside: I don't think putting half of your income into a savings account works these days. The percentage gained is just not good enough. Or did I miss something again? I do not watch Oprah.

Re: Living on half

[eve-the-just.livejournal.com]

Yeah, I really couldn't care less about having all the newest gizmos. For the first 6 months we were married we didn't even own a TV. Concert tickets are a rare and wonderful thing, and I do splurge on those occasionally, but with the baby that's probably going to end. We still don't have a stereo. We both have ipods, and my parents bought a little thing you can plug it into that acts like a cheap stereo and that does us.

As for the savings account I still think that is the best place to stash your savings. I don't give a shit what the "experts" say. They'd have had us all invest everything in stocks, and we didn't do that. So here we are now and I still have money and everyone who followed their advice has less than they started out with. Savings accounts don't get you much, but they also guarantee you don't lose anything. To me that guarantee is more important than the 5-10% that I *might* be missing out on. And really, the emphasis there is on *might* because everything anyone "made" in the last 10 years or so is completely wiped out at this point. Right now you're lucky if you still have what you put in with no gains at all. Sure if you stay in for a few more years it might come back, but I'm a bird in the hand kind of girl. To me putting your money in stocks is just like putting it down on a roulette table. I can't see how that is a good idea.

And yes, Suze did recommend putting the money in savings. Not your retirement fund, but a 6-8 month "emergency" fund. You need to have about 6-8 months of cash that you can access easily should the worst come to pass and you have to live off it. So it can't be tied up in stocks, bonds or GICs or anything where you'd have to wait to get it out. If you haven't got enough in liquid savings to live off it for 6-8 months, then that is where your excess money should be going right now. We don't quite, so that is where our excess would go if there was any.

Re: Living on half

[firefred.livejournal.com]

I will reply later. I just wrote a long response and deleted it (I am an idiot)

Re: Living on half

[eve-the-just.livejournal.com]

lol, I hate it when that happens ;)

Second attempt

[firefred.livejournal.com]

Having learned my lesson afyer accidentally deleting my previous reply, this will come from a saved textfile :)

- ipods: you are certainly more up to date than I am. Have not bothered to buy an ipod, as I notice that I do not use my portable CD- and MP3-players a lot anymore. There's too much entertainment in this house - basically I blame computer games for the lack of music these days. Of course I also blame the cats - they hate electric guitars. They also hate my keybords and my old drum computer, so I don't even bother anymore to hook all of that stuff up again. Although I still wish I had a piano ... the lack of music is rather disgusting, I used to play in a band, and I collect old vinyl and CDs. Oh well!

- saving: I have nothing against the concept of saving money, and yes, I agree that saving in the form of a certificate of deposit is still the most secure investment. What I do not enjoy are the low
interest rates offered these days. Like you, I am very wary of risky investments (stocks and bonds), and I have not made a lot of profit with the few mutual funds I have. I would not invest in mutual
funds again! Your comparison to gambling is totally correct, made me grin. It needs to be said that my view on these things is rather European. I dislike credit cards, too. In my opinion, don't spend
money you do not have. Living on borrowed money is basically the reason so many houses are being foreclosed these days.

- financial advice from Oprah: yes, in an ideal world, we would put half of what we earn away for an emergency, but this is not how it works these days. I put away whatever I don't need, and then just re-invest it. I also make a conscious effort to spend less on entertainment. I guess living with these animals is a luxury. We now see the vet bills as 'household expense', but it's brutal. And
again, so are groceries. I noticed this in particular because of our last two trips abroad, the UK and Germany. There, groceries were dirt cheap. I was positively surprised. Aside: they also tasted a lot
better, not as much chemical junk in them as here.

Sorry, this is turning into a rant :( - just don't let me get started on the weather forecast. They predict thunderstorms with a 10% chance this weekend. My foot!

Re: Second attempt

[eve-the-just.livejournal.com]

I bought the ipod so I could go jogging in Hawaii. It was awesome. I also used it to block out all the sounds and do yoga in the airport when we were delayed. Now we have a car adapter and I drag the little speaker thing around the house when I clean. I <3 my ipod. I can't imagine life without it. However, I also couldn't bring myself to buy an "updated" one every time they release a new model (which is the basis of Apple's business model). I'll use this one until it doesn't work any more.

I love credit cards for the convenience. I can't imagine carrying a balance though. I never carry cash, that's crap I can lose and not get back. I put everything on credit cards (or did when I lived in Canada, here I'm reduced to debit only due to the lack of SSN) but they were paid off in full every month. And yes, I think it is a European thing to try to live within your means, my mother is British and I learned it from her.

I don't think animals are necessarily a luxury. I think choosing to get them in the first place is a luxury choice that you should only make if you are informed about the true cost and willing to meet the financial demands of ownership (which you obviously have), but once you own them they are a part of the family and a responsibility. I think people who abandon pets when they hit financial difficulties are scum.

I remember food being very expensive in England last time I went over. That was about 10 years ago now and we were coming from Canada back when our dollar was shit. It might be different now. Groceries were also VERY expensive in Malta when we honeymooned there 5 years ago. Groceries are cheaper in Ontario than they are here though and that was what I was comparing to. I can't really figure why they are expensive here, I knew why everything cost so much in Alberta because it was like being on an island. We didn't grow anything other than oil and cows, so everything else had to be brought in. But I can't figure why things are expensive here, when we should be able to grow a lot of our own stuff. And also our population density is greater, which should allow for economy of scale. *shrugs* I've always had to buy groceries in expensive environments so I don't think too much about it any more. And it's not like I have a choice. You gotta have food.

With respect to the weather, yeah, 10% is basically no chance at all. I don't think our chances are even that good.

Pets/groceries

[firefred.livejournal.com]

I think people who abandon pets when they hit financial difficulties are scum.

I could not agree with you more.

Groceries: prices in the Uk have gotten so much better, there's also a better variety, lots of organic food that won't make you bankrupt. Same in Germany - although they've had a bunch of food scandals lately. What I dislike here: all these fillers. For instance, too much soy. High fructose corn syrup. Palm oil. Saying it's low-fat, but it's full of sugar. Claiming bread is whole grain, when it really isn't. I particularly dislike the latest prices for dairy and related products - and there's still SOY in those once you take a closer look. I order my dairy stuff from Wisconsin - they don't do that (see, even I sometimes splurge). Vegetables are a disaster, too. Pesticides. I have reasons for growing my own. A lot of what is sold here just tastes artificial. Where do you shop for groceries?

[bridgeoutahead.livejournal.com]

no, I couldn't do it if I had to live on half of my income. I'd be an emotional wreck, to say nothing of the sacrifices I'd face.

I know almost every single penny that goes in and out of this house; I know how it's all spent, where it goes, and why. I just couldn't do it. The cuts would be too deep.

[eve-the-just.livejournal.com]

I'm sure you could do it if you had to. And of course it would be unpleasant. No one likes to give stuff up. But you are strong and you could survive if you had to.

My question isn't about whether you'd enjoy the experience but whether you could actually do it or not, even on a temporary basis without some DRAMATIC shifts in lifestyle. Like I said in my post, we actually CANNOT do it and still keep the house. We'd have to starve and live in the dark to keep this place on half the income. And I'm not willing to move just to participate in a 6-month experiment, so we can't do it. I'm interested in knowing for how many other people the basics (mortgage/rent, utilities and groceries without any perks or frills) are greater than half of what they bring home.

So ignoring the unpleasantness of giving up things you enjoy and crapping up your lifestyle, could you do it? Are your bare-bones expenses more or less than half of what you make?

[bridgeoutahead.livejournal.com]

no, I'm saying I really couldn't do it. I couldn't afford to pay the bills, period, and keep the house and the car. And without the car, I couldn't get to work.

And my original reply was intended as such -- but I left out a lot of the detail I guess. :) it's a long story :)

[eve-the-just.livejournal.com]

Ah, so you're in the same boat as us then. Single income living is hard. It does really highlight the need to be able to live on a single income even if you are paired up though, so you're learning good money skills.

[duir-sidhe.livejournal.com]

We could do it, when Em is working.

Without a double income our baseline eats up a little more then 3/4 of my take home. When Em is working we make it a rule to live on about %75 of out total take home and I am sure we could trim that back to %50 without a problem. We find that tucking away %25 works just fine for back up accumulation, %50 seems a bit panicky... that said we both have ultra secure jobs.

[eve-the-just.livejournal.com]

Yeah, that's our situation too. We can do it when we're both working, but when I stop we're using it all. We also both had pretty ultra secure jobs. I miss having a career - sigh.