Living on Half Your Income
by Gary Foreman - gary@stretcher.com

Description: Budgeting tips for living on half your income.

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They've lived on half their income for years. So when his job was eliminated this couple was able to continue the same lifestyle they had before. Recently, we interviewed Peggy from their Lincoln, Nebraska home to learn how they did it.

She's a programmer/analyst at the university. Their income changed dramatically when he lost his job. "He has his Ph.D. in poultry animal science. That has been shrinking in the United States. He discovered that at 50, he really couldn't get a job in agriculture at all. According to our lifestyle we have been able to absorb the loss of an income. Basically we made about the same amount of money, so when he lost his job our income was cut in half."

What's the most important part of successful family finances? Peggy responded, "The most important thing is to know where your money goes. If you know where it goes then you can make the decision whether that's how you want to spend your money. Or if that's not what you're happy with, you have the basis to make changes."

How does she know if they're spending too much on a certain category? Who does she compare with? "You have to measure it with yourself. I don't think you should measure against anybody. Like I don't compare what our groceries are to anybody's. We try to spend $25 to $30 a week on groceries. That's for two of us and for any entertaining that we do. That includes dog food and a few other household items! So, I keep that as a gauge for myself and if I'm spending more than that I need to know what I'm doing."

Their pattern for savings began early. "By living a very simple life we have been able to reach a goal that we feel that we can take care of ourselves during our retirement years. I never have believed that the government would be there when we needed them, either in health care or in retirement. So I early on figured out that we needed something that we didn't pay all of our money in taxes. By making savings every month and on a yearly or two basis doing some investing in real estate. So we took money that most people probably would have blown on cars or eating out or whatever and we took that money and invested it from our second salary."

Peggy has done some mentoring with younger women at the university. What suggestions does she have for beginners? "The first thing people have to do is to find out where their money is going. They need to keep a running total or go back a few months and look at three months to a year. That's what I've done at different times. You can really see where your money's going whether you're getting it out in cash or it's eating out or whatever you're spending it on.

"This last fall I was helping my niece. They wanted to look at a different house. It was something they wanted, but it wasn't something they needed. She couldn't figure out where all their money was going. They make, probably three times as much money as we do. They have four children at home. We sat down with her checkbook for a month. She spent eleven hundred dollars that month on groceries. Which is hard to believe. So there's really surprises where you're spending your money."

Planning ahead and thinking things through are part of their formula. "I find that food is a really strange thing in people's lives. Some people when they want food, they want it now, but they don't plan ahead. I go to the store generally once a week. I try to buy simple things on sale. Things that I feel are good value. What I try to do is have a meat serving of a dollar or less for each of us. It's OK if I spend 25 cents, but no more than a dollar. Then I plan what I want to go with that. I use a crock pot a lot and I have an appliance timer. I have my timer set up so that I put frozen meat in, everything that goes in there, whether it's rice or potatoes, vegetables and so forth. It sets until about 2:30 and it cooks, it's hot and when you come in it's ready to eat. So you don't have these temptations to go buy something at the fast food place. It's just as easy to take it out of the crock pot as to go through some drive through. That's one of the things that I've found really helps. I've done that for years."

How would she define frugality to others? "It means low consumption on those things that you really don't care about. Spend your resources on what you do care about." Can it be taught to someone who was raised differently? "Oh yes, I think so. There are many men and women who have not lived that lifestyle but are interested in it."

Has living a frugal lifestyle impacted you for better or worse? "It's very much a plus. When I see people that live the other lifestyle you see children that continually want more because they can never be satisfied. They don't have as much imagination because they're given everything rather than learning to make up stories. The children are more active because they play more active games rather than the high priced computer games that they sit around. I think that it's a good impact in that way.

"Another way is that my sister makes the remark that my husband and I talk. How many times do you hear in relationships `he won't talk to me'? That's one of the things that we do. We discuss things. We'll work things out on paper and make our lists of pros and cons. We really discuss things. I think that makes a good relationship with your spouse."

Sounds like a lifestyle that many of us could learn from. Thanks to Peggy and her husband for showing us what can be done and passing along advice on how to do it.

Gary is the Editor of The Dollar Stretcher newsletter. If you'd like a sample copy, send your name and address, along with $2 to: The Dollar Stretcher, Dept OL, PO Box 23785, Ft. Lauderdale, FL 33307.

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