When I divorced for the first time, my children were three and six, I had $17 to my name and my income was a whopping $30,000 annual gross. Living in a very high cost of living area, this miniscule amount did not make life easy for my children and I. Things became worse when I lost my job, and my income reduced to $1000/month from unemployment. For some, that is a lot of money, but for me, it meant dipping into my savings to make ends meet. Fortunately, I was receiving $412/month from my ex-husband for child support, which nearly paid the $525/month daycare bill, but what about my $850 rent payment and my $325 car payment, not to mention the utilities, gas, internet, cable, insurance, food… you get the point.
If you are like me, you have already done the math and realized my outgoing was significantly less than my incoming. So, how did I make ends meet? I believe in the ‘pay-yourself-first’ method of savings. No matter what your debt looks like, if your savings is empty when hard times hit, you will become destitute! While I was making $30,000 a year, I penny-pinched as best I could and made sure at least $50 each paycheck went into my savings account. My children and I had to cut back on things to make ends meet, such as groceries – our staples were hot dogs, macaroni and cheese, and ramen noodles, but always with a vegetable because no matter what, I continually strived to be health conscious for my children’s benefit. After two years of “scrimping and saving”, I had enough in savings to offset the cost of living when I lost my job. Somehow we survived those hard times, and once I found a job, I took my children on their first family vacation that didn’t include visiting out-of-state relatives.
Again, you have done the math, and you understand that my savings helped offset the cost of living, but you are scratching your head in wonderment of how I was able to take my children on vacation after such hard times. I lost my job in early April 2000, which was about the time I submitted my tax paperwork. I started my new job in late July the same year, which was about the time my tax return arrived. As a treat to my children, whom suffered the most during the hard times, I took them to the beach using the tax return. I did put half of it back into savings, because I still believed in paying myself first – after all, it was our saving grace – but the other half allowed us to splurge and enjoy a worry-free week at the beach!
Since those hard times, I have picked up a few other “savings graces” (pun intended) along the way. For instance, I have set up several savings accounts for important things or events, rather than use credit cards or financing. I have a savings account for the children’s college, Christmas, vacations, remodeling my home and buying a new car for when my car finally dies. I put as much as I can afford into each account each month, along with the $50 into my regular savings account. Now, instead of going into debt over the Holidays, or having to finance the full amount of a new car, I have the money set aside for each occasion. Also, when enough money is saved up, I get to finish my basement, so I have something positive to look forward to. The amazing part of this program is that we don’t miss the money; once the money is no longer available, we find a way to survive on what is available and we do just fine. So, if you want to live free of financial worry, remember to always pay yourself first, and you will see it pay off in the end!