Live Well on Less
Posted by Gail | Filed under Money Management
I get a lot of emails every week, and while most of them are about debt and how to get out of it, I’ve noticed a growing number of people are trying to figure out how to live on less. Whether they’re retiring on a fraction of the income they had, moving to a single income because they’ve had a baby, forced to simplify because of a job loss, or living in reduced circumstances because of divorce, widowhood or disability, heaps of people are trying to figure out how to make it to the end of the month on a whole lot less money.
There are a few things you need to do to prepare for living on less. The first is to find a way to significantly reduce your housing costs. If you’re headed to retirement, a good goal would be to manage your mortgage down, so that your total housing costs represent 35% or less of your lower income. If your income is falling through no choice of your own, downsizing or moving to a cheaper area or cheaper digs may be your best bet.
Having an emergency fund is extremely important when you have to live on less. Even a small emergency can be devastating to a budget that’s so tight it squeaks. Make sure you have stash of cash set aside just in case the worst happens so you aren’t forced to use credit and incur interest costs when you can least afford it.
Just as important is ensuring that you know the difference between the things you need (must have to keep body and soul together) and want (would like to have.) I’m amazed at the people who can’t tell the difference: the people who, despite not having the money in the bank, see no problem buying booze, take-out and a new set of threads, putting it all on credit. Wake up! If you’re living on limited resources, putting your must haves at risk for dumb wanna haves is not only short-sighted, it can be very painful because it leads to higher costs and lower cash flow.
If you’re living on reduced income, you can’t do it and keep up with debt repayments. Paying interest is hard when you have a good income. On a limited income, it’s the difference between keeping the lights on or not. It doesn’t matter what you can’t have… what you must do without… don’t go into debt. And if you have debt, you’ve got to find some way of ridding yourself of the burden. So, sure, working three jobs may suck for a while, but since you spent the money, it’s now time to earn it.
While people who don’t make a lot of money love to say that they don’t have enough money to make a budget; that’s just an excuse. At no time is a budget more important than when you’re living on a small income. It’s also a good idea to build up a bit of a “slush” fund when you’re living on a small income. Setting aside your change, or taking $2 a week out of your budget and setting it aside until you’ve accumulated $100 or so means you’ll have money available to take advantage of sales. If chicken goes on for 99¢ a pound, you can stock up.
Learning to barter is another good strategy. What do you have or what can you do in exchange for something else you may need. Offer to weed a neighbour’s vegi garden in exchange for a dozen zucchini. Offer to sit a friend’s kids in exchange for a home-cooked meal. Give a foot rub to an elderly relative in exchange for stuff she no longer needs that you can sell second-hand.
Learning to do for yourself will also save you money. If you can learn to repair what breaks, do your own maintenance, make your own goods, you’ll save gobs of money. While I had neither the tools nor the strength to remove a dead tree from my yard, I did have the skills to cook a lovely meal for the Sub-Hub (substitute husband) who did it for me. Ditto if you learn how to shop second hand and develop other strategies for getting more for less. Find free fun. Learn to love your library. Make friends with people who also live frugally, and take their tips to heart.
You may not be able to live large on a small income, but that doesn’t mean you can’t have a good life. You need to get your priorities straight. And you need to stay focused on what’s really important.
April 13, 2009 at 8:14 am
Good reminders Gail. I think it comes down to identifying your needs – must haves, would like, would be nice, etc. Then prioritize these. Get very dispassionate, detached and analyze the nitty gritty details. It’s a personal challenge from me when I track every penny our family spends – roll the ‘extra’ against the line of credit and ‘discover’ that we’re saving over $130 in interest due to this exercise.
Enjoy this gorgous spring day today.
PS. I like your term ’sub hub’.
April 13, 2009 at 8:15 am
Whoops – forgot to clarify, we’re saving over $130/month = $1,560 per year! Yippee!
April 13, 2009 at 9:26 am
I think this site is great. One thing I have done is to purge every year and have a yard sale. If you sell things prior to them being outdated (holding on to things that someday you may use) you can recoup much of the cost you laid out to get them. I have even sold things for more then I paid. However, I have friends and family that think it is wrong that I do this and that I don’t just give it away. Is this wrong? I work two jobs in order to have nice things and if I want to be paid for them when I no longer need them and use that money to purchase something else should be ok. I made $900 at my last yard sale and that was selling the baby stuff. I use that money to then purchase new clothes for the kids as they grow out of things.
April 13, 2009 at 9:35 am
Excellent post as always Gail.
@Melanie, I applaud your methods. Until your friends and family give you $$ per month they will have to deal with it I think. Besides, the ‘baby stuff’ sold has paid for the same childrens new clothes! How can they say this is wrong?
I’m downsizing here. Have sold several things – both antique dealer and at auction….it’s disheartening how little things go for….eg. a table that cost me $495. 15 years ago went for $5. at auction….we have no control sometimes, but at least I’m trying.
Today I’m washing and ironing all my doll clothes – yes I still have 3 of my dolls from childhood, crib, quilted blankets, even the trunk from 1956. Saw an article in the paper about a woman who collects dolls etc., so am going to call her to see if she can give me a name of someone who would be interested in my childhood things. I am keeping one of my dolls and my Mom’s from 1928.
April 13, 2009 at 9:38 am
Melanie! thank you for saying that you resell items. I have twins and my multiple group has a used clothing and equipment sale twice a year and I tend to recycle enough items to sell to break even or more for what I buy for my girls. (They are really! hard on their clothes there really isn’t a lot that I sell) But I can buy items for about $100.00 per sale and that covers my girls for most of year. My sister thinks that I am terrible for not giving away or forwarding items on to people and have actually offered MY belongings to people. She has no dependants, a good job, amazingly low rent (parents of a friend of mine) and no debt. She has this desire to gift a lot and forgets that not everyone has the option of doing so.
April 13, 2009 at 9:43 am
This post comes with great timing for us. We’re in the midst of trying to re-jig our budget to see if/how we could live on one income (although we have no immediate plans to do so). Our top two items to tackle were the same as Gail’s: reduce debt payments (should be gone by November) and reduce our housing costs (in progress).
April 13, 2009 at 10:30 am
Housing costs are sometimes frustratingly high! I moved from a rural to an urban area and my mortgage payment used to be less than half of what I now pay for rent! I cannot justify buying a home right now as we anticipate having to move for work in about 2 years (not long enough to build equity in the home, or to cover the expenses of selling the home). So although it pains us every month we pay horrendous amounts of rent money.
We could probably find a less expensive place to rent but we selected a neighbourhood where we enjoy living and it very walk-friendly. All of my errands can be done within a 10 block radius – we didn’t even put gas in the car in January or February.
For those of you who are selling your items for income – great for you – it really isn’t anyone else’s business what you do with your belongings. I think it is great that you have the time, and desire to get the sales organized.
No one can fully realize your situation except for you, and you are the only one who can determine what you need to do.
April 13, 2009 at 10:38 am
Another great post, Gail.
About 6 weeks ago, my husband and I were faced with the possibility of us both losing our jobs. We managed to keep our employment, but we are on reduced hours. Our line of work always sees slowdowns at the beginning of the year (Jan and Feb) but with the recessions in the US and Canada, it is slower for longer.
So… I started to trim. Cancelled an unnecessary service, saved $35/month. Decreased services on cable, saved another $30/month. Made changes on our mortgage, saved $100/bi-weekly. Made changes on our vehicle insurance, saved $15/month. These are all small changes, but they add up to a lot in the long term, and provide some stress relief.
I have always been one to shop the specials, and stock up on what is on sale that I know we will use. It doesn’t hurt to check out the supermarket within an hour of closing too. There are often lots of 50% off deals on things that are close to expiry. It sure helps the budget when you can pick up meat for 3 meals for under $6. And salad and fresh, cut fruit for under $7.
My neighbour and I are even able to save money on some home repairs as we both need the same type of repair done. The tradesperson is able to use one package of shingles since both houses have the same colour, and the fact that the houses are right next to each other makes it easy to do them both as one service call. We will both be saving about $55 by doing the repairs at the same time.
Looking forward to gardening season, so I can get planting, and get sharing the bounty again.
Liking the fact that I have good neighbours that make it easy to share time and ideas.
Thoroughly enjoying the fact that my husband and I have no desire to “live large”, even when we had a large income.
And to all those learning to live well on less, and searching for ways to save money, way to go!
April 13, 2009 at 10:46 am
Gail, you’ve provided a great strategy here. Essentially you’ve just summed up the best way to live a frugal life.
Melanie – I think you’re doing a great job. A lot of people, including myself, love shopping at yard sales. I don’t think there is any problem at all with putting a price tag on used goods. It’s far better than just throwing it away. You don’t have to listen to those critics – you’re being environmentally responsibly by recycling goods and being resourceful in terms of finding supplemental forms of income.
April 13, 2009 at 10:55 am
I agree — don’t take any guff for selling your stuff instead of gifting it away. It’s yours to do with as you please. If you want to gift it, go ahead but don’t feel guity for a second for selling it instead. (On a related note and in a similar vein, I once had a discussion with someone who was upset that her parents wouldn’t always want to provide free babysitting. I took a different view and said what I already plan on telling my son later: Hey, I’m responsible for YOU. Not your children.”
April 13, 2009 at 11:03 am
I agree with Melanie…sell it if you can!…you are recouping some of your funds and other folks are getting a deal…I have a yard sale every year or two and don’t make much money(i’m willing to let stuff go for pennies on the dollar..lol..) and what I don’t sell I donate to the Salvation Army so they can make money by selling it…also, I only sell/donate items in excellent condition, anything that is damaged, stained, or broken goes to the dump. Also, if I have something that I am no longer using I will give it to someone I know who can use it and tell them to either pass it on when they are done with it or donate it to the Salvation Army…if they return it to me I may try to yard sale it…next month I am planning a huge yard sale with some very nice items…what doesn’t sell goes straight to the Sally Ann…a little cash for me (we are building a garage this year and the yard sale money will go to cleaning/renovating the laundry room as that has served as the garage for the last 15 years..lol) and a donation to a great charity…all bases covered!!
April 13, 2009 at 11:08 am
I think part of my sister’s problem is that since I was “gifted” items for my twins that I should be willing to gift it to others. Although I am grateful for family and friends passing along items for our use (ie; a bunk bed from my step brothers’ father – he was moving & just wanted rid of it and we were willing to pick it up) – but I believe that the items now belong to me and if I can get something – any little amount out of items still usable (my kids are so! hard on things – not much is worth passing down) that I should be able to try and sell it to be able to give my girls things that they need now.
April 13, 2009 at 11:14 am
Joanne, as a person that often gifts things to other folks I think you are right on…when I give things to others that item is theirs…if they ask if I want it back I always tell them to either pass it on or donate it BUT if they choose to sell it then good for them….once I give it away with no stipulation that they return it to me then it is theirs to do with as they wish…no strings attached…so Joanne I say, sell it if you can…it’s a way to boost your budget and the person buying your kids items at a lesser price than they sell it in the store is also boosting their budget so it’s win win!
April 13, 2009 at 11:39 am
Great post — it reminds me of a Dave Barry line I read once: “the motto of the wedding industry is that money doesn’t buy happiness, so you might as well give your money to us.” I think many of us in North America are caught up in the frenzy of consumption because it’s become such a defining feature of who we are, to the extent that our economy is essentially bolstered by consumer spending. So when people stop spending money we don’t yet have, the economy slows down. But the illusion that ‘we’re richer than we think’ is not a great foundation for our economy.
I’m a little too young to have worried about the atomic bomb, but I find my thinking is getting increasingly apocalyptic about the environment. I’m trying to live more simply because after we hit peak oil a lot of the things we take for granted are going to change. (On a lighthearted note, I’m thinking no more strawberries from Mexico in January; on a heavier note, I’m thinking post-WW2 Germany — total devastation.) Essentially I’m trying to ease my way into the big changes that I think are coming….
On a more practical note, we cancelled our cable years ago. Now we get calls every week offering digital hi-def cable with a bazillion channels for for only $X per month on a three-year contract…but if I do the math it works out to close to $1000 for TV over 3 years! This is not a good deal, especially since we really don’t want bazillions of commercials beamed into the living room showing things we might want to buy. When we want to watch something — a hockey game, the Oscars — we invite ourselves over to a friend’s house, bring snacks, and get to hang out. We watch a lot of movies, often from the library, but even if we get them from the video store, the cost doesn’t add up to what TV would!
April 13, 2009 at 12:02 pm
Hey Liz, shouldn’t you still be worried about the atomic bomb?
April 13, 2009 at 12:49 pm
Liz;
as of tomorrow we will have been cable free for 9 years. We bought our house in 2000 and I refused to pay the 50.00 transfer fee from my apartment to the new house and we have been without the cable bill for 9 years. With the anntenna that we have our 6 year old twins are able to watch some the cartoons that other kids watch. (At least I can watch new episodes of TDDUP on Slice.com – reruns I get on Global) However, my husband has been asking when we might be able to put cable in the budget. I’ll have to see how long I can hold him off ;0) .
April 13, 2009 at 1:02 pm
I also resell my previously loved items, however, I do it through consignment. The consignment store I deal with gives me 50% of the selling price and I don’t have the hassle of sorting, pricing, and organizing a yard sale. And the items that don’t sell are donated to charity. It’s a win-win situation for everyone ( clear the clutter in my house, recycle, help a small business owner/local economy, give to good causes and best of all, help build my emergency fund!). I also enjoy buying second hand and getting more bang for my buck.
April 13, 2009 at 1:14 pm
Melanie, I sold all my big baby stuff recently (swing, exersauser etc) and quite a few of these items we’re gifts from my mom & dad. My mom was not happy that I sold them but we are done having children and I don’t have storage space for them. It was quite a bit of money so what my husband and I decided is that we split the money between our 2 kids and put it into their RESPs. Now my mom is delighted that the kids got the proceeds of their gifts and I got the 20% grant from the government!
April 13, 2009 at 1:54 pm
It is amazing the amount of money you can get for baby items at a yard sale. The sooner after having children you sell them the faster they sell and for more money. I have sold things at yard sales that I purchased at a yard sale and no longer use. I have given away to close friends some items or we swapped boy stuff for girl stuff. I have a lady that watches in the local paper for my yard sale because she has a daughter a year younger then I do. I got her phone number last year and told her that this year I will call her first and she can have first choice of the stuff. It feels good to help someone else out and myself at the same time. This year it is the Little Tykes stuff that is going. The kids don’t play with it anymore and it is like brand new and BTW most of it was gifts and I am selling it anyway.
April 13, 2009 at 1:57 pm
RESP’s are a great idea for the money. Arlene, I like the fact that you said you don’t have the storage space….why would you store it anyway if you never plan to use it again. I had someone say to me why was I not keeping the stuff for when I have grandchildren….grandchildren!! my kids are 3 and 6. I am not storing things for the next 20-30 years for grandkids.
April 13, 2009 at 2:05 pm
To do away with Cable TV – well I can live without it – but not my husband. He lives for the sports stations. However, to ’save my marriage’ I’ve negotiated that my husband gets to keep his cable if I get to keep my cleaners!
Mind you, we can legitimately write off 1/2 our cable due to the second outlet in the basement apt we rent out. I also can justify the cleaner costs since
a) my royalities cover these costs +
b) my weekends are now freed up from cleaning [after a very full work week] to entertaining at home, seeing movies with my sweetheart, cooking enough food to last into part of our work week – and art-making [my passion = investing in growing my next career after retirement].
April 13, 2009 at 2:15 pm
“…but since you spent the money, it’s now time to earn it.”
I know it’s only Monday but this has got to be the quote of the week, if not the month and the year.
April 13, 2009 at 2:29 pm
Our local Salvation Army used to have ‘give-away’ tagged clothes – the remains of a certain colored tag were free, up to a limit of 6 items per person. If you weren’t there Monday morning when they opened, you were out of luck. Since I recycle interesting fabrics into teddy bears, or old wool coats into braided rugs, etc. I made a habit of hitting the SA weekly. Crushed velvet tops make awesome bears, but aren’t quite the fashionable item they were in the 80’s. Unfortunately, an oriental fella who had a garage sale running seven days a week, nine months a year also collected items and resold them!!! This abuse led to the SA discontinuing that process. When you donate to the Salvation Army, make sure your items go inside the building. Our city paper had an article about people rummaging through the donated items left outside the drop chute, and helping themselves before the stuff got in the store! I am all for selling never used belongings if you can, and I also love garage sales. I have found the most unusual items, and lots of craft supplies as well. I am all for doing what others won’t/can’t do for themselves and making a buck at the same time. I just shortened five pairs of jeans, and put a crotch back in another pair and made $68 for my emergency fund. The crotch wrecker lives in a motel and wants me to do his laundry – for $25/garbage bag! I struggled with this for a bit, but decided I am not too proud to fold an acquaintance’s underwear if I am getting paid for it!! I stand to make $100 on my days off, with the cost of a little soap and softener. Every little bit helps, and we have to be pro-active in our quest for our share of the little bits of currency that are floating around. BTW, I too went without cable/internet for years – my sons and I actually played games, did puzzles, read, and generally spent more time together. Nothing wrong with that, except that now the powers that be are removing all air waves, so those who had some reception without cable will now have none!! HMMMMMM, something fishy with this picture; I agree with Liz, something is brewing, and those of us who are prepared might survive. Anyone ever see the movie/read the book The Handmaid’s Tale?? With out automated deposit payrolls, the government has full access to our money if they wanted…. something to think about.
April 13, 2009 at 2:32 pm
… should read *our* automated payroll…..
April 13, 2009 at 4:11 pm
For keeping it simple, I have found it helpful to use common sense about what is a necessity instead of the common public opinion.
A car is to get from point A to point B safely. An older car works just as good as a new car when it’s properly looked after, and a tiny car is just as good at getting you there as an SUV. If transit is good in your area, then try it and save some cash!
Clothes that are preworn cover up and keep warm just as well as brand new clothes, and as a bonus you already can see how well they fit after a wash! Protein can be just as balanced with ground beef as it is with a roast or steak…. or go even more frugally and find some tastey recipes with beans or legumes a couple time a week. It makes the steak all the more tastey if it’s only a special occassion food.
Really think about what is vital, what is the real joy in your life? When I focus on the genuine things, life automatically gets less expensive. And the important stuff gets covered.
April 14, 2009 at 9:19 pm
On the saving things for the grandkids note – I also have a small house, not much storage and a strong aversion to clutter… so most of my kids things get handed to friends, sold at consignment or lent out. BUT, there are some special toys and books that we have made an effort to save, like the $$$ worth of Thomas the Train (after weeding out the lead paint ones) and other wooden/high quality toys and favourite books, because in the last few years I’ve seen the joy my kids have experienced playing with toys that used to be mine (grandma has no aversion to clutter whatsoever). Just the notion that their mom played with this object as a kid thrills them to bits. I used to have no sentimentality at all but my thoughts have changed a bit when I see firsthand the interaction across generations.
August 17, 2009 at 7:29 am
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