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Spin off: Could you live on 50% of your income? - Page 6

post #101 of 118
We DO live off 50% of our income. We made/ make MANY sacrifices. Now we are benefiting from it tremendously. We also pulled all our retirement savings out of the stock market 3 years ago.

We bought a house in a supposedly less than desirable neighborhood (housing projects within a mile) and don't buy anything unless we truly need it. His salary has gone up over the years so we do have some luxuries... satellite TV, occasional takeout, and recently some new clothes... but generally we are super frugal.
post #102 of 118
Quote:
Originally Posted by A&A View Post
yep. Suze Orman doesn't live in the real world.
When DH made 30k/ yr we lived on 20k. When his salary went up to 50k we lived off about 30k (we weren't saving aggressively at the time but we were making double/ triple payments on our mortgage). Now his salary is six figures but we have kept our expenses around 30-40k, so we actually live on less than half his salary.

Living on less than 20k a year is going to be difficult. We live in NYC which is a very high COL area. But we bought a cheap house before the real estate bubble and never took out a home equity loan or refinanced. We paid off the mortgage instead.

We live in a minority neighborhood near a housing project. When we were house hunting we quickly realized that houses in minority neighborhoods were half the cost of houses in white neighborhoods. The ugly truth is a lot of white families aren't willing to move to neighborhoods like mine but we have had no problems and have saved a ton of money.
post #103 of 118
Quote:
Originally Posted by meowee View Post
The ugly truth is a lot of white families aren't willing to move to neighborhoods like mine but we have had no problems and have saved a ton of money.
I'm sorry but this is HIGHLY offensive.

If half your income is a living wage then its a different story. Half of our income is not..esp after taxes.
post #104 of 118
Before we both got laid off, we lived on about 55% or so of our income (good thing too! LOL!). The one thing that really bumped that over was when our van finally gave out last summer and we ended up with a new car payment.
post #105 of 118
Quote:
Originally Posted by avendesora View Post
We could, but we're choosing not to.

Obviously some things would change if we were laid off. We wouldn't have to pay childcare anymore, and that's not something that we can cut out any earlier than necesary.

I'd have to stop giving to charity. We'd have to stop giving gifts - most of which are useful things that my sisters (who have lower income than we do) really use.

My daughter will be going to private school next year. I feel very strongly about the quality of education available at this school. As long as we're still working, we'll keep sending her to that school. We'll pull her out when and if we were to actually be laid off.

I also consider myself fortunate to currently afford to support local organic farmers. I consider that a useful way to spend our income.

We have 3-6 mo in savings, depending on how you calculate it. I know we ought to have more, and we are building that, but I'm not going to negatively affect other people (like our charities and local farmers) in order to do that faster.

We are prepared to cut down our spending to that 50% mark if either of our jobs were to be lost, but we have no intention of doing that prematurely.

I'm not sure I'm buying this recommendation to cut back to 50%. I think she should more realistically recommend that you try to set your budget up so that you could go to 50% if you had to. But a lot of things change when not working. Lower gas bills, possible lower grocery bills, lower child care bills, etc.

Aven
:
(Except our daughter is no where near ready for school)

We've discussed this because if either of us were to be laid off (which fortunately isn't likely), our income would be cut by 50%. We don't currently live on 50%, but we could if circumstances called for it.
post #106 of 118
I know we can, because we are doing it now. We both used to work until I got fired.

We also bought this house with only one of us working, so we even qualified for the loan and everything.

Could we live on 50% of just DH's paycheck?

Live . . . barely . . . yes. We would have to cut the internet and anything else we could shave off the budget. I can also put my Discover card and student loan payments on hold, but it would be temporary at best. Somebody has to work full time at a minum of about $10/hour for us to make it comfortably. Half that would be less than minimum wage, so hopefully we will never be THAT bad off.
post #107 of 118
Hmm, this is an interesting question for me. Because we have a kind of unique situation the answer to this isn't cut and dry for us. It would be very very difficult to cut our expenses to the point that they would only be half of what dh makes. But, we have what we call the "house account" that is set up for any housing expenses like repairs renovations, etc. So if things got tight, we could pay our mortgage out of that for a while (probably a couple of years if no major repairs came up), which means that we would be totally fine if dh's hours got cut or something and he was only making half of what he does now.

I haven't heard this advice directly, only read about it here, so I'm not sure of the context. I agree that if we're talking about severence packages and living off unemployment for a while, etc, then it would likely be necessary to slash your expenses in half or as much as possible. If the idea is cutting the budget in half in anticipation of the what-if's, I agree with others that have said maybe that's not that great of a goal. I mean, I think in times like these we should all know what our priorities are and what can be cut out of the budget immediately in case of job loss or something, but some people don't have anywhere left to cut, and even if you can cut back, as long as everything's paid and you're putting something into savings/retirement I don't really see it as necessary, unless you think there's a pretty good chance you'll be laid off and want to save aggressively to prepare or something.
post #108 of 118
Not really. DH took a 20% paycut this year. We still are saving. I am not sure if you mean 50% gross or net. We put the max in to the 401K and IRA. That adds up to close to 20% our income. Then we put 10-20% in to savings each month and dh recently took a 20% paycut. So...if you are talking about living off of 50% of the next, probably not. 50% of the gross, that is pretty much what we are doing.
post #109 of 118
No, we couldn't. It just wouldn't be possible for us, since we are already cutting corners everywhere we can.
post #110 of 118
If we paid off all our debt, and really cracked down, we probably could do it. However, I've lived off that amount of money before - with only one child - and it was brutal. I have no interest in going back to living like that. I'm totally for putting money away for the future, but not to the point where I can't enjoy anything in the now. I want to be able to buy my kids some strawberries without putting my budget in a tail spin. I want to be able to put the kids in swimming lessons. I want to be able to sing in my choir. I couldn't do any of those things on 50% of our income...not even close.
post #111 of 118
Quote:
Originally Posted by meowee View Post
Living on less than 20k a year is going to be difficult. We live in NYC which is a very high COL area. But we bought a cheap house before the real estate bubble and never took out a home equity loan or refinanced. We paid off the mortgage instead.
That definitely puts you in a good situation. We don't live in a good neighbourhood (it's not terrible, but it's not great). We pay over $17,000/year in rent. There's no way I could pay for food, clothing, etc. for a family of 5 on $3,000/year - just couldn't do it. Half our income would be more than that, but it would still be a huge undertaking, and not sustainable for more than a few months, or a year, at most.
post #112 of 118
We are (not on purpose!), and no, we can't. At least not if we want to pay our mortgage and our bills and still eat.
Doesn't help that our mortgage is nearly half of DH's take-home pay; and it's still one of the lower mortgages for this area. We were lucky and got our house right before everything started going up like crazy 5 years ago.

Hoping things get better soon.
post #113 of 118
Yes, we have done it before. It isn't pretty though, it was peanut butter for dinner most nights, but it was doable.
post #114 of 118
If we paid off all of our debt we could, definitley. Until then we are just making it. Its amazing how much our debt squeezes out of take home income. My goal is to pay off all but the van loan this year. So hopefully by next year we will be living on half.
post #115 of 118
My DP and I do bills separately, so for my portion (rent, cell phones, gym, car, student loans, insurance, sitter, gas, garbage, and groceries), I spend 75% and 25% goes into savings.

However... this is only because I generally work at least one day of overtime every two weeks. Without my overtime I'd be at closer to 100% without a lot I could cut out.

Thankfully I love my job and it doesn't appear that the overtime will dry up anytime soon. I am intentionally working OT so that I'll have the extra $$ to put in savings as I'm thinking of buying a house soon~ish...

So yes, I could do it. But man it would suck. :/
post #116 of 118
I do not think I can but I would be up for the challange
post #117 of 118
Our regular bills and food and gas are about 2/3 of DH's pay, the rest pays on debt and covers emergencies and maintenance stuff. There's nothing left to cut out unless we want to eat really lean and have no internet, or sell the house and rent a rundown 1BR apt in a high crime area. Not gonna sacrifice that far because she says so, sorry.

Our area is like 21% below avg cost of living and income is 200% of fed poverty level.
post #118 of 118
I'm sure we could if we really had to, but thankfully at this point we do not. It would be very, very bare bones here if we did have to live on 50% of DH's income. We have no debt and live on about 75% of it for regular expenses. We are frugal in most areas, except that we feed our family mostly local organic food.
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