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Old 04-03-2009, 02:33 PM
 
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You know, this strikes me as a pretty meaningless goal. Whether or not you can live on 50% obviously depends A LOT on how much 100% is!!

Unless she's saying we should all bump up our income AND cut spending, until we are living on 50%?

Still, it seems like the more realistic advice would be to live on a particular COL basis for your area/family size, right? Figure the "minimum" cost to maintain health and safety in your particular situation - like the WIC people do it - 200% of the poverty level, or whatever, and then live on that. Any leftover $$ goes to savings/debt.
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Old 04-03-2009, 02:52 PM
 
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No, we are not and we could not right now. I am a SAHM. Our housing (very cheap rent for our area) and food costs (we are on a specialized medical diet which is expensive) take up half of our take-home income right there, and then we still have car maintenance, gas, utilities, and clothing costs. We are working towards the goal of being able to spend a smaller percentage of our income, though. DH works lots of overtime, and is working his way up the ladder at his job, and also adding to his job skills to make himself even more desirable in his chosen field. We just paid off our only car loan. We are going to sell that car now and buy a cheaper car in it's place. But some things are important for us to "splurge" on for our betterment (like books-- we buy them discounted or used) and travel (also discounted as much as possible), so that we can spend time with family members.

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Old 04-03-2009, 03:06 PM
 
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I. Wish.

Honestly, I have been financially clueless until about 2 years ago. That is when I went on unpaid maternity leave for 4 months and became very adept at budgeting and for the first time really actually lived within my means. I also read up on David Ramsey and how our society pretty much can't function without a system of debt and I was pretty disgusted. Especially when I realized that I was part of the problem.

I figured out that if we did not have any credit card debt (which was mostly consumer debt from the moment we turned 18) we would easily be able to make double payments on our mortgage and our home would be paid off in exactly 4 years and 8 months :Puke.

I am a long way from my dream of having a self-sustaining kingdom of my own that can exist without a need for money but someday!
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Old 04-03-2009, 03:08 PM
 
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I wish we could live on 50% but then we would have to skip out on paying some things.

We basically live on about 63%-75% right now, if we stick to the budget - this is just DH income though. I do have a PT job but I don't count it as part of our income - I just use it to help with the debt snowball right now. So my % is off a little.

eta: I think if we didn't have to pay for student loans then it may be possible while we are still living in an apartment.
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Old 04-03-2009, 04:46 PM
 
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No way. Not while I'm in school and DH is the only one working. Just not possible.

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Old 04-03-2009, 04:57 PM
 
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Originally Posted by maryjane View Post
I read in the Suze Orman post that she recommended that people live on 50% of their income. I'm assuming she means take-home pay.

I just don't see how we could do it without moving in with my folks or going without health insurance. Neither of which seems too tenable.

What about you? Could you/do you do it?
No.
Unless we sold the house (including the garden in the yard that feeds us) and we go camp out on a friend's property, stop life insurance, have no vehicle (leading to no work for hubby), and so on. We have 2 small/medium tents that would probably fit all 5 of us, at least until the feet of snow for months on end comes...

Wages don't keep up with inflation, at least in my experience. The cost of medical expenses that never stay just even, cost of food, cost of housing, blah blah blah. And our only debts are the house (we bought before prices around here skyrocketed, to boot!) and hubby's student loans. But when you have a single income supporting a family of five, that income gets stretched, especially when the kids need shoes.

I honestly have no idea how my parents made it as a single income of $28K in the 80's - only way I think things were okay was because they owned their home outright from a lawsuit my dad won. And in the last 20 years, my mom's income has gone up to a whopping $36K - before taxes (good thing the health insurance was good - 2.5 years of cancerous brain tumor stuff for my dad added up).

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Old 04-03-2009, 04:59 PM
 
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Originally Posted by obiandelismom View Post
You know, this strikes me as a pretty meaningless goal. Whether or not you can live on 50% obviously depends A LOT on how much 100% is!!

Unless she's saying we should all bump up our income AND cut spending, until we are living on 50%?
I think maybe she was suggesting this because the show had a lot to do with the current economy and they were talking to many people who had just been laid off. She also mentioned that millions more would lose their jobs in the near future

So, when she was talking about unemployment pay being about equal to 50% of your current income, it had me thinking about how we would possibly survive in that situation. I *think* that was her point. That you should make a goal of cutting your bills and possibly increasing your income so that you can live off 50% and be able to save the rest for a rainy day. Many of these people had living expenses of $6K per month, and received something like $8K in severance... so, even with unemployment + any savings, they were going to be struggling if they didn't drastically cut back.

It had me thinking, anyway. In the other thread I said we could live on 50% of DH's income, but that would leave no money left for food. And this was after cutting out pretty much everything but essentials such as housing, utililities, etc., If DH were laid off, he would get a severance pkg + unemployment and if we qualified for food stamps we could stay in our house and survive. But it wouldn't leave any money for extra... though, I suppose I could get a job and DH could SAH eliminating the need for childcare. It would be rough, but not as drastic as I have always imagined.

My goal (someday! ) is to have that 6-8 months of living expenses in savings (like someone else said, this could be attained by the 2 extra paychecks a year + income tax refunds + small monthly savings) and to somehow increase our income so that we could cut-back and live off 50% and save even more money by doing so.

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Old 04-03-2009, 05:04 PM
 
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My question is : Does Suze Orman live off 50%?
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Old 04-03-2009, 05:18 PM
 
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My question is : Does Suze Orman live off 50%?
:
And living on half of $500K is probably easier in most parts of the country than living on half of $36K. Well, unless you buy the Spelling's estate... that person is in a whole 'nother stratosphere than me though.

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Old 04-03-2009, 05:29 PM
 
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I think this advice is two-fold. To allow for increasing your savings (saving as radically as possible) and to see if you "could" live on unemployment. And the later is exactly what we discovered when dh was unemployed-- the unemployment turned out to be LESS than 50% of our previous salary. Luckily, we discovered that we could, with the help of some savings, live at less than 50% (and luckily our health insurance was covered). I

It also took dh 5 months to find a job-- when in the previous 15 years of his work experience would have normally taken 2 weeks. So, having a lot of savings, and being able to live on unemployment was very, very helpful. However, if dh had gone for a year without a job, and the unemployment ran out, we would have really been in dire straights. So that is now why we are aggressively building our savings back and increasing it even further-- continuing to live on 50% salary-- which is not super fun .

It became very clear to us that having as much liquidity during unemployment was helpful.....we also made sure that we had a couple of credit cards, including a 0% interest card. We also re-fi to reduce our mortage payments to amass more cash.
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Old 04-03-2009, 05:35 PM
 
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Originally Posted by lmonter View Post
:
And living on half of $500K is probably easier in most parts of the country than living on half of $36K. Well, unless you buy the Spelling's estate... that person is in a whole 'nother stratosphere than me though.
exactly. Even the difference between living off $50,000 and $25,000 is HUGE.
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Old 04-03-2009, 05:43 PM
 
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We do, our bills and expenses are 47% of my husband's income, the rest we save. We recently started a new savings plan to increase our savings. We have always lived on his income only and in the last couple years we have got ourselves down to 0 debt except the house. We don't have cable tv, cell phone contracts, car payments, or the like. The house is currently for sale and after we sell it we will be 100% debt free. We will rent for a while till we make a decision about where we want to settle down for good.

We are not rich, I am a SAHM. My dh is in the military. He works about 60 hrs a week, not including TDYs or deployments. I do not pay daycare, babysitters, or anyone else to watch my child. He works extremely hard to make each promotion every time. And so far he has. He is even taking a pay cut this year to do a job that will be helping other people out. We have been married 10 years and have been living frugally since the very beginning when we had nothing. Except for a few years when we lived in the DC Metro area and we got influenced by others. Now we are back on track!

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Old 04-03-2009, 05:51 PM
 
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We do. We're aggressively paying off debt and living bare bones to make it happen.
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Old 04-03-2009, 05:53 PM
 
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That would make Suze's eyes pop out!!

We live on 50%; the other 50% is spent on medical expenses.
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Old 04-03-2009, 08:58 PM
 
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Yes, although it would mean cutting out some luxuries. We currently save approx. 40% of our income.
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Old 04-03-2009, 09:10 PM
 
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If i had no debt than probably.. but i pay 570/month for a consolidation loan and 630 for rent... depending on the month my income is from 1500-3000.. and i have student loans coming due which will be impossible... so no.. not over here... that doesn't count cell, internet, gas for the car... we don't have tv...

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Old 04-03-2009, 11:23 PM
 
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We are doing that, but it's not as good as it looks. I quit my job to stay home with our kids and there went half our income. We bought a house with a lower mortage so we could afford it, but it's been tight ever since. I would love for us to be able to spend 50% less and put the rest into savings but it's not going to happen. Every time we get extra money we end up spending it on some repair that comes up. Hopefully when I make it through nursing school and get a job, we can increase our income. We plan to live in the same house, drive the same old cars, etc and just put as much as we can away in savings.

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Old 04-04-2009, 02:31 AM
 
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Yes, we can, but ONLY because last summer we did something drastic. We tossed/donated/stored most of our belongings from our 2 bedroom apartment. My husband rents a room and I moved in with my parents. We live and work in two separate towns and see each other on weekends. We decided we needed to get serious if we were going to pay off debt and save for a down payment on a house.

Because our cost of living is so low, we're able to live off 50% (or less) of our income. We're expecting to buy a house very, very soon and have zero credit card debt.

I blogged about it here.

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Old 04-04-2009, 02:40 AM
 
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All the years we both worked we never thought we could live on half our income. When I quit working five years ago we cut our income in half and have been alright although we've dipped into savings several times (to purchase vehicles and pay medical bills) and haven’t been adding to savings much. I don't think we could live on 50% of our current income; 25% of our previous income...
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Old 04-04-2009, 11:55 AM
 
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no. I think we could get buy on 66% but only 50% if we only ate oodles of noodles.

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Old 04-04-2009, 01:04 PM
 
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I was laid off a few years ago and lost a 6 figure income. At the time, I was the higher income spouse. So yes, not only could I, but we do. It was very hard but we muddled through and have adjusted. No more shiny toys though.
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Old 04-04-2009, 01:28 PM
 
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No. Not unless we were able to move to a much cheaper house, cancel all un-necessary bills (phone, internet, tv) and eat only beans and rice for...ever.

100% of our income is barely enough. 50% just wouldn't do it.
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Old 04-04-2009, 03:00 PM
 
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We just realized today we're living on 70% of our income. I think 50% would be doable, just really tight. But I don't know. Dh's pay is dropping over the next 4 months so we might be there.
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Old 04-04-2009, 03:06 PM
 
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No, but I wonder how this is supposed to be computed. We put 15% of our incomes in tax-deferred supplemental retirement funds. Does this 15% count toward the 50% I'm supposed to be saving? If I withdrew it before retirement, I'd pay scads of taxes, so it's not like I can use it to count as my 6 month emergency fund. But I think it's important to have good retirement savings. We do something similar with education funds for our kids.
Dave Ramsey counsels stopping all retirement and education contributions until the 6 month emergency fund is saved up, for that reason. I don't know whether Suze Orman has the same advice, but it wouldn't surprise me.
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Old 04-04-2009, 03:18 PM
 
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Well, we did that a few years ago when I left work to SAHM. Probably closer to living on 45% of our income.

No way in hell we could cut that in half again.

The good news is, when I go back to work full time, that extra income will be all the sweeter.
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Old 04-04-2009, 03:18 PM
 
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i just can't help but think--50% of someone like suze orman's income would be a windfall of major proportion to a family like us. 50% of our current income is like, not even enough for many people's grocery bill.

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Old 04-04-2009, 04:00 PM
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i just can't help but think--50% of someone like suze orman's income would be a windfall of major proportion to a family like us. 50% of our current income is like, not even enough for many people's grocery bill.
yep. Suze Orman doesn't live in the real world.

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Old 04-04-2009, 05:05 PM
 
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In the Bay Area? No, we couldn't.
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Old 04-04-2009, 06:34 PM
 
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Yes... but...

Right now, we both work FT. We have a nanny who cares for the baby, and our older son goes to preschool (which costs money).

We'd have to switch to a cheaper daycare solution. If I'm not working, then our mortgage is 50% of our income. (However, because we're using a fairly pricey daycare situation, my take-home after subtracting our childcare expenses doesn't even cover our grocery bill.)

Our mortgage (the number I'm using for it includes property taxes and insurance) is about 30% of our combined income with me working.

I actually *am* thinking of going back to being a SAHM in the fall, when DS1 starts kindergarten (public school, free-ish) and DS2 is old enough for preschool a couple days a week.

But... the upshot is, while changing childcare solutions would be the BIG change, we'd also have to lower our utilities, grocery bill, cut out our spending money, lower our car insurance coverage, dump all the stuff in storage, and cut out a couple of luxuries like our every-two-weeks gardener and housekeeper. Right now, our expenses run about 91% of our take-home.
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Old 04-04-2009, 07:34 PM
 
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We could if we weren't up to our eyeballs in student loan debt. We have an average income and an average priced home, and we don't have a lot of luxuries. But the student loans are going to do us in.

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