Over the last few months, my husband and I have lost some income. Not a little drop in income. About 20 to 25% of our monthly income. And let me tell you, we weren’t earning more than the median income for a family of five to begin with.
Our budget was already tight, so when the drop in income happened a few months ago, I’ll admit, I panicked a bit. I felt a little bit desperate. I’m sure those of you who’ve been in a similar situation know the feeling.
And then I took a deep breath, and told myself we’d be alright. And we are alright. We’re actually better than alright.
Taking Stock of the Positive
The first thing I did, after I calmed down a bit, was to look at the positive side. We had already paid off half of our debt, so we don’t have several debts to pay monthly. We’re only left with one student loan payment every month, so that is a relief. (When we started our debt repayment over two years ago, we had five monthly debt repayments that totaled almost $1,000 a month. Now, we only need to pay $315 a month.)
Why Our Income Drop Turned Out to Be a Good Thing
While our budget is lean, we still had some fat there. We subscribe to Netflix for both streaming movies and DVD home delivery. After the income drop, I decided the home delivery at $11.99 a month could go. I had been thinking this for awhile, but I was afraid we’d miss the service. Guess what? We don’t. I can borrow most of the movies for free from the library.
In addition, I think much more carefully about purchases now. Buying something on a whim is no longer a possibility. I have to think carefully before making a purchase, which has made me realize I don’t need many of the things I’ve been thinking of buying.
I also took other frugal steps that I’d been to lazy to take previously. I had always read that making your own laundry detergent can be a big money saver. A year ago, I bought all the supplies that I needed, but I never got around to making it. Well, I finally did a few weeks ago, and it works great. Sometimes it takes circumstances to prod me into changes I should have made a long time ago.
Of course, we don’t want to live with such a tight budget indefinitely. But now I know that there are many cost cutting measures I’ve implemented that aren’t difficult. When we make more money, that just means I’ll have room for greater savings and paying off that last student loan.
Have you ever experienced a tight budget? If so, did you find it to be a good thing as I have?
Melissa is a writer and virtual assistant. She earned her Master’s from Southern Illinois University, and her Bachelor’s in English from the University of Michigan. When she’s not working, you can find her homeschooling her kids, reading a good book, or cooking. She resides in New York, where she loves the natural beauty of the area.
When my wife and I created our budget, we actually put the discretionary spending items in their order of importance to us. Limited resources requires prioritization. When we saw what wasn’t making the cut, we had some interesting discussions about what what important to us and why.
I alway say that quitting my job was the best financial decision I ever made. 🙂 So yes, a drop in income for us turned out to be awesome. Not because I turned around and started making more money but because having a tight budget made my husband and I come together financially in a way we never had to before. Eventually I did find ways to make money without a formal job. I now earn more than I was earning while “working” but we use our money so much more effectively because we already had adjusted our lifestyle to live on less and had clear financial goals.
It’ll REALLY seem like a good thing when (hopefully) your income goes back up and you continue your thrifty habits. You’re income will seem much more because you’ll be more efficient with your funds!
I think learning to seriously consider purchases is particularly valuable. Even though you may not be so committed to a strict budget forever, its a really good skill to develop. Identifying what you want versus what you need is really important to navigating finances in general.
I think, in a lot of ways, that when you do have an event like this, the focus it brings becomes ingrained and many of the things you do to get by become habits. It’s stressful to be sure, but when the income recovers, you’ll end up in a better place because of those habits you developed while stretching your budget.