If there’s one concept we’ve heard more than we care to hear about over the past year or two, it’s fiscal responsibility. We’ve heard about it because our economy has been down and further down and then rebounding. It’s because real estate has been in a bubble and then the bubble burst. It’s because unemployment rates have hit an all-time high.
I don’t know of one person in my life that has not been affected by the changing economy. My family is no exception.
I was laid off in August of 2009. It was because my position was being eliminated due to financial constraints. It had nothing to do with the economy. It had to do with a small, privately-owned company that mismanaged (and continues to mismanage) their funds. They ran out of money and made some cuts.
If I sound bitter, I promise you I’m not. I might have been if you asked me about it in September 2009 but my unemployment is what has ultimately led to my blog. So I can’t be bitter about that, right?
The other thing it led to was an examination of our household finances. I went from a full-time working mom earning a pretty hefty salary to being a (mostly) stay-at-home-mom. I decided to send my son to his sitter’s house 3 days a week to keep up the routine until I found my next job. Instead, this blog has become my job.
So how has this impacted our finances and our lifestyle? Not a whole lot. How did we do it? Here’s what has worked for us and has thankfully kept us afloat.
- First, we saved up money until we could buy the house we wanted. We put 20% down on our house and financed when mortgage rates were at a historical low (they have actually gone lower since then). It gave us instant equity in our house and gave us a low mortgage payment.
- We didn’t buy more than we could afford. You can certainly qualify for more than you can afford but we made a choice to buy a house that we could sustain on one income if we ever had to. Thank goodness we did.
- We do it ourselves. I’m fortunate enough to be married to an IT professional who just so happens to know plumbing, electrical, mechanical, carpentry, automative, etc. You get the idea. Over the years, he’s taught me how to do tile floors and hardwood floors. We built our own deck, just the two of us. By doing it ourselves, we’ve learned practical skills and saved a ton of money. We’ve also learned that we’re better craftspeople than a lot of professionals out there.
- We bargain shop. We clip coupons and buy online. We go to outlets to buy higher end brands for lower prices. And we live comfortably but frugally. I don’t happen to need a Louis Vuitton bag.
- We buy new cars. WHAT?!? I know. That sounds weird. My husband insists on it so I’ve never argued with him about it. You pay more upfront but pay less on maintenance and care and get a lot covered under warranty, if necessary. Plus you know how well your car has been taken care of from day one.
- We donate a lot to charity. Not money, but stuff. At least twice a year, we declutter the house. Sometimes we hold a yard sale with rock bottom prices. Whatever is left and doesn’t sell on Craigslist, we donate to charity. It makes us feel really good to help. Plus we get a receipt so that we can claim all donated items as itemized tax deductions.
- We take advantage of programs available to help us. I’ve joked around by saying there’s never been a better time to be unemployed. In additional to unemployment compensation, I applied for and received supplemental benefits to help cover the outrageously high cost of health insurance premiums. I also was able to get 12 months of my car payments forgiven. I bought my car at the height of the fall of the U.S. auto industry and I happened to get payment protection from unemployment. I never intended to use it but I’m glad I could.
There’s no magic pill to keeping your head above water in uncertain times. Most people get thrown a curveball when they’re least expecting it. We were lucky enough to work for many years before we planned a family. We had the luxury of time that not everyone has. But the lessons we learned early on, mainly don’t bite off more than you can chew, have carried us through as many highs and lows as the Dow Jones Industrial Average.
What’s the smartest financial decision you’ve ever made?
11 comments
Like you, my husband and I didn’t buy what the bank said we could afford, but bought within our true means. We got a fifteen-year mortgage, too. So while so many people are underwater with their house right now, we only have three years left to pay on the house.
If we go out, we use a restaurant.com certificate, or go to a place that has half-price drinks for happy hour. Picnics are the norm for taking the kids out, instead of driving through McDonalds.
I think the biggest thing we did for our financial health was to keep to living within/below our means even when the economy was booming. Even though the economy has impacted us (my husband works out-of-state and commutes because there are not any jobs for him in this area), we’re still able to live quite comfortably. It sounds like your family is doing the same thing.
That’s one part of moving that I’m dreading. Starting all over again with a mortgage. We’re 8 years in and I’m sure we’ll have to do another 30 year mortgage. Do people ever even own homes anymore?
And yes, we ALWAYS use coupons when we go out to eat. Kudos from one frugally minded gal to another 🙂
The two smartest financial decisions I’ve ever made? One was marrying my husband! 🙂 And the second? Actually learning from past financial blunders!!
How could we forget the obvious? It’s so much easier to live as 2 than as 1. Marriage is definitely a step in the right financial direction (usually). And I, too, learned from my mistakes – the hard way!
The smartest financial decision we ever made? Not buying a new, much bigger, much more expensive house in August of 2008. I wanted it SO bad, but hubby held back, not feeling right. We would’ve been in a real bind if we had. We would have maxed out the equity in our current home to buy the new one, and I lost my job 3 months later (worked for a mortgage company!) Plus now, all the kids are about grown and gone, who needs a house that big anymore?
I hated to admit it, but hubby was right on this one!
Bernice
Oh – you worked for a mortgage company too? I got laid off from mine in 2008 but I hated working there anyway. Very boring stuff. And yes, that would have been a bad time to buy.
I usually am pretty agreeable with my husband’s whims but sometimes I have to be the practical one and I’m glad I can be!
I worked in the mortgage industry too! I worked in wholesale, on August 3, 2007 the world changed; actually it began a slow meltdown. I worked for a national lender who financed A paper quality loans, but every type of loan was affected. I was finally unemployed in August 2008 after a year of living on on a mere fraction of what I used to earn. Living in California where at the time every loan was a Jumbo, for a while there we couldn’t get anything funded and home values were dropping by the hour. What did I do? I changed. Everything about how I lived, spent and thought about money. I became conscious of every single penny. I relocated and finally landed a job in a new industry. I may never earn a living even close to my previous career but I am living. I appreciate this blog post, all of the good advice, I wish I had lived more frugal sooner. I am 53, I now rent an apt. I have no retirement because I was foolishly draining it to keep up the big mortgage payment while I tried to sell the house for over a year. I didn’t have a fat retirement, I was putting two sons through college on my own and wasn’t saving a whole lot. I always used to think I could catch up the savings once my boys were out of college. I didn’t realize how bad that bubble would burst. Good advice shared here by everyone, thank you!
Oh yes. We dabbled (quite unsuccessfully) in wholesale lending. All of it folded for us around the same time. It ended with huge debts and an FBI investigation. I watched a millionaire boss get swallowed up by greed and ended up costing a lit of people their homes and their jobs. It’s tough to learn things the hard way but you’ve got your health and your family – two things that are priceless.
I haven’t had to make many financial decisions but the smartest one I made was listening to my mother and establishing good credit early. I got my first credit card at 16 – my mother co-signed so I got used to paying my card off in full. I never ever carry a balance on my card and only like to buy items if I know I have the cash to pay for it right away.
GOOD FOR YOU! I learned about credit cards when I went to college and they were practically handing them out left and right. I never really thought about the repayment and I certainly didn’t know anything about interest rates.
Needless to say, I learned my credit card lessons the hard way but I’m happy to report that we are credit card debt free (and have been for 10 years) and pay our balance in full every month. It also helps us realize how much we spend!
The best financial choice my family made was to go cash only. It was hard to give up my debit card, but I am amazed at how differently I view money as a result. We are saving money for the first time and that proves to me that the simple change is paying off!