Do you think it’s possible to truly feel financially empowered while you’re living on a small income? Does more money equal more power over your own life? I would argue that it’s never that cut and dry. The breakthrough in my financial story wasn’t the day I doubled my income. It was the first big shift in my mindset.
Broke Vs. Poor
“Being broke is a temporary situation. Being poor is a state of mind.” – Mike Todd
When my husband and I agreed to transition from a dual-income to a single-income family shortly before our second child was born, we lived on $36,000 for the next year. Sure we were glowing with adoration for our newest bundle, we were out of debt, we had an emergency fund, and we were glad to have one parent at home full-time with the children, but living each month on $1,600 . . . → Read More: How to Feel Financially Empowered on a Small Income
In 2012, my husband and I both worked full-time with no children. By 2014, we were a family of four living on a single income of less than $2,000 a month. It wasn’t an easy time for us, but I’m going to share with you the lessons we learned and applied to help us make it on our own two feet. By the end of this article, you will have a clearer understanding of not just how to survive a loss of income, but how to thrive afterward.
7 Ways to Survive a Loss Of Income
In the following steps, I’m going to outline what you can do today to prepare for a future income loss or how to survive a current loss. Many of the techniques my husband and I used were lessons we learned from Dave Ramsey’s Financial Peace University. Whether or not you follow all of Dave’s . . . → Read More: How to Survive a Loss of Income
According to Money Magazine, 78% of Americans will have a major financial setback in any 10-year period. If you’re reading this, then the odds are you’ve had one. Perhaps it wasn’t major, but even a minor financial setback like an unexpected bill or an auto repair can leave us reeling.
Do any of these sound familiar?
Losing an income
Losing a job
Major car problems
Unexpected medical bills
Unresolved poor money management
Those are ALL things I’ve experienced since living on my own, getting married, and starting a family. They’ve all taken place within the last 10 years. I call that last one my “head stuck in the sand” syndrome.
Your list will look different, but a financial setback has a universal effect on us.
It attacks our dollars. It attacks our resolve.
Losing . . . → Read More: How to Get Back On Track After a Financial Setback
If you don’t yet have an emergency fund, I’ll be dramatic enough to say that this would be the most important new year’s resolution to make in 2015. Of course I’m an advocate for cleaning up your diet and adding more physical activity into your routine. However, there are far too many people who would be financially wrecked by an emergency because they don’t have a reserve to help them out.
Visits from Murphy
Murphy’s law is the concept “if it can go wrong, it will.” It’s quite a pessimistic thought but if you have an emergency fund established then Murphy doesn’t seem that intimidating. If your dryer comes to the end of its life, but you have an emergency fund then you won’t face going into debt to replace it because you can cover the cost in cash. Anxiety won’t be so prevalent when you’re prepared for financial speed . . . → Read More: The Emergency Fund – The Most Important New Year’s Resolution to Make in 2015
My wife and I have been working on our budget for almost a year now and we still do not have it perfected. Our goal is to get out of debt within the next six months or so and we plan our budget accordingly, but I don’t think we have successfully matched up our expenses to our budget yet. Let me tell you, it’s frustrating! The car needs a new part, subtract $2,000 from the bank account; ouch! That was not in our budget.
First of all, a budget is not fun, not even for me and I’m the nerd in the relationship. It takes time, countless meetings to stay on the same page, plus there’s the relentless updating to the budget if unforeseen expenses occur. Secondly, becoming debt free is a slow process, which makes budgeting even more of a bore. There is a silver lining to this dreary . . . → Read More: Plan For Unexpected Expenses and Get Out of Debt
If you have started the Dave Ramsey 7-step plan to wealth, you have most likely asked yourself, “Ok, I have saved up my emergency fund, but where do I put the money?” This is a great question that I have often asked myself as well. The current yield on an average checking account is something like 0.02%; meaning that if you have $1,000 in your account, the bank will pay you a whopping 20 cents for the year. Yep, that’s 20 pennies from the interest. Clearly, this isn’t a wise place to park your money.
Where can we put our money so that it yields greater interest? Well, this is a correct question to ask, but it’s not the only question. There is another portion to the equation. Not only do you want a high yield, but you also need your funds to be liquid in the event that there . . . → Read More: How Do I Invest My Emergency Fund Savings?
As I had stated in a previous article, Dave Ramsey has a 7-step plan for getting out of debt and becoming wealthy. As simple as these steps may seem, when we are burdened by the mortgage, credit card payments, student loans, and all other forms of debt, even the simplest of steps can seem nearly impossible. So, I thought I would break down these steps and show you that no matter how bad your current situation, there is a way out.
Step 1. Set aside an Emergency Fund of $1,000
This sounds so simple doesn’t it? Easy on paper, perhaps not so easy in real life. Lucky for us, at the same time my wife and I decided to start this financial plan together, she found a job. Boom, step 1 was completed in our first month. Since then we have seen our fair share of financial disasters though, and . . . → Read More: 6 Ways to Save Up For That Emergency Fund