How a Drop in Income Turned Out to Be a Good Thing

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.)

drop in income a good thingSecondly, we’re used to living on a tight budget because we’ve been doing so as we try to pay down debt.  Our income drop, though not slight, was not going to throw us into a completely different style of living that we weren’t accustomed to.  I’m used to buying my clothes second hand.  I’m used to cooking all of our meals from scratch and not going out to eat.  The only adjustment we had to make was buckling down even more.

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?

Frugal Estate Planning

One of the joys of getting married and having kids is that you then must face your own demise.  The poet Donald Hall wrote about this in his poem, “My Son, My Executioner” stating, as a man and his wife look down on their newborn son, “We twenty two and twenty five/who seemed to live forever/observe enduring life in you/and start to die together.”

Cheery, thought, eh?

Estate Planning Isn’t for the Faint of Heart

Yet, if you have children, you must plan for their future should you die while they’re still young.  I know, no one wants to do this.  In fact, 4.5 years ago when I was pregnant with my last child, I sat down to do a will and trust kit that I got online.  I only got about three questions in, before, in my wild hormonal state, I broke down crying when I started facing the questions about when I would want the cord pulled.

It took me another four years to feel ready to have our will written.

I know.  Irresponsible.  Yet, it took me that long to accept that yes, I will die at some point, and yes, I need to plan for it now, while I’m still healthy and (relatively) young.

It Takes a Strong Wallet, Too

However, facing my own mortality was only part of the problem.  Once I was ready to have a will written, I had to face the fact that it was unbelievably expensive!

We live in the suburbs of a large city, so I don’t know if that’s the problem, but the first lawyer we contacted quoted us $2,500 to set up our will.  When I told him that we are living on a smallish income and paying down student loan debt, he generously agreed to put us on a payment plan without charging interest.  While I appreciate the generosity, we still couldn’t afford $2,500, even on a payment plan!

Next, I contacted a lawyer from my small hometown, but he still was expensive, quoting $1,200 to $1,500.  As Dave Ramsey would say, “It’s not in the budget.”

A Frugal Estate Planning Option

Frugal Estate PlanningIn the end, we made a compromise.  My husband and I both knew we needed a will in place, but we didn’t have the kind of money lawyers were asking for.  Instead, we turned to LegalZoom.

For less than $250 total, my husband and I each had our wills drawn up.  We each answered a few simple questions online, and each will took less than 30 minutes to create.  Then we paid and waited for the lawyers at LegalZoom to look over the document.

Less than a week later, the wills came through the mail and were in our hands.

When we don’t have so much debt and have a larger income, we plan to get a will and trust set up in person with a lawyer.  However, for now, on our budget, LegalZoom works perfectly.  We have a will in place should anything happen.

Have you used LegalZoom for a will?  Would you consider it?  Does $1,200 to $2,500 for a will created by a lawyer seem outrageous or normal to you?

Declutter Your House Like You’re Moving and Make Some Cash

It’s been a long, hard winter.  In Chicago, this winter ranks as the third snowiest on record, and the temperatures have been bitterly cold.  Of course, we’re not alone; much of the country has felt the same pain.

Finally getting some warm, sunny days and watching all the snow melt has put me in the mood to spring clean.  I’m not someone who cleans just for the sake of cleaning.  No, I clean for two main reasons–to feel better about our home and how we feel in it and to make some cash.

To me, spring cleaning and decluttering mean raking in some extra cash selling the crap stuff we no longer use, love, or need.

A New Way to Think about Decluttering

But this year, I’m looking at decluttering and spring cleaning in a different light.  My husband’s mentor has accepted a job in Florida, and he asked my husband to come with him.  For a few weeks, we thought about going before we decided it wasn’t the best move for our family.

Still, during those few weeks a move was on the table, I panicked a bit looking at all the stuff we would need to either move, sell, or donate before moving 1,000 miles.  Suddenly decluttering became less about the mantra, “Only keep what you love and use”, and more about, “Would I pay to move this item 16 hours away?”  It wasn’t a pretty picture.

Declutter your houseHow Much Money Can You Make Decluttering?

You make think of decluttering primarily as tossing or donating, but there’s also good money to be made in decluttering.

Things to Trash

Of course, we have our fair share of trash.  One of our daughter’s is a prolific artist.  She’s only 5, but she creates artistic masterpieces every day.  I’m perfectly okay with just keeping a few of these and trashing the rest, but my husband can’t yet bear to let them go.  We have three shelves filled with her work.  Seriously!  Almost none of those drawings would make a 1,000 mile move, so it’s time to purge.

Things to Donate

Right away, I saw plenty of stuff that we just don’t need and that have no resale value.  Clothes that we don’t wear, clothes that the kids have outgrown, baby blankets we no longer use, books and more books that we no longer read.  The list goes on and on.  Those items would easily make the donate pile.  (Remember if you itemize on your tax return to get a receipt for your donations so you can get a tax deduction.)

Things to Sell

But then I looked with a keen eye at the dollars we’re sitting on.

  • My husband has a jigsaw tool that he used once and never used again that could be sold for perhaps $50.
  • I have a good stash of canning jars, many of which I will never use and would not want to move 1,000 miles which could be sold for another $40 or so.
  • We have a foreign language program that we bought for homeschooling that was never opened because we were able to get a different program for free.  That is worth another $250 to $300.

The more I looked around, the more I realized I was just holding on to stuff that easily tallied $1,000 or more!

Is decluttering worth it?  For a cleaner house and an extra $1,000, I’d say yes!

What’s the most you’ve made when decluttering?