When cutting spending isn't enough
A newly divorced mother's budget was so tight that every expense was keenly felt. Bigger changes were required.
This post by Daisy Bailey originally appeared as a reader story at partner blog Get Rich Slowly.
Three years ago, I stopped reading Get Rich Slowly because I just couldn't read one more article on how to save money by shampooing with baking soda or how to go on a cheap vacation. I was in a panic over my own big question: What do you do when there simply isn't enough money?
What do you do when there's nothing left over for the emergency fund or, God forbid, an actual emergency?
Things fall apart
My finances were very stable until my marriage fell apart. I ran the numbers before the divorce and knew that money would be tight, but the reality was much bleaker than I expected.
I was working full time and making in the mid-40s and my husband made in the mid-20s. I'd fooled myself into thinking that because I made more money than my husband, I'd be able to handle the day-to-day costs. I dared to hope that I might be better off because I would no longer be paying for his bad money habits. I had no car loan, no credit card debt and no student loans.
But the fact is that when you build a life for two (or more) on low to modest incomes and one person leaves, you both feel it desperately.
- First, we had an 18-month-old daughter for whom I became the primary caretaker and custodian.
- Second, I remained in the house we had bought together and I paid for it and everything relating to it all by myself.
My budget became so tight that I felt each expense keenly -- the regular bills, the rising cost of food, gas and doctor copays. (Post continues below.)
I performed as many cost-cutting maneuvers as I could: I canceled cable and the land line, I reused water, I turned down the thermostat, I stopped all nonessential driving, I made my own baby food and stopped eating out. I patched the roof myself and shoveled the snow. And still my income wasn't enough and every month, I spent more than I made.
Because my daughter was still a baby, I didn't feel I could work a second job at night, but I did wrangle a temporary promotion at work, which helped for a few months. I researched state and federal assistance (I didn't qualify because my salary was too high) and looked into attending divorce support groups (but couldn't pay for a baby sitter).
Here's where I should note that I did have some reserves in the form of retirement and a small stock investment. If I chose to cash out my stocks, which would have provided only a short-term fix, then I would have paid a significant amount of capital gains tax. So, even though I technically had reserves, they wouldn't have fixed the problem for very long.
Finally, I freed up some more cash in my paycheck by cutting back on my retirement contributions, and I asked my parents for a loan. That's when I could finally hold my own.
So that takes me back to the initial question: What do you do when there is simply not enough money?
Making big changes
I'm fortunate that my parents, who live 1,200 miles away, could respond with both money and frequent visits.
Also, as a little time passed, I became open to making big changes. It's hard to give up your house, your job and your spouse at the same time. I had to space things out a bit, but in the end, those big actions are what finally turned my finances around.
A year after my divorce, I accepted a job in another state that paid more money and had a better career ladder. (I did have to return to court mediation to negotiate taking my daughter out of state, but it worked out well because the schools are better where I moved.)
The very best thing I did for myself was to sell my house, even in the low market. Gone were the big mortgage payments, the utility bills, the repairs and a lot of the resentment I felt just walking into those half-empty rooms. Because my husband and I had put down a huge amount of money when we bought the house, I even walked away from closing with a modest check. Not everyone would have been so fortunate.
Back on my feet
Once I stopped bleeding money and could think about it without panicking, I started reading Get Rich Slowly again. I made myself a budget-tracking spreadsheet that shows me in a big green box what I have left over at the end of each month instead of what I spent. Believe it or not, that simple green box has inspired me to save more than I ever thought I could.
Three years after my divorce, I can finally breathe, financially and mentally. Now, the next stop in my financial journey is learning to balance my money and my life as a single parent, a homeowner and an active adult.
More on Get Rich Slowly and MSN Money:
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