lurkyloo
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Post by lurkyloo on Sept 6, 2015 12:23:02 GMT -5
I married well
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muttleynfelix
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Post by muttleynfelix on Sept 6, 2015 14:01:30 GMT -5
Ok maybe I will get better answers here. For people that have gone from a 2 income household to a 1 income one... How did you make it work? Wether it was job loss? Deciding to become a stay at home parent? Divorce? How did you make it work? What did you cut? How did you adjust? We finished paying medical bills and the truck before we went to one income. We had savings to pay for big things coming up (maternity leave). Not much changed for us. We had to be more intentional with our shopping, but we weren't unintentional before. We had a transitional time while DH collected unemployment while he recovered from neck surgery and we looked at our options. When interest rates dropped, we refied our house and that freed up a car payment for us so we could keep our savings. Our car purchases have been very intentional since the switch. Income has come back up. We went from $99k annually to $57k and now back in the $75k range. Retirement savings has gone to minimal outside work contributions (vs maxing ROTH), but my old work retirement situation was pretty sweet. So we're at 5x the retirement savings we were at then. I don't want to go back to 2 incomes. I like having the flexibility of only having to secure vacation time at one employer. And not having to worry about leaving work at a certain time every day to get kids at daycare. We came to one income when DH was laid off after neck surgery. He had an option for a job, but could not get medical clearance to do it. By the time he was medically cleared, the job was no longer open and I was pregnant. He did some consulting work on the side until DS was 1 but it was not worth it.
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NastyWoman
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Post by NastyWoman on Sept 6, 2015 14:15:00 GMT -5
Single person here. Considering that I live off less than half of my net (after maxing 401 k plus catch up) income, I would not really have to make many if any changes to my lifestyle. It would majorly tick me off though. It is one thing to live mostly frugally by choice ( I do still travel internationally though, so not all frugal). It's something else to do so because you fear that the next "hit" would put you into deficit.
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Anne_in_VA
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Post by Anne_in_VA on Sept 6, 2015 16:30:52 GMT -5
I went to one income when I git divorced a long time ago. How did I make it work? I moved in with a roommate (we'd already sold the house),had a car with a minimal payment, bought clothes at thrift stores, got rid of cc's, and didn't get ant new cc's, bought minimal, cheap food.
It wasn't fun, but doable.
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Bonny
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Post by Bonny on Sept 6, 2015 18:25:51 GMT -5
There's a reason that years ago you needed 20 per cent down and it could only be 25 per cent of your net or 33 percent of your gross. Uh Zib...the low down FHA and no down VA loans have been around since 1945. My parents bought their first house in 1963 with about 5% down.
Not saying that they could actually afford it though
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zibazinski
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Post by zibazinski on Sept 6, 2015 18:57:44 GMT -5
I just had conventional. I'm assuming the govt backed the other kind. My house and my job backed mine
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8 Bit WWBG
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Post by 8 Bit WWBG on Sept 7, 2015 10:43:15 GMT -5
...:::"Decent EF, to cover you for 6 - 12 months if no income at all, longer if some income coming in. CCs paid in full every month.":::...
This can make all the difference. My parents went through it when my Dad was between jobs. Going from a $225K household to a $40k household for over a year was a non-issue because they had about 18 months savings. Since they were used to saving, their savings went pretty far.
Can you share more details about your friend? Are they doing a lifestyle change so somebody can stay at home and/or pursue a different career? Is a job ending and it will take time to get a new one?
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zibazinski
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Post by zibazinski on Sept 7, 2015 10:46:53 GMT -5
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 10:51:56 GMT -5
Can you share more details about your friend? Are they doing a lifestyle change so somebody can stay at home and/or pursue a different career? Is a job ending and it will take time to get a new one? All of the above
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zibazinski
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Post by zibazinski on Sept 7, 2015 10:57:43 GMT -5
Well, your "friend" has been given a. Lot of advice, none of which said "friend" will ever follow. Good luck with whatever said "friend" decides to do.
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8 Bit WWBG
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Post by 8 Bit WWBG on Sept 7, 2015 11:06:31 GMT -5
...:::"All of the above ":::... Awesome. Well if your friend has any friction with his spouse during the transition, perhaps the relationship advice that I've sought here on behalf of my friend could be of help
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 11:46:48 GMT -5
...:::"All of the above ":::... Awesome. Well if your friend has any friction with his spouse during the transition, perhaps the relationship advice that I've sought here on behalf of my friend could be of help No friction , I believe they are common potters....
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murphath
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Post by murphath on Sept 7, 2015 11:59:07 GMT -5
A big, fat emergency fund would certainly help the transition!
We went through this in 2009 when the recession finally made DH see the light that his restaurant had to go. He'd been "successful" for a number of years (30)it's a grueling occupation and his energy for it was also gone. Naturally, there were some lingering expenses after it closed; and his ego was severely bruised. Guess he went through a very real depression which did not help. Fortunately, I was working and two of our three kids had already graduated from college. We just had our son to see through. Of course, we did just about everything that was mentioned in all the other posts re cutting back. I have to say I cringed when I saw on a prior thread that you spend @ $1,000 month on food for 3 people. That would have to end, for sure.
The good news is that it can be done. Frankly, we're happier now than ever. He is working again for various caterers and I've since retired. The nice thing is he can say "no" when we have plans. His only regret is not shutting down sooner. Our entertainment consists of daily hiking, having friends over for bbq's, an occasional movie date, or going to Flemings for their $6 happy hour.
Our frugal ways have been retained. It's amazing how much money you can save when you look for ways to do it. That may not be much as "one savings" but in the aggregate, it amounts to much more. And, I'd have to say, we live in a very HCOLA (the San Francisco Bay Area), just like Massachusetts is for you.
I love your French saying but would add that when you're young, you sometimes can't see how you can cut back so drastically because the "want" meter is running at full steam. Now that I'm older, I can see very clearly how we wasted money in so many ways.
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murphath
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Post by murphath on Sept 7, 2015 12:04:10 GMT -5
P.S. I think it's wonderful that your MIL lives with you (must be my age talking!). In addition, I believe she earns her keep by cleaning and cooking. If they were alive, I'd take either my mom or MIL in a heartbeat and there would be no talk about them paying rent.
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 12:14:34 GMT -5
I'm doing it now somewhat and will be doing it officially after 9/30. I think the "easy" part for me is reducing fixed expenses (smaller, cheaper housing, only internet, cheap phone plan). Variable expenses and saying NO to the little indulgences I enjoy will really be the tough part. The little shindig in midtown NYC I went to a few weeks back is definitely the last of its kind for the foreseeable future. Good luck! Keep us posted on how you are doing!
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 12:18:48 GMT -5
You have to be prepared in advance, to some degree, to pull it off successfully. Decent EF, to cover you for 6 - 12 months if no income at all, longer if some income coming in. CCs paid in full every month. Used cars bought for cash, no car notes (and thus cheaper insurance, too). No other monthly obligations, except reasonable mortgage and student loans. Money going into savings of some sort: retirement accounts, bank, etc. I realize for the people in my family It happened to, the second spouse was not bringing in "much " income which made it easier to absorb the loss. This couple on the other hand, I don't think they have much time to be prepared. The change will be effective starting new year and they are basically kissing goodbye to 35-40% of their income. Will be interesting to see how it plays out ...
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 12:20:05 GMT -5
I married well Does he have a sister
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 12:23:10 GMT -5
A big, fat emergency fund would certainly help the transition! We went through this in 2009 when the recession finally made DH see the light that his restaurant had to go. He'd been "successful" for a number of years (30)it's a grueling occupation and his energy for it was also gone. Naturally, there were some lingering expenses after it closed; and his ego was severely bruised. Guess he went through a very real depression which did not help. Fortunately, I was working and two of our three kids had already graduated from college. We just had our son to see through. Of course, we did just about everything that was mentioned in all the other posts re cutting back. I have to say I cringed when I saw on a prior thread that you spend @ $1,000 month on food for 3 people. That would have to end, for sure. The good news is that it can be done. Frankly, we're happier now than ever. He is working again for various caterers and I've since retired. The nice thing is he can say "no" when we have plans. His only regret is not shutting down sooner. Our entertainment consists of daily hiking, having friends over for bbq's, an occasional movie date, or going to Flemings for their $6 happy hour. Our frugal ways have been retained. It's amazing how much money you can save when you look for ways to do it. That may not be much as "one savings" but in the aggregate, it amounts to much more. And, I'd have to say, we live in a very HCOLA (the San Francisco Bay Area), just like Massachusetts is for you. I love your French saying but would add that when you're young, you sometimes can't see how you can cut back so drastically because the "want" meter is running at full steam. Now that I'm older, I can see very clearly how we wasted money in so many ways. Again: NOT about ME lol! But definitely, I have a lot of fat in our current spending and plenty to cut. We will definitely re-visit our budget and make some necessary cuts. We are trying to save more / pay down debt but for us it is voluntary vs having no other choice (divorce, job loss, etc). Thanks for all the feedback, my research appreciates it
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teen persuasion
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Post by teen persuasion on Sept 7, 2015 13:26:25 GMT -5
You have to be prepared in advance, to some degree, to pull it off successfully. Decent EF, to cover you for 6 - 12 months if no income at all, longer if some income coming in. CCs paid in full every month. Used cars bought for cash, no car notes (and thus cheaper insurance, too). No other monthly obligations, except reasonable mortgage and student loans. Money going into savings of some sort: retirement accounts, bank, etc. I realize for the people in my family It happened to, the second spouse was not bringing in "much " income which made it easier to absorb the loss. This couple on the other hand, I don't think they have much time to be prepared. The change will be effective starting new year and they are basically kissing goodbye to 35-40% of their income.Will be interesting to see how it plays out ... Yes, but how much net difference will it be? No more FICA, no fed or state/local tax on lost wages. No commuting costs, work lunches, work wardrobe. Possible increased tax credits (are we talking about a pregnancy and change to SAHM status?) Time freedom to cut expenses (cooking, etc.). Big changes in your (generic YOU here) life provide the opportunity to reevaluate everything and make changes. A change in job can also mean change in location (new rent, utilities, etc.) while a change in family makeup can change your freetime and recreation preferences (more time at home, less going out). Embrace the changes, look for new opportunities, don't just try to maintain the status quo and mourn what you have to "give up". More details would also help us give better, more focused advice. As you can no doubt tell, we are just guessing wildly and making assumptions, Carl.
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 13:47:33 GMT -5
I don't think they know yet how much of a difference it will be net wise and they were just talking about it and worried about how they will manage. Gross is ~45k for simplicity. Remaining income I am guesstimating is 70k-80k (not sure).
So they are going from 115-125k to 70-80k.
- house has a mortgage, low rate and no equity so refinance is out.
- they could sell but I don't think they have money to bring to the table.
- cutting back on retirement savings or just not contributing at all.
- yes lower cost in the form of commute to work and what not; eating more home cook meals etc.
- they were talking about cutting landline but that is only $20/month but that helps.
- they will go from a family of 2 to a family of 4 (twins) so they will definitely see a nice refund so that might help.
Basically daycare for 2 kids = what she brings home net wise after taxes, transportations, etc
They had a in home daycare that was on the cheaper end which would have allowed her to keep on working and still net $200/week after daycare is paid for but that fell through.
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 13:52:09 GMT -5
I realize for the people in my family It happened to, the second spouse was not bringing in "much " income which made it easier to absorb the loss. This couple on the other hand, I don't think they have much time to be prepared. The change will be effective starting new year and they are basically kissing goodbye to 35-40% of their income.Will be interesting to see how it plays out ... Yes, but how much net difference will it be? No more FICA, no fed or state/local tax on lost wages. No commuting costs, work lunches, work wardrobe. Possible increased tax credits (are we talking about a pregnancy and change to SAHM status?) Time freedom to cut expenses (cooking, etc.). Big changes in your (generic YOU here) life provide the opportunity to reevaluate everything and make changes. A change in job can also mean change in location (new rent, utilities, etc.) while a change in family makeup can change your freetime and recreation preferences (more time at home, less going out). Embrace the changes, look for new opportunities, don't just try to maintain the status quo and mourn what you have to "give up". More details would also help us give better, more focused advice. As you can no doubt tell, we are just guessing wildly and making assumptions, Carl. No change in job for 1. 1 job is going bye bye 1 car note and 1 car paid for They both have student loans; not sure how much. Utilities I think are fix, they are in a budget plan: $66/natural gas $133 / electricity Less usage so may go down but maybe not. With wife and 2 kids at home, natural gas might go up during winter. Cable? Anyway I know before they were pregnant they were complaining about how money was tight, so not sure how they will manage now that her income will be gone for what? 3-4-5 years?
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milee
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Post by milee on Sept 7, 2015 13:57:49 GMT -5
- they were talking about cutting landline but that is only $20/month but that helps. Hard to describe, but one of the most important things they'll need to do is shift out of this mindset. When you have an income that allows a little breathing room, you have the luxury of this mindset - being able to compare things and decide that a relatively small extra expenditure is worth it because the benefits received are worth more than the tiny additional outlay. If you're going from 2 incomes down to 1 and struggling just to pay all the pre-set bills, you can't think like that. Every $20 counts. It's not a matter of "only" $20 and you will have to start examining all spending with that new mindset that you're currently in the red, so every single dollar counts, even if that dollar might buy you a lot, you just no longer have that dollar to spend.
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 14:23:58 GMT -5
- they were talking about cutting landline but that is only $20/month but that helps. Hard to describe, but one of the most important things they'll need to do is shift out of this mindset. When you have an income that allows a little breathing room, you have the luxury of this mindset - being able to compare things and decide that a relatively small extra expenditure is worth it because the benefits received are worth more than the tiny additional outlay. If you're going from 2 incomes down to 1 and struggling just to pay all the pre-set bills, you can't think like that. Every $20 counts. It's not a matter of "only" $20 and you will have to start examining all spending with that new mindset that you're currently in the red, so every single dollar counts, even if that dollar might buy you a lot, you just no longer have that dollar to spend. That is a good way to see it... I am sure at the end of the day when push comes to shove they will just make the cuts necessary. From what I gathered it is not like they can go to their family for help (both first generation college educated) since they are doing better than some of their siblings/parents. Ex: it was a big deal for him to buy his first house because his parents and siblings still rents. Anyway since their income is similar to ours , my wife and I are considering "testing" the theory if we could survive on my income alone. Based on property records I am guessing our mortgage are similar... We bought last year using USDA and financed 306k and they bought this year using FHA and financed 302k. Different towns so property taxes may account for a couple hundred dollar differences; they are in a more "upscale" town but smaller home. Student loans I am sure we have more than them and they probably could put hers in forbearance I guess. Cars: her BMW is paid off and his Toyota Highlander he just purchased this past summer when his Acura died (he bought it used so YM approved purchased there). So that still have a note. Really like I said, just research. We were talking about it over dinner because she was visibly upset (just found out about the daycare situation) and we were making conversation. She feels she is at a dead end job anyway so she can sacrifice her job for now (underwriter I think), while he is a branch manager for a bank. And the conversation continued home on how we would do it if we had too and it became a challenge... In their case some of the things they were considering or that was mentioned as possibilities: - renting out their house and finding a smaller place - she is against that - turning in his car - but she was worried about her car being "older" and her being stranded at home with 2 kids and no car ... What if there is an emergency? - he is looking into part time work - cutting all entertainment (that is a given) but he wants to keep cable and sports channels. - vacations : bye bye Anyway I am sure they will figure out something. My wife felt that the wife was questioning her about my mother in law like it was an interview... Aka she has a feeling that eventually they will ask us if her mother could do it for them. We told my mother in law and she was alike : as long as they pay me... Why not? LOL!
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Blonde Granny
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Post by Blonde Granny on Sept 7, 2015 14:26:49 GMT -5
Tell them to d/l the free trial of YNAB and put the new income and outgo figures in there. As they see the available funds dwindle rapidly, only then will they be able to determine what can stay and what can go.
If they don't know where to start getting the line items for the budget, I'd be happy to post our 30 lines of expenses that are budgeted for each month. But remember, we don't have a mortgage and we have no car payments or student loans.
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teen persuasion
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Post by teen persuasion on Sept 7, 2015 14:28:48 GMT -5
Ok, so not planned in the sense of "We want to start a family; can we afford a SAHM?", but rather "Twins - how do we do this?"
Time to throw out all the old assumptions. Start with new gross income, figure out income taxes on the new family base and numbers. Then list required expenses : mortgage, base utilities, health insurance and copays, car note, SLs (could IBR lower these?), reduced food expenses, ... If it's not mandatory, it's not on the list. Hopefully income > expenses. Then begin adding things like retirement savings (and readjust taxes!), sinking funds, HSA contributions, some fun money, other reasonable wants.
They can't just wing it, they were tight before on the higher income. They need to account for every dollar, and get the biggest bang from every $ spent or saved.
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8 Bit WWBG
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Post by 8 Bit WWBG on Sept 7, 2015 14:30:21 GMT -5
...:::"No friction , I believe they are common potters....":::...
Hahahaha... less money and no friction. Guess they can pass the time at one of those 24/7 libraries with free WiFi on every corner.
...:::"Hard to describe, but one of the most important things they'll need to do is shift out of this mindset.":::...
Exactly. Nothing can be sacred or off limits when you don't have enough.
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 14:35:26 GMT -5
Ok, so not planned in the sense of "We want to start a family; can we afford a SAHM?", but rather "Twins - how do we do this?" Basically... It seems the reason the in home daycare failed through was they just found out they are having twins and in home daycare can only have 1 infant... So 2 is a no go. So they have the following options: - go with a business that can take 2 infants: way more expensive than in home and also no guarantee of spots. - use 2 separate in home daycare : 2 drop offs / 2 picks up. - she stays home That is me assuming from past conversations, really have no solid evidence of it.
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 14:37:16 GMT -5
Tell them to d/l the free trial of YNAB and put the new income and outgo figures in there. As they see the available funds dwindle rapidly, only then will they be able to determine what can stay and what can go.
If they don't know where to start getting the line items for the budget, I'd be happy to post our 30 lines of expenses that are budgeted for each month. But remember, we don't have a mortgage and we have no car payments or student loans. I am sure they can figure it out: he manages a bank for a living Or I assume they can!
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8 Bit WWBG
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Post by 8 Bit WWBG on Sept 7, 2015 14:43:55 GMT -5
...:::" ... - renting out their house and finding a smaller place - she is against that ... - turning in his car - but she was worried about her car being "older" and her being stranded at home with 2 kids and no car ... What if there is an emergency? ... - he is looking into part time work... - cutting all entertainment (that is a given) but he wants to keep cable and sports channels. ... - vacations : bye bye ... ":::...
Seems like it always goes down like that right? They each have different ideas on how to cut, and the the other responds with a "but". I suppose it is natural to start out hoping you each agree to jettison the same things, but it's going to get very difficult when each of them want to keep something the other doesn't value.
I suppose if DW and I had to go through this, the first thing I would do is pull out the list of our absolute committed expenses, and see where we stand based on that. I'd still want to be able to trim, but it all depends on the margins I guess.
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TheHaitian
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Post by TheHaitian on Sept 7, 2015 14:45:10 GMT -5
Exactly. Nothing can be sacred or off limits when you don't have enough. Not even considering my wife here but just ME... I have a hard time coming to that point. Ex: today a lady was shopping with her husband and their child. She had he coupons, her smart phone, the ad and a calculator . Every purchase was carefully calculated and items were not purchased if not on the list or not on sale. I freaking work hard damnit for my money, if I want to buy freaking Oreo cookies I am going to buy Oreo cookies wether on sale or not or on the list or not. I know sometimes you are forced into that situation (and others it is a choice); but working in a grocery store and seeing folks from different walks of life: one of the simple pleasures I do enjoy (and maybe take for granted) is buying what I want when I want it , not price comparing we want Barilla, Ragu, Tide, Charming Soft, wether on sale or not. And yes I know that mindset would need to change if we were the one facing a 40% paycut essentially ; but this is how I feel right now and I being honest about it.
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