Welcome! I’m so glad you are joining me for this series on How to Live on $25,000 a year (and Live like No One Else)! This is the second part of the series in which we’ll talk about the mental change that needs to occur in order for this to happen. Be sure to catch up on Part 1 if you missed it because in it I talk about why we are in this financial situation.
As I said in the last post, when I became a stay at home mom, thus cutting our income substantially, we didn’t actually take a hard look at the numbers and definitely didn’t change our spending habits to accommodate for the reduction in income. It’s embarrassing to look at the last few months and how out of proportion our budget had become. That embarrassment led us to realize we needed to make a change, a drastic change in order to come out on top.
If you are in a similar situation, this post outlines the first thing that needs to happen while beginning a journey of financial victory.
First, what needs to happen is a complete shift in mindset. This isn’t as easy as it sounds and requires a lot of honest and clarity. Sit down with your spouse and work through some of the things I’ll outline below. You both have to be in on this and on the same page for it to work.
Nothing hard can be accomplished without having an end to look forward to. Clear, written goals are the motivation you need if you have a hope of sticking with it. Our goal: “to live like no one else now, so that later, we can live like no one else” (Dave Ramsey) took a while to catch in my mind, but now that it has, it resonates throughout the day. Living like no one else looks like this for us:
- Living on one income so that I can stay home and raise our kids
- Paying off the mortgage in our twenties
Your goals could be completely different. That’s cool, just make sure you write them down so that when things get really hard and something is really tempting you to blow it, you can refer back to them and remember the “big picture”.
Continuing in the change of mindset that needs to occur in order to get on track for living on one income, we need to decide: “what really makes me happy?”
Is it the stuff you have? The electronics, the furniture, the clothes, the cars, the house? Or, is it the precious times you have with your family, the feeling of overcoming victories, the pleasure in the simple things. Call me old fashioned, but I think deep down, we all wish we could live in simpler times.
Need a hand planning out your finances? I’ve got just the printables for you!
Once you have set your mind to realize what really makes you happy, you’ll be able to start, which is the next step. Make a really honest assessment of what you actually need vs. what you want in your life.
I’ll give you a clue: needs are food, shelter, and clothing. Period. Anything beyond that, for us, was on its way to court where the judge is mean and the jury is tough to convince. Here are a few things that got severed from our lives:
- Magazine subscriptions
- Haircuts (I cut mine and the guy’s hair)
- Pet grooming (I also do our Golden doodle’s)
- Hair products (other than shampoo and conditioner)
- New clothes
- Gifts (This year we are hand making gifts for our loved ones)
- Eating out
And, here are things we’ve cut to a minimal budget:
- Groceries: $250 a month
- Phones: $24 a month (more on that later)
- Home repairs/projects: $30 (I had to have some money to keep up this blog!)
We are just about as miserable as they come…NOT!!!!!! The next key to living like this on one income is learning the art of contentment. It’s not like we don’t still want these things and more, but that will be for a time in the future. For now, we are learning to be thankful for what we do have.
So, for starting this journey to being able to make it on $25,000 a year, we learned to make a 180 degree turn in our mind first by setting goals, realizing what really makes us happy, assessing our needs and cutting out the unnecessary, and by learning to be content and thankful.
Be sure to join me for the next two posts where we’ll talk about the person you need to listen to in order to get on the right track financially and go over some practical financial tips.
Part 1: Why We are Here
Part 2: Changing Your Mindset
Part 3: Who to Listen to
Part 4: Practical Advice