RUNNING SHORT OF CASH
Stories About Being Broke Are Abundant
I wanted to see what stories existed that were written by people who had experienced the malady first hand. So I went on the internet and read a bunch of them. Kind of depressing, I suppose, but informative.
Drinking, cigarettes, credit cards, unaffordable cars, unemployment, bad friends, you name it. The examples of why, or reasons for are endless. Bad spending habits seem to be the center of it all. If you spend $125 for every $100 you earn, it won’t take very long to go broke or top out your credit resources.
The dialogue on this subject is one of endless stories that clutter the blogs and advisory articles concerning this tragedy of human nature. It wasn’t until I retired on a fixed income that I finally had to grapple with my own shortcomings. Being a self-employed contractor meant I did not have a fixed income and I never took the steps to create a definitive salary or savings plan for my self.
Don’t Let The Grass Grow Under Your Feet
One of the amazing things about most people is that they continue to stay in the area they are already in when time runs out. The economy sours for the industry they are involved with and they struggle with a different line of work that pays much less than what they are accustomed to. So, their quality of life begins to deteriorate and bills go unpaid.
If you get fired or laid off from one job in your town, and you land another one, chances are high for you to get bumped again. Sales and management positions are notorious for this. A whole new area might be more stable and give you a new lease on life.
Construction is an example of a fickle and often brutal business. It can be booming one day and gone the next. When it dies, income from other lines of work can be half of what was earned before. You can’t sit around and let that happen. You have to pull up stakes and move to where the activity has shifted to.
I have shifted gears many times and moved as soon as I had an inkling that my time for being in a certain area was running out. I had to make quick and unfettered decisions to move elsewhere. And this meant leaving places where my wife had pretty good jobs. Fortunately she always made the “adventurous” decision to pull up stakes one more time and go with me.
There are never any guarantees in life that let you be permanently affixed to one city, town or industry. Even government jobs can disappear when a town has to be abandoned or a tornado destroys a school or civic facility.
After Hurricane Michael collapsed the building center where I had my cataract surgery done, it was all over. All the ophthalmologists finally had to seek employment elsewhere which probably included moving to other states. It was because they no longer had income from eye operations. My follow-up appointment for an eye evaluation was no longer possible at that facility.
If you can’t afford to live in your own home or don’t even want to, you have some options. You either pay rent, freeload off of someone else, or reside in the streets. I think the latter two options are becoming more and more popular. Rental rates are going through the roof with no sign of slowing down.
In June of 2018, the average rent paid for all housing units combined was $1,405 per month. That average increases by an amount of $30 to $50 per year. That gets you less than 900 square feet in most cases. If you have to put more than one paycheck together to make the rental payment, you are suddenly waiting for the next one to buy food or make a payment on your car. I have been there and done that.
The average cost of a single family home in the US was $287,600 in January 2019. With a 10 % down, that leaves $258,400 to finance. That translates to a $1309 mortgage payment “before” property tax and homeowner’s insurance payments are added to the amount ($1,700 ?). The average mortgage payment (principal and interest) was $1030 (2015 data). The aggregate payment which included property taxes and homeowners insurance is $1492 .
Budgeting for that once-a-month expense can be daunting. And it becomes the center of all your monthly outlays. Sometimes the money runs out and you have to figure your way through it all.
I managed to circumvent a high rental payment several times by trading for repairs to the buildings I lived in for a specified number of months. Another time, free rent was part of the deal where I was the maintenance supervisor for the apartment complex I held a unit at. I also brought an empty complex back to life that sat dormant for years. Half the going rate was my monthly rental cost as a result. That was the combined amount for a 2 bedroom unit for myself and my wife and an efficiency unit for my mother-in-law.
Other cost saving venues included in my exploratory endeavors were:
- Doing the yard work myself
- Taking responsibility for minor property repairs in my unit
- Handling the rental operations on other units for my landlord
- Doing the bookkeeping for him or her
- Living in a manufactured or mobile home at reduced rates
- Living in a lower rent rural area outside of city limits
Do You Have A Really High Car Payment?
The average price of a new car in September 2018 (Kelly Blue Book) reached $35,742 With a no down payment loan at 6.5 % (average rate) for 6 years translates to a cost of $600 a month. A $50,000 income nets about $3,500 a month after taxes. So with a rental payment and car payment taking over $2,000 off the top, you are left with less than $1,500 for utility bills, food, and other expenditures.
In contrast, the average used car prices for 2018 (3rd quarter 2018) were $20,084. Using the same interest and time frame criteria, the monthly tab drops to $338, an almost $300 savings.
I leased a new Chevrolet Tahoe in the year 2000 when the price was $32,000. When the lease was up, I had the cash to pay it off at $18,000. Since I had it new and took good care of it, I decided I would keep it a long time. I still have it and it runs like new. However, you can buy a used one for around $3,500 (Kelly Blue Book) in good condition.
I also had the cash to buy a 2005 Chevrolet Silverado new for $24,000. It has all the bells and whistles including a Bose stereo system, Onstar, and Satellite radio. The price was bumped up by converting the cloth seats to leather and adding a tonneau cover for the truck bed. It’s possible the dealer gave me a good price overall because the truck was one of the first hybrids and no one else wanted it. I still have it and it also runs well.
My wife and I are not fans of owning a small or medium-sized car (or any car, for that matter). Trucks and SUV’s are our choice and will last you a long time if you take care of them. Most smaller cars are what I call throwaways because numerous problems start showing up midway through their life cycle. They also don’t handle dirt roads or adverse weather conditions very well. I have often driven my truck or SUV through flood waters that stalled out cars and smaller vehicles. Country living can be a real test for the type of transportation you choose.
What About The Food Bill
The average cost of the grocery bill for a family of 4 (USA Today) is around $220 a week. And that is for families that prepare meals at home, shop sales, and make judicious use of leftovers. It does not include fast food outlets or fancy restaurants.
If you subtract $880 from the remaining $1,500, you have a little over $500 for gas, cable TV, internet, car insurance, phone bill, water bill, etc. It’s starting to look intimidating.
We do our grocery shopping at Wal-Mart, even though it is not a catch-all for every necessity. Still the bill runs around $600 a month for 3 people. Kind of high, but we are continually looking for ways to cut that cost down.
We try to get produce from local farms when vegetables and berries are in season. It is better quality than store-bought items, and the price is usually 30% to 50% cheaper. Our friends provide fresh eggs for us from their chickens periodically and we are starting to grow our own tomatoes (which are a big part of our diet).
Almost all of our meals are cooked at home and they are done with nutrition guidelines for reference. Expensive cookies, cakes, ice cream, junk food, processed food and such are avoided for the most part or are eaten sparingly. No pricey soda pop or bottled water is contained in our budget.
The Chart From Red To Black
A lot of this information is readily available to anyone who fights a cash-shortfall each week to make ends meet. A budget only works if it is applied and adhered to. There are Apps for your mobile device like MINT and WALLY that can help you control your expenses.
I have made a CHART on Microsoft Excel that has all my information in one spot:
- Bank Accounts and current balances.
- Projected income for the coming month.
- Regular Billings and dates when payments are due which is the last day to pay them before late charges assessed.
- Projected cash left over following bill payments.
- Mortgage payment breakdown.
- Upcoming Obligations (license renewals, medical bills, etc.).
An Excel Spreadsheet with formulas for debits and credits is the program I use to keep track of my bank accounts. I not only enter current payments made, but also upcoming payments not made yet. The CURRENT BALANCE is inserted in the Memo slot where it is applicable for the current amount in the account “before” the next direct income deposit is due that I have also entered, but not had happen yet. Unfunded entries or pending expenses yet to be finalized are listed on the spreadsheet register in red.
The end result is that I can show what deposits I need to make in current and upcoming weeks to project what will be left over during the course of each month. If I don’t know the exact amount of an upcoming bill, I enter a projected amount.
This discipline will allow me to view the amount of spendable cash that I have to work with. If I have to dip into savings to cover an unexpected expense (like a car repair or home maintenance issue), I will at least know where I stand.
The Bottom Line
Credit cards will take you only so far and probably wind up going into default when you fall behind in payments. If you pay things like Federal Income Taxes with a credit card, you are in big trouble already. Yes it gets the government temporarily off your back, but the card interest will escalate your balance-due dramatically before you know it.
I am no recognized authority on saving money and budgeting expenses, but I can tell you what I have done:
- Found a home in the country at a dramatically low price (The BudgetHouse Renovator) and taken my housing payment from $1050 per month in rent (Ft. Lauderdale, FL) to $550 per month (Defuniak Springs, FL) in an all-inclusive mortgage expense. This PITI payment includes:
1. Pay down on the Principle.
2. The amortized Interest Payment.
3. Set aside amount to cover Property Taxes when due.
4. Set aside amount to cover Insurance Bill when due.
5. Mortgage Insurance Payment
- Kept an 18-year-old SUV and a 13-year-old Pickup Truck in good running order and avoided a monthly car payment.
- Negotiated lower payments on all my utility bills.
- Tapped into disaster relief programs for my mortgage and utility bill payments when available (we have been affected by 3 major hurricanes in the last 3 years).
- Participated in picking my own fruit events and vegetables where available to save money.
- Bought produce from local farms.
- Eaten less food.
- Purchased (and sold) used items in venues like OfferUp and Ebay such as furniture, tools, yard decor, lighting, and such.
- Sought “best pricing outlets” online with free shipping to save money over retail outlets.
- Initiated disciplinary budgeting procedures for my fixed-income lifestyle.
- Dramatically modified my pathetic city-based Yuppie Mindset.
I am talking to myself when I write articles like this. My guilt lies in the fact that I could have implemented a lot of these procedures much earlier in my life.
To those of you who still have a lot of years leftover in your life span, take heed. It’s all about the way you deal with money. Not about how much you make each month, but how you live at home and what you do with your finances.
I hope this article helps those of you willing to read it. If if helps just one or two people who are constantly running short of cash, then it was worth it. I hope it will help you.
I am requesting that my readers click on the links provided and download a sample read of each book and give a review on Amazon. You will have free access to the first four chapters of each book. My hope is that you will like the story lines enough to obtain either an eBook version or a paperback copy that you can put on your bookshelf as a masterpiece when you are done. FATE STALKS A HERO I: RESURGENCE, FATE STALKS A HERO II:THE FIJI FULCRUM, and THE SAGA OF HERACLES PENOIT. I will be giving excerpts on these works in upcoming blogs to familiarize you the reader with exciting details about the contents of each one. Thank you!