Sometimes we find ourselves in family life, struggling to maintain a budget, and think we are the only ones out there dealing with similar issues. I mean, it’s easy to look at the neighbor across the street with the new truck, your best friend who is excited to spend money for the entire bottle of wine EVERY time you go out with her, and even family members that seem to have it all together when it comes to their finances.
The truth is…things aren’t always as they appear…am I correct?
I’ve been really nosey lately, asking questions about people’s financial lives…even some of the uncomfortable ones…so that we can all better understand that we are not the only ones struggling (or succeeding) when it comes to making the right financial decisions for our families, or powering through when times get tough.
It’s my pleasure to have the opportunity to feature Kimberly today. Kimberly lives in Arkansas with her husband of 30 years and has three kids, ages 12, 17, and 24. Her husband works as a factory worker, and though Kimberly worked primarily as a Merchandizer for the past 15 years, she recently lost her job. She is a Certified Sunday Basket Workshop Organizer, though, and can also be found blogging organizing, cooking, saving money, and traveling over at Kat’s Kreative Life. Below, she shares with us her finances when unemployed.
Income
One or Two Incomes?
Two
What’s the biggest struggle your family has when it comes to income?
Paying down debt
What method do you use to keep track of your budget and why?
I don’t really budget, except in my head. I am not a detail person, more of a general idea to pay off our debt as quick as possible.
How do you budget for kids clothing, school supplies, shoes, activities, and everything else kid-related?
Our kids are older now and do not need a whole change of wardrobe every year anymore. When they did, I participated in consignment sales to sell their outgrown clothing and purchase the new sizes with the proceeds. I am very good at buying the items they need when they are on sale or on clearance. That way when they need them, they are waiting for them.
What is the biggest struggle you are currently having related to your budget?
Being unemployed has been a bit of a downer on our debt repayment. I drew unemployment until recently, so we have been able to pay all the bills but were not able to put as much money towards our debt as I like to normally.
Savings
What percentage of your income do you save each month?
5% in our 401K accounts.
Do you have an emergency savings account?
Yes
Would you consider your emergency savings to be able to cover one major emergency, or to be of long-term assistance if, for example, you were to lose your income?
Now it is down to one emergency since I have been using some of it while I am unemployed.
Do you have special savings or “funds” set aside for vacations and/or other big purchases your family plans to make in the future?
We have a timeshare which covers all the lodging expenses and some of the activity costs for our vacations, but no other special savings accounts.
What is ONE of those funds you know you couldn’t live without? (or if you don’t have one – what is one you could see your family creating?)
I plan to do more advance savings in the future when we have our debt paid off. I would especially like to save for our vehicles before we need one.
Debt
Do you have debt that you are actively working to pay off?
Yes
How soon do you anticipate being out of debt?
In less than five years
What is your current strategy (if any) for debt elimination?
I pay as much as I can each month towards our debt depending on our income and expenses. I pay a minimum of $600 per month and as much as $1200 a month when we have extra money.
Anything else you’d like to include about debt, as it relates to you and your family?
Most of our debt at this time is related to our timeshare purchase, but we have had a lot of credit card debt in the past that was due to us using the credit cards to supplement our lack of income. We have learned a lot from our mistakes over the years and are much better about just saying no when we can’t afford something or working extra to increase our income to cover something we want instead of turning to credit cards.
Goals
Have you made short and/or long-term goals that you and your family are working toward? If so, will you share one or two of those goals and the steps you are taking to reach them?
Yes. We want to pay off our debt, buy a newer vehicle, and purchase a home.
How did you come up with those specific goals?
That is just what is needed in our situation. I have been needing to upgrade vehicles for a while but have been trying to pay off our debt first. We would like to move to town and have a more energy efficient house, but that is not the most important thing to us at this time.
Successes
What is the biggest success you have had to-date when it comes to your finances?
We were able to pay off all of our original credit card debt and have not added to it during this period of unemployment.
Do you have other successes you’d like to share related to your finances?
We have been able to instruct our children in the mistakes we have made and so far they are very good with their money. Our oldest was able to graduate college with no debt and is in the process of getting ready to purchase his first house.
Struggles
What is the biggest struggle you have had related to your family finances over the past year?
My job ended in January and I have not been able to replace that income in full at this time.
If you could pinpoint one major failure you’ve had in your finances over your adult life, what would it be?
When we were first married, we did not have any idea how to budget our money. I got in credit card debt due to a business that did not do well, then I lost my job while I was on maternity leave after the birth of our first child. The credit card debt added up until we could not pay the bills anymore. We finally filed bankruptcy to clear off our debts but didn’t change our ways and ended up back in debt again the next time we ran into a problem.
Have you overcome that failure or is it something you are still working on? (Explain how.)
Yes, I went to work full time and was able to pay off all that credit card debt and very rarely ever use a credit card anymore. Being debt free is our main goal now.
Finally…
If you could go back and tell your young adult self how to handle finances differently in the future, what is the one thing you would most like to share?
Do not use credit cards. Either increase your income or decrease your expenses, but do not use credit cards.
For those with children, how are you currently educating your children when it comes to finances?
We have taught them to be frugal with their money. Both of the boys have worked during the summers and earned money so that they had a chance to learn how to handle money before it mattered as much. We have also taught them that credit cards are not something to rely on. In fact, our 24-year-old just got his first credit card this year to help improve his credit so that he could buy a house.
What is one topic you wish you knew more about, related to budgeting or family finance?
Teaching kids how to budget their money better.
If you could share one piece of financial advice with those reading today, what would that be?
Keep your expenses lower than your income. Just because you can afford to buy it at this time doesn’t mean that you can still afford it next year. We have had a lot of personal setbacks due to job changes, family changes, or sickness. If your expenses are lower, that allows some cushion to be able to absorb some of the impact of whatever changes come to your family.
I’m grateful to Kimberly for being willing to disclose the struggles and successes of her family’s finances today. So many people deal with job loss, it is super inspiring to see someone managing finances when unemployed I love her advice to “keep your expenses lower than your income”. I know that by doing so, financial freedom is so much easier to achieve. If you’d like to see what else Kimberly is up to, you can do so by checking out her blog, Kats Kreative Life (katskreativelife.com) or by following her on Twitter.
Tip: If you find yourself concerned about losing an income, make sure to grab my FREE Income Worksheets to help you plan for whatever might come your way! Find them HERE.
