You Make What?!?

(not 100% about baby, but 100% about money...and babies cost money)

"You make what?!?"

It's true. We aren't millionaires. Not even close.

Who knows why, but there have been several friends, family members and blog readers who have taken interest in our finances lately. I, Katey, have been contacted by strangers, even, asking how a young couple like us is able to manage a home and growing family on a shoestring budget. I'm flattered that people recognize our hard work to stay financially secure in such a shaky economy, but I'm not sure that many of them (or you) realize how small and how tight that shoestring of a budget really is.

Sure, we would always like to make more. Who wouldn't?
But the point, for us at least, is to appreciate what we do make and to use our resources wisely.
Well, as wisely as a 23 and 25 year old can manage...c'mon, we love road trips!

Because so many have asked, and because we are glad to share if it helps others, we thought it would be fun to share our saving secrets with the world...or at least our readers.

But first, the shocking number that makes everybody ask...
"You make what?!?"

Under $30,000

Yes. That's it.

The simple math is this:
2 people + 1 full-time income + whatever money Katey makes doing whatever it is that she does =
under $30,000.

We aren't suffering.
In fact, life is really good and we would love to share with you the simple steps that we have taken to be able to confidently celebrate and enjoy what we make.

Steps to Stretch $$$ Without (totally) Losing on Luxury:

Probably the most important thing to do first is to recognize what luxury means to you. If a home the size of the White House, a garage full of cars like Jay Leno's and a night life as ritzy as the Hollywood stars is your idea of luxury, then this post is going to make you VERY uncomfortable. Basically, evaluate what is need and want in your life and decide which of those wants should stick around and which ones should hit the road.

For us, we consider luxury to be this:
We own a 3 bed/2 bath home. We NEVER go hungry. We have transportation. We have more clothing than we need. We have loving friends and family. We have a VERY spoiled dog. And we have a baby on the way.

So go ahead - take an inventory of what you consider to be luxury.

Now the steps...

1. Budget, budget, budget!
For us, the most important thing is to make sure that we are not spending more each month than we are bringing in, causing debt to pile up. Jason is the "man with a plan" and he does a fabulous job at keeping us accountable to our budget.

Quick Tip:
Don't start planning your budget with how much you can spend each month. Instead, budget for how much you want to SAVE each month. Pay yourself (rather, your bank account) first, then factor in a mortgage or rent, cost of living, transportation, animals, children, etc. Also, when making your budget, don't forget about vacations and gifts - birthday parties, bridal showers and other fun happenings seem to sneak up on people and you want to make sure that you've budgeted for such occasions.

2. Just Say No
Decide right now, between you and your spouse, who is the tough one. Make sure that the "tough one" is prepared to refuse to buy that really, really cute purse that you sooooo "need" or the baby bedding that would be sooooo perfect but costs soooo much. For us, Jason is the tough one. It's the only way that we can celebrate and enjoy our income. If it were up to Katey, we would move to Disneyland, never work again and buy everything we ever wanted.

Quick Tip:
Ladies - when it doubt, cry it out. If hubby says no, don't fight him. Trust his judgment, give thanks for being blessed with such a wise husband and then, when you have a moment to yourself....go ahead and weep. There are many purses and shoes out there that I have shed tears over but I promise you this - crying over a purse is a whole lot easier than crying over your home going into foreclosure. Husbands - have grace. We need it.

3. Used Is The New New
Remember when pink was the new black? Well, used is the new new. We are yard-sale and consignment junkies! We've owned our home for one year now and still do not have bar stools but that is because we haven't found them used. There is NOTHING in our home that is brand new and we get compliments all the time on our furniture and decor. (Of course, we scored on some new stuff for our kitchen when we got married...but those were gifts).

Quick Tip:
You will save 50-90% if you take your time and search for used items instead of buying new. Try Craislist, Ebay and other online resources. You can also find great deals at yard sales, second-hand stores, consignment stores and thrift stores.

For many years, we both had single moms and although they both re-married, they continued to live as though they only had one itty bitty income. Shopping at The Dollar Tree, yard sales and thrift shops is old hat for us but we do understand that it may be a stretch for those who are accustom to finer living. Our advice to you - start small. Soon enough, you will learn to enjoy hunting for a good bargain and who knows - maybe you will be teaching us a thing or two about shopping.

4. Sales Racks
When it comes to clothing, keep it simple. If it isn't on clearance, don't bother trying it on. If you try it on, you will fall in love with it and convince yourself that it's worth the purchase. Sure, it might be a super cute dress for only $25 but how many other super cute dresses do you have in your closet that you've actually worn in the last month??? Exactly. If it's not on sale, it's not available. End of story.

Quick Tip:
Decide now on a fair amount to spend on each clothing item. For example, Katey refuses to spend more than $15 on a casual dress. She never buys a shirt that is more than $8-10 and pants don't go home with her unless they are under $25. This includes sales tax.

Another helpful hint... if you buy five articles of clothing, DO NOT take off the tags until you remove five articles of clothing from your closet. Give those items away - bless someone in need or donate them to a thrift store. You never know - you just might be browsing the clothing section at the good will and find an adorable top for $.25 that came from the trendy closet of a gal who sticks to the "what comes in, must go out" rule. 5 in, 5 out. Simple.

Plus, your husband will complain less about you buying clothes if your closet isn't already busting at the seams.


5. Buy in Bulk
Not everybody has a Costco card. We are blessed to be Costco members through Jason's work. If you do have a Costco membership, buy as much as you can in bulk. Obviously, some things will spoil before you can eat it all but items like dog food, toilet paper and laundry detergent are great examples of buying in bulk and saving money. YOU DON'T HAVE TO PAY A MEMBERSHIP TO BUY IN BULK. It's a shame that so many people think they have to put in to get out. You don't. There are plenty of stores where you can buy in bulk. In fact, Katey prefers Winco over Costco because she can buy cereal, beans, pasta and baking items in bulk and doesn't have to pay for the packaging.

Quick Tip:
Shopping at stores where you bag your own groceries keeps the cost down. The fewer employees that a store has to pay, the lower the cost of most items. Plus, you get a mini-workout when you bag your own goods and haul them to your own car. Also, shop for your items on the bottom shelves. The pricey stuff is places eye level. Buying off-brand items also helps to keep your cost down. And, like our mother's have been saying for years...don't go to the grocery store hungry. You will buy way more than you need. We would like to add to this rule by saying: Don't go to the grocery store pregnant. Fellas, your woman will eat you out of income so if you want to afford that child, do the grocery shopping alone for 9 months. Also, need we say it? Coupons!!

6. Sharing is Caring
Check this out - Jason's co-worker was moving out of her home at the same time we were moving into our home. She knew that we loved her big dinning room table (seats 14) and she blessed us by GIVING it to us because it was not going to fit in her new home. In addition, she gave us two large cabinets from Ikea that she no longer wanted. A few months later, one of Katey's friends mentioned that she needed a big cabinet and Katey mentioned that she was looking for a hutch to use on the patio as a potting area. Katey traded one of her big Ikea cabinets for the hutch that her friend no longer needed. How about them apples? The point here is that sharing is caring...when someone blesses you, pay it forward. Also, trading home goods with friends is fun. Katey often trades her homemade soap for fresh veggies from friend's gardens. Everybody wins :)

Quick Tip:
There are several sites online where new and expecting parents can trade items with other parents. Use your search engine to find such sites...trust us, you will save a world of money! Besides, why hold onto that changing table if your toddler can potty on his own? Trade it in for a toddler bed, or a front-facing car seat.

7. Stingy is Sexy
Here us out...
When we got married, Katey thought she was going to die of embarrassment every time it we got to the check out line and Jason started chucking items out of the basket because spending $2 on Kleenex was "way too much", or would ask the clerk if he could get a discount because the packaging had a small hole in it. What was once super mortifying for Katey to be apart of has now become SUPER SEXY. For every item that Jason chucks, Katey now sees dollar signs that add up to a new pair of shoes, new purse or something for the baby. Let us be the first to tell you - we would not be buying a car right now if it weren't for Jason's stingy ways. $10 here and there adds up fast!

Quick Tip:
Fellas - stick to this. Be the man you claim to be and get stingy! It might not cause your wife to swoon right away but as soon as she starts to see her clothing budget increase, you will see your efforts paying off. Remember, the stingier (within reason), the sexier!

8. Invest
Who invests their money anymore? It seems like it has become the American dream to spend but the reality is that unless you invest, you'll be a financial mess. (Yes, we rhymed on purpose). We aren't encouraging you to throw caution to the wind and put all your eggs in one basket of stock....in fact, please don't. We do encourage you however to contact an agent in your area who can assess your finances and help you to make wise decisions in your investments. Here at the Rallis home, we are big fans of mutual funds/bonds. Interest adds up fast folks...don't underestimate the power of investing.

Quick Tip:
Whatever you invest needs to become invisible money to you. In other words, unless you are in the midst of a major emergency, are retiring or are paying for a kid's college tuition...DON'T TOUCH YOUR INVESTMENTS. It only adds up if you leave it alone. We've been married less than a year and have over $6,000 in our mutual funds. Trust us...it's like magic. One minute you have it, the next you don't.

9. Bring Back Game Nights
We're a social couple so hosting game nights is a breeze for us. We love getting together with friends and probably what excites us even more is opening our fridge to those friends. Think about it - you're not paying for entertainment and you are sharing a meal with your buddies, who are all saving money by hanging at your place instead of going out on the town. We love our game nights but we won't lie - we like to eat out. This is probably one of our biggest areas needing improvement. We've started by planting a veggies garden and creating menus that inspire us to cook. We've cut back from eating out about 5 times a week (gasp!) to about three and we'd like to get it down to once a week...two if there's a special occasion.

Quick Tip:
Pick one night a week when everyone knows that the party is at your house. You will look forward to that night all week, and so will your friends. Encourage your pals to bring table games, movies, games for your Wii or whatever to increase variety. If you and your gal pals are big readers, hold book club meetings once a week. Even better, make it a weekly potluck with games, books, movies, whatever. Everybody brings a new dish each week and not only are you entertaining on the cheap, but you are also eating on the cheap too....and it is likely that there will be leftovers!

10. Don't Be An Idiot
Seriously. Just don't.
Tempting as it may be, credit cards are not the answer to your needs, wants or impulsive moments. In fact, we are pretty sure that Satan himself invented negative credit. Sure, a couple credit cards per family is okay as long as you are making payments on time but PLEASE, we beg you...don't be an idiot. Nobody needs a 200 gallon fish tank in their living room THAT BAD.

Quick Tip:
Our rule of thumb with credit cards is this: If you don't have the cash, don't swipe your card. The idea is that we use our cards only to build good credit so when we fill up the car with gas, we swipe our card and then head to the bank to deposit cash (or wherever you go to pay your credit card bill). If we only have $15 in cash available, then we only swipe $15 worth of gas on our card.


And so...

There are hundreds of additional things that we do daily to save money and stretch our income, but we thought these ten tips might help get you going in a healthy direction. PLEASE note that we are not experts by any means. We have been married less than a year and are still figuring out how to share money, especially on such a tight income...so by no means are we even close to being good at this money stuff. We have however found what works for us and we work very hard to stick to the rules, expanding on fun ways to enjoy life on the cheap.

We know that money can be overwhelming and we know that financial freedom can seem like such a distant dream at times but we want to share with you the things we are able to celebrate today and hopefully this will encourage your journey to a healthier financial life.

At the ages of 23 and 25...
We have ZERO credit card debt.
We own our home and one car.
We are buying a used (new to us) car this week.
We have a baby on the way and we can actually afford the kid!
We have money in our savings account, money in mutual funds (investments)
and money in the baby bank.
Out of a possible 850, Jason's credit score is 820.

This is not to brag, but to encourage. If we can do it, so can you.

It may not seem like it, but we still have plenty of luxuries...

We eat out A LOT. We love to go bowling (cheaper on Sunday nights) and we love going to see movies (cheaper to see them in the afternoon and take your own snacks). We greatly enjoy watching our favorite shows and movies at home (don't pay for cable...we have three channels on our TV and pay $10/month for Netflix which gives us a lot of viewing options). We even take road trips just about every month (make it a goal for gas to be your biggest expense...stay with friends, eat cheap, enjoy the scenery).

We hope that as you prepare for your little one to arrive - or whatever big goal you are looking forward to - that you will be able to find freedom from debt in the process, and pad your bank account along the way.

Next time someone asks you about your income and budget, smile with pride when they freak out and scream...

"YOU MAKE WHAT?!?"