Surviving (and thriving) on $12k a year: The reboot.Posted by Donna Freedman on Jun 6, 2015 | 77 comments
When I wrote that I was 49 years old, back in college and coming off a two-year-long divorce. At the time the assignment seemed like a one-off freelance gig. I had no way of knowing that it would ultimately lead to a career as a personal finance blogger; at that point I didn’t even know what blogs were.
People still mention that $12k piece. Some ask me where they can find it. Unfortunately, MSN Money changed platforms and the work I did there between 2007 and 2013 can no longer be accessed.
Fortunately, I keep copies of everything I write.
Instead of running the version that appeared on MSN Money I’m putting up my original essay, the piece I wrote before the editor nipped and tucked. (Hint: I hadn’t yet learned to write MSN Money-style.) Asterisks indicate that updates can be found at the end.
I’ll be living on just over $1,000 a month this year. That doesn’t sound like much – and it isn’t – yet I plan not just to live on it, but to build a savings account.
My 2007 “income,” the money I can actually count on, is $12,084 – a blend of alimony and education grants. (I went back to college last year, and just transferred to the University of Washington.) The big-ticket annual costs are rent of $6,300 and $1,200 for car insurance.*
Subtract these from my income and I’m left with $382 a month for food, utilities, clothes, medical deductibles and co-pays, gasoline, renter’s and life insurance, and any help I give my daughter, who lives on even less than I do: a $788-a-month disability check.**
Last year I survived on a number of here-and-there gigs: freelance writing, work-study, babysitting, mystery shopping, resident manager (read: janitor and handyma’am) of my apartment building, paid medical research and writing for the community-college newspaper. (I was the oldest living cub reporter.)***
There was little down time; when I wasn’t working I was studying, doing homework or writing papers. And I was perpetually weary and frequently ill all year long. Fact of life: a 48-year-old college student simply doesn’t have the energy of an 18-year-old college student.
This year I’m dumping most of the part-time gigs; I’ll still freelance and babysit, but very selectively. Transferring to U.W. means tough classes, a long bus commute, and lots of reading and studying. More to the point, it’s a great opportunity, and I’d like to take full advantage. So I’m choosing to work less in 2007, focusing instead on getting healthy and getting my education.
How much can I keep?
That means careful money management and a fair amount of sacrifice. I’m willing to do both. As a freelance writer and recent divorcee, I’m accustomed to lean living. Here are some of the mantras that have kept me going thus far:
Float, to stay afloat. Cash flow is a challenge. The rent is due on the first, my credit-card bill on the 15th and the COBRA health-insurance payment at the end of the month. (I use a mileage-plan credit card even for small purchases; one wedding gift to my daughter is going to be a frequent-flier ticket for the honeymoon.) But the alimony and the previous month’s COBRA reimbursement arrive in the middle of the month.
The education grants are my financial safety net. After tuition is paid on the first day of the quarter, “leftover” funds get direct-deposited into my checking account, providing a cushion to pay each month’s bills while waiting for the next month’s funds.
It’s not what I have, but how much of it I can keep. To paraphrase Ben Franklin, every dollar I don’t spend is a dollar I have earned. So when I think I need something, I ask, “Can I do without this?” Often I find I can. If I can’t, then my next question is…
How can I get it free, or almost-free? The obvious answers are sites like Craigslist.com and thrift shops, especially ones like Value Village that offer coupons and half-off sales. My 99-cent clock-radio wakes me up every morning just as efficiently as a high-tech alarm from The Sharper Image.
Rummage sales are swell, too. My church has an annual sale called “Superfluity” (I love that name) at which I bought my desk for $4 and a small chest of drawers for $1. I also buy Christmas and birthday gifts at Superfluity and an annual “500-family” rummage sale. No one has to know that that hardback bestseller under the tree cost you only 50 cents.
Enough is as good as a feast. I love to eat. I don’t love paying for it. Because I don’t have a “regular” job of at least 20 hours a week, I don’t qualify for food stamps. So I shop very, very carefully and I go to the food bank. Most weeks I can count on potatoes, apples, bread, and a can or two of vegetables. Some lucky weeks I get milk, orange juice, pasta, tomatoes, rice or a small package of meat.
I cook a lot of beans and stews, and I’m adequately fed – maybe not as richly or as conveniently as I’d like, but well enough to keep me going.
Every day is casual Friday! When my jeans are in tatters I buy a “new” pair at Value Village (one pair cost me just $1.63, and it was new – still had the department-store tags on it). I spend $15 or less on running shoes from clearance tables. I’ve bought a couple of thrift-store tops, but mostly get by with shirts I’ve had for ages. (Hint: The clothes dryer takes years off the life of your duds. Get a drying rack.)
Some days I wish I looked nicer. Most days it doesn’t bother me, and I doubt it’ll bother anyone else since U.W. students have been known to wear flannel PJs to class. Bonus: When you dress the way I do, panhandlers hardly ever ask you for money.****
Announce my intentions. Time and again I have found that when I need something I should “put it out in the universe,” which is also known as “prayer.” One night last fall, squinting over my homework, I realized I needed more light in the apartment. A day later, a halogen floor lamp landed in the Dumpster outside my window.
Recently my umbrella got cranky about opening. The next week I was given a high-quality bumbershoot as a thank-you gift for helping with a campus blood drive.
Coincidences? Maybe. Or maybe it’s true what they say: “Coincidences are God’s way of remaining anonymous.”
Other survival strategies: bringing my laundry to babysitting jobs (yes, I ask permission); using a 3.1-cent-per-minute phone card; buying textbooks online (saving hundreds of dollars so far); brown-bagging it every single day; combining coupons and rebates to get items for free (I haven’t paid for toothpaste, shampoo or other toiletries for years); rarely going out, and seeking free entertainment when I do go.
And always, always hustling – i.e., looking for ways to save a dime or to make one. I exchange spent ink cartridges for reams of printer paper at Office Max. Whenever I see a candy dish I put a piece in my coat pocket; if my energy flags mid-day, those toffees and peppermints keep me from buying snacks.
After I won a basket of specialty coffees at a college event, I immediately sold it on Craigslist; I sold a “free after rebate” phone that way, too. I buy overripe “red-band” bananas for 29 cents a pound instead of paying 69 cents a pound for their greener cousins. I drink free water instead of buying juice or soda away from home.
If you’ve never been really broke, all these desperate little economies might seem silly. You’re probably thinking, “Why not have a soda? It’s only a dollar.” Because I’ve got just 382 of those dollars each month, that’s why, and those dollars have other places to go.
The COBRA runs out in May and I’ll need to get student insurance, at $389 per quarter. The car needs a 60,000-mile checkup. My share of a dental crown is going to be $486; I will ask for a discount if I pay in cash. (That is, if my monthly “float” will allow it.)
Yet despite my money mania, I’ve decided to increase my monthly church tithe to $20. Sure, I could use that extra $240 a year. It just about equals the university registration fee, or the money I promised my daughter toward the price of her wedding dress. It also represents almost half of the car insurance premium heading my way in April.
But giving that money away makes me feel rich. No matter how straitened my circumstances, I can be a part of services the church provides for the homeless, the impoverished elderly and those living with AIDS. In other words, tithing reminds me that there are lots of people worse off than me, people who’d love to have my so-called “problems.”
That’s not to say that I wouldn’t like to have more cash. It would allow me to help my daughter, to secure my future, to buy more roasts and fewer pinto beans. But I figure I won the cosmic lottery just by being born in America, a country where I can not only work on a college degree at age 49, but also find scholarships and education grants to help me pay for it.
I have a roof over my head, food every day, family and friends, and occasionally even a $10 student ticket to the Seattle Symphony. Some days I feel like the luckiest person in the world.
If I really am lucky, then I’ll make it through 2007 with a positive bank balance. Check back with me next December and I’ll let you know how I did.*****
*Clearly I vastly overpaid for car insurance. Still shaking my head over that.
**Abby eventually found a job she can do from home and is no longer on disability. She blogs about money, disability and “perfecting imperfection” at IPickUpPennies.net.
***This gig amused me greatly, since my most recent writing job had been on the city desk at the Chicago Tribune.
****Once the recession hit I started getting asked for money no matter how shabby I looked. I’d set a limit, though and would say after that, “I’m sorry, I’ve given away all I can afford today.”
*****I did, in fact, have a savings account in December. In part that was due to my mad financial skillz. Yet it was also because of three unforeseen income sources: a handful of additional MSN Money freelance pieces, getting the chance to run an MSN Money board for a few months and being hired in September to write the Smart Spending blog.
Note: One of the results of all this frugality was my book, “Your Playbook For Tough Times: Living Large On Small Change, For The Short Term Or The Long Haul.” Since J.D. Roth (MoneyBoss.com) has linked to this article twice now, I’m going to name a coupon code after him: Get the e-version of “Playbook” (PDF) for just $5 by visiting my payment platform and using the code JDROTH. Oh, and stay tuned for the sequel; it should be out within a month or so.