This guest post from Daisy Bailey is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income.
Three years ago, I stopped reading Get Rich Slowly because I just couldn't read one more article on how to save money by shampooing with baking soda or how to go on a cheap vacation. I was in a panic over my own big question: What do you do when there simply isn't enough money? What do you do when there's nothing left over for the emergency fund or, god forbid, an actual emergency?
Things Fall Apart
My finances were very stable until my marriage fell apart. I ran the numbers before the divorce and knew that money would be tight, but the reality was much more bleak than I expected.
I was working full time and making in the mid-40s and my husband made in the mid-20s. I'd fooled myself into thinking that because I made more money than my husband, I'd be able to handle the day-to-day costs. I dared to hope that I might be better off because I would no longer be paying for his bad money habits. I had no car loan, no credit card debt, no student loans. But the fact is that when you build a life for two (or more) on low to modest incomes and one person leaves, you both feel it desperately.
- First, we had an 18 month-old daughter for whom I became the primary care-taker and custodian.
- Second, I remained in the house we had bought together and I paid for it and everything relating to it all by myself.
My budget became so tight that I felt each expense keenly: The regular bills, the rising costs of food, gas, and doctor co-pays.
I performed as many cost-cutting maneuvers as I could: I cancelled cable and the landline, I reused water, I turned down the thermostat, I stopped all non-essential driving, I made my own baby food, stopped eating out, I patched the roof myself and shoveled the snow. And still my income wasn't enough and every month I spent more than I made.
Because my daughter was still a baby, I didn't feel I could work a second job at night, but I did wrangle a temporary promotion at work, which helped for few months. I researched state and federal assistance (I didn't qualify because my salary was too high) and looked into attending divorce support groups (but couldn't pay for a babysitter).
Here's where I should note that I did have some reserves in the form of retirement and a small stock investment. If I chose to cash out my stocks, which would have provided only a short-term fix, then I would have paid a significant amount in capital gains on my taxes. So, even though I technically had reserves, they wouldn't have fixed the problem for very long.
Finally, I freed up some more cash in my paycheck by cutting back on my retirement contributions and asked my parents for a loan. That's when I could finally hold my own.
So that takes me back to the initial question: What do you do when there is simply not enough money?
Asking for Help
My first action was to ask for help, and I'm fortunate enough that my parents, who live 1200 miles away, could respond with both money and frequent visits.
Also, as a little time passed, I became open to making the big changes. It's hard to give up your house, your job, and your spouse at the same time. I had to space things out a bit, but in the end those big actions are what finally turned my finances around.
A year after my divorce I accepted a job in another state that paid more money and had a better career ladder. (I did have to return to court mediation to negotiate taking my daughter out of state, but it worked out because the schools are better where I moved.)
The very best thing I did for myself was to sell my house, even in the low market. Gone were the big mortgage payments, the utility bills, the repairs, and a lot of the resentment I felt just walking into those half-empty rooms. Because my husband and I had put down a huge amount of money when we bought the house, I even walked away from closing with a modest check—not everyone would have been so fortunate.
Back on My Feet
Once I stopped bleeding money and could think about it without panicking, I started reading Get Rich Slowly again. I made myself a budget tracking spreadsheet that shows me in a big green box what I have left over at the end of each month instead of what I spent (my format was inspired by a popular tax software). Believe it or not, that simple green box has inspired me to save more than I ever thought I could.
Three years after my divorce, I can finally breathe, financially and mentally. Now, the next stop in my financial journey is learning to balance my money and my life as a single parent, a homeowner, and an active adult.