Budget Breakdown (Ep. 13) Low Income Family, High Cost of Living | FrugalFitMom Podcast

welcome to today's episode of The Frugal fit mom podcast we are doing another budget breakdown where we take real life family budgets submitted by you guys the listeners and my husband Dave and I go over them with a fine tooth comb to help you achieve your financial goals now this is a real family although all names will be kept private for the sake of the innocent or the guilty depending on how you look at it if you have not subscribed to the channel or the video version on YouTube take a minute and do that now leave us a review if you haven't really helps the channel out since it's fairly new Dave what do you say we jump into this budget I have jumped okay this is a family of four wait what oh oh the Hat's on thinking cap it is serious now okay thinking cap it's a family of four okay the two parents are in their 30s and 40s the kids are 8 and 11. they live in the Pacific Northwest okay so let's say it's expensive yeah they have unique living situation and kind of unique jobs okay so let's do the living situation first sure they live in a tiny home okay on Wheels really it's like 250 square feet on land like a significant amount of land and the land has a small structure on it as the kids get older they're finding this to be quite inconvenient living situation I am so intrigued yeah it's kind of crazy right yeah you know that whole living situation has been romanticized in social media for the last I don't know 10 years okay yeah so part of me is like oh that's kind of cool and then I start to think about it I'm like no way with an 11 year old and an eight-year-old they say specifically as the kids are getting older it's getting really hard oh you need a little more space more than 250 square feet I feel bad we'll come back to that when we hit the goals just I just wanted to tell you the living situation okay kids are ages again 11 and 8. okay okay so definitely are getting into the when they hit teenagers they really take up a lot of space okay like so did they give you a specific goal about what they really want as far as space yes but let's get to there in a minute okay okay these are just interesting facts I feel like you should know all right both work full-time low-income jobs okay so before we really get into this I want to throw out the possibility that this could just be a job issue it's possible okay so in their 30s and 40s the biggest concern is they have almost no retirement in their 30s and 40s less than 20 000 total okay this is number one concern are they living what is that phrase or it's a abbreviation about low-income retire young or something like that you know that was the fire movement the fire move what is it called Financial Independence retire early I'm wondering if they kind of had some of that going on in this whole idea of live minimalist reduce your expenses as much as possible so that you can you can do these things yeah but it's babies just not working out the way their hopes Perhaps Perhaps so but she did by that they both work long hours for not a lot of money so they both work full time their total income is fifty eight hundred a month I know you're thinking well that's not that bad it's not that much for two people but for two people working full-time it's not that much either that's less than 3 000 per month per person which is I'm gonna say teacher status that's like two teachers probably or less or less even depending on where you are I did also want to mention that their income fluctuates based on the number of weeks per month one of them Works in a grocery store okay like maybe a grocery store manager kind of a thing some months they go as high as 7 000 a month but we're airing on the low end for the monthly budgeting purposes of fifty eight hundred yes everything else will be a windfall exactly so we'll just we'll budget off of 5800 as far as the monthly income the monthly bills I've already added all this up the monthly bills total 5 674 dollars okay leaving only a 126 dollars a month in excess if anything goes wrong that's gone in a heartbeat that's not retirement savings yeah it's ouch this is already tight can I ask some questions yes okay the house is 10 50. that's like the land did they pay for the tiny house in cash and it's all paid for do they have a loan on that I'm a little unclear basically the land all together I think it's just the land it has a low interest rate 2.85 interest rate on the land okay and that's what I'm calling the house I'm just saying that's really high for someone living in a tiny home on land like even if you but the land was a couple hundred thousand dollars I'm assuming it's a quite a bit of land but also listen this is the Pacific Northwest yeah it is expensive there so let's throw that out there also I hear about people in the midwest that buy a couple acres for like thirty thousand dollars and I hear about this one and my mind just blown okay this is probably like Washington not Iowa okay this is a little different all right well I'm just going through the other one yeah let's go through the bills okay so you've got utilities you've got phone they are putting an IRA out here yes 200 a month into an IRA which is better than zero so their goals are powerful retirement and they are actually working on it but it may not be enough is that your well it's definitely not enough okay food is I may have found your your first point I agree I think the food is an issue at 900 a month for a family of four uh-huh is that pretty high that's pretty high is the Northwest a little more expensive listen I've never been to the Pacific Northwest so this is one where I definitely can't say for sure because I haven't been there I do expect it's a little more expensive maybe leaning towards California prices but I know I could cut that budget in half if I was in California wow all right I think I've got to lay the land do they have any other debts do you know no it's just the land okay so yay so we're not dealing with a lot of get out of debt issues we're not I really think we're dealing with an income and maybe slightly fluffy budget yeah well start where you want to start then so one thing I really liked about how she gave me the numbers is she took all of 2022's bills and sinking funds and averaged them out for the entire year and then gave me that number oh so can I just say very helpful very very helpful these are quite accurate numbers and not every month looks like this but it averages out to look like this so let's do let's jump over to sinking funds just because I think this is an interesting one as a reminder the kids are 11 and 8. I call this the golden years of child raising because activities don't cost that much clothes don't cost that much and they're out of diapers and formula it's the age where like the expenses are the least amount but they're gonna go up quickly they will go up very quickly very soon so in the golden stage of parenting which is right here yeah your bills for the kids should be pretty low I'm gonna go Blue on my marker here gifts at 81 a month close at 116. entertainment at 179 birthday at 69 and Christmas at 86. this is their average this is the average okay I don't think these are unreasonable but I do want to ask why is gift and birthday and Christmas all separate what gifts are we doing that aren't birthdays yeah that's a good question right yeah I would say those need to be combined and then you look at them together and you're pushing 280 entertainment at almost 200 a month okay that might be a lot I feel like that's a lot especially I'm trying to think of the right way to say we don't really know what entertainment involves here but if you're going to the movies it's a lot yeah it's just like movies go out to eat this is probably date night you know all things that I do not think are unreasonable however I think it's really important to mention your income only what it is yeah unless you are willing to change your jobs or work more so so the entertainment line item should be a little bit more reflective of your of the income income and the goals okay I think I say cut gifts I'm Gonna Leave birthday and Christmas because I think those are fine I'm going to cut entertainment to 100 a month how about that let me just point out since they're not in a lot of debt we either have to cut these items or we have to increase their total income exactly those are the only two options or both there's not a lot to sell here there's no debt to pay off and free up monthly minimum payments Dave is dead on you have to either cut stuff or make more money or both that will get you to your goals the fastest I think yeah so if you don't want to cut the gifts and the entertainment great that's fine yeah but you do have to do something different exactly assuming we cut only we're gonna we're gonna try to keep it under this budget we're gonna go what would we do to cut this is what I would do electronics this is electronics and hobbies at 44 a month feels like a weird it's an interesting category interesting category I'm gonna cut that I'm going to leave their Garden at 72 a month because they're kind of leaning into homesteading a little bit and that does cost money for supplies yes but if that was the case you would think that the food budget would be lower you'd think so but it is not okay Home Maintenance at 163 this is probably accurate car maintenance at 137 also accurate camps and child care I don't know what child care you need at the moment but you're not doing camps right now so I think you could cut that by 100 a month pretty easily it's probably summer Child Care maybe maybe yeah it was it was Uncle you have medical irregularly covered by their insurance so I'm I'm kind of leaning can you find better insurance I would ask that question I would ask that question and then vacation I have down here at 3 23 they have some family that lives across country to visit every other year okay I'm gonna cut that right now and here's why I'm gonna cut it completely okay because with a family of four if you're going to visit Mom and Dad it's going to be way more convenient for them to visit you they have more Expendable income it's only two people even if they stay in a hotel it's gonna be easier yes but sometimes the purpose of visiting families to go see other people besides just the Mom and Dad yeah they didn't say that there could be siblings and cousins there could be all sorts of reasons why you do want to keep that there could be and I say if you want it you need to make more money no you don't think I think vacations are a luxury you can definitely do it on a budget and if you want to keep it we got to cut somewhere else well yeah but I mean there's a lot going on in this there's a lot you can do besides just cut it straight I'll cut it to 150 instead of 323. you can get very creative I think with Christine's point is you can get very creative on vacations especially if they're just to go visit other family there's driving there's meeting halfway into other places we've done a lot of camping family reunion vacations they also work out really nicely where you go to Flaming Gorge Utah or you go to Lake Powell You Idaho or basically call Arizona it's experienced as a child you grew up in a family that I would consider not wealthy yeah yeah you it was very very tight for you guys there were five kids and they traveled from Arizona to Canada by car every summer to visit grandparents and you are able to do that on a budget how well we did we either drove all day and night and never stayed at any one place to this day I don't know how your dad did that he would drive all day and night and get us there the other thing we did when we got a little older is they mapped out mom paw type campgrounds and we would pitch tents and it would take us like two nights right so we would do like one spot in Colorado another spot like in Montana Wyoming are you saying like thirty dollars a night thirty dollars a night plus boys in the 90s it was like fifteen dollars right now it would be like 30. there still are campgrounds for 30 20 to 30 you can even do Boondock camping on BLM land yeah for free if you bring your own gear there's ways to do it what would you guys do for breakfast in the morning oh it was always oatmeal or something yeah you can serve mom and dad did bring a lot of Sandwich stuff so we weren't buying and eating out a lot if we got McDonald's like 25 or 55 hamburger whatever it costs back then that was that was definitely a luxury yeah for sure so I just want to say you can do it on a budget that's that's what I'm trying to say yeah I think on the sinking funds that kind of covers it let's go over to regular bills I don't see anything that's jumping out at me except for food food is a huge one food at 915 a month for four people eating out and treats at 133 and allowance and spending maybe at 250 maybe listen as you and I have started to do better going out on dates you know that going out on dates once a week eats this up pretty quick eats up to 133 I agree it could totally but if you're if you have other goals you can cut it out and do other things together besides eating out in treats all the time so I can see that one going both ways I I see this for me is a huge 900 a month on food when you're already spending 70 dollars on a garden usually you spend money here to save money here you spend money on the garden to save money on the groceries yes yes and so I just I have a real concern about spending that much money on food let me throw out especially for four people I know for four people it's over 200 a person um but an idea I'm thinking about as I'm looking at this okay okay so family of four with semi young kids both parents are working their tails off they have extensive hobbies and land extensive Garden I'm trying to figure out what else are they doing like how much time do they really have to eat out and have a this big entertainment budget and have an electronic Hobby and also spend 250 a month on like allowance and spending how much time is that it could be a lot of time so like on on the weekends on Saturday what are we doing as our family activities as a relaxed day are we shopping all day there's a lot of questions here there's some questions there I just want to bring up sometimes the shopping as like a day of relaxation can be very expensive as a hobby and so maybe just reevaluate that that's all I'm saying your point is how are they spending their time they might be spending their time to spend money yeah exactly you might be spending your time to spend money when you could do other stuff spend your time to make money spend your time to be with each other right do other things around all right let's attack this food budget okay what do you what do you for people that are doing a tiny house and a little bit of homesteading I I don't see why that number shouldn't be 300 a month whoa I know right like I follow some homesteading people and I think it's really fascinating and sometimes I wish I had the skills to give it a try but to be doing that type of lifestyle and still spend 900 a month feels like Polar Opposites Pacific Northwest has got to be Washington or Oregon right yeah like I said I've never been there but with a quick Google search are you ready for the three most popular grocery stores in the state of Washington sure Walmart Costco and Fred Meyer okay you know what I know about Fred Meyer they have good sales they have excellent sales Fred Meyer is a Kroger store I have one myself yeah they are fantastic Walmart is great for your Staples a bunch of places in Washington also have the grocery outlet grocery store I'm saying there are stores where you can save money and Costco is there any chance that this is Pacific Northwest Canada no because they wouldn't have an IRA oh good point okay no it's it's definitely Oregon or Washington just wanted to make sure because if this was Canada it's Victoria Island this is a different conversation you're right about that okay no because they have an IRA so they have to be us okay so I'm thinking for four people you could easily do 150 per person that's 600. I feel like that is luxury eating yeah I really do I I agree I just saved you 315 a month on your grocery budget that's gonna take some discipline she laughs because she has that discipline and she earned it over lots and lots of years you really did I just don't think it's that hard you don't but for some other people they don't know how to shop a different way you have to learn how to walk the stores differently how to plan your food differently right there's a lot of things you can do and you can find a lot of those things on her videos on the actual Frugal fit mom Channel but you taught yourself to shop differently so that we could still eat nice meals for a much cheaper price and these people are gonna have to do the same you know that's probably not fair for me to put my experience on someone else who's never done it because I shop in the way that I grew up eating and my house never had snacks we didn't have chips we didn't have soda we didn't have granola bars we have cookies we didn't have ice cream I did not grow up on that stuff we never ever had it in my house and that's the way I ended up shopping and one of the biggest grocery budget Busters are those I'm gonna call them junk food convenience items you don't actually need them to survive you they're they don't like compliment your dinner you know it's not like a protein and a veg and like rolls I would even be like buy the rolls whatever you know it's it's the other stuff that will destroy your budget yeah and I'm telling you if you just eliminate them you'll be shocked at how cheap your grocery bill could be well the other thing that you did I think that really changed our family budget was when you meal planned you looked at what were the sales what were the foods that are available for cheaper this week and how can I make them fit into the meals that I want to eat and you only planned those meals the difference is I think your repertoire of how many meals you can cook is very large well now it is yes yes well it's always been fairly large nah maybe and so you were able to really manipulate that to be the make the numbers fit in the budget yeah okay I don't know that other people are they're gonna take that's going to take some practice and some growth I still think it would be an amazing video if I followed someone around the grocery store and took things out of their car so that's the last time you suggested you had like 150 volunteers but they got to live locally I actually offered it to a real life person I know and they said no did you really yeah they didn't want to be on video and they were embarrassed [Laughter] but I really think it would be fun to be like Five Guys of ice cream what are you doing there you have if you're local somewhere I would say if you're anywhere in Idaho Eastern Idaho or northern Utah we might be able to figure this out we could figure that out if you're willing to film a pilot episode of The Frugal fit mom and let her just trash how you shop at the grocery store knocking cookies out of your hand none of that for you no soup for you no soup for you next okay why does this always turn into an episode of Christine slashing the food budget ah because I think a lot of people don't know how to do it that's what kind of made my point it's the easiest one to cut it's the biggest one to cut yeah that's why but I'm gonna say it's easiest for you once again because you really practiced this and out of necessity when we were poor right when I really wasn't making much money and so these people are funny to me is either they've never had to practice it or they just don't they've had no one show them how if it was you I know this number could be 300. yes this number would be 300 today so I think 600 is you minus all the experience like this is going to be their adjustment six seven hundred dollars you could go there easily the first time it's gonna take a lot more did I also mention I think it could be 300 because she works at a grocery store and gets 20 off of everything oh absolutely again not if it's Costco right you won't save money going to Costco on this one I'm sorry you will not you won't we don't buy everything at Costco I I rarely buy food at Costco you are very intentional about what you buy at Costco it's not food and you know what's really funny can we say this is that a lot of it is stuff for videos for this channel not necessarily things we would always eat ourselves that's absolutely true yes okay Eating Out treats I'm gonna say you can't do this unless it's a high month I'm cutting it completely unless you have a high income month yeah you have 133 dollars in a high income month add it back in that month how about that house miscellaneous you have a teeny tiny little house so I don't know why we're spending this much money on this it's 225 a month I'll give you a hundred yeah yeah you got to look at your budget here again and this number is just I we don't spend 225 on miscellaneous things around the house no we don't spend a hundred maybe we spend 100 I mean maybe kids at 90 .99 I'm kind of whatever with that the allowance has been that's high it feels High to me just because you know what this is what we're gonna do the same thing we're gonna cut this one unless you have a high month yeah you have a high month added back in you know what I mean like some of their High months get upwards of close to 8 000. that shouldn't be the average it costs 12 months No it should not that is that should be a high month you get that that means you're spending almost three thousand dollars am I doing the math right a year a year on allowance and spending just for fun I decided to add up all of these line items that I consider fun okay this is going to be things like Hobbies subscriptions excess food eating out allowance and spending money we're gonna call it entertainment gifts vacations this is all fun stuff okay okay the total for the fun stuff is 1450 a month a month that's a fourth of their budget that's 25 of your budget on fun wow when you put it like that does it change the way you look at it a little bit it's a lot I would hope it changes the way you look at it just a hair and and to understand I'm not trying to be mean here I'm just trying to get you to where you want to be that's more than they spend on the house that's more than you spend on your house ouch house and utilities combined well and maybe the bigger Point that's way more ten times more than they spend on retirement now we're talking that's ten times more than they spend on retirement wow so if your goal is retirement you need to switch those priorities around right because right now it seems like the goal is to spend money yeah the goal is to play on fun things all right with these cuts that I have suggested already and remember some of these I cut completely come back on a high month which they have every so often okay from time to from time to time I've cut twelve hundred and sixty dollars out of their budget okay okay so now we have twelve hundred and sixty dollars a month on a low month okay to play with on a high month we're gonna add the excess of the high month to the goals right that's what we're not gonna go buy a couch okay we're gonna play with it we're gonna do our goals so here are the goals retirement is Numero Uno she's very worried about retirement like how can we ever stop working yeah when you're 40 you start to see that that day on the horizon on the horizon so let's talk about that number one they're already doing 200 a month into an IRA they can with both of them do 600 a month each oh wow so they need to Triple that per person so we're gonna add a thousand of our 1200 to that okay this is the monthly like on a low month remember that's the first goal and can we point out how much would that actually be by the time they retire I'm so glad you asked that question Dave yeah if you start putting 1200 a month in an IRA okay if you you put 1200 a month into an IRA for 20 years at six percent interest you're going to end up with close to a million dollars if they retire from age 40 to age 65. it's 25 years 25 years starting with only 20 000 in their account that's all twelve hundred dollars a month they never ever put a penny more and you get six percent interest which is historically Low by the way they will end up with 920 000 at the end just shy of a million just shy of a million so my point is it's not too late and you have time and if all you do is this it's way better than what you're doing now I keep talking about Massive Action that is a massive action point that really leads to retirement and this is going to feel like a really long slog especially on the low months yeah so let's talk about high months and what we'll do with the extra okay okay they also want their emergency fund to be 20 grand I think this is a great place to put the extra 250 a month plus extras from high months load it up when you hit 20 grand you're done that's the great thing about a goal like that yeah you just let it sit there's a Finish Line check it off the list finished so we've got retirement emergency fund they do want a new to them car I suspect because they live on land and they're trying to do gardening SUV or truck I would think so is is my guess you can get a used one they are expensive these days they are very expensive again I push for more High months to get that done quicker how much do you think they should spend on this 20 grand 25. I'm probably in the ballpark of 20 20. I think you get a pretty good truck for 20. it will have some miles on it yeah it'll probably have a hundred thousand miles it'll probably have a hundred thousand but please do not be scared of cars with a hundred thousand they've been very reliable for us like we drive cars with a hundred thousand 160. and they're great they want to do some experiences and travel a little bit I think that's fantastic when the first three are done okay okay I agree with that one okay they would like to build a more realistic house on their property okay okay this is gonna cost some money this is gonna cost some serious money you're gonna have to have a down payment and they probably I'm thinking about this twenty thousand dollars of an emergency fund it's going to be tempting to use that well yeah but you can't but you can't but you need to have about that much money probably to get someone to give you a loan to build I awesome I'm thinking at least that one you want at least 50 before you could do that thousand so and and then after that the very last one is to pay off the property at the end we're that's several years down the road I'm not too concerned about that at this moment especially with that interest rate no so what I want to end with in this episode is on their High months at pushing eight thousand dollars on a high month that is really good money yeah how can we get to a point where we make eight every month exactly what do we need to do to do that because it is possible they need to switch careers I totally agree yeah if they can increase the income these goals get met really quickly I want to talk about someone that I know that I will not name who got a job by talking to someone they knew this is the power of like I'm gonna say networking or just talking to people in your circle okay so you just talk to people hey I'm kind of looking for a job do you know anybody do you know of anything have you heard of anything okay this is how my friend got this beginner job just looking for a little bit of something no real experience in a job she didn't even know was a job in the first place that's really common so she gets the job and it turns out she's actually really smart and likes to learn and is good at it worked her way up big time switched companies worked her way up again became a valuable switch jobs again with like no formal education in this field is getting paid Bank well over six figures well well over six figures to do a job she never thought she was qualified for but but most importantly didn't know even was around and you can find jobs like that just by talking to people you will not find it on LinkedIn you will not find it like on or else you go to find jobs zip recruiter or or one of those you have to talk to people that you know I go to your buddies and be like hey kind of branching out have you heard anything do you know of anybody and I would say be vulnerable that's what gets you to that point be vulnerable say hey look I'm really struggling with this thing I really want to get here what do you know what can you share with me yep people want to help so just ask don't be pushy and don't be annoying right right right right try to find someone that's willing to Mentor you a little bit or even has an opportunity to give you something yeah I even got a friend of a friend offer kind of like a week or two ago do you remember when what's his butt who I won't say his name was like oh by the way did you know so-and-so is retiring do you think Christine might want to jump in there right yeah just because we knew we knew someone who knew someone you know yeah if you're really struggling with income I can't stress enough you need to Market yourself a little bit get to know people find places to meet people whether it's in a gym or it's at some volunteer work volunteer work is a great place to meet new people one of my favorite things I've learned in the past four years is how much money and job opportunity there is if you talk to the right people and that is not something I learned in college yeah I didn't learn that in high school and college or even really talking to my parents it was like kind of branching out my friend group Dave would you agree with that I'm kind of shocked at how many opportunities there are out there that aren't known to the general public I guess or that aren't taught to college students I suppose yeah I think it's a great place to leave it I think you made some excellent points about increasing income really refining your goals and aligning your spending to your goals I think that's what I see the biggest problem here is there's not a lot of income and it's not a line they're spending is on a line to their goals and their income yeah I think that's the biggest I do I think it's low for a high cost of living area and I think it's low for two incomes yeah and I think their spending is high in some categories compared to that and compared to their goals yeah you're totally right yeah they're just out of balance a little bit so I'm a big fan of the talk to people Camp so I encourage you to do that I think you can it's doable this is not a disaster I've seen worse ours has been worse ours has been worse and good luck on the tiny house with kids yeah until next time that'll do it okay

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Length: 30min 41sec (1841 seconds)

Published: Tue Jun 27 2023