Are We Rich or Poor?

This year Molly started to notice a shift in the girls’ perception towards our standard of living.  Even with the two of us out of work for most of 2011 our spending has changed very little compared to the previous year.  When we cut our expenses back by 50% a few years ago they perceived us as a family who had money but chose not to spend it.  There’s an interesting interview Molly did with the girls 2 years ago about their take on our cutting back on Molly On Money.  In the interview they talk about their initial fears but in the end they were happy that we did cut back and paid off our debt.

Lately we’ve heard them make comments to the effect that we are ‘poor’ and cannot afford to have a nice things like so-and-so’s car.  So let us repeat…how we spend our money now compared to when we had much larger incomes has not changed but somehow we’ve become ‘poor’.

Notes on our budget vs. spending

Molly:  I’ve thought a lot about this and I believe Mike and I are mostly responsible for their shift in perspective.  When they ask for something I find myself saying, “We can’t afford that right now.”  Before I would say, “I don’t want to spend our money on that.  We don’t need it.”    The former statement suggests that there is no choice- we can’t have it so don’t even think about it.  The latter gives them the message that it’s a choice whether we want the item or not.

The other change that happened last June was that we stopped tracking our expenses.  WHAT?!

Molly:  Mike, did you hear that?  

Mike:  Relax, it’s just our readers screaming in shock and surprise at finding out that we (you) haven’t tracked our expenses for the last 6 months.

Last June our Quicken file was corrupted.  To make matters worse, by the time Molly realized it she had tried restoring from several backups which promptly were also corrupted.  On top of that Quicken and our bank stopped talking to each other.  We weren’t able to download any information from the bank to start over.  It took almost 50 hours of talking to the reps at Quicken and at our bank to figure out a solution.  As of last Friday it was resolved and finally all of our accounts are updated and reconciled.

Molly:  I was a little worried to see how the year ended for us.  Because of my unexpected lay off in September we did not have a lot of wiggle room.

Mike:  So how did we do on keeping our most challenging expenses in check and adding to our savings?

Expenses

  •  Dining: Over by 10%
  • Groceries:  Over by 6%
  • Entertainment: Under by 31%
  • Household: Under by 20%
  • Health & Beauty:  Over by 13%
  • Gardening:  Under by 28%
  • Home Repair: Under by 45%

Savings

(January 1,  2011 we had $7,000 our emergency fund)

Our goal by the end of 2011 was:

  • Emergency Fund: Add $3,000 (to bring the total emergency fund to $10,000)
  • Savings:  $2,400

That goal went on hold (in our minds) in September when Molly was laid off. Our emergency fund had reached $10,000.  Automatic contributions to the savings were put on hold and we just hoped that nothing else unexpected would happen that would cause us to dip into our emergency fund.

Mike: This type of circumstance is exactly why we were happy we had an emergency fund but we still wanted to see if we could make it without using any of it.

How did we end up in the savings department?….drum roll please:

  • Emergency fund: $10,000
  • Savings: $6,800!!!!!!!

How did this happen?

1.  We made more in the first half of the year than we predicted.

  • Molly worked more than expected and we did not account for Mike’s last paycheck.

2.  We spent significantly less in several categories:

  •   Automotive repair, the kids activities, donations, entertainment, gardening, home repair, medical bills and heat for the house we were under by $500- $1000 in each of these categories.
  •  Where we were over was only a few places- vacation (by $400), Vet visits ($600), chickens ($850).

3.  We felt poor so we spent less.

Not tracking our expenses actually helped us.  Starting in September we reacted like we were in a economic meltdown.  The combination of Molly’s unexpected layoff and not tracking our expenses created a perfect storm of non-spending.

Molly:  I’m still a firm believer in tracking expenses.  We stopped spending as an emotional reaction to our circumstances and not because we were making informed decisions.  It goes back to how our attitude towards our money made the kids suddenly feel we were ‘poor’.  I think one tragedy is that we did not donate the $650 we had allotted to causes we wanted to support.

Mike:  I’m on it.  I just donated $25 to our favorite jazz station, KCSM the Bay Area’s Jazz station.

Some good news:  Mike just got a job working as a web designer part-time.  It doesn’t match the pay of his last job but it is something that he finds interesting, keeps him on his toes and off the dole.

Mike: I enjoyed my ‘time off’ but it feels good to be working again.  I wouldn’t have been able to get the job if I hadn’t had the experience of building this website so you could say this site is making us some money now. 🙂

What?  You can’t get enough of us?  Well do we have options for you!

 You can subscribe to Mike and Molly’s House through our RSS feed or email.

You can also follow our Facebook Fanpage , join us on Twitter, see what we are up to on Google + and see what cool stuff we follow on Pinterest.  

 Like what you see here?  Spread the word to your friends and family!

Thanks!!!!

11 Comments

  1. Tracey Brad
    Posted January 22, 2012 at 9:51 pm | Permalink

    Congrats, Mike, on the new job.  And kudos to you both (and the girls) on managing to save money despite all odds.

    • Posted January 24, 2012 at 5:52 am | Permalink

      Thanks!  A few years ago we would have just racked up the credit card balances.  It feels so good to have moved away from that.

  2. Grumpyrumblings
    Posted January 23, 2012 at 4:50 am | Permalink

    Congratulations, Mike!  And good job keeping afloat, even if you had to feel poor to do it!

    • Posted January 24, 2012 at 5:55 am | Permalink

      I gave the money tracking duties to Molly years ago so I don’t spend much time thinking about it.  Just like the kids I really only feel poor when I can’t buy something (shiny) I want.

  3. Posted January 23, 2012 at 6:54 am | Permalink

    Congrats on the job. It’ll be fabulous experience.  It’s nice having the experience of knowing what it’s like to keep your spending at a bare minimum.  Doing a dry run when you don’t have to be frugal makes it easier to know that you can still have a life and be fine and not spend a lot of money.

    I almost think it’s easier saying no to everything vs allocating budgets to a lot of categories.

    • Posted January 24, 2012 at 6:00 am | Permalink

      It would have been so much harder to do and so easy to fall into a victim mindset if we hadn’t adjusted our lives already.  Last year felt like a release to freedom rather than a crushing blow.  It’s so interesting how we spin the narratives of our experiences.

    • Posted January 24, 2012 at 7:00 am | Permalink

      I think if anything we are needing to shift our mindset back to bringing income in. We had a nice sit-down this weekend on how we could bring in more money and put it towards our mortgage.

  4. Posted January 23, 2012 at 8:27 am | Permalink

    It’s funny how kids (and adults) associate material things with financial success.  And as you’ve shown, those material things (like a new car) have very little to do with the truth of the matter. The bottom line is what shows in the black, and what shows in the red. 

    • Posted January 24, 2012 at 6:06 am | Permalink

      So true. .Back in the day we bought a new car (first and last time for that) $10k , 25mpg and I got to be uptight  about every little scratch.  That car deprecated to $3k in 3 years.   I love my replacement car.  It looks like it came from the scratch and dent dept.  $2,300 to buy, 
      42mpg, 263k miles and still running!  

  5. JStark
    Posted January 31, 2012 at 12:37 pm | Permalink

    You guys are absolutely AMAZING and INSPIRING! only wish we lived a little closer.  okay, so I’ve got to ask….$850 on the chickens? We’re planning on getting our first chickens this year – that is until JT spied the $850 and insist I ask if this was typical upkeep/feed costs. So I’m crossing my fingers that it’s totally not so we can have some peepers of our own.

    • Posted February 1, 2012 at 8:45 am | Permalink

      Don’t let him spy!
      That $850 covers the cost for our layer chickens, ducks and meat chickens.  The cost is usually offset by selling poultry.  Last year we lost 75% of one batch of meat chickens before we could butcher them and than we had the tragic loss of an entire batch right after they were delivered.
      Just to feed our 18ish layer chickens and 4 ducks we spend about $40-50 / month.  If you have 4 chickens you will spend between $8-10 a month on feed.  Initial equipment costs will depend. Feeders, wateres and a water warmer can run from $50-75 each.

One Trackback

  1. […] Are We Rich or Poor? at Mike and Molly’s House […]

Post a Comment

Your email is never published nor shared. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*
*