I’ve stolen a tip or two from Jason White’s addictive money blog, Frugal Dad (follow him on Twitter @frugaldad), in the past. And I’m not the only one: Frugal Dad, which Jason started in 2007, partly to document his family’s long slog out of debt, has grown into one of the largest personal finance communities on the web. So of course we invited him to do a guest post weighing in on our three Boot Camp families.
Jason keyed in on single mom Lori, and gives this blockbuster advice: She should hold off on her dream of going back to school.
Here’s what he says:
The Financial Challenges of a Single Parent
I have enjoyed following the posts by all Family Budget Boot Camp participants. While I can relate to each of them, I have to say that Lori's story touched me the most, because I was raised by a single mom and I am familiar with the financial struggles that role entails. Even with financial support from her ex-husband, it means Lori will be the main provider for both children's needs, from childhood through college.
While I don't know Lori personally, from her posts here I can already see she has the ambition to make the most out of her circumstances. But, she is also a little like me — easily bored at work and looking for a creative outlet. This is, in fact, a good problem.
As a single mother, Lori can ill-afford to be choosy about job opportunities that pay relatively well, provide a stable environment, and some level of benefits for her and her kids. That said, she also can't afford to sell herself short or put her dreams completely aside because she is a single parent.
Administrative work can be painfully boring, but the good news is that frees up plenty of mental energy for freelancing opportunities. A couple years ago, my family was facing financial struggles and I weighed taking on a part-time job in the evenings in addition to my full-time job. Like Lori, I enjoyed writing, and decided to give blogging a try. Two years, and hundreds of long nights later, my blogging business now supplements our household income as a viable business.
Lori mentions in her introduction that while she earns $1,000 a month, she often wonders where it all goes. Sounds familiar. Until we got serious about tracking our expenses we never knew where our money went, regardless of how much, or how little, we earned. We went through a period of very strict budgeting with an envelope system until we got our spending under control.
If you find yourself wondering where your dollars disappeared, I suggest adding these three exercises to your first-of-the-month routine:
1. List all expenditures smallest to largest. Chances are the larger expenses are not negotiable. Things like housing payments, car payments, and utilities are difficult to eliminate. However, those smaller expenses add up to one big one, so whittle, cancel, and slash those expenses wherever possible. Say goodbye to extras such as gym memberships, Netflix, the cable bill, etc. Don't worry — this is only temporary.
2. Start saving a small amount from every paycheck. Make it a point to save something — $10, $25, or $50. Don't get caught up on the amount at this point — just save! You must begin to build a cushion between you and the next financial emergency.
3. Create an envelope budget. Most of us don't have a problem paying regular expenses; it's categories like food, entertainment, and clothing that often blow the budget. Assign an envelope for each category and write the monthly budget on the outside. When you get paid, withdraw enough cash to fill all of your envelopes in equal installments depending on the frequency of your paycheck. For instance, if you get paid twice a month, divide your monthly budget by two and place that amount in your cash envelope. Only spend from this envelope for each category of spending. When the food envelope is empty, don’t borrow from the clothing envelope. It’s time to dig out the macaroni and cheese from the back of the cupboards.
Finally, I believe Lori should consider putting school off for a couple years while she builds both her emergency fund and her budding freelance career. After emotional events such as divorce we often look for ways to reinvent ourselves, when what we really need to do is focus on what's most important at the moment. In Lori’s case, that list includes building savings, reducing expenses, and most importantly, providing a stable environment for her children. Adding thousands of dollars in student loans to the mix does nothing to help her reach those goals. In a couple years, Lori’s financial situation will have improved to the point where she may have the cash flow for classes at a local university, or perhaps even become eligible for tuition reimbursement at her employer, enabling her to attend school without accumulating debt.
Good luck, Lori!,