Can You Feed a Family of 7 on $115 a week?

At the start of this 2 week period I had $231 budget for all grocery and household needs. Right now I have $22 and $21 are earmarked for haircuts for Anson, Nathan and Annika. That leaves $1. Right now I know that I will need size 2 diapers and baby food, if nothing else. If I could scrounge up a mere $50 (of which $11 was already spent on wood glue and batteries for a bed-wetting alarm) then I could also buy some bananas and grapes.

Part of me feels so stinkin' proud of the fact that I am taking care of my whole household budget for $280. And the other part of me is already tired of stressing about running out of cash.

Cash Part 2

At times I feel like a three-headed alien when I admit that using "plastic" to spend, doesn't feel like "real" money. It's magic. (Somehow, money in my checking account "magically" disappears when I use plastic.)

As the economy has slowed, and Wendell's paycheck's shrunk with it, I knew I had to get real about our money really fast. So I sat down and figured out our bills on a paycheck by paycheck basis, then cashed out what was left. Last pay period that was $418. I was shocked.

With just over $400, I would have to buy enough groceries for then next 17 days, buy back to school clothes and pay for PTA memberships, yearbooks, etc. But I did it. I was so proud.

Next pay period will be better, I told myself. I'll have lots of money. $1100, probably. I mean, not exactly but after I deduct a few things it should still be $700 to $800. Yea. That'll be great. It was pretty fuzzy math, interestingly enough it's the kind of math our brain prefers, but a good estimate, I was sure.

Wanna guess how much disposable income I have this pay period? $231. No kidding. It's 51% of what I had the first half of the month and 33% of what I thought I'd have, going by my lowest estimate. Thankfully, this money only has to last us 13 days, but I feel a bit stupid being off by that much. It was like I was compelled to estimate in my favor leaving an enormous gap between where I thought I'd be and reality.

An MP Dunley article, Is Debt Your Destiny, talks about some of the things I've noticed as I've retired the debit card and started paying with cash.

"Numerous studies have demonstrated that when a purchase and the payment for it are closely linked -- as when you spend cash -- you are more aware of how much you spend and tend to spend less, says Dilip Soman, an economist and professor of marketing at the University of Toronto.

Uncouple the purchase from the payment -- as when you whip out a card or tap that home-equity line of credit -- and you suddenly become much fuzzier about how much you spend. In those situations, you tend to spend more, Soman says."

This has been shockingly true for me. When I'm spending cash I can't go over budget, not even by a little bit, otherwise I'll be standing at the register saying, "Now, if I take that off, then how much is it?" I wouldn't allow myself that level of mortification. So when I shop with cash, I take my grocery list and a pencil and jot down what I'm spending as I go.

In this case, I over estimate every item rounding up to the nearest dollar. That way when I get to the register I know, pretty darn close, what the total will be. The two times I've done this I've been within $2 of my estimate.

Probably the biggest surprise has been my sudden avoidance of "extras." If I don't have the cash for it, it doesn't go in the cart. Not that I was some kind of spendthrift before, but $5 here and $1.50 there and $3 for that, all seem like insignificant things, but collectively, they sure add up.

I rarely get out of Wal-Mart spending less than $150. My last visit: $88. At Costco I have the same problem, but my visit there on Monday: $96. Switching to cash has put me in touch with our budget in a wonderful way. When I made this change, I mentally prepared for deprivation eating: beans, rice, eggs. (I even watched 30 Days with Morgan Spurlock about living on minimum wage, which both gave me ideas on how to reel in spending and made me feel very rich indeed.)

But we haven't even been close to deprivation. We're having all of our normal family meals with a bit more care given to the planning and use of left overs. In reality, switching to cash hasn't really been hard at all!

How My $7 Salad Became a $16 Lunch

A "friend" of mine (you'll see later why I use this term kinda loosely) had been begging me to go to lunch.

"Well, Wendell's day off is thus-and-such, so that would be a good day for me to go," I remember telling her.

"My girls could babysit," she insisted. "Then we could go anytime."

"True," I replied, "but it would be cheaper for me if Wendell babysat."

"My girls could do it for free."

"Are you sure?"

"Sometimes they owe me something and I could just have them babysit in exchange so they don't have to pay me back."

Three months went by before I could arrange the outing. The Sunday before we were to go I asked if she had any ideas.

"Oh yes," she said confidently, "I want to go to The Grill."

The Grill is a very nice, very expensive restaurant at the ski resort nearest me. It would be a 20-30 minute drive and the last time I went there, 8 years ago, lunch for two cost $80. No kidding.

As it got closer and closer to our lunch date, I got more and more anxious. In the past, she has been very draining on me and I wasn't looking forward to the lunch. The day arrived and, to make matters worse, things fell apart at my house. When E, her daughter and daughter's friend showed up, my children were fighting and screaming. I gave E one look and said, "I can't go to the ski resort."

"No problem," she replied pleasantly. "We'll go somewhere else."

We decided on a place that Wendell doesn't like and I rarely get to go. Fast forward to the end of lunch. (I could mention here how she interrupted me very rudely and killed the conversation or how she wouldn't help me with Beck (8 months) who I'd brought with me, but suffice it to say, by the end of our slow lingering lunch I was ready to head for home and face the screaming masses.)

As we settled the check E asked, "So how are you going to pay the girls?"

What I should have said: "You told me that your girls would do this as a favor for you, so there would be no cost to me."

What I said, "Oh. Um. Well."

E: I ask because I promised to take the girls out for a shake after so it only needs to be a few dollars each."

Me (mind racing): Yeah. I have a few dollars at home. I can do that.

At home I had exactly 3 dollars in bills so I ended up paying the girls in quarters and dimes as well, just whatever I could scrounge out of the coin jar. I severely underpaid them, but it was the best I could do on a moments notice.

I suppose I'm not the only who's had an experience where you thought you would be paying one thing and ended up paying lots more, but it still felt awkward.

Cash

While reading an MSN Money article, I saw a question about budgeting, that interested me. As I checked the discussion on the message board, an interesting side conversation had started. One young man admitted that he had A.D.D. and that made sitting and budgeting very difficult.

To compensate, he would first set aside money that he needed for bills, then he would put money in savings. He started with as little as $25 per paycheck, but challenged himself to add $5 the next check, arguing that he could do without $5. Then, he took the rest of the money in cash. As he paid for his groceries, clothes, etc with cash, he was careful about how he doled out the money. When the cash was gone, he had to wait until his next paycheck.

One of the people posting on the board thought that was a stupid way to keep track of money. She didn't trust herself with cash and argued that he shouldn't be trusted with cash either. Instead of wasting cash, she put her monthly expenditures on her credit card. At the end of the month, she paid the card off and could easily see where she was spending her money.

To be honest, I was surprised by this woman's reaction. Cashing out your disposable income is a great way to keep control of your spending, especially if you don't have a lot of money.

When my folks were newlywed and poor, they would cash out all of their income that they didn't need for bills. Money for groceries, clothes, gifts, etc. was all in cash. When the cash was gone, they stopped spending. They have always recommend this method as a good way to control spending.

As they economy has struggled and car sales are down, I've gone back to doing the same thing. When I'm spending cash and not my debit card, I'm so much more careful. It's almost disturbing to watch the cash dwindle.

Keeping in mind that we have 5 children (ages 9 and under) as well and Wendell and me, I was really proud that we spent only $144.00 on groceries for the next nine days. This includes everything we need to eat for breakfast, lunch, snack and dinner, although we may need a milk run before the time is up.

So, how do you manage your money best? Does cash help you or tempt you? Can you use a credit card to keep track or is that "magic money" problematic?

Flux

Our pay has huge flux to it. From our worst month last year, to our best month we had about an $8000 variance. This means, when it's good, IT'S GOOD; but when it's bad, we are really struggling.

It is imperative, in the summer to put money away into savings for the fall. I'm have a lot of trouble doing this. A lot.

Target seems to be my down fall. With a little of this and a little of that (oh, look that skort for Emma is only $5.00) I seem to fritter away our money. Especially this month.

Next month I'm going to either 1) make a collection of my Target receipts and go through and itemize them one by one or 2) I'm going to leave only what I need in my account to pay my bills and cash out the rest to pay for groceries, etc.

Take Off the Rose-Colored Glasses

The best financial advice I ever received was this, "Never take a rosy view of the future."

It may sound a bit depressing, but it's not unlike the adage, "Expect the best, but prepare for the worst." That's what being financially sound does for you: it prepares you for the worst.

In 2000, Wendell and I bought our first home. We found a nice twin home, newly built, with a large master suite, a gorgeous kitchen, and a mostly unfinished basement. I can't remember how much the bank had approved us for, but the mortgage on the $129,900 for this home would stretch us to the max.

But we were eager to be done with apartment living, to have our own fenced yard where our one-year-old daughter could play safely. It would be close, but we could afford it. Kind of.

My folks decided to give us $20,000 for a down payment on the house. We were excited about the twenty grand, but didn't think a down payment was the best idea. Our loan officer at the bank suggested that we buy down the interest on our FHA loan. This would mean that our first year our monthly payment would be just under $900. The next year it would go up $100 and the third year another $100 where we would finally arrive at our real payment.

Since Wendell had just gotten a job offer, his first job after college, we should be fine. I mean, obviously his pay would go up next year and the year after.

By the time we bought down the interest, and paid our portion of closing costs, we paid essentially nothing down on the house.

Once we moved, I was surprised how much the upkeep cost. We needed blinds, a fence, a sprinkler system and grass. We had to get cable installed and all of our utilities started up. It was staggering.

Suze Orman's recommendation on home purchase, on her Women & Money website, is what she calls it the 40 percent factor. "When you rent a place it’s easy to know your monthly housing costs: it’s right there on the check you write to the landlord each month. Owning is a bit trickier. The basic mortgage cost is just the beginning of what you owe. It simply covers your principal and interest payments on the loan. But you then need to add on all sorts of other costs, including property tax, home insurance, as well as incidental costs you typically don’t have to worry about when you rent.... My housing rule of thumb is that you should add 40 percent to the basic mortgage amount to get a sense of your overall housing costs when you own."

If I only had had this tidbit of wisdom before this ill-fated purchase. If I could advise myself in retrospect I would say, Go get a condo or a townhouse. Find something with a neighborhood park close by. You need only stay five years, but buy reasonable and build equity. Then you can get a house with a yard. But wait just a few more years.

Two months after we moved into the twin home, my son was born. Three months after that, Wendell lost his job. 2001 was a horrible year for us. Wendell had four different full time jobs. We lived off his income when we had it, but we would go weeks at a time without any. During this time we were forced to rely on our church welfare, my parents and our credit cards.

As the fall rolled around again, our mortgage payment went up. Wendell had only had his job (he was selling cars now) for a couple of months. He was working on commission and our income had definitely gone down. In November, with our children ages two and half and one, we would learn we were in for another surprise: we were pregnant again.

Over the next couple of years things continued to get worse, or at least stay pretty bad, before they got better. And they got better slowly. Financially speaking, paying down our interest so that our payment was affordable right now, was probably the dumbest thing we've ever done.

Thankfully, we've learned that lesson. Now when we make decision we see if we can afford it now. Not if we think we will be able to afford a year from now or two years from now. The rose colored glasses are off and if you want to know the truth, I like the view better this way.