I’ve already mentioned that I’ve been wondering about the economic fallout of the current pandemic, but to be honest haven’t given it much thought, because our financial situation has been dire for quite some time. I can’t imagine it getting any worse, except if one of my sons were to leave home and leave me with even less income from the government.
But some friends have pointed out that for a great many people the pandemic has already brought financial ruin, one which they may or may not recover from. Having been there and done that, I wanted to share with you my tips for living frugally, when you suddenly find yourself living on nothing more than what the government doles out to you.
To be completely transparent, my income consists of the Family Tax Benefit, the Job Seeker Payment (reduced by whatever I have earned in my part-time job each fortnight) and my part-time job income (max $660 a fortnight). My boys also receive a Smith Family Scholarship each, which helps to pay for their school books each year. My business contributes maybe $300 a quarter.
Mortgage and Debt
When my ex lost his job and went to jail, I suddenly went from living on a decent child support arrangement from someone who earnt $100K a year to living on nothing more than the Parenting Payment and Family Tax Benefit. I could no longer make my mortgage payments. Even were I to get a full-time job immediately, there was no chance of me getting a $100K job in Frankston and I wasn’t prepared to spend 12 hours a day away from home so I could work in the city.
With the help of a financial counsellor from the local council, I contacted my bank and arranged for a significant reduction in my mortgage payments with the aim of selling the house.
So, if you have a mortgage, ring your bank now and see what they can do for you. If your job or income loss becomes longer term, yes you will need to sell your house, but you know what? As much as that will hurt, it is not the Worst Thing in the World. If you do end up selling your home, make sure you start looking for a suitable rental well in advance of your settlement date. I didn’t and ended up in a less than optimum rental that wasn’t anywhere near big enough for all of our stuff.
Yes, you may need to move away from your suburb and the schools your kids go to. You may not afford a rental close to them. But you have a choice. You can drive your kids to their current schools, they can learn to get there on their own, or they can change schools. That also, while not ideal, is not the Worst Thing in the World.
Take stock of all your other debt and with the help of a financial counsellor, who you can usually access through your council or a local community assistance organisation like CAFS or Anglicare, see what measures can be taken to reduce it, wave it, or reduce payments.
When you receive government benefits such as the Job Seeker payment you automatically receive a Concession Card. This card entitles you to some savings on your utilities and vehicle registration. This will vary from State to State to Territory so check it out and see what you’re entitled to. You will need to call your utility companies and let them know you have the Card. In Victoria, you can not only get reduced vehicle registration you can also pay it 6 monthly or quarterly.
As a Concession Card holder you will also get cheaper prescription medications that are on the PBS and access to bulk billing with some GPs and other health professionals. Then there are things like free or reduced entry to some family attractions, like Scienceworks in Melbourne.
These days I only shop at ALDI, with only small occasional shops at IGA or Woolworths for when I run out of something and can’t be bothered with the extra 5-minute drive. While I’d love the luxury of online shopping, that is not an option for me. Aldi will save you at least 25% – 30% on your grocery bill and ALDI brands are just as good if not better than the major supermarket brands. Yes, you have to pack your own bags, but hey, you’re in a new world now. Have a look at Aldi Mum to get familiar with shopping at Aldi.
Other sources of cheap food are farmers’ markets, bulk food stores and community co-ops. Check out what’s available in your local area and you will soon find ways to save money on your food shopping.
One major switch you will have to make is a mindset one. You need to realise that some things are luxuries now and you simply can’t afford to buy them. When you go shopping stick just to your list, no more treats, no more Magnums at the checkout, no more soft drinks or cakes. If you want a cake, make it yourself. It’s really not that hard. My 13 yo loves the packet cakes from ALDI – he loves to make them and he loves to eat them and they’re pretty cheap.
This actually goes for all food. Packet cakes are about the only processed food we get, apart from the chicken nuggets my 13 yo is addicted to. A great way to save money is to stop buying processed/packet food and buy only ingredients. This is why my kids always say there is nothing to eat in the house, there are no snacks, other than fruit or crackers and cheese.
Eating out and holidays
You will need to make the same switch when it comes to eating out. You no longer can. Or if you do, it’s going to be a special treat that happens once in a blue moon. We go to Maccas once a fortnight and get a takeaway pizza in alternating weeks. When things are really tough, we don’t even do that. The only other time we go out is for birthdays, when my parents shout us a dinner out, or when I’ve had a windfall in my business.
We don’t do holidays, or outings of any sort, or if we do it’s very rare and usually sends my budget backwards. An hour at a trampoline park is a huge hole in my budget. Our idea of a family outing is a grocery shop at Aldi, or a walk around the block.
If you have camping gear or friends with a house you can borrow in a holiday destination, then that’s an added bonus that you should take advantage of. But you will still need to make your own meals.
You will have to think twice before buying a coffee and when you do, make sure you see it as a treat and really take the time to enjoy it.
Before the pandemic, I would still go out and have drinks with friends, once a month, but I was a VIP member at the pub we went to and got my drinks half price.
I almost didn’t write this section, because my kids don’t do any activities, mostly because there is no money for them. They are also not interested. I’m sure if one or both of them would suddenly express an intense love of ballet or swimming, I would somehow find the money, but the truth is that after school activities are just not in the budget when you are living frugally. Both my boys did Scouts for a few years and each year it was a huge struggle to find the cash to pay the annual fees. I was so relieved when they both gave up.
What personal grooming? I’ve always been very low maintenance, my only extravagance being my hair. I stopped dyeing it a few years ago to save money and have adapted to my white head. Since my hair is short, I do need to have it cut fairly frequently and I like to have it done well, so I don’t skimp on my hairdresser. If I can’t afford a haircut, I just let my hair grow and it looks awful, but there’s not much I can do about it. I try to budget it in between bills and other necessities and when I work enough hours, I can usually manage it.
If you do want to save on haircuts, try Just Cuts, or your local home salon or find someone who can come to you. Find a local bartering group on Facebook and see what you can swap for a haircut. Most recently, I swapped an old dining set that was taking up space in my hallway for a great in-home cut. I took a chance and it worked out great.
For everything else, find a DIY option or forgo it altogether. I understand that looking good contributes to us feeling good and confident and positive, so decide what the most important thing is for you and budget that in.
The bottom line
Living frugally means spending money only on necessities. It means paying for rent and food first. I pay all my utility bills monthly (except water which seems incapable of sending a monthly bill) which makes it easier to manage on a limited budget.
Mostly, it means a severely revised expectation of your lifestyle, which can be a hard pill to swallow. I know it was for me. I no longer see shopping as a leisure activity. It’s a necessity only. New clothes? Only made possible by my job and even then I make good use of After Pay. Every purchase is carefully thought out and considered. Do I really need it? Will it make my life easier? Will it bring me joy? Only then do I press the buy now button and only if I happen to have some spare cash after paying all the bills, which is not very often.
Living frugally has been my new normal for the past 6 years. I also managed to accumulate a heavy credit card debt as I tried to make up for what I couldn’t afford with my incomings. I’ve worked with a financial counsellor to reduce it and manage it, but it’s been really hard and I have hurt my credit rating in the process.
I may never again own my own home, or even a mortgage. I may end up in public housing, but the older I get, the less important those things seem to be. As long as I have a roof over my head and food on my table, I’m OK.