My husband and I are used to struggling. We’ve never truly been what many consider “comfortable”. But I recently noticed something.
When our daughter was born, we barely had anything. We worked hard, but my husband and I were both making only twelve dollars an hour. But here’s what’s interesting – we made it work.
Fast forward to today. My daughter is now seven and we make quite a bit more than twelve dollars an hour, but we’re barely scraping by. This past year we have felt more pressure and desperation than we ever have.
If at one time we made twelve dollars an hour work, why are we broke now?
I feel our life was simpler when we were younger. We have less stuff. Now we have more subscriptions, bills, expenses, etc.
Kinda weird, but I also think we didn’t realize how expensive having eight cats would be. One of our cats was recently injured and while we would do anything for our kitties, that 700-dollar vet bill hurt.
Things are even shittier in the US right now, and I’m sure that contributes to why we are broke.
This is a short post, but I’m curious if any of you can relate. Have you made your life work for less money than you have now? Did your life get more complicated when you made more money?
Early in our married life, (when our income was low but raising), we noticed that the expenses have a way of magically stretching as the income increases. We made a pledge to make a conscious effort to not ‘upgrade’ our lives as income increases.
Fast forward to today (20+ years later), we’re still driving 14- and 17-year old cars respectively, have old(er) computers, and cameras. Generally we live as if we only make about 40% of what we actually make. My wife jokes that our neighbors must be pitying our ‘poor’ condition.
Now, I am not saying you’re there, yet. Most of your increase in expenses can be explained with children, cats and inflation, but this is something to keep in mind.
why are we broke now?
we didn’t realize how expensive having eight cats would be
Leaving aside the uncalled for comment about cats, I think you are correct about the additional stressors for individuals and families today. Even as compared to three years ago.
For many years I haven’t just maintained a budget, I’ve been tracking our expenses. I’ll share some of the results.
In 2019, we spent ~$8,800 on food for the year. In 2022, we spent ~$10,800 on food. That’s about 20% more just in food costs over three years. Our utilities have also gone up. I think our case is a little exceptional because I made some poor decisions on home improvements, but our utility bill went up ~$3,000/yr over the same period. Just food and utilities consume about ~$5,000 more of our yearly cash flow that they did in 2019.
Now, I make a decent wage (my wife doesn’t work), and I’ve gotten raises for the past 3 years, and our after-tax, take-home income has increased by ~$5,500 from 2019 to 2022. But look at those numbers, if other expenses hadn’t dropped we would have managed to increase our savings to the tune of about $500/year. What expenses dropped? I saved ~$1,000/year because I could work from home and didn’t need to buy as much petrol. Anyone who couldn’t work from home, which generally means lower-income jobs, would also be impacted by increased petrol costs. For anyone operating close to the margin in 2019, they are probably having a really hard time making ends meet today.
Then, to your specific case. Seven years ago, you were a couple with a newborn. Now your expenses have gone from covering two and an infant, to two and a child. That alone increases your expenses. In 2019 your child was four. At most they were in pre-school. In 2022 your child is older and needs more things (not wants, but needs), but as discussed in the previous paragraph, even if your families income has increased in those three years, it probably didn’t increase enough to cover the increased costs for necessities. So yeah, your impression that it’s harder to make ends meet today, even with your increased income, is probably accurate.
Wife and I have discovered that expenses will expand to absorb 105% of available take-home income.