How a Single Mom of Three Scrapes by on a $40,000 Salary

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Getting by on $58,000 a year isn't easy, but it's manageable. Doing it as a single mother of three is a near-Herculean task.

Mike Dang of personal finance blog The Billfold sat down with an anonymous mother trying to pull off this feat, and the interview is a startling look at the compromises some Americans are forced to make on limited salaries. The subject of the piece works at a nonprofit that pays her around $40,000 a year, and she gets an additional $1,500 a month in child support payments from the children's father. It's barely enough to get by.

On payday, she says, she's almost always hovering around $0 in the bank. She has a $48,000 loan from her ex-husband's education that she's been unable to pay off. Her work pays for two-thirds of her health insurance, but she's still considering dropping the coverage because her share of the premiums is still pricey.

And some bills simply go unpaid.

"I can't always pay utility bills in full, but I have figured out how much I have to pay to keep the utility companies from shutting off my service," she tells The Billfold.

The story is a great look at how people can be really smart about money when they're forced to be. The mother managed to negotiate a below-market rent by doing home repairs herself, and further negotiated with her child care provider so she could afford that vital service during the children's summer vacation. She always shops for groceries with a list, and doesn't stray from it. And she gets hand-me-down clothes from other moms to keep up with her growing kids.

Still, certain aspects of her finances need to fall by the wayside: Retirement, for instance, isn't in her future.

"I know that I will be one of those people who works until they drop dead," she says. "My priority is my kids and making sure they have a better future than I have."

That dismal financial outlook is sobering, but it's even more so when you consider that many people have it a lot worse than the subject of this article. Those child support payments account for an extra $18,000 in income, bringing her total income to $58,000 -- and keep in mind that that $18,000 is post-tax. By contrast, the poverty line for a single parent with three children is $23,400. For some perspective, roughly 27% of all single parents are living in poverty.

In other words, roughly a quarter of all single parents are making less than half of what this single mother is making. If she's struggling this much to get by on her salary, how are they managing to make ends meet?

Check out the whole interview over at The Billfold.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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How a Single Mom of Three Scrapes by on a $40,000 Salary

"My husband told me he'd heard about this book, ["America's Cheapest Family Gets You Right on the Money]," she said. "We talked about it over the phone and I read it and thought how it could apply to us."

The couple had a single savings goal in mind –– scraping together $30,000 for a downpayment on their home in their native Henderson, Nevada.

The mindless spending was out, and Wagasky came up with a budget she could make work.
"I changed the way I was grocery shopping and started working my way up, " she said.

By Business Insider

Wagasky barely knew her way around a kitchen when she started her money makeover.

Now she's an avid cookbook collector (she checks them out from libraries or asks for them as gifts to save), and it's one of the simplest ways she's managed to cutback on spending.

With a $7 bread-maker she scored at a local thrift shop, she never spends on store bought slices. She's not shy about professing her love for wholesale stores like Costco, which is her go-to source for baking ingredients.

Above Wagasky's twist on homemade Sloppy Joe's.

By Business Insider

"Everything must be budgeted," Wagasky wrote in a June entry on her blog. "From family outings, to toiletries to clothes purchases. It must be budgeted."

And she takes Do-It-Yourself to the extreme. Everything from laundry soap and clothing to the kitchen her husband installed in their new home was either crafted by hand or thrifted.
She swears by this home-made laundry detergent recipe. (pictured above)

By Business Insider

When it come to cutting costs, cable was as easy luxury to part ways with.

With two children aged 6 and 8 to entertain, Wagasky invests $14.99 in a Netflix plan and recently added Hulu to the mix.

The family also uses a simple antennae to pick up basic cable channels.

By Business Insider

With a single source of fixed income, there's no room for impulse purchases in the Wagasky household.

They budget $400 for groceries each month and that's it.

"Once that $400 is gone, it is gone," she writes. "There are no extra shopping trips made because there is no more money."

By Business Insider

Wagasky said they have no credit debt, but they do charge emergency expenses on plastic when absolutely necessary.

"We recently had some medical bills we had to pay, and we were able to take our savings and pay those down as fast as we could," she said.

By Business Insider

With gas prices creeping higher each all the time, the Wagaskys watch their mileage like hawks.

That means combining errands together and doing all they can to make one take of gas last a month.

"We know we don't get to drive and visit family often, so when we do we cherish it," she wrote in a blog entry.

"We don't go just for an hour, we stay and visit and even run errands that may be close to where we have family. We try to remember that when the gas is gone...it is gone."

By Business Insider

After Wagasky's husband left active duty and started school, the couple knew they would only have $14,000 per year to live on.

So they paid off the $8,000 he owed on his truck while he was earning more and they could afford the expense.

They also bought a van, which they saved $10,000 for initially and were able to pay the remaining $12,000 owed within a year.

Having zero car payments is a nice relief.

By Business Insider

Like anyone with simple math skills, Wagasky was quick to realize how much cash she was wasting on prepackaged snacks for her children.

She cut them out completely and whips up homemade granola bars and trail mix instead.

By Business Insider

If you're on a tight food budget, your freezer will become your best friend.

Wagasky chops vegetables and fruits and freezes them for a month. She actually does the same for dairy products like cheese, butter and yogurt.

"I am able to freeze about 8 gallons of milk each month," she writes. "They sit at the bottom of my freezer and we thaw them out when we need them." Baked goods get the same chilly treatment.

By Business Insider

Wagasky was dubious about joining a food co-op, but after three months, she realized she would never beat the savings or quality she found.

Food co-ops pool membership fees together in order to fund a monthly harvest that's distributed at designated pick-up points.

A couple of times per month, Wagasky gets a basketful of in-season produce for $15 –– way better bargain than she'd ever find in stores.

By Business Insider

By the time Wagasky's husband came home from Iraq, they had managed to scrape together the $30,000 they needed for a downpayment on a home.

"But we decided the best option would be not to have a mortgage payment at all," she said. "We found a fixer-upper that didn't have a kitchen ... and we paid cash."

Price tag: $28,000. With the leftover cash, they were able to finish the kitchen and install wood flooring throughout the house.

By Business Insider

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