Money, Money, Money

Who can't relate to ABBA's Money, Money, Money song? My children walk around singing that song every day, not only because they love Mamma Mia the movie, where they first heard it, but because to them money is fun so why wouldn't they want to sing about it? They know that people have to work to earn money, and I've tried explaining to them that it pays for our food, rent and other essentials, but I think that's a bit over their heads at the moment. All they know is that money buys them treats and toys in the shopping (way too many to be honest) and they get to have fun putting coins in their money boxes.

I was thinking back today to when I was a kid receiving pocket money. I carefully planned every purchase, wanting to get the best value for my money. Granted I used to spend it all on junk...but I did a good job of it! It didn't take me long to realise that if I bought chewing gum the enjoyment would last longer then if I spent all my money on lollies or chocolate that would be gone in an instant. And by the time I was ten I'd calculated that buying the big multi packs of gum would stretch my money even further.

It was also during those years that I had my first taste of what it's like not to calculate your expenses and budget accordingly. I remember going through the checkout with a friend. I was buying several things to share with her but when I was told the total I came up a dollar short. A kind lady overheard my dilemma and gave me the dollar I needed, but it was an embarrassing moment for me and I knew then that I'd have to be more careful in the future.

Unfortunately it was a lesson I pushed to the back of my mind once my relationship with Josh started. I always paid my bills first but the rest of our money was frittered away on crap. Lets just say we didn't eat at home very often during those early years of our relationship and I didn't think twice about spending $20 on morning tea, lunch and magazines at work every day. We should of been saving every penny we could, but unfortunately we learn some lessons the hard way.

Before our first year together came to an end we found ourselves short of money to pay a fine that had caught up with Josh from the previous year and the easy solution was to get our first credit card to bail us out. Soon after that along came the kids, then our first car that we purchased with the funds from our first personal loan, then another credit card, then our second personal loan. Today we're just over $9000 in debt. To some that might not sound like a lot, but to us that's huge. Especially when you consider our debt has increased by well over $1000 for each year we've been together.

Now we have to face up to reality. We can either continue on with this trend of steadily going further into debt or we can tackle it face on before it drags us under.

What makes things difficult is our list of fixed expenses, they account for about 70% of our income:

Rent
Preschool
Speech therapy and medical
Sponsor child (I've been her sponsor for 8 years and wouldn't give her up unless I was on the brink of bankruptcy)
Union fees
Utilities
Phones and net
Car expenses (fuel, repairs, rego etc)
House expenses (repairs, appliance replacements etc)

That leaves us with our variable expenses. Somehow, and it will be tough, we need to lower these to not only fit into our budget, but leave us with money leftover for debt repayment. I've broken them down into four categories:

Groceries
Gifts
Clothes (including shoes and haircuts)
Entertainment

With an income that can vary by up to $300 a week, it's not going to be an easy task. It's going to take a lot of commitment and it means we'll all have to make sacrifices. Josh has already reduced how much money he spends on smokes by more then half, but we need to do a lot more then that.