The title of Danny Kofke's book, How To Survive (and Perhaps Thrive) on a Teacher's Salary says it all. When their first daughter was born, Danny's wife quit her job and they lived on the $36,000 Danny earned as a special ed teacher. Three years later, another baby came along, and Danny's salary was it until just recently when their younger daughter, now four, started preschool and Danny's wife began teaching part-time. Even before the girls were born, Danny and Tracy were preparing, practicing their rules on how to be frugal.
Little Money, But Living Large
How they live large on little money offers a reminder of some simple rock-solid lessons in personal finance. We should all know them - and we probably do. But do we follow them? Here's a quick refresher course.
"While Tracy was still teaching, we planned," Danny says. "We knew she wanted to stay home at least a year and we started working toward that goal while we were both employed." They did things that other people laughed at. "I rode my bike to work before it was cool, so we only needed one car," Danny says. They bought a two-bedroom house. "People asked why. It's hard to swallow your pride, but we had our eye on the prize. We couldn't save if we had a big mortgage and two car payments."
As much as they could, they tried to live off one salary. They paid off their car loan in two years instead of five, paid off college loans and created an emergency fund. The first five years of their marriage, they had no credit cards. "We had spending money for the week and that was it." When their first daughter arrived, they began using a debit card. Now they have a credit card, but they pay it off right away. "Put five grand on a credit card, pay minimum and you'll pay twenty grand in the end."
They're choosy about what they spend money on, but Danny says they're not deprived. "We do cool things. We have a nice house and we take vacations. We went to Disney World. Do we do it every year? No. We save up and then spend."
The One Big Rule To Follow
The cardinal rule: don't buy it unless you can pay for it. "Dinners out, TV, clothes, wait until you save up. The cool thing about using cash is you can negotiate. I've bargained on a TV, a refrigerator and washer/dryer. A friend bought a $1,200 TV for $700 because she walked in with cash."
The drug of buying things - the euphoria it brings — only works for a while, Danny says. "It's a vicious cycle having to keep fueling that fire."
What about the kids? Don't they want the snazzy sneakers their friends have. "Sure, they do, but I'm very open about money with my girls. When they turned three, we started chores and allowance. When Ava, my seven-year-old, asks why doesn't she have more toys, or why don't we have a bigger house, I say we could, but something's got to give. Mom wouldn't be there when she gets home from school because she'd be working full-time. I show Ava how much the mortgage is, the electric bill, my salary. I want to build the foundation of money knowledge. If you've messed up with money, telling your kids you blew it lets them learn from your mistakes."
Danny is making $43,000 now, and with Tracy starting her return to work, he can dream of some bigger ticket things. "It would be so cool to drive a Porsche, but we've lived so frugally I don't know if could spend the money even if I had it," he says, going on to list some more attainable goals: a backyard pool the girls can swim in and a camper the family could take on vacation and visit every state.
"The advice I give has been around forever. Spend less than you have. My message is that it's really not that difficult." Danny's blog expands on his ideas for how to be frugal and have a full life.