chapter 6~"making margin"

As a single mom I started budgeting for the first time in my life.  I started seeing my longtime habits of overspending everywhere in my life.  In my business.  In my household.  And that overspending meant I was always in debt.
 
I didn’t have any margin.  I was always chasing my tail.  “I owe, I owe, so off to work I go”.   I kept out-earning my debt, but it was a constant struggle to keep up with the bills.  Hustle, hustle, but nothing to show for it.
 
With my new habits I began to make margin, and then my extra cash started to pile up.   I started to get somewhere.  It was like my financial engine had been going uphill, working so hard, and now I could coast downhill…things became so much easier.
 
 
What is making margin?
 
  “Do what you can, with what you have, where you are now.”  ~Theodore Roosevelt
 
Making margin is the process of increasing the amount of money between what you bring in and what you spend.  Basically, it’s creating extra cash to put on your goals.  I think of margin as a comforting “cushion”.  To always have extra cash is very stabilizing, and increases a sense of security.  We use most of our margin to save for retirement.  But you might use your margin for travel, saving to buy a home, or paying off debt.  Remember your Big Why?  That’s where your margin can go.

 You can use your margin to:
 
*pay off debt
 
*save your emergency fund
 
*pay for a vacation
 
*fund some fun lifestyle
 
*save for retirement
 
*pay for household improvements
 
*pay for out of pocket medical costs
 
*pay for anything you consider “extra”
 
 

So how do you make margin when your income is down?  For those who are in economic hardship, the thought of trying to save money is hard, but not impossible.

REMEMBER I raised my net worth by $40,000 as a single mom!!  Making margin does take focus, and dedication.  You are building your “margin muscle”.  And the following steps can help you.
 
Act Your Wage
 
This was the most important step for me as a working single mother AND as someone knee-deep in debt.  Since I have been a professional I had consistently made good money, but always outspent my salary.  I had to let go of “keeping up with the Joneses” or trying to please others.  I cut my lifestyle drastically so that I could live within my means.

Acting your wage means not pretending to be wealthy, when you are actually in debt or have minimal savings.   It means you need to stop spending above your income. 
 
Stop the bleeding!
 
As a single mom I was willing to not look good for a while, in order to get my financial house in order.   I rented out a room, stopped ordering takeout, looked for sales, and started using coupons. I said, “no” to my kids a lot, and made them earn their own spending money.

Anyone can do this. I got food stamps and state sponsored healthcare.  What can you cut out of your budget to free up cash for your goals?  Remember this is a temporary sacrifice, for a lifetime of financial security.
 
Be selectively frugal.  You don’t have to cut out everything.  Cut the items that are not important to you, and spend on what you love! 
 
My husband and I chose to buy a home in a lower-end neighborhood in a very inflated real estate market.  We have no mortgage.  This “cheapness” enables us to keep our children in a good school district without overspending on housing.  It also allows us to invest 30-50% of our income for retirement!  It is a trade-off that we love.
 
My parents built a significant nest egg over 50 years.   One of their secrets is they were selectively frugal in their lifestyle.   They chose to be cheap in their choices of cars(always used and 10 years old), clothing(often shopping at Goodwill and other discount stores), and vacations(often taking us camping or to low-cost locations).  This meant they had margin to be able to splurge on the things that were important to them:  education(they funded both high school and college for myself and my brother), organic food(my mom has always been health-conscious!), and an upscale home.
 

1. Drive a beater car.  Dave Ramsey often talks about how he drove a beater when he was getting out of debt, and it helped his family dig themselves out of a financial mess.  He recommends a safe, reliable car, that is UGLY.  That will do the job.
   
   2.  Have a roommate or cheap housing.  Many people pay way too much for their housing.  The recommended amount is 25% of your take-home pay.  If your rent/mortgage is more than that, or if you want to accelerate saving, you may want to consider taking on a renter.  One great benefit of a roommate is they can help feed the cat when you are out of town.
   
   3.  Wear your old clothes until they wear out.  Most of us(except my son who grew 3 sizes in one year!) have plenty of clothing in our closets.  Why shop for the latest fashions when you can shop in your own closet?  Of course get what is necessary.  But adding a new pair of earrings or scarf can jazz up old clothes anytime.
   
   4.  Use older electronic devices, including phones.  Do you really NEED the latest iphone?  When we think about it, all of our cell phone and digital entertainment devices are wants, not needs.  So what if your phone doesn't have the latest bells and whistles?  If it works, it works.
   
   5.  Take your lunch to work and make your own coffee at home.  Aah...leftovers!  I used to hate them, and I have grown to love them.  They are actually delicious!  Especially when they come with the taste of success!  And don't get me started on how much money giving up my daily latte habit has saved me!  Cha-ching!

 
Of course, I still get a latte at a business meeting or when I’m out with friends!  Selective frugality is my jam.

Make More Money
 
The second thing I recommend is to be willing to do whatever it takes to generate the cash flow needed to meet your goals. Unfortunately for single parents, many have a victim or entitlement mentality which makes hard work, well, hard.  I recommend dropping the “poor me” attitude, and just getting down to work. Can you take on a delivery job?  Work at a grocery store?   There are jobs available if you are willing to hustle. 

As a single mom I took on a side job at a housewares store, made calls to get extra music gigs, and networked to keep my coaching business strong. I sold stuff around the house. I applied for grants for my business. If I could do it, you can do it.   

Also there is no shame in looking for free money, discounts, and grants.  There are many free resources out there, from free food at the food bank to business grants.  Many during COVID-19 have accessed government aid. 

Stop the whining! Your work ethic and willingness to do whatever it takes are an essential part of your success.  Even if you deliver pizzas, you can make an extra $1500 a month! Having more cash to dump debt or build savings helps keep the ball rolling!