A day early and a dollar ahead

March 1, 2012
One hygienist’s guide to surviving the recession

One hygienist’s guide to surviving the recession

by Cathy Hester Seckman, RDH

Eight years ago, we suffered a devastating fire at my husband’s car repair shop. The garage was flattened, two customers’ cars were ruined, and my husband, Randy, had second-degree burns on his neck and shoulder. He couldn’t work for the next six weeks. During that time, several family members and friends, as well as the elders at our church, asked us if we were all right financially. Did we need a loan? Could they help us out with anything?

“No, thank you,” we were able to say. “We’re fine.” Four months after the fire, we flew to Arizona for an expensive 10-day vacation to tour national parks.

“It’s all because of The Plan,” we told each other. The Plan has served us well in the current recession. If both of us lost our jobs tomorrow, we could live for at least a year with no income and without changing our standard of living.

We’ve followed our uniquely personalized financial plan, based on irregular paychecks and part-time work, for 25 years now. We’ve been debt free since 1991. We own a nice home, pay cash for every vehicle, zero the credit card balance each month, and have savings and hefty IRA accounts ready for retirement.

How do we do this? Randy’s a mechanic, and I’m a part-time hygienist and part-time writer. It’s because of The Plan. We love The Plan, because it allows us to live worry free as well as debt free. We prefer to stand far, far back from the financial edge that so many people teeter on from paycheck to paycheck, so this works perfectly for us.

In these tough economic times, we’ve been sharing The Plan with friends and family who worry about losing their jobs and receiving reduced paychecks. One of Randy’s customers took The Plan to heart, and she recently paid cash for a new car.

Here’s how it all started. Twenty-five years ago, my husband was ready to take the leap into self-employment and open his own car repair shop. I saw an ad for a small business course at the local university branch, so we signed up. The course taught us about bookkeeping, paying estimated taxes, getting insurance, and dozens of other details. The most important thing we learned, though, was a tidbit the instructor mentioned almost casually. “Before you quit your day job,” he said, “put aside money to pay six months’ worth of household bills.”

Randy, being the cautious person that he is, said, “I want us to save a year’s worth of bills.” He added up the bills we pay on a regular basis — electric, telephone, property taxes, car insurance, etc. At the time, it came to $4,000 a year. We saved that, set it aside, he quit his job, and he’s never looked back.

I’ve worked part-time for most of my career, so paychecks are irregular. Randy’s income, of course, was patchy in the beginning. With the $4,000 buffer, we didn’t have to worry about bills for that first year. It worked out so well that we decided to save another $4,000 for the following year.

That’s The Plan, in a nutshell. Over time we’ve added to the basic bills. Each year, besides saving for next year’s utilities, insurance policies, and taxes, we now build a new car fund, a vacation fund, an IRA fund, a veterinary fund, working budgets for the shop and my writing business – there’s even a fund for magazine subscriptions and memberships.

We do not use our current income to pay current bills. The bills are paid with last year’s money. Every January, Randy transfers the bill money we’ve saved for the coming year to an interest-paying checking account. As bills come due, he pays them without worrying about whether business is slow or whether one of my checks is late. In the meantime, we use our current income to pay for incidentals such as gas, groceries, and entertainment, then put all the rest into an account for next year’s bills. Every few months Randy, who manages the checkbooks, says something like, “We’ve paid off the household bills and the IRAs. Next is the vacation fund.”

It usually takes until late summer to pay up next year’s bills; then for the rest of the current year we have free money to spend. Free money buys things such as tile for the kitchen, a new television, an extra vacation, or toys like kayaks and motorcycles. By the time the year winds down, we’re tired of spending the free money, and this jump-starts the account for the year after next.

The most brilliant part of The Plan, we think, is the new car account. It occurred to us one year that everyone has to make car payments, but most people make them after the car is purchased. Why couldn’t we make them before the car was purchased, and save the interest? We made an extra effort to save $2,000 per year toward a new car. These days we wait until the fund has $8,000 or $10,000 in it, then we trade the oldest car for a new one. We have to be sensible about choices – I have a Honda CRV instead of a Lincoln Navigator – but we always drive away loan free.

Other sensible choices support The Plan. I love chai tea latte, but I don’t often buy it from Starbucks; I make my own. I also make wine, and the average cost is about $2 per bottle. We grow our own vegetables in our large garden. We get our beef and pork by the half from a local farm, and we eat 95% of our meals at home. The laundry hangs outside or in the basement to dry. The winter heat comes from wood Randy cuts on our six acres.

We rarely go to the movies, instead buying used DVDs at flea markets and resale shops. On vacation, we sleep in a camper more often than a hotel room. Our cell phones cost $50 each, and are on the minimum plan with no texting. There’s no cable television. At this point in our lives we don’t have to be so frugal, but the lifestyle suits us.

We aren’t frugal about everything. We spend a lot of money on things we consider important, such as vacations, motorcycles, a cleaning service, central air conditioning, books, and tools.

I’m sure The Plan can’t work for everyone. We don’t have children, for instance, so we haven’t had those expenses, but we wouldn’t have them at our ages now anyway.

For anyone inclined to try The Plan, the first year is the hardest, when you’re saving for next year’s bills while still paying this year’s bills. But once you manage to do that, the rest is easy and worry free. It’s a great way to live — a day early and a dollar ahead.

Cathy Hester Seckman, RDH, has written on dental topics for 26 years. She speaks on pediatric issues, and works clinically in a pediatric practice. She is also an indexer and a novelist.

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