We don't seem to be able to live on what we earn

I recently quit my job to become SAHM of 3 (twin babies and toddler). This took our gross salary from over $200k a year to about $125k a year. We knew we would have to make some living adjustments, but we still don't seem to be able to live on what we earn without going into savings each month. I'm looking for advice on some ways to cut costs. Here is what we have done thus far.

No cable. No cell phones. No gardener. No spending on seemingly small things like (on Starbucks or Peets.) Wah! In fact, no cash or ATM use at all except at grocery store. No purchases on credit card No buying books. Only using library. No renting videos. Library again! Shopping at Costco on bulk staples like meat, diapers, etc. No going out to eat. Lunch included. Only getting clothes for kids second hand. No new clothes for us. Basic energy conversation stuff like running full washer/dishwaser/dryer and turning lights and heat off.

Our only debt is our house payment. We live in a small two bedroom house that we just refinanced to save some money. We both have used cars (5 and 9 years old) without any payments. So we basically have bills (phone, water, health/car/home insurance, etc), food, and diapers (and lots of them.) Our only luxury is a housekeeper every other week so we can keep our sanity. You'd think we should be able to live on on my husband's salary, but it isn't the case.

What else can I do to save money each month???? Need to spend less...

My advice: first, check to be sure that too much isn't being withheld for taxes (just don't go too low and end up paying a big penalty in April). Second, write down everything (and I mean everything) you spend for a few weeks to see where the money is going. It might be helpful to break out your categories into a fair amount of detail. For example: an incredible amount of our grocery bill was spent on beverages. If you drink alcohol, coffee, soda, or juice, it can really add up. When we didn't pay attention, we could easily spend over $100 per month on beverages. Third, you don't say what the commute/parking situation is like. Maybe there isn't anything you can do about it, but: a) are two cars necessary? b) is carpooling a possibility? or c) have you considered public transportation? Between gas prices, bridge tolls, and parking, public transportation becomes increasingly cost effective. In our case, it was much less expensive for my husband to ride BART than to drive to school and either pay for parking or risk have to drive around forever looking for a spot to park all day for free.

Finally, although I know you are trying to reduce your expenses, I've got to say that if you don't splurge in little ways every now and then, you may not be able to keep your sanity for long, especially if you are used to a different lifestyle. You two need to figure out how to make that work; just keep it reasonable. I was much better able to keep spending under control if I didn't feel like I had to deprive myself 100% of the time. In my case, ''fun money'' probably amounted to less than $10 per month on average, but it kept me sane. Anonymous

But I digress. My suggestions are: 1) Read this book: Your Money or Your Life. It helps you to evaluate your priorities and your spending and the true cost of things. It's an easy read and puts things in perspective even if you don't do all of the exercises. It's not a new book so you should be able to find it in the library. 2) You must have either quite a mortgage, or quite a grocery bill, or there is something else (vacation? hair/nail salon? health club? gifts?) that was left off of your list. Something that could possibly be lowered. If you haven't done this already, you might try keeping a money diary or make a balance sheet (list income and expenditures) to find out where the gap is between your perceived and actual expense. 3) Your grocery bill could be much lower depending on where you shop and what you buy - it is much cheaper and healthier to cook simple meals from scratch and avoid buying prepared foods. I have found if you shop the perimeter of the grocery store (produce, dairy, meat, bread, etc) and avoid much of what is in the aisles (canned goods, cereals, crackers, snacks, mixes, frozen foods) it saves a LOT of money. If you have a very full pantry or freezer, try using it all up before refilling it. I know many people who could probably go for a month or two just buying fresh fruits/veggies/milk/eggs while using up what they have stockpiled. Costco does not necessarily save you money - evaluate each thing you buy there: a) is it really cheaper (then go for it, in moderation) and b) do you really need it (was it on your list or did you just think of it once you were already in the store?) 4) Check out a cloth diaper service - since you have three in diapers, it may save you quite a bit on diapers. 5) Are you paying too much for your car insurance? Once my car was more than about 5 years old, I only kept the part of the insurance that covered people/medical and liability (to pay for damage if I am at fault) and dropped the part of the insurance that would pay for repairs to my car. Review your policies carefully. anon

We've done well with using all the strategies you mentioned, but to add a few: use coupons; look for free, fun activities like outdoor movies(since it's summer, there are always listings in the paper); go hiking and picnicking; use freecycle for recreational games and fun stuff you wouldn't be able to buy; read ''The Tightwad Gazette'' books from the library- there are lots of little strategies in there; we also share a car to cut back on maintenance/insurance/gas.

Know that you're not alone, anyway. It's a battle we fight everyday to stay on top of our spending. I'm looking forward to reading the responses you get. Good luck. Anonymous Fellow Scrimper

We're always spending more than we earn

Help. We keep spending $1000-$5000 more per month than we're earning. We staying afloat by spending home equity and occaisional infusions of money given or borrowed from family. I keep trying to figure out where the money goes, how to separate necessary from extras, how to predict future costs. Part of my problem is that I just have no time make any headway and I have no financial skills at all. We don't have cable, I feel like we've cut out anything extra. I've read and done my best to implement the finincial advise in BPN archives. But, we just can't seem to manage on what we make. Someone suggested quicken software, but i don't know if I can carve out the time to figure it out even if we could shell out the money. Is there something online or in a library that's quick and EASY to read for a finincial dummy with very little power to focus. thanks in advance

So far for this year, I am trying to cut back grocery bills by planinng meals ahead of time and buying grocery only needed for those meals. I also try to sell things we do not use via craigslist.org and often am surprized to find so many people interested in my unwanted stuffs. I also asked my husband to cancel his YMCA membership, since he rarely goes but pays about $70 per month.

Sorry for not having some magical answers to your situation, but I just wanted to tell you that I struggle with the same issue every month,,,,. I am trying to stay within our budget,,,

You can check this book out at the library. Also, you might want to go check out this website: http://www.debtorsanonymous.org/

I've found DA (debtors anonymous) to be very helpful over the years.

One thing I've learned is that my problems with money hardly ''happened'' to me overnight. It took years to get the way I am with money, and it took me years to heal from my unhealthy relationship with money, and I still have a long way to go.

Through DA, I know I'm learning how to continue to have a healthy, abundant relationship with money that I couldn't get by trying to ''budget'' my life to death.

Wishing you a life of abundane and prosperity Recovering compulsive spender, underearner

1. All Your Worth - The Ultimate Lifetime Money Plan by Elizabeth Warren and Amelia Warren Tyagi. Got it used for cheap on Amazon. Lots of worksheets and practical advice. I especially like the fact that they focus on dealing with the big picture, instead of every tiny transaction. They don't really address charitable giving as part of your financial planning, which I think is unfortunate.

2. We did buy Quicken, although we are just getting it all set up. I've thought about this for awhile (my Mom has used it for years) but couldn't stand the idea of inputting every receipt into the computer. These days you can download straight from your bank statements, credit cards, etc. which is what made me finally get it.

3. We're writing a budget on an Excel spreadsheet (which presumably we will then import into Quicken to track how we are doing). I took the last three months of spending, input it, and broke it into categories, to see where it all goes. Then we could try adding and subtracting from various categories and see immediately how it would change the bottom line. It took about two hours work to set up the spreadsheet and input the info and it's been incredibly useful as we think about what to do going forward. We did this before we bought Quicken - presumably you could just start out with the program.

It's hard to find the time to do this stuff, and it is work, but we think it's worth the investment of time to come up with a plan. Then it will be easier to make decisions as they come up - should we buy this or that? should we cancel the cable? How much do we give to charity this year? how much do we put in retirement funds and the kids college fund? etc. - which should save us time later.

Good luck! Resolved to get better at it in 2006

1. Don't worry about figuring out where your money is going. You know you are spending $1,000-$5,000 a month too much.

2. Set up an automatic payment of 10% of your income that goes for the following (5% for retirement--preferrably in a 401(k) or a Roth IRA; 2% for emergency fund-- in a savings account until you have 6 months of living expenses; 2% for college for the kids-- in a 529 Plan; 1% furniture, new clothes, etc.--in a savings account).

3. Write a list of your monthly bills in order of importance (rent/mortgage; groceries; utilities; phone; medical, 1st car payment, etc.). List how much each of these items costs. and then add up the list starting at the most important bill and adding the next important until it adds up to your total net income (what you bring home minus the 10% that is going to your automatic savings plan outlined in step 2). Then you MUST eliminate everything else on the list which might include things like cable TV, eating out, new clothes, 2nd car payment.

4. Get rid of any credit cards, but continue to pay them off-- you have to. If you have a staggering amount of debt (you can't pay the minimums and pay for your basic living expenses) talk to a financial counselor. Not one of those credit help places, but a real financial counselor with a CFP--yes, it will cost money, but you need to do it.

5. Once you have steps 1-4 in place you can start to learn about investing. DON'T WORRY ABOUT THIS NOW. If you need to open up a Roth IRA (per step 2) talk to Vanguard or T.Rowe Price about no- load mutual funds. Don't get hung up about which mutual fund just make sure you are putting something in there every month.

Finally, there is no quick fix. Also, don't skip Step 2. This is the step that will ensure you are never in this situation again. Finally, if you need to use your emergency fund (as you probably will if the car breaks down) go ahead. Don't use a credit card no matter what and replenish the emergency fund. You can do it!

Making it work in the Bay Area with 2 kids

We are most probably leaving the bay area but in a last ditch effort to figure out a way to stay, I put this question to you: How do you make it work with 2 kids if you don't have one of these things:
1. enough money/earning capacity so that one person can work part time (or not at all) or you can hire extensive help to get kids dropped off, picked up and taken care of when you are both working full time
2. one person with a flexible work situation so they can do the above
3. family in the area that can help you do the above

I struggle with this a lot because while I love many things about living here, have a nice community of friends and acquaintances, am pretty connected professionally (albeit in a low-paying profession), the thought of having 2 kids and figuring it out so I'm able to live here without feeling like I'm frazzled and running around all of the time (I often feel like that now and I have one kid and work part time!) and I'm able to spend quality time with my kids, seems incomprehensible. There are many other issues such as being able to generally keep up our standard of living, the school issue, and outgrowing our house, that are pushing us out of the Bay Area, but the intial question I asked is most puzzling. How do you do it? anon

My only advice (and it may have already crossed your mind but I have been thinking about it strongly myself) is to seriously consider two questions: 1.) Are there ways to cut down your expenses further? In other words, do you really need every single thing that your spending on? 2.) Do you really need to have a 2nd child?

I know these are harsh questions, but these are the only ways that I have been able to survive here. I basically never go shopping -- our clothes are very old, gifts, or used. We minimize the use of babysitting and keep our dates to the cheapest possibilities (i.e. co-op babysitting and going out on picnics, etc.).

And, I agonized over why I would really want a 2nd child when we are as strapped as we are. I love the idea of a sibling for our daughter, but it could be the straw that would break the camel's back in our family. I often feel the pressure to have more kids and while it's romantic in so many ways to me, it's a reality that could put enough stress on my marriage to put us over the edge.

I'm sorry to sound so negative. But, sometimes I feel like one has to be real about their limitations. My advice is for the sake of your marriage and family, do what you have to do to ease the burdens in your life - that could be moving or any other number of things. Don't get caught up in the hype of this lifestyle just because so many others do. Strapped in the Bay Area Too

1)	we rent
2)	we don't go out to eat or have takeout every week.  At most,
two or three times a month
3)	we rent in a place where we can send our kids to public school
(when the time comes, and it has come for our older child)
4)	we buy clothes at Target, consignment stores, thrift stores,
and if we have gift money
5)	we get most of our food from Trader Joe's, Monterey Market,
and Costco
6)	we have a Costco membership, which helps us on basics, gas,
and infant supplies
7)	we have memberships to 1 art museum, 1 science museum, 1 zoo,
and use those as our during-the-week or weekend activities.  We
go to a lot of parks, and see friends on playdates or at each
others' homes
8)	the place we live is small, we can't change that, and so our
kids share a room.  We try to keep unnecessary stuff to a
minimum, and do our best with the help of IKEA furniture to live
well in a small space
9)	we have one car.  The one who works, bikes to work.  We fill
up our car at most two-three times a month.
10)	The job we do have affords us excellent health care, with
dental and vision coverage, and allowed us to consider having
kids in the first place.  Our decision to stop with two was based
on space, money, and patience of the stay-at-home-parent
considerations.

Different things work for different families. I would recommend you sit down and try to figure out your non-negotiables about your way of life. Do you both have to work full time? Do you have to have x size of house? Do you have to eat out x times a month? What things are truly essential to your happiness and well-being? (these are tiny examples--I know that there are more important issues, too!) Figure that out, see what you have control over, and then you will be better-equipped to make your decision.

Good Luck Donna

My husband travels a lot for work so he's had a chance to see how our life would be if we moved to those places (Denver, Phoenix, Salt Lake City, Portland, among others). He has also lived a lot of different places in his life and this is by far the best place he's ever lived. When he travels and comes home he gets a constant reminder of how lucky we are.

As for me, I was born and raised in the Bay Area. It is my home.

Financially we could probably be better off if we cashed out and moved elsewhere, but I doubt we'd be as well off emotionally. A few years ago we tried living somewhere else for financial reasons and we came back as soon as we could. We'd rather be broke than depressed. Working it Out

2) Housing -- we live in a small(1100 sq.ft.) house, and I comfort myself with the knowlege that when these houses were built people (including my child's kindergarten teacher) raised large families in them. Lots of big house problems (illicit internet use, not know what's going on with your kids) can't happen in a little house.

3) Sometimes you have friends you can trade off with -- it's not like a family member who can (if you are lucky) step in and take over a pick-up, but it does help.

4) I'm not really sure that the equation is that much better elsewhere if you already have a house. In my field and my husband's salaries are lower in other states. Carol

We both work for ourselves, my husband pretty much full-time (he is also a student) and myself 1/2-2/3 time, from home. We have a babysitter who is with our daughter and another child 4 mornings a week, and this is my work time. Afternoons, I am with our daughter and we usually go to the park or play with another mom/kid. Sharing a babysitter helps us save money - the sitter earns more for two kids, but it comes up to be less for each of us parents. We have an apartment that is too small for the three of us, and which definitely won't work when we have another child in 1-2 years. So we are looking to move to a place that has an extra bedroom. That means higher rent, hopefully not more than $400 more than we pay now. Since buying a house here is virtually impossible without a small fortune (or at least the ability to pay a large mortgage every month - not our case) we are looking into the possibility of investing out of state in real estate, as a way of growing our money. There is only so much a person can earn from working, so we are looking into ways to invest wisely to grow the little money we have.

To answer your questions: We don't really have the capacity for one of us to work just part-time, and yet somehow we make it work. We don't have a second child yet, though, so who knows how that will look later on. I have a great relationship with another mom with a same-aged child, and we help each other out a lot. I have to go to a meeting, she watches my daugther and our kids play together. She has errands to run, I help her out in the same way. And it saves on childcare.

California is a hard place, because even though it's so hard to make ends meet here, it's also really hard to leave. We've gotten used to a certain standard of living here, and a certain standard of earning - I'm not sure how we'd get that elsewhere. But I know a LOT of people who have, and have done so successfully. I would move to Oregon in a heartbeat if it didn't rain so much... Good luck!

I think those who feel comfortable in staying are also comfortable with the sacrifices in order to live here. For example, housing- if you did not get in when prices were somewhat reasonable you must resort to owning maybe more than you can really afford (interest only loan) on paper or continue to rent without any equity accumulation. Secondly, childcare and school- there are plenty of options here but most quality and flexible childcare (with extended hours) is very pricy as well as private schools if you are not in a good district. Again, you have to choose and feel very comfortable with the fact that owning on the high end may mean contending with questionable public schools and maybe less than ideal childcare- Having said all this, you are tired and stressed (and perhaps worried if you are doing your family right). You could change your way of thinking and be an advocate to change your “not so decent public school”- like many of us, we just decide to go private- it is easier yes is it more money- of course!! Home prices through the tunnel are still expensive, although you do get more for your money and better schools but then you have to contend with long commutes (time away from children and family). Lastly, if you have a great extended family that lives close by, it seem the sacrifice is well worth it as you have people to ''pitch in'' for you when you need a break...not to mention you nor your family has to pay for airlines, travel time, time off from work to visit each other....

I am sure you have run all the scenarios and there will be some who say the sacrifice is worth it- it is all relative, yes there are some people who claim to raise their families here on less than $50K a year and maybe they are ''comfortable'' with that. One is not right or wrong but when it comes to what you feel is best for your family's well being- living appropriately within your means, without completely altering your standard of living, while balancing career and family, you may find that you are not ''giving up'' the bay area, but instead exchanging it for a peace of mind for yourself and family that you do not have to worry so much about your personal sacrifices or beliefs in order to support living here. Good luck to you.

I'm a stay-at-home mom with a three-year-old daughter & we lived in Berkeley until we sold our place & moved last fall. We were stressed out for the same reasons as so many of you -- high cost of living, no family/support system, my husband's horrific commute to his job on the Peninsula, a fixer/money pit in a ''transitional'' neighborhood, fear of our daughter being assigned to a mediocre school (Rosa Parks has had problems & was one of our three possibilities), problems with neighbors & so on.

When my husband got a job in Santa Rosa, we decided to sell & buy a place along the lovely, (comparatively) affordable & more laid-back Russian River. Then my husband got laid off. After running through all our savings & racking up mucho credit card debt, he finally took a job in Mountain View & rents a room so he can stay out there during the week. And he's still making the same salary that we were barely able to live on before. Luckily, we were able to rent out our downstairs to cover most of his rent (the blessings of trading up), but we're still struggling.

We love where we live, have always been strongly attracted to this area, & don't regret moving. Although my husband works in a highly specialized field, the job market around here is fairly decent & I plan to start working again now that my daughter is starting pre-school.

But the fact is: We jumped at the opportunity to move to a more affordable & laid back area and thought it would solve all of our problems & alleviate our stress. And that definitely NOT been the case.

If you don't really love the area to which you're thinking of moving, it may not be worth it. And in my humble opinion, a close network of friends -- like the one you mention having -- is more important than just about ANYthing (assuming that you have a roof over your head, food on the table, & can keep the lights on).

We have a wonderful group of friends, but they're scattered all over the Bay Area. If they had been concentrated in a single place, it would have heavily influenced our decisions concerning where to live, because -- amongst other reasons (including fun & maintaining sanity) -- being able to provide an emergency number to your child's school is a really nice feeling. The couple of close friends we made during our time in Berkeley are so dear to us that we still visit with them two or three times per month. You can be happy without a lot of things, but without your friends, life can really suck. I'm incredibly extraverted & find that it STILL takes a rather long time to build real friendships.

I think it's stressful EVERYwhere these days. My husband & I have looked into relocating to other areas of the country & also have friends and family all along both coasts, in the south & in the midwest. Things seem to be hard everywhere Also, I looked at that Best Places to Live site (www.bestplaces.net) that ranks large, mid-sized & small metropolitan areas across the country based on categories like Housing, Economy, Education, Culture, Recreation, Stress, Crime, etc. ... and hardly any places got good grades (i.e. B or above) for the housing OR economy categories, let alone in both. Cheap housing doesn't matter if you can't get a job to pay for it.

And pretty much ANY area that has even a remotely Bay-Arean feel (i.e. near universities, cultural amenities, fun stuff for kids, good grocery stores, educated & liberal people, tolerant, etc.)is probably as expensive in relation to the local job-base as Berkeley/Oakland. Even the relatively cool midwestern cities like Ann Arbor MI have gotten out of control.

I guess I'm just saying ... hang in there! If you're generally happy in the East Bay and have close friends & good acquaintances in the area, you can find a way for things to work. Things get easier & you have more options for just about everything when young children get to school age. I mean, you're not just struggling with finances & urban stress, you're also struggling with the trials & tribulations of young childhood (Just this afternoon, I curled up in fetal position on the bathroom floor & locked the door as I cowered from the shrill, evil little voice demanding candy 100 times per hour). You're not alone. You WILL get through all of this. I don't know how, because I'm still going through it. But I know people who have survived. When I ask them how they survived, they do not remember the details. Perhaps that's one of the few mercies provided to us mothers of young ones -- that we will not remember the utter misery. When I'm going crazy, I often try to remember that the things my daughter does to me -- including sleep deprivation, frequent & unpredictable infliction of physical pain (flying knee-drops onto one's chest & stomach are not as cute at age 3 as they are at 12 months), & constant subjection to loud, high-pitched noises -- are prohibited by the Geneva Conventions. Yet, I still have not reported her.

And if you do decide that moving away would be the best thing for your family, do as much research as you can & go to the area as often as you can afford to & make sure it's a place in which you can find contentment & find new friends. Cheers. Lisa

What we could NOT accept was that fact that our children would recieve a substandard education simply because of our financial situation. In my experience, a decent public education is available only to the wealthy in Oakland. Our solution - I asked my company to transfer me to Denver. In fact, I posted for advice this summer when we weren't yet sure if we were moving - thanks to everyone who encouraged us to go for it.

Here are the good things about moving:
-We bought a house in a small suburb outside Denver for $110k less than our house in Oakland sold for, and it is over twice as big as our old house.
-My son goes to the local elementary school four blocks away and LOVES it. His teacher is wonderful, the school has a music teacher, art teacher, a PE teacher, and a very active parent association.
-We are paying $200 less per month for preschool for our younger child than we were in Oakland.
-My commute is now 5 miles each way instead of 40, I can drop the kids off at school, get to work by 8:30, and still get home in time to cook dinner.
-Suddenly one income is enough to pay for everything. When we think back on the life we had in Oakland, we can't imagine what took us so long to get out. I just wanted to post our experience to show that there is life *outside* the Bay Area, for some people, a much better life.

Alisa

Can't make it on 5 figure income

Hi everyone,

We have three small children a moderate income and MASSIVE credit card debit. We are planning to pay it down but not right away. Within three years all of our children should be attending public schools and that will free up a lot of money. We have never been late with any payments and we've never defaulted. Now, all of a sudden, we sense a crisis approaching and it is affecting every aspect of our relationship. We don't have the time we thought we had to start paying off these debits.

This summer the big CC companies are raising their minimum (principal) payments by around 100% and there's no way that we will be able to keep up. (I know that really this is a good thing and will get people out of debit sooner than later but…) No lectures please. Our daily cold sweats and petty bickering is punishment enough. Even with a (low) six figure income we simple cannot afford daycare, preschool etc. How it happened? Three children, preschool, summer camp, braces etc.

The debit consolidation commercials on television these days with their worst case clients have nothing on us. Our debit is truly monstrous and we're renters! Are we the only family in this situation? I have never read about other people who owe in excess of 50k to plastic.

My husbands mother is willing to let us take some money out of one of her properties. The property involved is in a trust and we will eventually inherit it. It was recently appraised at 560k and has a 90k mortgage on it at 6%. Because the house is in a trust, my mother in law's income is the one that will be considered for any new mortgage. Her income is rather low. What kind of mortgage should we look for? What kind of mortgage should we avoid? Should we refinance? What's the going rate for this type of thing? Should we get a 2nd mortgage?

Thank you for listening; any advice would be greatly appreciated. anon

1) in your situation, with a six figure income, I doubt you'll get much sympathy from the BPN community. Six figures is more than moderate.

2) your husband's mother must be a little crazy if she is willing to lend you 50 big ones.

3) there's got to be more to your story than just daycare, preschool, summer camp, braces, etc.

4) I have a friend who had 2 kids, a stay at home spouse, a mortgage, and over $60k in credit card debt. Got out of it in under a year by cutting way back on home expenses and refinancing the mortgage.

5) probably the easiest and cheapest solution for all parties is for your crazy mother in law to get a home equity loan. Rates for such loans are usually lower than a first or second mortgage. Plus she gets the benefit of deducting the interest. Plus she better charge you interest, too. Rates are going up, don't know if her 6% loan is fixed or floating. But the home equity route most likely better than doing a refi or getting a second.

Just an idea. Julie

ps - You are not the only family with $50k++++ in credit card debt. How do you think all these families are affording these insane real estate prices?? No one talks about it but you are certainly NOT alone or the worst case out there! Julie

His response to your question of whether or not to get a second mortgage was ABSOLUTLEY. Rates on adjustable mortgages are very good right now; you can try ELoan to get a ballpark figure (and then talk to a couple of different mortgage brokers and you may be able to get an even better rate). Do whatever necessary to get out of credit card debt; and once you're able to do that, cut up your cards and establish a firm monthly budget for personal spending, kids' spending, even camps and orthodontic payments. It may seem draconian to think of putting your kids on budgets, as it were, but how else can you avoid digging yourself back into a future hole, which will impact your ability to put three kids through college?

If necessary--and while you still can--might you declare bankruptcy? You would want to consider how this might affect your future ability to get loans, but it could be an option.

I feel for you, and I wish you the very best luck. Middle-Class and On a Budget

Good Luck!! Been there (kind of still am)

1. You can get out of the fix you're in. Please stop beating yourself up about this.

2. Talk to East Bay Credit Counseling (http://www.cccsebay.org/) -- they can help!

3. Please don't do the second mortgage!

FIRST -- You & your husband need to stop beating yourselves (& each other) up about this. It's hard to focus on the finances -- or ANYthing -- with three young children around. Lots of people have gotten themselves out of similar situations & I know that you can too. 20 years from now, you, your husband & your kids will remember all of your special times together & how cute the kids were -- not some stupid credit card balance.

I also found one of the responses to your posting to be extremely mean & judgemental. This is a community & we all make mistakes & should not withhold sympathy from people because they make more money than we do.

A low-six-figure income does seem like a lot of money, but it doesn't go as far as you would think. Especially with three kids. When you make $90-$120K, a huge amount gets taken out in taxes & you don't wind up taking home much of it. You make too much to receive any assistance with high-ticket necessities like housing, medical care, food, daycare, etc. & yet not quite enough to manage comfortably. Also, families who've moved into their homes within the past five years (whether they rent or own) are paying a much higher percentage of their take-home pay towards their rent or mortgage than folks who signed their (rent-controlled) leases or bought their places before the current boom.

In any case, it's not how much you earn, it's how much you're able to keep. If you have a rent-controlled apartment from 10 years ago, a strong support network, a fairly stable job in an industry that doesn't frequently lay people off, a short commute & excellent organizational & household management skills, then you can live on a lot less money than parents who are paying today's housing prices, have no relatives nearby, work in unstable fields like high-tech (where you make $100K one year & get laid off the next), have long commutes, & who have trouble staying organized.

SECOND -- Please call East Bay Consumer Credit Counseling Services right away & make an appointment. You can go to their Web site (http://www.cccsebay.org/) to find the office nearest you. They'll negotiate with your creditors & consolidate your payments into a smaller & more manageable monthly sum, which would immediately reduce your stress. It's free & I know people who've used these credit counseling services, were very happy with them, have good credit ratings & are in good financial health.

So what's the catch? These non-profit credit counseling services get a lot of their funding from the credit card companies (who would rather that folks pay something rather than default) & they do require their clients to stop using their credit cards until the debts are paid off. Some people also say that you'll wind up paying more interest over a longer period of time with a credit counseling service, but I don't think this is necessarily true. There are a couple of postings about credit counseling services & debt consolidation on the site at: http://parents.berkeley.edu/recommend/legal/debtmgt.html. I really feel these people can help you.

THIRDLY -- DON'T TAKE OUT A SECOND MORTGAGE! It's awfully nice of your in-laws to offer help, but please don't do it. You & your husband are already fighting & the last thing you need is having his parents involved. Also, this is your inheritance & your ace in the hole: Eventually you'll be able to move in, or sell it for the downpayment on another house. So you'll want to keep it intact! Besides, home equity loan rates aren't as low these days as they were. Since you don't have to save for the downpayment on a house like many folks do, pretend that the payments towards your debt is a downpayment. In a way, it is -- it's a downpayment on a debt-free life.

Good luck! -- Been there, done that.

How to deal with money shortfall

Hi. I am looking for advice on places to shop to buy the daily essentials as cheap as possible. It looks like I am getting laid off and I am currently pregnant with my second. After looking at our finances we are looking at about $400 bucks a month to live on for a family of four. That is for food, gas, diapers, incidentals. Bacially I feel like we are screwed, but I am trying to stay positive. I know about Costco, Trader Joe's, but does anyone have any advice on where else to go? Is anyone else in the same situation? It seems like most of those I know around me don't seem to have any financial worries, or at least not this dire, but I don't know. Guess I am coming face to face with the joys of the Bay Area economy. Thanks. anon please

Cheap and healthy places to buy food:
- Monterrey Market (fresh and organic produces -mostly outside, also ask for ''special'' bags of ''less fresh'' products).
- Berkeley Bowl (I find their fresh produces to be a little more expensive than Monterrey, but they have other stuff that is cheaper -e.g., prepared cous-cous boxes).
- Trader Joe's.

Places to buy cheap clothing (for kids and adults):
- Ross (but you need time to find the right stuff).
- Target.
- Old Navy.
- Salvation Army.

Entertainment:
- Save on cable: use your local library resources. Berkeley Central Library has tons of videos and DVDs for kids and adults. Also, PBS has great programs, but sometimes at the ''wrong'' time - we just record and watch when convenient for us.
- Save on books by borrowing from your local library. Also, if you plan to buy a reference book, check it in the library and then buy the one that better fits your needs/taste.
- Movies: reduced prices at the 1pm and 4pm shows. Plus Landmark passes: reduced prices for movies.
- Free activites such as Street Fairs, Farmer's market, etc.
- Check the Bay Area Parents newspaper for free fun family activities.

Exercise:
- No gym fees. Walk in Tilden, Isabella Point, Berkeley Marina... Bike... Dance!!
- If you want a gym, the YMCA has lots of activities, it's great for families, and has daycare (but I still found myself not going enough to the gym to justify the expense!).

Edutainment:
- Library shows for kids: songs, magicians, story times.
- Small fee shows at La Pena.
- Free activities at different East Bay Regional Parks.
- Habitot: for a fee you can get a membership that lets you borrow toys and parenting books.

Small houshold items:
- Ross.
- Big Lots.
- Target, Walmart, etc... during sale seasons.

House Maintance:
- Home Depot.
- Allis Ace Hardware (they always give you good advice on ways to fix things properly without spending a ton of money).

Childcare:
- Coop.
- Swaps.

Birthdays:
- Big Lots and 99c stores.
- Paper Outlet (in San Pablo).

Used baby stuff, furniture, electronics.:
- BPN!!
- Craig's list.
- Ebay.

Phone:
- No cell phone. Use answering machine and check messages often.
- Buy a prepaid cell phone so you can have one to use only during emergencies (Tracfone has good deals for people who sparingly use the phone). Give the phone number only to the people who really need to know it. Have the phone disconnected when not needed.

Drive an old car using your savings and take it to a good, honest mechanic.

And the most important thing: don't use your credit card... money is the most expensive thing to buy! Good luck! bargain hunter ;-)

What about your vehicle/s? We have one vehicle that we share for our family of 4. We have to coordinate what days my husband needs to get to work early and when I need to go shopping. Unnecessary vehicles are a liability and added cost. Check out the bus schedule.&nb! sp; Walk when possible (skip the gym). Also, check around for better insurance rates. Read your car manual: you might be able to use a lower octane of gas and most likely do not need an oil change every 3000 miles. Call around for repair quotes.

Go through each bill as you receive it and ask...can I make due without cable, internet, cell, etc? If you must have it, see if you can find a lower rate or substitute. Call utility companies and see if your household income qualifies you for a lower rate. They also often have specials on energy-saving lightbulbs, low-flow toilets, rebates, etc. Do you have a place you can put up a clothing line?

Big Lots has the cheapest diapers I have found...stock up and cut down on the number of trips (saves gas). Make a list and go to thrift stores...on their discount days-it's can be fun for the kids too (toy section)! Scrutiniz! e clothes for stains, tears, etc and don't buy those. Try things on for size-no return policy. Sometimes you can get a dirty greasy item (like toys, not clothes) for really cheap and it's really awesome after it's cleaned. In general though, just buy what you really need. Train the kids to leave the toys at the store.

Get rid of stuff you don't need. Sell it on craigslist, ebay, consignment stores, etc.-whether it be small appliances, books, posters, furniture, etc. It costs to store it and is losing value while it sits there and will free up space for your new addition. Trade babysitting or offer babysitting for money.

Mostly, it takes the right mindset and lots of organization. The more you practice...the better you'll get at it. I've had to cut down spending since the 2nd baby and the loss of one income, but it turned out to be a blessing for us.&n! bsp; It's definitely a financial challenge. Best of luck to you and your family. marian

WIC was a lifesaver for us back then. Do follow the previous advice and contact your phone and utility co. to get a reduced rate, based on your income. Don't rent/buy videos; check them out at the library. Save at thrift stores or trade/recycle clothes & toys w/ friends and relatives. Learn to use/eat what's in season or on sale. Fresh foods are generally cheaper than frozen meals, however, a $5 frozen pizza goes a long way in feeding a group of kids. Check out the newsletter ''Tightwad Gazette'' (or something like that).

There are tons of cultural events and museums in the bay area that offer ''free'' days, take advantage of them. We thought we would never climb out of our financial hole, but we did and you can, too! Signed, Been There

Family Budgeting on One Income

How are you doing it on one income? I'd like to hear your recommendations for living well in the Bay Area. What is your favorite ''cheap'' thing to do with a child, as a family? And more specifically ...1) groceries - how to continue to eat organic, drink wine with dinner. I already shop farmer's markets, B.Bowl,Whole Foods, Trader Joe's. We only eat meat once a week, fish once a week 2) eating out - really good food, with a child (16 months)under $30.00 - once or twice a month 3) retail - I'm not a big shopper - already go to re-sale shops, Ross, etc. Any other ideas? and MOST IMPORTANT ... how to save money for that ''rainy day'' or for private school, if that becomes the best option for us. Thank you for your recommendations. Lisa

I don't have tons of great advice, some of it in fact might seem obvious and mundane, but I can offer you a few observations in the hope that they might help.

We have a fixed amount that we are allowed to take out each week for cash expenditures (buying coffee, paying for occasional parking, etc.) In our case, it's $40. This amount does not cover bigger weekend entertainment items (movies on an occasional basis, for example, or dinner), but it does cover smaller recreational things (a trip to the pool or bowling).

No impulse spending. That is, no little trips to various stores (or on-line stores) just to see what might catch the eye. We go to stores when we need to buy something specific, and we try to limit ourselves to buying only that item.

We eat out at the most twice a week. Favorite places include the Sa Wooee (sp.) Thai Restaurant, Cafe Raj, and Christopher's Nothing Fancy Cafe, all in Albany. To entertain we often invite friends over for take-out and share the cost of the food. When my husband and I go out alone (not often), we eat good food, but we eat small amounts. A shared salad and a shared woodfire pizza at Beauregard's Bistro is actually a lot of food. In general restaurant portions are much larger than what we would prefer ordinarily. We also eat appetizers at places like Britt-Marie's. We have only one car (a 91 Honda, runs great) and I bike to work, thus saving us the $70+ per month of a parking pass or money for a bus pass. On rainy days I take the bus, but we save hundreds of dollars on parking, gas, insurance, etc. besides keeping me in shape :). Our son bikes to school with me, and then I go on to work. We only take the car out to go for big grocery trips, buying larger items, or to go on an outing. Low gas $$. Less stress, too. We will keep our car for at least another couple of years and then trade it for a five-year-old Honda (best repair records around -- the car is almost never in the shop).

I have a coffeemaker in my office and make Peet's coffee for myself; even with the expensive pound of Peet's, I still save by brewing my own. My colleagues like a cup now and then too. We buy clothes (for the adults) very infrequently. Clothes last a long time if they're relatively good quality. We also have very few pairs of shoes. In general I think some people overspend on clothing and make-up. I buy clothes at Ross, underwear and such at Target, my son's shoes at Payless, and an occasional splurge at a medium-range place (Lobelia in Berkeley is nice). I'm not a fashion plate, but hey -- in my line of work, I don't have to be.

We read the newspaper in the library or on-line. We don't buy books -- we put them on reserve in the library and wait for them. After the bills for the month are paid at the beginning of the month and $140/week is calculated for groceries and spending money, my husband socks away most of the remaining money in the savings account. That way it's simply not ''there'' in the checking account to spend. Removing money from the savings account requires an emergency.

Odd Lots on San Pablo is a great wine source. They have good advice and super prices.

We go to the El Cerrito and Berkeley Farmers' Markets for organic produce. I think they have better deals than the stores, and it's all in season and fresh. I buy whatever is cheap, too. Very little meat, but that's our preference. Peanut butter is very big at our house. We like it.

We clean our own house. It's not super-clean, but no one has called the Health Board yet... I also make my own salsa and sometimes my own bread (though I'm not convinced you save on that) and always my own muesli.

We trade off on babysitting with friends. Big bucks saved and psychological relief earned there.

Except for the aforementioned $40 per week, we know exactly how everything is spent in the household. When grocery bills or other items start to creep up, we have a pow-wow to discuss how to cut back (painful, because I'm the spendthrift in the house, but helpful).

One splurge: I belong to the Y. I figure big bucks are saved there on therapy ;). Last year we saved enough to go abroad. Good luck! thrifty is nifty

Freaking about money-a lack of

I am sure a lot of people are in the same situation, but my husband and I are freaking out about money. We are lucky to both be employeed, but no raises in about 3 years, which is really starting to hurt since the cost of living has increased (property taxes, daycare, the like). I am thinking of trying to find a supplemental job, or something. We have thrown around the idea of moving, but I really don't want to. We just moved about 3 years ago from Seattle and I really don't want to uproot my life again if I can avoid it. Any creative ideas out there? I have to be honest I have been tempted by those scams out there, you know get paid to drive your car and the like. Pathetic I know, but that is how desparate things have become! Any ideas on how to find creative ways to help supplement our income would be heartily welcomed! Thank you. Anon please

Here is what we've done to alleviate the situation. 1. I took a second 10-hour/week job. It doesn't pay very well, but it helps a little. It's just too bad I have to give up my Saturdays.

2. I buy everything used, and go to the Salvation Army for clothes.

3. Instead of throwing out or giving away old toys and books, I sell them on ebay on in garage sales.

4. We've had a lot of medical bills. I delay paying the bills as long as possible. When the creditors start calling, I explain the situation and ask for a reduction or payment plan. I've been successful in getting both.

5. No vacations or movies in a couple of years.

6. When the kids ask for toys, I explain the situation to them, that we have less money than before. My older child appears to understand.

7. And I vote! Hoping to get this recession-causing administration out of power :-)

P.S. Don't fall for those scams - you'll just lose more money.

-- stock up on things when they go on sale. Dacyczyn recommends learning to recognize a good price by keeping a ''price book'' of the things you buy frequently. Personally, I've found that, even without a price book, just by paying attention to prices, I've gotten to the point where I know what's a good deal. For example, my favorite pasta sauce sells for $3.69/bottle when not on sale, but Safeway and Albertsons both frequently put it on sale for $2/bottle -- so now I wait for a sale and buy 10 jars at a time. I recently bought a ten pound bag of potatoes for $0.98 -- about 1/5 the price of loose potatoes not on sale. I've bought pasta on sale for as little as $0.25/pound -- when not on sale, it can be $1/pound or more. I buy the Long's store brand of diapers during their periodic ''buy one get one free'' sales -- at about 10 cents per diaper, vs. 25 cents for name brands. This approach is saving me HUNDREDS of dollars a month, and it's not even that much extra effort.

-- try the store brand -- it's just fine for some items -- especially single ingredient items like sugar, flour, oatmeal, etc.

-- I asked Victoria's Secret and LL Bean to take me off their mailing lists -- I have a weakness for catalog shopping, so I've removed the temptation. I'm not big on yard sales, but I find you can get some really nice clothes in consignment shops for 1/3 the price of new.

-- bring my own food to work, including snacks. I can buy diet Pepsi on sale for 25 cents per can, vs. 75 cents for the vending machine.

-- went through my monthly bills with a fine-toothed comb to see what I could cut -- as a result, I've gone from a $22/month internet service provider (Earthlink) to $10/month (NetZero's premium service). I switched long distance from MCI (5 to 9 cents per minute) to Talk America (3.9 cents per minute). I got rid of VoiceMail ($8/month) and went back to an answering machine ($4 at a thrift shop). I got rid of Well's Fargo bill pay ($7/month) and just mail my checks. I switched to a credit card that gives me a 1% cash rebate on purchases, and to a savings account that gives me 2.7% (NetZero's banking center) from one that gave me 1.7% I switched my cell phone from a $15/month plan, to $8 (Tracfone). Each of these steps was a small amount of money, but they add up, and I enjoy the savings every month.

-- exchange babysitting with other parents, rather than pay a sitter

--Oh, and I found this really great source of inexpensive (sometimes free) baby stuff -- it's called the ''UCB Parents Network Marketplace'' ;-)

Good luck! -- happy bargain hunting mama