This is part of a series called How We Saved Enough Money to Change Our Lives and How You Can, Too. Click here to get all the posts delivered directly to your email inbox or feed reader. You’ll want the inside scoop on how we saved $75,000 for the adventure of a lifetime!
As part of this series I want to show you other people who have reached a personal financial goal. Today’s focus is on Danny Kofke, a special needs teacher in Georgia, and as you can see from the picture he has a beautiful wife and two small children. Danny’s wife is also a teacher, and when they had children they made the decision for her to stay at home with them. It is very important that they be able to do this and live well, and they spent a lot of time focusing on their finances to get them in a place where they could live their dream. Not only are they able to live well on one salary, their only debt is a recently refinanced mortgage, which will save them $100,000 over the life of the loan.
Danny started out trying to survive on a teacher’s salary, and now he can confidently say his family is thriving. Read on for three of Danny’s tips to making your money work for you.
Plan Ahead – Have A Goal
This helped Tracy and I a lot. Before having our daughters, Tracy was a teacher too. We had a long-term goal of having her be able to stay home once we had children. During the time she was working, we used her salary to pay-off our debt and build an emergency fund. We knew that if we wanted to live off one teacher’s salary, we would have to have minimal expenses. Even though we made a good amount of money – for us at least – we lived like we only had one income coming in. Since we lived like this, we are now able to do well on one moderate salary.
Know Where Your Money Is Going
I think the reason a lot of people are in financial trouble today is because they have no clue how they are spending their money. Buying houses and cars that you cannot afford have hurt some but I think the reason that some are in trouble is because of those day-to-day purchases that add up over time. For example, let’s say during the work week you buy coffee out at $3 a cup, buy lunch out at $10 per meal and buy a soda and snack from a vending machine at $3 a pop. This may not seem like a lot but, if you add it up, this equals $80 a week, $320 a month and almost $4,000 a year! You are not spending a large amount each time so you don’t realize how much money you are spending on these things. Shortly after we married, Tracy and I started tracking our spending habits. For one month, we walked around with a piece of paper and pen and wrote down everything we spent. This was tedious but we were able to see exactly how we were spending our money and cut out things that we really did not need to buy.
Create A Spending Plan
After seeing how much money we needed each week (by tracking our spending), Tracy and I started using cash for our purchases. Every Friday, we would go to an ATM machine and pull out the exact amount of money we needed for the week – this money was for living expenses along with a little for entertainment. This helped us in many ways. Let’s say it got to be Wednesday and we wanted to go out and eat but we did not have any cash left. We would have to eat leftovers or a sandwich and wait until Friday rolled around before we got our weekly money out. Using cash also helped us cut down on spontaneous buying. Many people have an emotional attachment to cash that they don’t feel when swiping a piece of plastic through a machine. In fact, there are studies that show most will spend 12-18% less when using cash instead of a credit card. Using cash helped us create a spending plan and encouraged us to stick to it.
You can see that Danny’s tips align pretty well with what we’ve already discussed with setting your goal, finding out where your money is going, and creating a budget. There is no magic formula or secret sauce to saving money, though you can learn a lot about mental tricks and successful habits from people who have done this. That’s why I’m sharing Danny’s story with you.
Danny Kofke is currently a special education teacher in Georgia. He has also taught kindergarten, first grade and second grade. Danny’s love of teaching others led him to write the book “How To Survive (and perhaps thrive) On A Teacher’s Salary.” To learn more about Danny and his book, please visit his website.