Sometimes stuff happens!! You lose your job, a family member unexpectedly dies, your child gets sick or needs surgery… Or your debt level has gotten out of control and you are making large repayments to keep up with it. The responsibilities we have don’t automatically go away when our circumstances change.
That’s my story! At the beginning of 2015 my former husband and I separated. I remained in the family home with full time care of our 3 kids. My youngest was a year away from starting full time school. My oldest also changed schools at the same time, from a private to a public school.
Then, my second son had an accident where his knee got cut open to the bone. He had to have surgery to reconnect the tendon and was then in a wheel chair for 10 weeks. He had just started school that year and was too young to use crutches at the time. It was a really challenging time!!
On top of caring for my kids and helping us all adjust to some huge changes in our lives, the mortgage still needed paying! How thankful I am that I live in a nation that provides a way for women to leave abusive marriages and still keep a roof over their children’s heads.
Some things that are unique to my situation and would affect how I could afford to pay a mortgage on a Centrelink Payment:
- My (loosely said here) mortgage is about $170,000. Repayment amounts are similar to the average rental in the area I live. $300 a fortnight. Except of course, I don’t receive rent assistance from Centrelink and I have to pay council rates, water bills and building insurance.
- Interest rates are at a record low.
- My house has solar panels and I get a very good rebate/ feed in tariff through my electricity provider. So my electricity costs are very low.
- Most of the time I haven’t had any additional debt.
Here are some of the things I have been doing to keep the lights on!
1. Create A Budget
This is probably my No. 1 tip for making it possible to pay a mortgage on a low income for a season. You may be tempted to put your head in the sand and ignore the bills coming in and your dwindling account balance. DON’T!! While ignorance may provide temporary relief from the stress, in the long term it won’t help you out at all.
Instead grab some good quality Fairtrade chocolate, a cuppa and sit down to go through your past and future income and expenses. Might as well make the experience as pleasant as possible!
First, what is a budget?
A budget is simply a tool for planning how you will use your income over a period of time. It helps you work out your regular income and expenses, and hopefully save as well.
When your income is reduced to the amount of a Centrelink Payment, a budget will give you ideas for where to cut back on spending so that you can continue to make your mortgage payments.
The Australian Goverment’s Money Smart website has a really simple online Budget Planner you can use for this purpose. Currently I do my budget using a paid online budgeting tool called You Need A Budget. I highly recommend it!! And YNAB offers a free 34 day trial too!!
When creating my low income budget I have found that paying larger bills, like car insurance, on a fortnightly or monthly basis the best way to go. That way, I can keep my expenses at a similar amount from month to month. Now I have organised 75% of my bills to be paid like this. When extra cash is limited, receiving or not receiving annual large bills can make a big difference to the budget.
An alternative way is to average the total yearly amount you spend on bills to a fortnightly amount and put that aside in a separate savings account. The disadvantage with that is that it can be tempting to dip into those savings ahead of time for other expenses that crop up.
2. Reduce Regular Expenses
Some ideas are:
- Access discounts or concessions from Utility companies or other service providers. I have found discounts with my gas, electricity, water and local council rates.
- Change to fee-free banking.
- Buy clothes and other items second hand. I love it when I find a pair of brand new leather shoes at my local charity shop for just $2.
- Research, research, research before buying anything! Compare online and in-store prices. Some retailers will even beat competitors discounted prices if you ask. Also ask friends and family to look out for the item you need at a discounted price.
- Look around for a cheaper quote when your insurance is due for renewal. This can save you $100’s at a time.
- Discontinue any memberships or subscriptions you no longer use or can do without.
- Go DIY. Repair and maintain the house yourself if possible. I even decided to renovate my own kitchen myself, saving $1000’s on the cost of labour.
- Use your vouchers and gift cards.
- Take a drink bottle everywhere or bring a thermos of tea and coffee with you.
- Fill up the car with fuel at the lowest price.
Save on grocery shopping by:
- Buy the basics like bread, milk, fruit & vegetables. Fresh, whole food is cheaper by the kilo than processed, ready made food most of the time.
- Shop for food at the lowest priced retailer. I buy my fruit and vegetables from an IGA instead of Coles because they have cheaper prices and more local produce.
- Only buy certain items when they are on special or reduced. I often buy my meat at 50% off. Since I am a non-recipe follower, it doesn’t phase me to come up with a dish based on what I got cheap.
- Create a weekly meal plan so you can eat at home.
- Shop your pantry and freezer first, before buying more food, and cook with what you already have on hand.
- Be willing to forego regular purchases which are treats for a time. I have a friend who gave up her regular high priced coffee for a cheaper alternative to save money to pay off debt. She knew it was only for a season and being out of debt was more important than enjoying the coffee for those months.
3. Avoid Credit
I made sure I had a debit card and no credit card. It was nerve wracking at first knowing that I didn’t have a credit card as a back up in an emergency. I was actually just spending my own money. However that gave me motivation to increase my savings and build an emergency fund. Plus 20% is just way too much interest to pay!!
If you do happen to have high interest debt, work out a plan to pay it off have as soon as possible. Always make sure your repayments are higher than the minimum amount required. I went into full time single parenting with a small credit card debt of $2000. Thankfully I was able to borrow that money from a friend, pay off the credit card straight away and repay them back at a lower interest rate.
After creating a budget, the second biggest thing that has helped me pay a mortgage on a Centrelink payment is having savings. My savings habit started many years ago when I was first out of school. Back then my first full time job was working in a market garden, picking celery and cauliflowers etc. The hourly rate was $5.50 which was huge to me at the time. From that, living at home paying board, I was able to save about $1000 in 3 months. Over the years, I have saved whether doing casual cleaning jobs and studying full time at Uni or working part time and home with kids, or working full time.
So put a weekly or fortnightly amount aside to build an emergency fund. Even $25 a fortnight can make a difference over time! Recently I saw this in practice in my own life, when our gas water hot system died after a very long and faithful life. Having savings meant I could get it replaced it with a new one within a few days! That money didn’t have to be taken from my very lean budget.
The other thing I do is put any bonus money I receive during the year, such as a tax refund or Family Tax Benefit, straight into my emergency savings account.
5. Find Extra Cash
Some ideas are:
- Do odd jobs for friends and family.
- Look through your house and sell anything you no longer need. I have slowly been doing this over the last year with furniture I have had in storage. Try Gumtree, Ebay or a local buy and sell Facebook group to list your items. Or do it all at once by organising a garage sale.
- Pick up casual, part time work or one- off jobs. Just make sure to declare any income to Centrelink and the ATO. Cleaning houses, babysitting, tutoring, mowing lawns, helping someone move house etc. Airtasker is a good website to check out for one off jobs.
6. Enjoy Life
Life is short and even when we go through difficult seasons it’s important to take time out to laugh, play and relax! Actually it is even more important when your circumstances are stressful!
Here are some ways the kids and I have fun on a Centrelink budget:
- Get out doors. We like to visit local parks, reserves and national parks. Sometimes I’ll take a picnic with us or we will just go for a bush walk. Or get out to the beach!! Free sandy fun!
- Find out about free events in your local area or city. From Festivals to outdoor movies to concerts, there are lots of different events put on for the community to enjoy for free.
- Visit your local library. Borrow a novel to read or a DVD.
- Take low cost holidays. Camping in beautiful National Parks or Reserves can be really affordable! Or find about free camping grounds in your state.
- Spend time with family and friends who are supportive.
When it all fails…
Even with all those strategies there have been months when it has just been financially hard going.
Times when I have had to phone utility providers and ask for extensions for bills.
When I am appreciative of family and friends members who have been generous with the kids and I, who drop by with milk and bread and eggs. Those little things make a difference over the long term!!
Times when all I have been able to do is make interest only payments on the mortgage. Thankfully I am ahead in payments so I have that as an option!
And somehow you keep going!! 🙂