Kudos to the Wagasky Family: Debt-Free on $14000 Per Year

Posted on March 5, 2013

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It often happens, in discussing general financial well-being, that someone will say:  “But these days, families neeeed two incomes just to get by.”  I have always disagreed with that statement, if only because childcare expenses demolish most of the second income.  For my example, I habitually point to one of my former Army colleagues, who supported his family of nine on a single income.  His wife, who had a Master’s degree, could not afford a job; she provided all childcare, managed their finances, cooked bulk foods at home, and the kids had to make do with hand-me-down clothing and toys.  Luxuries were out, and financial discipline was in, but really – they lacked for nothing, in the big picture.

This weekend, I ran across an even more impressive example of people who know how to make it on a small income:  Jason and Danielle Wagasky.  You can bet that next time someone whines about “neeeeding two incomes just to get by,” I’ll be mentioning the Wagaskys.  They own a three-bedroom home and two cars, and are living nearly debt-free… no car payment, no mortgage, no credit-card debt… and supporting their two children on just $14,000 per year.

It wasn’t always so.  When Jason was on active duty in Iraq, in 2008, they were far better off financially than they are now; Jason was raking in his active duty pay, hazard pay, allowances, benefits, and tax breaks.  Yet, like so many other American families, they weren’t making ends meet and had nothing saved.  Danielle was overspending and missing bill payments at home.

What a difference one’s attitude makes!  Jason insisted that Danielle read America’s Cheapest Family Gets You Right on the Money.  They had a talk about their goals, and Jason’s plans to leave the Army and go to school on the GI Bill… meaning, a serious pay cut was coming.  Danielle read the book ran with it.  By 2009, they had saved $30,000 for a down payment on a house.

Faced with a pay cut down to $14,000, most couples I know would decide that there was simply no way to survive, and Mom would go out and find a job.  The long hours outside the home would mean childcare expenses.  Two worn-out parents at the end of the day would mean more expensive convenience foods, whether from the grocer or the restaurant.  It’s those kinds of things that add up, and end up negating the value of the second income.

I believe, for two-parent families, that a stay-at-home parent, some forward planning, and firm financial discipline are all that is needed to live debt-free, and the Wagaskys prove it every day.  Like my old colleague’s wife (and like my own Mom decades ago), Danielle really runs her household, doing all the cooking, childcare, and budgeting.  That budget is the key:  once the monthly budget allocation is spent, there is no more until the following month.  Period.  No borrowing, no credit purchases, no rationalizing about it.  Stay strictly within your means.  Just like the days before credit cards.

Reader comments on the several news articles about the Wagaskys are split.  Some are admiring (“They should be hired as consultants for the government!”), others doubtful (“Living maybe…but living WELL on 14K a year is just pure BS.”), or even critical (“These types of articles are trying to socialize us to accept a lower standard of living.”).  One particularly long and disbelieving comment even picks apart a budget for a hypothetical family of four (one which does not resemble the Wagaskys) and makes a lot of crass assumptions about welfare.  It is clear to me that the naysayers either did not read carefully, do not understand that Jason is no longer receiving military benefits (other than the GI Bill), or just flat-out don’t want to accept the fact that doing the same thing themselves would require discipline and sacrifice.  Are they willing to live like the Wagaskys, and give up cable TV and eating out?  Are they willing to sew their own clothes or buy appliances from thrift stores?  Bake their own bread and mix their own laundry detergent? Get their books from the library?  Are they even willing to sit down and do the math to figure out how much money these actions would save?  Mostly, I think not.

Some naysayers have argued that the Wagaskys didn’t buy their house on $14,000 per year.  True enough, they did that by planning ahead and saving Jason’s active-duty pay, yet another thing too few of us do.   Too many of us, no matter how much we make, tend to spend it all, M.C. Hammer- style, and even take on additional debt, believing we can pay it off.  Then we whine about how hard it is to save money.

Well, the Wagaskys started out that way, too, but then they made that hard, conscious decision that most of us just don’t want to make.  Seeing a big pay cut looming, they stopped their frivolous spending, and in just one year, managed to go from zero to $30,000 in savings (I do not personally know anyone who has done this).  Then they used those savings to buy a house for cash.  Smart move!  Property taxes are a dang sight cheaper than rent any day.

For anyone who wants to learn more about how Danielle runs her household, here is her explanation on her blog, Blissful and Domestic.

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