The $50 Rule

Several years ago I wrote a post on how we retired early. I thought I might revisit the original premise that we call "The $50 Rule".

We married in the 70s. Like most young marrieds, we were broke and basically started with nothing.

We went without a lot of things. Furniture for one. Our very first purchase was a bedroom suite that I paid for myself when we married. But that's where we stopped. We figured as long as we had a decent bed, other furniture could wait. 

For nearly two years we ate meals off a large cardboard box. Our chairs were short, squatty fiber drums used in manufacturing. I was ecstatic when we could finally afford director chairs and a folding camp table as posh dining room furniture. (We still have that table!)

Truth was, despite going without a lot of things that most people today take for granted, we were still running into debt. 

We bought a lot of tools in the early days. Greg was and is a wizard when it comes to fixing and building things. To me, it was a good investment. 

Still, some months left me scrambling for grocery money.

I learned to stretch a dollar like you wouldn't believe. Greg, who today won't even tolerate a leftover, gladly ate whatever I served. There were a lot of mean meals back then. It was always pasta or rice as a side or main dish. He was very forgiving on what we had to eat.  

There's a picture of us back in the 70s where we were profoundly skinny. We obviously didn't eat a lot. Luckily, when you're young you don't mind too much.

There came a point though where the credit balance was getting too big. I'm no math geek, but even I could see we were heading for a spiral if we didn't turn things around. 

That's when I came up with The $50 Rule. 

The rule was simple. Neither of us could spend more than $50 on any item without consulting the other. The rule was only suspended on things that were an emergency or a direct replacement of a necessary item.

There's something about justifying a purchase to another that makes you think twice. Is it a whim, a want, or a need?

Since we were still struggling financially, all purchases had to be real needs, and we had to number them by priority.

For example, if Greg needed an electric saw and brakes for the car, the brakes had to come first. Getting to work had more priority than remodeling a house.

It was harsh in the beginning. Even if purchases were under $50 we scrutinized every expense. It had an unexpected side effect because it slowed down our spending immensely. It gave us the breathing room we needed to pay off our debt.

It didn't take long before we were paid up. Other than a house note, we never carried debt again.

Our rule now is if we can't pay for it in cash, we wait until we've saved enough to do so.

So why $50? In 1975 $50 was the cost of most quality tools, one small stick of furniture, and a day's car travel with lodging. 

It was the tipping point that kept driving us into debt. We were pretty good at holding back on small expenses. No meals out, no junk food, no impulse buys. But since we were starting from scratch, even a dining room chair was out of our reach.

To give you some idea of our expenses:

My average grocery bill a week in 1975 was $40 ($120 per month).

Our medical insurance covered nearly everything, but as luck would have it we never got sick back then. LOL!

Auto and house insurance were surprisingly inexpensive compared to our insurance in Chicago. We got by on $80 a month.

Speaking of auto, gas for us was about 50 cents a gallon, and that was high.

Our mortgage was $160 a month.

Utilities (including water) averaged $100 a month.

Our only splurge was a pound puppy that my sister bought us. We paid for food and shots which back then amounted to under $60 for the year ($5 a month). We didn't get another dog until we recovered from debt.

Add that up and our basic needs were met with $465 a month. PS: We could not afford air conditioning until five years later. It was HOT in east Texas.

Now add debt. I think we averaged about $300-$400 per month in credit card debt. We were buying tools and remodeling supplies since we were living in an old sea captain's home and it needed lots of work.

For the first two years, Greg's paycheck was spent before the next one appeared.

We tried to pay off our credit card every month but we usually failed. 

And what happens if you don't pay off your balance? Interest and more debt the following month. It was a vicious circle.

About a year in I realized things weren't getting better. That's when we jointly decided to put the brakes on spending unless it was absolutely necessary. Once we were stable we put a limit of $50 that could not be spent unless we both agreed it was necessary.

The number you choose should reflect your lifestyle. It could be $10 or $200. It all depends on your situation and how you handle money.

We weren't impulse buyers. We were just two desperate kids trying to build a home from scratch.

We saved all our lives, especially after we retired. In the back of my mind I half expect some global calamity to wipe out our savings so we still watch every penny. 

We shop garage sales, look for clearance items at the grocery store, and negotiate for big items. We still follow the $50 rule. After 47+ years, we still ask each other for permission for a splurge even if it costs only $5.

It might sound strange to others, but it works for us. It makes us mindful that since everything costs something, it ought to be something worth buying.

Buy things of quality and buy things you love. You'll enjoy them more and it will be something that lasts.

What's your budgeting strategy?


Mike Keyton said…
I bought my first house in 1975. Like you I started off with a bed. Then a tv and rocking chair. No curtains. Must have cast quite a sinister silhouette- - psycho Mrs Bates vibe. My new neighbours donated an old couch and coffee table along with the reassurance everything will fall into place - which it did. Never been in debt thank God. I have a real fear of it and have often wondered where the fear came from
Maria Zannini said…
Mike: You made me laugh. When we bought our latest house, I didn't have money for shades. I wanted very specific shades so I wanted to wait until money freed up.

Luckily the house is very wooded so you can't see into the house. Still it felt creepy.

You are smarter than us. It took us a year to realize we had to get out of debt and fast.

I suspect you were probably more influenced about debt because you were born closer to the last war than us.

My father, who grew up during the Depression was frugal all his life, even when things got easier for him. You can't shake it if you were molded that way.
Luba Meader said…
This post was good reading, Maria. I loved how you shared you 50$ Spending Rule, with Greg. My mom was very frugal. She was a penny pincher, LoL. I learned that from her. I live within my means and refer myself as a simple girl. I don't mean it in the mental capacity either. 🤭😊 I don't believe in debt either,except the house or car, you know. But even then, I bought a Craftsman style house and fixed her up. Not all at once in bits so I didn't have to borrow money to fix it up. I did, however, go into debt and got a new roof. And its guaranteed for 45 years. Good buy!!! My heart goes out to people who borrow against their credit cards. I've read that lately. That saddens me, tbh! My first furniture purchase, too, was my bedroom set. My mom had a great saying, "Pay as you go, or you don't go." [Until you can afford, LoL]. My Golden Rule 10, 20,70!!! 💖🌹
Maria Zannini said…
Luba: We've reached a point where if we don't have the money to buy it cash, we don't buy it.

I think your mom and I would've gotten along real well. :o)