Today’s blog posting is actually a guest post from Danny Kofke, a teacher and author of the book “How to Survive (and Perhaps Thrive) on a Teacher’s Salary.” Danny’s whole approach is about living well on a modest income, something he’s achieved as a special education teacher for the past nine years. Currently, he teaches outside of Atlanta. Here’s what Danny told me about his reason for writing the book:

“My colleagues inspired me to write my book.  I had a few teachers tell me that Tracy (my wife) and I did really well on a teacher’s salary and that I should write a book.  I really did not give it much thought but a few years ago Tracy and my oldest daughter were out of town and I decided to go ahead and try.  After a few months my book was done.  I thought it was neat to just have my words on paper for family and friends to read.  A few people said I should submit it to publishing companies.  I went ahead and Tate Publishing liked it and now I have a book.  It is so neat for me to see my name on a book.  My book was targeted to teachers but with the current economic situation, I feel it could benefit most.  I have actually gotten a few kind letters from others telling me how much my book has helped them.  That is PRICELESS and makes the effort I spent on it all worthwhile!”

Danny knows what he’s talking about, in that he walks the walk: despite living off one teacher’s salary, he and his wife “have no debt except our mortgage, have a 9-month emergency fund, invest so that we will retire with a sizable nest egg (yes, the stock market will rebound) and live a “wealthy” life on moderate salary.”

With that, Danny offers his three tips for setting a realistic budget so that you, too, can live well, even on a teacher’s salary:

1. Write Down Everything You Spend
After Tracy and I were married for a few months, we took a pen and paper with us everywhere we went and wrote down all of our purchases.  Yes, this was time consuming but well worth the effort.  I think so many people are in financial trouble because they do not know where their money is going.  For many it is not those big ticket purchases that have caused them trouble but, rather, those $5-$10 purchases (eating lunch out, drinking coffee out, buying sodas/snacks from vending machines, etc.) that add up over time.  Since the amount spent is not that much, many do not realize how fast these small purchases add up over time.  Let’s say you spend $3 every work day for snacks/drinks from a vending machine.  That adds up to $60 a month or over $700 a year!  If you write these purchases down, you can at least see how much you are spending on these items.

2. Use Cash
After coming up with a budget, use cash to pay for your purchases.  After analyzing your expenses, you will be able to see how much you need each week for items such as food, transportation, entertainment, etc.  Let’s say this amount is $300.  Every Friday (or whatever day works best for you) take that amount out in cash.  This will be your budget for the week.  When you run out of this cash, you will have to eat in or wait to buy something until the following week.  This may be tough at first but it helps you get a better control of your spending.

3. Analyze Your Monthly Expenses
We have all of our monthly expenses (mortgage, phone, utilities, etc.) written down – you would not believe how many people have no clue how much their house, car and utilities cost!  Tracy and I look over these expenses every so often to see if we can cut back anywhere.  A few years ago we realized we were paying too much for our phones.  We changed the plans on both our cell and house phones and saved over $75 a month by doing away with things we did not even use.  We never would have realized this if we had not analyzed our bills.

For more of Danny’s financial advice, visit his blog How to Survive on a Teacher’s Salary.

Thanks for a great post, Danny!