NAME: John Ellis OCCUPATION: City Engineer, Chicago INCOME: $31,600 annually, plus $2,800 form night teaching at a trade school PLEASURES: His six children, family musicales COMPLAINT: City pay raises haven't kept up with inflation; otherwise, nothing outstanding OUTLOOK: Good.

"I know people say you should borrow in times of inflation," John Ellis was saying, "but owing money just makes me uncomfortable."

So your only real debt is your mortgage?

"Mortgage?" Ellis, 42, and his wife, Anne Marie, 36, exchanged puzzled expressions. "Oh, no, we paid off our mortgage five years after we bought our house."

The Ellises have heard that thrift is passe in a time of double-digit inflation, that you lose money in a savings account, that you should buy now because things will cost more next month, that you should borrow because you'll pay back cheaper dollars.

But they still prefer to pay as they go. That policy, so far, has enabled them to rear six children, aged 2 to 12; on Ellis' annual earnings of $34,400 ($31,600 as manager of a plant that turns garbage into energy for the Chicago Department of Streets and Sanitation, $2,800 for teaching two night classes a week at a trade school).

The Ellis children attend, or will atend, parochial schools at a total cost of $820 this year. Most have had, or will have, orthodontic work at $30 per child per month.

Four take private piano lessons, at $4.50 per child per week, and the other two will when they're old enough.

The family's three-bedroom house in a working-class neighborhood on Chicago's far Southwest side is modest, but it has a dishwasher, a basement recreation room, a stereo (usually tuned to a classical music station) and a color television -- all paid for. Outside are the family's two paid-for cars, a 1973 Cadillac and a 1974 Chevy station wagon.

As a city employe, Ellis hasn't comeclose to keeping up with inflation. His earnings increased only 5 percent in the last 12 months and the best he can hope for from Mayor Jane Byrne's 1980 budget is a 6 percent raise.

But the couple see no need for Anne Marie Ellis to get a job.

Instead, they rely on old-fashioned financial discipline.

"We set up a real strict budget when we got married," said Mrs. Ellis.

Ellis does almost all his own home and auto maintenance. Mrs. Ellis is the family barber. The children make $50 to $75 a month with a paper route, and they wear hand-me-downs, not just from each other, but from other children in the neighborhood.

Mrs. Ellis stretches her $500-a-month food budget by buying food in bulk and freezing it and by buying day-old bread at a bakery outlet.

"There's more we can do, if we have to," said Ellis. "We could get rid of one car. I could take the bus to work. We could cut out restaurants entirely."

"Sure, I'm troubled by inflation," Ellis said, "but I'm an engineer and I tend to look at these things rationally. Frustration, anger, rage -- they're not going to solve my problems."