Despite living on one income seeming like an overwhelming prospect, with the unemployment rate in the United States at 8% to 9.5% it is probably a smart idea to at least think about it and perhaps set up a plan for living on one income in case the worse happens. To help you prepare for living on one income I’ve decided to share my own story about how my husband and I prepared and lived on one income for almost 13 years.
I met my husband when we were only 21 years old. We dated for three years, and agreeing upon a life plan of career and no kids we got married at 24.
(I know. It seems so ridiculously young.)
For some reason after we got married I, not wanting our great love to die with us (What can I say? I was melodramatic at 24), had a change of heart and announced that not only did I want kids, but I wanted one of us to stay home with them.
Living on one Income: How We Did It
After watching my husband’s head almost pop off, he graciously acquiesced (it took him 4 years to graciously acquiesce), and we created a plan for us to learn to live on one income. Here’s how we did it.
Step One: Gather Information
As I explained how to do in Women and Money: Family Budgets my husband and I figured out all of our expenses. We looked at all of our fixed expenses and all of our variable expenses, and in looking at expenses we realized a few things.
- We were smart when we purchased our home because we bought it using only one of our incomes. Sure we could have bought more home if we had used both of our incomes, but for some reason we being in our early 20′s decided that we wanted to have lots of left over money for fun stuff like traveling. So we purchased our home with only one income thinking that the second salary would go into savings. Our need to travel and luck saved the day for us concerning this big expense.
- The only debt we had were our cars and our house.
- Some of our expenses were because we were both working. For example, we had large commutes and our car expense were high. Neither one of us cooked and our networking lunches cost us a pretty penny. Finally work attire in those days was more formal (people still had to wear suits), and formal attire was expensive. The list went on and on, and we quickly realized how much money we would save by one of us staying home.
- The baby would cost us additional monies. Then we added in the cost of child care. This when things got interesting. Financially if things had stayed the same and we added in our child care expenses our 2nd income profit would be cut in half. If we had twins or a second child later, child care expenses would have caused us to lose money.
Step 2: We ran the numbers for each of us staying home.
The next step for us was to decide who would stay home with the baby. This was a pretty easy decision for us as my husband’s career was simply taking off way more quickly than my career. And as we sat down and tried to project whose career would be more profitable over the long run the writing was on the wall. I would have to be the one to give up my career.
Step 3: We cut expenses.
After gathering information we realized we did not have to cut too much (mostly because the house we purchased was purchased with one income). What we were losing in our income, we made up for with the following.
- I had to start eating at home. This was actually a pretty easy task as anyone who has a new baby knows, it’s far easier to stay home and scrounge for food than to drag you and the baby to a restaurant.
- My car expenses dropped dramatically as I no longer had a long commute.
- All of my clothing expenses dropped dramatically. No longer was I having to dress in more expensive professional attire. My clothes started coming from Target, Ross Dress for Less, Marshalls and other discount stores.
- I took over the grocery shopping and quickly developed a plan for saving money at the store. Grocery Shopping on a Budget outlines how I did this pretty carefully.
- We tracked our expenses to the penny daily, weekly, and monthly evaluating where we could cut expenses further.
Step 4: We had to get rid of a few things.
- We could only afford one car payment. We implemented some of the new rules before I quit my job and used the extra money to pay off one of our car loans.
- We got rid of all of our movie channels and switched to basic cable.
- We decided to forgo vacations for one year starting with when I got pregnant. (My husband and I were big travelers. This was a tough one for us.)
- We evaluated all of our insurance plans and re-negotiated the ones we could.
- We became less social with our non-kid friends. This was a big expense for us as we were super social. But amazingly this was the easiest one for us to give up. We were simply to tired to maintain the busy, expensive, social life-style of an adult who had no children.
Living on One Income: The Result
Finally after we did all of this work we decided that we could live on one income. It seems like a lot of work and sacrifice, but honestly those first couple of years we really didn’t feel it. In fact what we discovered was that we ended up saving more money that first year on one income than we had saved any year before that. It was actually kind of a shock to us. And to this day my husband and I both would love to go back to the newly married 20-somethings and pop us on the head for not doing a better job with our money.
Do you live on one income? If so how do you make it work?
Check out these other posts about Living on One Income:
- Steps to Living on One Income – Steps 1 to 3
- Steps to Living on One Income – Steps 4 to 6
- Steps to Living on One Income – Steps 7 to 9
- Living on one Income
- Becoming a Stay at Home Parent – Let’s Talk Money!