I would like to tell you our story. Our story is both a success story and a word of caution for those considering this life-style change.
First of all, my husband (Jerry) and I never intended to be living on one income. It happened as a fluke. We were stationed overseas for 7 years, then moved back to the U.S. after quitting our jobs and giving up our combined $100K/year income, desiring a fresh start in the U.S.. After 4 months, I took the first job offered with a start-up company (very big mistake) and after one more month, Jerry received a great offer from a large company we both admired. Needless to say, a few months down the road, I was again on the "questioning the career" path and Jerry was quite happy and very challenged with his job. With one income, we have been living on $44K/year for the past 5 months.
At this point, I decided to start my own company. The only problem was that the idea to do this was not my own, nor was it in a field I was educated in and I had minimal experience in it. I sincerely thought I could overcome these shortcomings with dedicated study and diligence. I was wrong. After 5 months of building the company, I have a wonderfully complete business plan, am registered, licensed and built a Web site. The problem is, after all my studying and self teaching, I still am not quite sure how to conduct the business, as the field is very technical and analytical.
As you can imagine, in the meantime no money has come into the family coffers from this business. This has been going on for 5 months. Psychologically, this is quite a blow to me. I have always been the breadwinner of the family, earning more than my husband in each job I've held. That in itself is not important, but contributing to the family's income and the accomplishment of a career has always been incredibly important to me.
After month two of my new company, reality set in that money would not be flowing in as budgeted, so I started doing some different homework. I started studying the concept of cost cutting and living within one's means. Many books have been tremendously helpful, but as usual, you can read and read all you want; the challenge comes when you try to implement those changes into your life. After a great deal of discussion with my husband, we implemented some drastic changes. I've included the top five changes below, including some of the success we realized following these changes:
Now, while I'm not working, this is the norm. We have converted our friends to this idea as well, rotating the entertainment responsibility among us and sharing our homes with each other instead of dumping $100 at the local eatery. One year ago we averaged over $300 each month in dining out. Now, we stick with our budget of $75/month (including lunch for Jerry at work).
After implementing these 5 most important steps, we have further managed our expenditures much more effectively by bargain shopping, rummaging on Saturdays and simply choosing to save for things instead of buying them on impulse. These changes are difficult, and sometimes painful. They take a style of discipline most people are not comfortable with - restraint. Be careful to avoid the "sacrifice" mentality (always feeling deprived, thinking that you work so hard and can't spend any money the way you want, etc.). Just remember, the practices you put into place right now will allow you to put that extra $50 into your investment portfolio, and you will increase rather than decrease your net worth!!
For those of you considering changing to a single income household - think hard. Consider living within your means for 2-4 months, practicing the first 5 steps outlined above. After you have a thorough understanding of your spending habits, adjust them and make changes that will allow you to live on one income. Can you do it? Those first few months will give you an indicator. Can you both adjust to doing without the extra night out on the town, that CD you've been wanting, that new outfit you've been eyeing in the catalogue? Are you willing to put in the time and restraint this life-style demands? There is very little room for mistakes, and no one will come in with job offer quickly if you find yourself losing the uphill battle. While you are practising, set aside that second income in an interest-bearing savings account that is not readily accessible (i.e., $250 minimum check-writing privileges). You may need it in the months ahead.
Case in point, we have just discovered we are expecting our first baby in December. Although this cannot properly be termed a "mistake", and while this is a wonderful time in our lives and we couldn't be happier, the timing is not ideal. We will now require $500 - $800 more income per month than we presently have. My choices are the following: telecommuting from home (ideal, but highly unlikely to be offered a position with a good company), independent contract work (good option, favorable due to the flexible schedule, difficult to break into this world), part-time work (fair option, poor career choice but income would meet requirements), full-time work (last option, good career & income choice, poor family choice). Tough choices and even tougher trade-offs, but necessary at this time.
The life change from living on two incomes to living on one income is a change that will either make you or break you! Think carefully about it, and go into the change as a team. You cannot do this alone, both of you must commit to it!! It is well worth the change in life-style to spend quality time with your children, to watch them grow up, learn from them and allow them to learn from your every-day actions. Just make sure you can do it by testing yourselves for a few months, and don't forget that savings account!!
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