Retire Early! One Income Family Plans For Financial Independence

by Lucynda Koesters


Laura and Dann Miller of Clarkston, Washington are living a successful one-income life. How successful? Staying out of debt, living comfortably within their means and saving and investing enough to retire in their forties (approx. 15 years away) are just a few of the fulfilling benefits the Millers attribute to their lifestyle. This success has not come easily or quickly; they've had to make adjustments from their former two-income life by reining in spending and saving more money. But with benefits like a far less stressful life and the goal of early retirement to look forward to, the Millers believe it's all worth it.

How did the Millers get started on the road to one-income success? They began their married life seven years ago in Anchorage, Alaska. They had two children within the first two years of marriage while Dann was still in college and Laura worked as a hairdresser. Early on, both partners worked even after the children arrived. Says Laura, "Looking back, we had what I call a 'two-income mentality'. We felt we couldn't have a comfortable life on one income. We never actually sat down and worked out the cost of working vs. the cost of staying home; we just assumed two jobs were better." The family was far from being spendthrifts, though, paying off education and auto loans quickly and purchasing a new home in the first four years of marriage.

Yet Laura was not happy having to put her children in daycare, so when Dann was transferred from Alaska to Clarkston, Washington, a year and a half ago, she made the decision not to go back to work outside the home. Of this decision, she says, "It hit me that at any time in my life I can go back to work, or school, but I only have one chance to raise my children. I became determined to make it work on one income."

This was difficult, because the family was used to the money from a second income. Laura began to read all the tightwad material she could get her hands on and sought help from her grandparents, who, as she describes, are of the "waste not, want not" generation. She learned to cook from scratch and began browsing second-hand stores for good-quality used clothing. Her husband was supportive, willingly taking homemade lunches and leftovers to work and wearing second-hand jeans. She feels that all the tightwad material was motivational and helped her learn to think creatively.

Her efforts paid off: "My kids wear brand-name clothes that I find in thrift stores--it is important to me that they feel they "fit in" with their peers, but I refuse to pay GAP prices. When we both worked, our kids wore OshKosh, Nordstrom brands, Levi's, etc. Now they wear OshKosh, Nordstrom brands, Levi's, etc. How? Because these days spendthrifts throw out anything and everything. If you visit the Goodwill or other thrift stores often, you will find many brand names, and many -- believe it or not -- with all the original tags still attached. I buy used (but in excellent condition) Levi's for my husband who is required to wear jeans and goes through a pair in six months (Dann is a marketing and membership manager at Costco in Clarkston). I have never paid more than $6 per pair, even for Silver Tab. I emphasize this because if you are extremely fashion-conscious as I am, it may scare you to start shopping thrift stores. BE NOT AFRAID! I love it when my husband gets occasional comments at work about his "expensive" clothes. It's not that I think we should all be focusing on brands; I would just like to blow the "welfare" image that being a tightwad conjures up."

On the grocery side of things, Laura insists, "being frugal means NOT eating as many packaged 'cheap' foods. My family has homemade meals with no preservatives, quality, fresh ingredients, and we drink water instead of pop. This is cheaper than buying pre-packaged meals and MUCH healthier."

The family experienced other benefits from having one parent at home. Dann pursued and received a promotion requiring a more flexible schedule--an impossibility if both partners worked. He was also able to pursue a dream of becoming a (part-time) firefighter. Laura feels the family is living a more fulfilling life with less stress: "I no longer worry that my kids are doing OK at the sitter; I make all their food and know it is healthy; they are very confident and secure kids. . .no matter how great your daycare provider is, WE are the ones who matter to our children and who will make the most difference. This confidence (or lack thereof) will be with them throughout their lives."

Dann and Laura are making a financial success of their one- income life as well. With Dann's promotion, they now claim an income in the $40K range, less than many of their peers, but the Millers are saving and investing enough to accomplish an early retirement--something many people say is the "new American Dream". How are the Millers carrying out this goal? Their early attention to saving money and avoiding debt is a major factor. Says Laura, "Dann and I have never bought major purchases (other than a mortgage and education) on credit. We started a savings trick when we were first married -- we saved a set amount, then we rewarded ourselves by buying something from our "wish list." By doing this we were able to buy two vehicles outright. That saved us a lot of money in the long run because we didn't pay interest. Obviously, having the money before you buy something requires some patience and discipline, but staying out of debt frees up our income for things we'd rather be paying for."

Dann and Laura estimate they are about 15 years away from financial independence. They plan to be earning enough in interest from their saved investments that they will have the freedom to choose whether or not to work. Laura says, "Often people assume that if you're financially independent you must be BEYOND WEALTHY, but that's really not the case. Anyone with determination can achieve this. . .I don't feel that I will want to be done working in my forties, but rather I will choose work that is really fulfilling. The point is, I will have the choice because money won't be an issue."

The key to retiring early, the Millers believe, is starting a savings program as early in life as possible. Laura explains, "The key to saving for retirement is to start yesterday. The younger you are when you begin to put money away, the less you must put away and the bigger it becomes. If you are able to visit with a financial advisor (or a friend who knows something about numbers), ask him/her to show you the difference between someone who starts saving in his/her 20's vs. someone starting in their 30's. It is astounding. My husband was already taking advantage of his 401K when we married. (I was 20, he was 23) We have the maximum amount taken from his check BEFORE we even see it. This way, even during times of financial strain, we are securing our future. With every decision you make there comes a sacrifice... we are not living as "high" a life as some of our peers right now because we chose to be able to have financial independence early. If things go as planned we will be financially independent in our forties. Sadly, even though they are living it up now, our peers will be working full time into their late sixties or longer before they can quit. Some never will. That is the sacrifice they are making. To us it is not worth having to work the rest of our lives so that we can have the latest toys and the largest house and the Eddie Bauer Ford Explorer NOW."

For anyone interested in early retirement and financial independence, the Millers recommend reading the book "The Millionaire Next Door" to get started. They also suggest utilizing mutual funds as an investment vehicle: "(We) recommend mutual funds because the return is so high and the risk factor is low compared with single stocks. We buy the "Mutual Fund Forecaster" and pick no-load funds that we manage ourselves, which saves us the broker fees. We DO NOT sell and trade like brokers want you to do. This makes them money because they charge a fee each time, which cancels out much of any profit you may have made. I am not a financial advisor, I am only sharing my experience, so do your own research as well and get advice from others --but start now."

Pretty motivating advice from a single-income family working toward the new American Dream: early retirement!


Lucynda Koesters is a former "two-income" spendthrift turned frugal "one-incomer." She loves to hear from anyone trying to make a similar transition. Contact her at lkoestrs@venus.net

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