Eric and I had almost a year to prepare to be a one-income family. We know everyone’s situation is different; some people may not have a choice as to becoming a one-income family, others may have to be a one-income family for several years, as opposed to only five months like us. However, these are the steps Eric and I took to survive these five months of living off of solely one income (and for our sanity, let’s hope it’s only five months and he gets a job in January, k?)
1. Decrease your living expenses
Having a whole year to plan for these five months allowed us to look at how to reduce our bills enough so that we would have extra money to save. The number one solution was to downsize our living arrangement. Last year, our rent and utilities were costing us 38% of our monthly budget. As much as we loved the swanky apartment building and the swanky Newport Beach address, we just couldn’t afford to keep living there. We managed to find a guesthouse on the same street as our apartment, but just a few blocks down. We ended up going from 38% of our monthly budget, to 24% of our monthly budget.
Trust me, it wasn’t easy to move into– essentially–a shack. I was embarrassed to invite friends over (I still sort of am), sometimes it makes me feel really poor, but for the most part, it hasn’t been that bad. And saving 14% of our monthly budget really helped in preparing to be a one-income family. There’s no way we could have continued to live at our old place on my salary alone.
2. Save, save, save
As much as possible, save as much as you can. Every month, from January to July, we were saving approximately 20% of our income. And honestly, we probably could have saved more–something I’m regretting right about now. We also put our entire tax return right into savings. Our goal was to save $8,000 and while we hit the mark for about 2 hours, we then ended up quickly having to pay off some bills. Our savings account is currently around $5,000 and I hope that we don’t take it any lower. I’m really depending on our savings account as more of an emergency fund, rather than a “we need it to survive” fund.
I also started clipping coupons in January. I didn’t really believe coupons were worth it until I tried it. I’ve been able to keep my grocery budget the same (around $325-350) but buying a whole lot more bang for my buck. I stock up on shampoos, conditioners and body wash when they are $1.50 or less with coupons. I only buy toothpaste if I can get it for free, and I have enough dish soap to last me a year. Now that Eric is no longer working, I don’t have to spend money on any toiletries and I hope to bring our grocery and toiletry budget to $250 for this month–the first time it will be under $300 this entire year! Krazy Coupon Lady and Living Rich with Coupons are some of my favorite blogs that help me match up sales with coupons.
3. Increase your income
This is a no brainer. But for the past year, I’ve tried to come up with other sources of income. We’ve had garage sales, I babysat on the side (and made $700 in two months!), I’ve been participating in surveys (earning $3 a pop, but it’s still something), I’ve taken every overtime opportunity at work, and I’ve been advertising on my blog (and although some people may want to complain about that, sorry honey, but you’re not paying my bills so advertise I will, if you don’t like it, don’t read it–easy as pie). This may mean that the spouse who isn’t going to school may have to bear the brunt of coming up with additional sources of income, but isn’t that what you’re doing anyway by allowing them to not work for however long? Just add this to your “to do” list and remind your spouse when they get their first fat paycheck, it belongs to you. That’s what I tell Eric.That, and he owes me a fat diamond ring, and a vacation, and a lot of other things to…I keep tabs in my head.
Another way to increase your income is to alter your tax with holdings. For the first six months of this year, I paid the maximum to my taxes. Now that Eric is not working, I changed my with holdings so that I now receive an extra chunk of change every month. This has helped a lot. I just hope we don’t have to pay any taxes come next April.
4. Learn to live a different lifestyle
The first month of our one-income lifestyle was a major disaster. For a week, we were completely living off of credit cards. This month, we’ve been having to live an even poorer lifestyle just to pay off that one week of credit card abuse. However, I am proud to say that so far this month, we’ve only spent about $120 on frivolous items (ie, $56 going out to dinner once, $17 on frozen yogurt, and $40 for Eric and mine’s allowance–we each get $20 every two weeks). Everything else has been on groceries, gas, dry cleaning for Eric’s uniforms, an oil change, and some home tools to fix things like our garbage disposal. We haven’t bought any clothes, we’ve barely gone out to eat…we’re living at the base capacity. This has been the hardest part for us, but for the most part, we’ve both been so busy and tired that we’re not even noticing how little we’ve been “living it up.”
How else would you prepare to be a one-income family?