Wednesday, April 9, 2014

Living on One Income, Part One

Despite what you read on the internet, or hear on the news, or from people you know, it is possible, in this day and age, to live on one income.

Now, I'm not saying it's easy, and I'm not saying you can keep up with the Joneses, but it is possible.

This post is kind of a follow up to my post Bonbons and the Magic Dresser, in which I mentioned how DH works and I "don't".  As in I don't bring a paycheck to add to the family money pot.

Some readers, who might have picked up from mentions I have made here and there in my posts over the last three years, might say: "But you are married to an engineer!  You must be rich! That is why you don't have to work outside the home.  I'm not married to an engineer; my husband and I aren't rich.  We can't possibly live on one income."

True, I am married to an engineer.  What is myth, though, is that therefore we must be rich.  I'll say it now:  DH has had his engineering degree since 1993.  He's been employed as an engineer since late 1994 (yes, a more than twelve month lag between earning the degree and scoring the job in his chosen field. His student loan payments kicked in before the desired job was acquired; we paid those, and all our bills the first year and a half of our marriage, on one income that was not an engineer's salary).

Another truth:  we live on a 5-figure income.  Five.  Not six (see?  Engineers aren't automatically rich).  Given the number of hours a week he spends on/at his job, and how that number has increased in the last handful of years since the American auto industry nearly died a fiery death, without a corresponding increase in salary, there are many jobs that pay more dollars per hour than his does.

In other words, yes, he makes good money.  But no, we aren't rich.  We know several people in the nursing field who work less hours a week than he does and make almost as much a year as he does.  Most people do not think of nurses as being wealthier than engineers.

But this isn't a post ranting on being an engineer's wife.  That very well could be a topic in the future. . .

This is a post on the feasibility of living on one income.  Or, rather, kind of a guidebook on how to live on one income.  A first-person experience on what sorts of things need to be done in order to have a one-income family.

First, I want to point out, to all the naysayers, that there are a whole lot of one income families in this country.  How many divorced parents are there?  How many parents that never even got married in the first place?  A whole lot of them live on one income.

So why does it seem to be commonly accepted that a two-parent home cannot possibly be run on just one income?  Why do we accept the notion that our kids have to be raised in daycares and after school programs instead of by one of their parents staying at home instead of working?  How come a single parent household exists on one income, but a two parent household supposedly cannot?

Think on that for a moment.

Okay, time's up.  Point made.  Now let's get down to the nitty gritty.

Having a family on one income requires some planning.  A whole lot of dedication.  Agreement between the spouses.  And lots of thinking outside the conventional American box.

In the case of DH and I, our goal from the start was to have me, the mom, stay home.  So, from the beginning, we lived on one income.  When we looked for a house to rent, it was based on a cap rent amount we had set for ourselves based on what we could afford on one income.  When we bought a car, via an auto loan, it was based on what we decided we could afford in a monthly car payment based on one income.  Even if I was working at the time, our purchasing decisions were made based solely on DH's income, not our combined income.

I think that is where a whole lot of couples go wrong: right off the bat they take their combined dollar figures, say "WOW!  Look at what we can have with that!" and then incur debts that require both of them to continue working in order to make the monthly bill payments.  Then they have trapped themselves into a lifestyle that makes wage slaves out of the both of them.

So, my advice to you, if you are just starting out, is to turn a blind eye to one of your incomes when you are making out the family budget.  (You do have a budget, right?  If you don't have a budget, how do you know how your income compares to your outgo?  How do you know what you can and cannot afford?)  Take that second income, while it is a second income, and either use it to pay down/pay off any debt you have (such as loans and credit cards), and then build up a savings account.  A lot of money programs will tell you to create a savings account first, as a cushion, and then pay off debt, but that isn't how DH and I did it (mostly because the interest earned on a savings account was way, way lower that the interest rates on our debt), and I'm telling my story here.  ;0)

On the subject of budgets, look at yours.  Don't just look at it in the manner of "We made $XXX.XX this month and spent $YYY.YY this month."  No, you need more details than that.  You need categories.  What does your housing (rent/mortgage) cost?  What do your utilities cost?  What do your vehicles cost, in payments and in fuel and insurance?  What amount do you owe monthly on other loans or credit cards?  How much are you spending on food; and I suggest breaking this down into food prepared and eaten at home and food that is prepared elsewhere (whether you eat it at that location or bring it home to eat).  How much does your childcare cost (if you have kids)?  What other things do you spend money on, and how much does that total?

Here are some of the categories in our budget:
Mortgage payment
Visa bill (our only debt aside from our mortgage)
Propane (mostly for cooking and hot water in the summer time; we go through about 200 gallons a year)
Auto Insurance
Gas (for the vehicles)

There are many more, of course, like diesel for the tractor and gas/oil mix for the chainsaw and tiller, clothing and footwear, but the ones listed are our major regular and predicatable expenses.

Did you look at yours?  Did you die of shock (most likely seeing your outgo was more than your income)?  Or did you look at it and say "Huh, there's actually 'extra' money"?  (If you have extra money, that's awesome!  You are ahead of the game.  Now take that extra money and get rid of some debt with it.)

If you want to be a one income family, taking a good hard look at the budget is crucial.  You must know what your non-negotiable expenses are.  The things you can't change very easily, like what is owed on your mortgage or rent, your car, your other loans.  Those are the things you are going to have to make priorities when it's time to fork over your hard earned cash.  The other things you have a little more wiggle room with. Take food, for instance.  If you have a higher amount of money going into food somebody else cooked for you than food you cooked yourself, that is something you can change pretty easily by getting out the pots and pans when you get off work rather than hitting the drive thru or calling the pizza boy.  Likewise anything that falls into the 'entertainment' category: books, magazines, movies, girls night out (or guys night out), concerts, even your cable or satellite tv subscription, is a place you can make immediate money saving changes.

If you really, truly, want to have one spouse stay home, you need to cut the entertainment budget down to what can be afforded on just one income.  This often requires learning a new way of thinking, a new way of defining where your fun comes from.  You can still get together with the guys, or the girls, you just can't do it in a setting where you have to shell out $20 or $30 or $50 (or more!) for that one night.  How about skipping the restaurant or bar meeting place, and just having it at someone's house?  Everyone BYOB and munchies too.  You can still talk, or listen to music, or watch the game, or whatever it is you usually do on these gender limited nights, it just can't have a cover charge, a gratuity tax, or jacked up prices for drinks and food.

Another category of expenditures you need to turn a critical eye to is personal care.  As in cosmetics, toiletries, mani-pedis and hair care.  This is mostly aimed at the women, since it is usually the women who want to stay home.  I can't tell you how many moms I've met in 24 years who've moaned how they wish they could afford to stay home with their kids, yet they sport manicured artificial nails, hair that requires monthly maintenance at a salon, and have an appointment later in the week for a facial.  My tongue-bitten advice, in the nicest way I can think of to phrase it: eat healthy so your own fingernails will be strong and grow long, learn to do a home facial, and find a less expensive hair-do, then you might be able to find some money to stay home on.

Now, I'm not saying stay at home wives need to be frumpy.  Not at all.  But do you really need to plunk down a whole day's wages (or more) each month to make (you feel like) you look nice?  Take some of that time you'd no longer have to spend toiling away for your boss, and learn how to color your own hair if you must change it's natural color.  Practice doing your own nails if you like the manicured and polished look.  There are tons of recipes for homemade skin care products if you want to pamper yourself; you don't have to pay somebody else to put gook on your face (or to scrub off the dead skin cells either).  This might even be a good theme for a girls night in (instead of a girls night out): facials, hair coloring, and watching a dvd!  Kind of like teenage girls at a slumber party.

Guys, I'm not going to let you off easily just because you don't pay somebody to polish your fingernails (at least, I hope not.  I'm assuming not just because most of the men I personally know do not get manicures).  Nope.  You can learn to do your own hair too.  They make hair color kits for men, if you are one of those guys who goes to a salon to cover his grey.  You can even learn to cut your own hair, guys.  DS2 does his.  His freshman year of college, he paid $13 for a haircut (with a coupon!  Emphasis his), after having 'free' haircuts from Mom (ie me) all his life.  Well, he decided right then and there he would never pay for another haircut again. He went out, found himself a nice set of hair clippers for less than $25--less than the price of two more haircuts with coupons-- and has been doing his own hair ever since. Three years now. He does a real nice job, you can't tell his hair isn't done by a 'professional'.

To Be Continued. . .