Lay-Off Resistant Family Finances

This guest post from Sam is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes. Sam writes about personal finance at Grad Money Matters.

A few years ago, my husband and I began planning to have children. As part of this, we tried to prepare to switch to a single income mode, in case it became necessary. Being a single-income family is hard, but as many people can attest, it's perfectly do-able. If you're spoilt by a dual-income lifestyle however, switching back to the single-income mode may seem next to impossible. Unfortunately, that's where we were. So we drafted a rough plan and started putting it into action.

Several years have passed since then, and we haven't quite made the switch yet. But something great came out of this exercise. Now, even if both of us were to lose our jobs at the same time, we think we could survive for several months, maybe even a year, without too much hardship. This has been a great source of relief during these turbulent times.

Here's what we've done.

We drafted a budget
When I was a student and my husband was the sole bread winner in the house, life was relatively simple. I made sure that I earned enough through scholarships, or part time jobs, to cover my tuition, board and fees, while my husband focused on paying off our debt and saving up for the future. Since what I made just covered my expenses, we pretty much had a single real stream of income which got mapped to all outgoing expenses, and we knew exactly where we were spending all our money.

Things changed dramatically when I graduated and started working. We lost track of who paid for what and did not have much clarity on how our money was being spent, or how much for that matter! This uncertainty was caused us a lot of anxiety anytime we thought of switching to single income. One day we sat down to analyze our household expenses and were pretty stunned at all the “excess”.

We categorized our expenses, and made one person responsible for each category. In general, this helped us get a better perspective and accountability of where we spent our money each month and how we would be affected if we were to lose a job.

We reduced expenses
Making one person responsible for each category really helped us see how much more we were spending compared to our old single-income days.

For instance, once all the restaurant expenses started coming from one person's budget, it was clear that this was one of the categories that we had to start trimming a lot. The same was true in case of the groceries, entertainment, travel, etc. (but to a smaller extent). Slowly we brought expenses down, until the total of all the categories fit within one person's income (we picked mine, since it was the lesser of the two).

It doesn't matter who actually pays the bills. If the total money spent each month is less than the lowest income, the transition to a single income is a lot easier.

We increased emergency savings
Once most expenses would fit within a single income, we had roughly the equivalent of an additional income leftover each month.

After maxing out our retirement accounts, we used the rest to bump up our emergency account and to make additional payments for the mortgage. When trying to determine a target amount for our emergency fund, we split it in two:

  • The first part was the “true” emergency fund, which has a certain amount to cover, well, true emergencies.
  • The second part (we called it “freedom” fund, kooky as it sounds) was for covering the shortfall for the first few months as we adjusted to living on one income.

Knowing that we had some wiggle room in our emergency fund for the transition period, without compromising the ability to be prepared for true emergencies, reduced the anxiety about the switch.

Interlude: By now, our baby was here. We got a lot of help from family to take care of our child, so we didn't have to switch to single-income mode. But my job was starting to look too shaky and my husband's wasn't entirely stable either, so we decided to continue with what we had started.

We decided to get out of debt
The most helpful part of this process was that we had already paid off all our consumer debt, and we vowed not to take out any more loans. We still had a mortgage, though. And when the baby came, we faced a big decision: Should we replace my older, smaller car (Jetta) with a bigger, newer one (SUV)? It sure would have been more convenient, and I was more than a little tempted.

But having a car payment of, say, $300 per month would mean $300 less money that we could apply towards the emergency fund/mortgage. And if/when a layoff happened, we'd not only have a smaller emergency fund, but also an additional $300 to worry about each month. So we decided to make do with our current car. Apart from occasional grouching, we've done just fine.

Also early on, we decided to start putting a little extra towards the mortgage whenever possible. Initially, the mortgage was so large that it looked like there wasn't any point to paying extra towards it. Even though we bought a house well below our means, trying to pay off a mortgage is no joke. After our emergency savings reached a decent level though, we started putting more and more towards mortgage.

I'm very proud that, as I write this, our mortgage is completely paid off. I really have no idea how we managed to do it, but at one point, it just snowballed. This has been such a huge anxiety reliever. Now even if both of us were to lose our jobs, we should be able to survive for several months, maybe even a year, picking up odd jobs if necessary, without having to worry about the roof over our heads. I know a lot of people think prepaying a mortgage isn't wise, but to us this kind of freedom is priceless!

We looked for extra income
After spending the day at a stressful job and the evenings taking care of the house and family, all I wanted to do in the nights/weekends was relax. Luckily for me, my idea of relaxing is plonking on a comfortable sofa with my laptop. Gradually, I started reading a lot of financial blogs. Some of them (like Get Rich Slowly) talked about how to make more money. This got me thinking that if we had some additional source of income, the loss of a day job might not quite seem so bad. So, I started looking into blogging myself.

Its been an on-again, off-again venture over the past four years depending on how busy life gets. And my blog hasn't generated a whole lot of income, but every single dollar that came out of it gave me that much more to add to our emergency savings and mortgage payoff. Now, with both of these goals met, I've been pouring the income from the blog back into it, which has helped me put together a spectacular section about money making ideas so I can share what I've learned with other people.

If I were to lose my job tomorrow, I probably wouldn't even look for another one. I know I could beef up my efforts on my blog to earn more income while having a lot more flexibility with my time and a lot less stress compared to a corporate job. I may not be able to replace my current income, but I should be able to earn enough to stay independent while my husband's income takes care of other family expenses. Without debt and a simpler lifestyle, we should still be able to save some for vacations and for the future.

We created some frugal rules
We both come from lower-middle-class families. We saved on our own to bring ourselves to the United States for our master's degrees. We made a lot of financial mistakes during our first years here in the U.S., and spent the next few years trying to fix them. But these early mistakes helped us put in place a few “rules”. Not anything stringent that would backfire on us, but some simple ground rules to keep us in check.

For instance:

  • “If it's not on the grocery list and not really needed right now, it waits till the next trip.” This rule helped cut down a lot on the unnecessary impulse buys.
  • “Eat lunch out no more than twice a week” helped cut down our eat-out budget drastically.
  • “Never buy anything that costs over $100 without comparison shopping first” helped us not only get good deals on what we wanted, but made us stop for a while and think if we really wanted it in the first place.

These are good frugal concepts to live by any time, but with the uncertain economic climate we currently have, these rules can mean the difference between smooth transition or total turmoil when dealing with voluntary or involuntary job loss.

Ready for anything
These simple things that we started doing a few years back have helped us a lot today to be prepared for possible layoffs. When we started, these habits were meant to help switch to a single-income mode. In hindsight though, these were some of the best “plan ahead” things we've done. With my job hanging on by a thread and my husband changing his job three times in the past year, these have been a big source of financial peace of mind for us.

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Nicole
Nicole

Congrats!

After several years of no raises and increasing fixed costs (insurance, inflation, etc.) we’re no longer living off just one income and it’s difficult to say whether we should cut back on luxuries and focus on the finances now or wait until there is a job-loss before making cuts that would actually hurt (or at least annoy). It seems ridiculous because we used to live on far less than one of our incomes, but we’re also happier not having to do that.

http://nicoleandmaggie.wordpress.com/2011/08/22/living-on-one-salary/

Sam Baker
Sam Baker

Hi Nicole, Thanks!

Sorry to hear about the “no raises” part. I totally feel your pain. We were in that state for about 3 years. This year I got a raise, but it looks very unlikely that I will have a job (at least with this company) through the raise time next year. Oh, well.. we’ll see how things go. For now, I am thankful for how things have worked out so far. I’m sure when things change, we will figure out a way to deal with it.

Good Luck to you!

Dallas+saver
Dallas+saver

Would love to hear numbers (salary, mortgage) to put it into context.

Erika
Erika

Hooray! Paying off the mortgage is an awesome thing you and your husband have done. I agree: getting out of debt is so important but I understand this is a weakness for a lot of folks. Sounds like you two are on your way! Congrats and God bless.

Sam Baker
Sam Baker

Thanks, Erika! Quite frankly, I never thought we’d be able to pay off the mortgage. My husband wanted to go on an all out attack on the mortgage, while I thought we should invest in the stock market. I am glad that sometimes I do listen to him ๐Ÿ˜‰

Andrew
Andrew

This article completely hits home for me.

I was laid off 3 weeks ago and, as it was a contract job, I am ineligible for unemployment. Fortunately, however, I paid off my house in 2009 and have enough saved to last for about a year and a half.

True, this came at the cost of neglecting retirement savings to some extent, and I do have moments of dreadful anxiety. But the security of owning the house free and clear is invaluable.

Well Heeled Blog
Well Heeled Blog

Andrew, your comment is exactly why I want to pay off my primary home by the time I am in my 50s. It’s such a relief to not have a mortgage payment – I think for everything else (food, gas, car, etc.) there are ways to scourge together enough money even when you are unemployed. The mortgage is another matter. Congratulations on your payoff!

Sam Baker
Sam Baker

Andrew, Sorry to hear about your layoff. My husband changed his job 3 times last year. If we weren’t quite so close to paying off our mortgage, I think it would have been a lot more stressful.

Wish you good luck to find another job soon.

krantcents
krantcents

I always find it interesting that there is something that motivates to do something about our debt. I think it is because change is difficult and we need a reason that compels us to overcome the difficulty of change. It doesn’t matter what the motivation is as long as you make the changes. Congratulations.

Sam Baker
Sam Baker

Thanks, krantcents! You are right – the reason for motivation does not matter. What matters is that we get there.

Hannibal
Hannibal

Great stuff! You’re talking about financial independence/freedom – which should be everybody’s goal. My approach is similar to that described in the article, but also gives a bit more detail on how to invest your growing savings.

http://www.the-diy-income-investor.com/2011/07/financial-freedom-is-measured-in-years.html

skeptic
skeptic

I think comments with such little substance and a link to one’s own website should be deleted.

This is not advancing the conversation, it’s just advertising with a thin veneer of relevance.

Cortney
Cortney

I just had a general question about this statement, for parents- “And when the baby came, we faced a big decision: Should we replace my older, smaller car (Jetta) with a bigger, newer one (SUV)? It sure would have been more convenient, and I was more than a little tempted.” I’m not a parent, so this statement confuses me a bit. I’ve known a lot of people to run out and get SUV’s when they have their first baby, even if they’re only planning on having two and being done, or if additional kids won’t be coming for a few… Read more »

Becka
Becka

I think it’s more of a problem when the babies are new. My friends had an Aveo and a Matrix, and while the Matrix does fine with the baby seat in the back, they said they made maybe two trips with the baby seat in the Aveo before realizing it was just unworkable – there just wasn’t enough space. They did replace it with an SUV (a RAV4, so nothing insane), but you’re right, I’m sure upgrading to a sedan would’ve been a more cost-effective way of getting a bit more space. Though I’m not sure you can really limit… Read more »

Cortney
Cortney

I agree, over sized SUV’s are prevalent in the U.S. in general, but I was asking about parents specifically because she mentioned it, and I’ve seen other parents “upgrade” upon the birth of a child, and I was always confused as to why that was a common thing to do.

Bella
Bella

We upgraded to the ‘mommymobile’ when it was time to upgrade my last car, and we knew we were having kids. I’m sure that some people think that having a SUV that seats 8 is excessive. For us it was what we needed. We take A LOT of road trips – economical ways to vacation, and the only way to see a lot of our great country. We have 2 medium sized dogs that in their kennels take up most of back (with seats down) leaving just the first two rows for us, the carseat, and all our (baby’s) gear.… Read more »

Kylie
Kylie

I agree. I have a 6 week old bub and a 7 year old Subaru Impreza. The baby’s capsule fits in the back seat with the passenger seat all the way forward. I don’t see a problem with it. My son will only be in the capsule for another 4 or 5 months. Sure, the stroller is a squeeze in the boot, and the baby and dogs get up close and personal when they’re all in the back together, but we own the car outright and it runs on the smell of an oily rag.

Amanda
Amanda

I wonder if some parents worry about the safety of their smaller vehicles…

Amy+F
Amy+F

I think it’s weird too. We kept driving my Civic until baby #3 was 5 mo old and we really, really wanted more space. It would have been nice to have a van on driving vacations, but 50 wks/year I was glad to still get 30mpg in my small car. We can fit all 5 of us in my husband’s tiny Toyota Echo in a pinch.

Nicole
Nicole

This is something that came up in recent conversation with some of my grad students…

I don’t understand it either– my kid is in kindergarten and I’m still driving an Accent (that we bought before DC was even a gleam in the eye), which is pretty small. If I were driving a 2 door car (like my parents did with us) I might have wanted to change to 4 doors after one kid, but I can’t imagine needing an SUV.

Frances
Frances

Well, we wound up with two smaller SUVs in the two years after our boy was born, but it certainly wasn’t a thoughtless decision. While we were on parental leave with reduced income, we drove what we had. But my beloved old station wagon didn’t accept the car seat easily, so it was first to go. We knew we’d eventually want a little camping trailer, so we purchased with towing in mind. Then we discovered that our aging backs were much happier being able to actually stand straight buckling our child in, and I needed more flexible cargo space than… Read more »

Sam Baker
Sam Baker

Cortney, Your reasoning was the exact one that my husband used to convince me that we don’t need an SUV ๐Ÿ™‚ I bought into this whole “need a bigger car when the baby comes” idea, especially because in our case our parents were going to stay with us to help with the baby. Between my parents and my husbands parents, we had help for about 7 months after our baby came. And with a rear facing car seat, it is very tight at the back of a Jetta for two adults to fit. However, since most local trips are short,… Read more »

Tyler Karaszewski
Tyler Karaszewski

The baby car seat I bought *barely* fits in the back seat of my wife’s civic. You have to slide the passenger seat forward to an almost uncomfortable position to fit the kid in the back seat. I doubt it would fit in my GTi at all, but being that it’s a two door, I’m not even going to try. We will replace the Civic before the GTi, and it will be replaced with something big enough that both adults and the baby can all fit in comfortably. This does’t mean it’s going to be a giant SUV, but given… Read more »

Nicole
Nicole

We have and had zero problems with the carseats we’ve used and DH’s civic. (Top rated in consumer reports for both infant and older seat.) With the infant seat it helped to buy an extra base so as not to have to re-attach the bucket when switching cars. A second base is a lot less expensive than a new car. With the older kid car seat we just got two car seats so we wouldn’t have to switch.

RosaMN
RosaMN

In our circle of friends, it’s been minivans, not SUVs – but it’s a carseat problem, not a kid problem. If you’ve got 2 in carseats, it can be physically impossible to have a small car. We have a 4 door Toyota Camry that works fine with two carseats (one child, but I go places with a friend & her kid often). Smaller than a mid-size can be a problem for that, though.

There’s also safety considerations – SUVs feel safer to people, even when they aren’t, and a lot of people go safety-crazy when they have a baby.

First Gen American
First Gen American

When my first kid was born, we had a 2 door car. That was a PIA to get the kid in and out of and we couldn’t wait to get a 4 door car. Nonethless, we still used it for another 3 years before we upgraded to a small SUV (Honda Element). I agree with another poster, that a midsize 4 door sedan is all you need for a family of 4..If you have 3 kids close in age, it’s hard to fit 3 car seats in a 5 seater unless it’s a bigger car..either fullsize or big SUV. Some… Read more »

RosaMN
RosaMN

Obviously me too, and in addition we choose not to go places we have to drive to, most of the time (and live in a place where that’s easy.) And not have 3 kids, either. We can fit 3 adults & 2 kids in our Camry just fine. With camping gear, even. But I can see how people make the decision – there’s a lot of social pressure to move far away from everything and get a giant kid-hauler of some sort, and if you can’t ever give other people’s kids a ride even though they are often hauling yours,… Read more »

phoenix
phoenix

First, as to the SUV issue, we bought one when our kids got to a certain age because I can drive my children and their friends to the skating rink, etc, which is impossible in a vehicle with two rows of seats. My SUV gets the same gas mileage as the minivans we looked at, but the brake system was better, and it has a higher ground clearance which is nice because we often need it to park at my children’s school where the parking lot fills up fast. And it tows much better–yes, we tow and have a tow… Read more »

Vanessa
Vanessa

I appreciate Sam’s perspective on preparing for a layoff and her family definitely seems to be on the right path, but I think I would’ve gotten more out of her story if someone had actually been laid off. It’s one thing to have your layoff plans all neatly lined out on paper, but quite another to put that plan into practice. Maybe I’m being nitpicky because I actually was laid off a few months ago. I saw the writing on the wall at my company years ago so I began socking away as much as I could, and like Andrew… Read more »

Well Heeled Blog
Well Heeled Blog

Vanessa, do you have an idea of your re-employment prospects? I have to admit that when I was laid off back in 2009 I was nowhere as frugal as I could have been. But between unemployment insurance and freelance income, I had enough to get by without touching my savings. That’s how I determined what to cut back and what not to.

Vanessa
Vanessa

My skills are outdated (which I wholly take responsibility for), so prospects don’t look too bright. I am applying for 5 jobs/week as is required by my state but so far no call backs. And hearing that employers don’t want to hire the unemployed doesn’t exactly fill me with confidence. I think my best option is to return to school, and I am trying to figure out how to support myself while doing that and how much into debt I’m willing to go.

Sam Baker
Sam Baker

Venessa, Sorry to hear that. Have you considered trying freelance jobs while you wait to for your next job? Your English is very good, and there are many sites where you can pick up writing gigs for $10 – $50 a pop. Going back to school is a good idea too. When I came to the US for my Masters all I had was about 2-3 months expenses, and no idea what to do after that. I was much younger and much more reckless, but the reason I mentioned that is to hopefully convince you that you can find a… Read more »

Sam Baker
Sam Baker

Venessa, I will surely come and write about it when I get laid off. By the way things are shaping up, I would say sometime early next year ๐Ÿ™‚ More seriously though, I do see what you mean. Sorry to hear about your layoff. I am worried about “living off savings” too, and that is why I am so fascinated by different money making ideas and on creating side income projects (something I write a LOT about on my site). I want to do it now when I still have a day job, so hopefully when I get laid off,… Read more »

Vanessa
Vanessa

Sam, please don’t take my comments to mean that I want you to be laid off just so you can write an article about it! And am I sorry that you may be anticipating a job loss as well. I just feel like I’ve read umpteen articles about “what to do in case of a layoff” that have never been written by someone who has actually, you know…been laid off. It’s not a criticism against you personally. Believe it or not, I was actually looking forward to my layoff! The previous years had been so stressful with rounds of layoffs,… Read more »

Sam Baker
Sam Baker

Venessa, No offense taken. And I totally understand what you mean about waiting to be laid off. We first started expecting the layoffs about 3 years back. In these three years, I have gone from denial to acceptance to sometimes looking forward to the layoff and back to denial ๐Ÿ™‚ Even though the work culture at my company is very bad, and it is extremely stressful, I don’t think my company is that much worse than any of the other companies out there. So, I am very ambivalent about looking forward to the layoff… we still are not at the… Read more »

Starla
Starla

Congratulations on approaching financial freedom! It must be a comfort during these turbulent times, knowing that you are not dependent on your jobs.

SB @ One Cent At A Time
SB @ One Cent At A Time

Sam, where exactly is the fun part? Your methods is nothing but a mad dash towards good financial health. Glad you succeed in it. Now tell me where were fun in the journey.

Amanda
Amanda

Everyone has different personalities. Don’t judge someone because they’re nuts n’ bolts, not fun-fun-fun.

I could do things more fun like my friends but I’m a heads down get to the goal type of person. They’re way behind me financially because they aren’t as goal driven.

SB @ One Cent At A Time
SB @ One Cent At A Time

And don’t judge me by my question. I want o emphasize that fun should be an important aspect of every long and strong goal. You got that?

Amanda
Amanda

You don’t have to be snippy about it. lol

Amanda
Amanda

The way you responded would make anyone not want to read your blog. Good thing there aren’t many people commenting on this article. ๐Ÿ˜‰

El Nerdo
El Nerdo

“You got that?”

LOL @ Taxi Driver “You looking at me?” tone.

“And donโ€™t judge me by my question. ”

LOL @ paranoia — Amanda didn’t judge you.

“Your methods is nothing but a mad dash towards good financial health.”

LOL @ wild assumptions & harsh judgments.

“Grad Money Matters vs SB @ One Cent At A Time”

LOL @ blog envy (oh yeah, I’m judging).

El Nerdo
El Nerdo

Ha ha ha. I swear I didn’t read Amanda’s responses while I was writing my post. Any similarities are strictly due to the fact that it’s easy to spot the obvious.

SB @ One Cent At A Time
SB @ One Cent At A Time

I think I am not used to criticism yet. If I criticize others, I should welcome other’s criticism as well.

Sam Baker
Sam Baker

SB, I am sorry if I gave the impression that its all about cutting back all the time. Its not. I actually am a firm believer that you need to know where your limit is and not push yourself beyond that when trying to be frugal, or it will backfire on you. We cut back when we have to, spend when we have to. As long as you are conscious about spending/saving, and make your choices with the long term goals in mind, you can find a way to both save *and* have fun!

SB @ One Cent At A Time
SB @ One Cent At A Time

Nice to have got your reply Sam. That was a wonderful explanation! Good that you made your journey with fun.

I absolutely agree to your point that being within limit and knowing how you spend is absolutely must in a personal finance journey.

Janwtte
Janwtte

Fun? This aricle is about being able to sleep soundly day after day. I appreciate hearing about people who are actually prepared for the next part of their lives. The US is in the state it is because fun has been placed in front of real. My husband and I had fun in our early years. We lived virtually debt free,traveled the world, and had children. We lived on one income, even when we had two. We chose to stick with one job that gave us travel. Fun? We had it at times, but we certainly put the security of… Read more »

20's Finances
20's Finances

Congrats! That is a major achievement. Right now, my wife and I are dependent on two incomes but only because we don’t make a lot of money and live in one of the most expensive areas in the U.S. I am also in grad school, but we live frugally and are able to save and plan for the future. I also liked that you made a plan to get out of debt. This gives you so much financial freedom. Keep up the great work.

Sam Baker
Sam Baker

20’s finances, Thanks. And congratulations to you for being so financially aware so early in life. I must admit, at your age (in my 20’s) I was rater stupid and got myself in a ton of debt! It is very refreshing to see someone so young being so prudent!

Amanda
Amanda

Sam, you’ve done great to this point. Keep up the good work! I just started working (two days a week so hard LOL) so I can pay off our mortgage. DH works 3 days a week and we use that for all of our living expenses. He contributes to 401k. Mine doesn’t start until I’ve been there a year but at the end of the year I calculate the tax benefit/credit from an IRA contribution and decide if/how much I want to put in there. My battle is to not spend the extra money! I have it direct deposited to… Read more »

PawPrint
PawPrint

Make your freezer your friend. ๐Ÿ™‚ We used to cook up a storm for a couple of hours on the weekend and then freeze meals. If you do casseroles that contain vegetables, then you don’t even have to make a salad–you just defrost and eat. Also, a crockpot works really well, too. If you don’t have time in the morning to put together ingredients, then do it at night and it will be done in the morning so you can put it in the refrigerator and heat it up when you get home. There are recipe websites galore for crockpot… Read more »

Amanda
Amanda

Thanks! I should use my crockpot more. I tend to prefer soups and stews because I’m vegetarian and those don’t interest me as much in summer!

Nicole
Nicole

Adding to that: Help! My apartment has a kitchen! is great for quick healthy weeknight meals that serve 2-3 people.

Amanda
Amanda

I’ll check it out.

Amanda
Amanda

I just ordered it on paperback swap! I like that it’s 1/2 vegetarian. =)

Nicole
Nicole

His girlfriend (later wife– in Faster! I’m starving! Serves 4-5 people, now our go-to weeknight dinner book.) is vegetarian.

Sam Baker
Sam Baker

Amanda, You are right. This was (and still sometimes is) one of the most difficult ones for me ๐Ÿ™ I would suggest starting out simple – have a rule saying “no eating out more than X times a week” and slowly bring down the X to the point you want it to be. And I totally agree with PawPrint – the freezer is definitely your friend!

I wrote a very detailed post about it some time back when I was going through the process of getting used to cooking at home. You can check it out here – http://bit.ly/qmOwHQ

Laura
Laura

Thanks, Sam, for the post and link. Eating out too much is my main financial problem, so it helps to hear from someone who didn’t enjoy cooking who’s learned how to handle it. Weekends are generally too busy to do much planning ahead, but the next time I have free time, I’m going to try some food preplanning. And congratulations on your financial accomplishments!

Amanda
Amanda

Excellent. Thank you! I know all the details. I even preach to friends and family about it. ๐Ÿ˜‰ I’m not 100% there yet either. Thank you for your motivating comments. And those of others! It’s nice to know I’m not alone. I used to plan a month in advance when I worked before. That way I only went to Costco once a month. Then I’d just pick up fresh veggies weekly. I should try that freeze for a week or month. I know it’d be a long day but it’s nice to pop something out. Right now I freeze black… Read more »

Lizzy
Lizzy

Love stories like this, very inspirational on an otherwise sad day! Great job paying off your mortgage – piece of mind is worth a million dollars! ๐Ÿ˜€ Great job!!

Sam Baker
Sam Baker

Thanks, Lizzy. I am really glad that J.D. decided to publish my story. It is really nice to read all the nice comments ๐Ÿ™‚

Well Heeled Blog
Well Heeled Blog

I think the idea of living on one income (or living on 50% of a couple’s combined income) is fantastic. When my fiance and I get married, I hope we will be able to continue this trend.

My questions: by “living on one income” do you mean gross or net? And how do you decide how much to put into each person’s retirement accounts such as the 401K and Roth IRA?

Sam Baker
Sam Baker

Well Heeled, we each maintain our 401K separately. We don’t have ROTH IRA. The way we did it was, after the 401K deductions and taxes are taken out, we look at the “take home” part of the pay check. After all the bills are paid off, and we put away money for property taxes etc., between the two of us, we should have roughly the equivalent of my “take home” salary going to savings.

RosaMN
RosaMN

We do a one-income budget as a just-in-case option, and actually lived on one income for 2 years. But we don’t always live on it; vacations, child care, and some other “extra” spending that I know we could cut if one of us weren’t working aren’t included for actual spending while both of us work. For the budget I start with take-home pay, assuming we’d still be putting the same amount toward retirement savings and our family health insurance would cost the same – unfortunately since we’re on my partner’s insurance, if he were out of work, our insurance costs… Read more »

happygal
happygal

I agree with PawPrint about how planning ahead makes a meal come together very quickly. We plan our meals for a week at a time before we do the grocery shopping. We have a fairly well-stocked pantry and freezer as well. You can chop veggies the night before and have them ready for a quick stir-fry when you get home. We have recently found several local shops that make entrees, veggies, and desserts that are frozen. We keep a couple of those entrees in the freezer, then follow the directions about thawing or simply popping them in the oven. They… Read more »

Sam Baker
Sam Baker

Thanks for your kind words, happygal. I totally agree with PawPrint too. And we do what you say too… have some precooked meals in the freezer to tide us over on the days that I am too busy to get anything done. I usually get them from costco, as it works out quite cost effective. And some of these (eg., ravioli) are great for packing a quick lunch too.

Julie
Julie

Congratulations on getting out of debt and so far ahead financially. I’m always interested to know how long it’s takes people to do the things like getting out of $40k worth of debt and then subsequently building an emergency fund (of how much?) and paying off a mortgage? I am a SAHM who manages our family’s finances. I’m pretty good at it. We have no debt other than our mortgage and already have a good emergency fund. And, we are fortunate that my husband makes a good income, but it would still take us quite a while to do all… Read more »

Sam Baker
Sam Baker

Thanks Julie, I think it took us about 2-3 years to get out of initial debt of 40K. It took us a total of close to 6 years to pay off the mortgage (which is rather small compared to some of the other parts of the country). We don’t have IRA’s or 529. 401K is maxed out. Our emergency savings is close to 4-6 months of living expenses + some money in the HSA to cover for medical emergencies. I was a bit skeptical about paying off the mortgage too. In fact I decided to try my hand at the… Read more »

Julie
Julie

Thanks for the reply. I would love love to have our mortgage paid off. It’s definitely a goal. But, I would also love to pay for most, if not all, of my boy’s undergraduate tertiary education (something my parents did for me), so after maxing out our Roth IRAs and putting in up the match max in my husband’s 401k AND adding to a 529, it leaves less for extra on the mortgage. Plus, my husband is from outside of the US, so we spend a bit on travel each year. I’m thankful we are able to and we are… Read more »

Amanda
Amanda

I am getting my mortgage paid off before I throw money at retirement. It’s a matter of cash flow. For us it’s only going to be an extra $500 a month (we have a small house / small mortgage) but that’s $6000 a year. If we get laid off it will be much more manageable to have $2000 a month in expenses after cutting out some unnecessary bills and having no mortgage.

bemoneyaware
bemoneyaware

Good read Thanks for sharing it.Your post reminded me of:”If we plan to fail we fail to plan” and any plan is better than No plan.

First Gen American
First Gen American

I really enjoyed this article as I went through a similar journey myself. I’d like to say that our journey to paying off the mortgage was structured, but it was just like you said. We threw a few bucks at it here and there and it built momentum and suddenly one day, we wrote our very last check. I’ve never been so at peace with my job as I am now because I know that a job loss would not be catastrophic.

NuRen
NuRen

This is a timely post for me as my husband and I prepare to welcome our first, early next year.
It definitely motivates us to sit down and plan for the likelihood of switching to a single income family, though we’ve been there before when I was a grad student and we lived on only my husband’s income. Though we are both basically frugal, things are slightly different now, we grew to enjoy the DINK-dom telling ourselves it won’t be for long anyway ๐Ÿ™‚
Inspiring post, thanks Sam.

Bella
Bella

Great post Sam,
It’s defintly a timely post – I think a lot of parents these days are wondering when one loses a job that maybe they should just switch to one income.
Thanks for the inspiration!

Golfing Girl
Golfing Girl

I like your frugal rules. I’m still working on the grocery list one, as I can’t resist the BOGO deals when I’m there. I also make sure to research larger purchases. In less than an hour of research this week, I saved about $30 on a new dog crate and bed (Craigslist didn’t have one cheaper).

Eileen
Eileen

This is a great post, but…I think I missed what country this writer/reader is from. Is it relevant? I guess I am just curious. Thanks.

Kathryn
Kathryn

Thanks for this post–just reading your story was encouraging. DH and I are a step behind you, but I can really related. We’ve started chipping away at our mortgage principal and have set ourselves the crazy goal of paying the whole thing off in 5 years. Like you, we’re trying to create a hedge against job insecurity (I’m self-employed, and DH wants to be). Stories like yours help keep me on-target when I’m tempted by sale racks and restaurant meals.

Melissa @ Mango
Melissa @ Mango

This is wonderful, thank you! And congratulations on paying off the mortgage, that is a huge accomplishment. Being nowhere near thinking about raising a family on a single-income, or raising a family at all for that matter, I have to say, I really appreciate how universal your advice is. I am single and do not have children (I do have a big dog, who is kind of like a big baby though), and I still found your advice for planning ahead very applicable, and admirable even. The most important thing about setting goals like these are to actually follow through… Read more »

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