When my husband and I decided to have a baby, we wanted me to be able to stay home with the baby. This meant going from a two income household to a one income one. Before committing to this, we did some planning to help make sure that it would work.
To make sure that we could indeed live on only one income, we tested it out for a few months. While I was still working, we made the decision to live just on my husband's income to see how it would work out. This was a very valuable experience because we could see where the problem areas were in advance. It helped us realize where we needed to cut back. It also helped us realize what were truly necessities and what were niceties. It made us realize just how much we would have to cut back on our lifestyle if we wanted to be only a one income family.
Paying Off Debt
While I was still working full time, we also made the decision to pay off all debt that we could. We paid off school loans, a car loan, and some personal debt before the baby came. We used savings to pay off some of it, the income from my job, and an unexpected monetary gift. Altogether, it was about $40,000 that we paid off. This meant that we no longer had those loan payments to make so our monthly payments went down dramatically, making it easier to live on just one income.
Adding to Savings
Because we were not entirely comfortable with committing to live off of just one income, we added to our savings before the baby arrived. This way we had some extra money saved up in case we ran into issues living on one income. We each saved up several thousand dollars so that we had a few months where we could easily add money to our checking accounts if needed. There were some unexpected baby expenses at first so this proved to be helpful during the first few months.
As it turned out, living on one income was not as easy as we thought it would be and the planning that we did helped us realize this. I do work part time to help supplement our income but my husband does still pay for most of the expenses of our household.
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- Banking & Budgeting