For years, my husband and I have worried about being kicked over the "job cliff" by a layoff. However, we managed to keep our jobs living in Florida, which was hit especially hard by the real estate bust. In the past few years we have made every effort to live off of one income, even though we are a dual-income family. Living on one income has given us the chance to save for the future and take care of our current financial obligations. We pretend to have one income so we will be ready for any drastic changes to our income.
Becoming a minimalist
One of the ways we practice becoming a one-income family is by owning less. We live in a modest home that is about 1,800 square feet. Since I don't like too much clutter, I'm less inclined to buy a lot of furniture and stuff for our smaller home. At this time, if we refinanced our home, we could obtain a small mortgage payment of only about $600 a month. If we materialists instead of minimalists, we might be tempted to sell our home and buy a bigger home. We could qualify for a mortgage that is three times as much as about $1,800 a month, but we resist the urge to upgrade.
Matching our expenses with one income
In order to save my entire salary every year, my husband and I had to match our expenses with his salary. In order to live on one salary, we cut out unnecessary expenses such as the gym membership, gourmet coffees and designer clothing, shoes and pocketbooks. We save money by cooking at home instead of going out to eat as much as we used to. Most importantly, we balance our family budget every month by making sure we don't spend more than my husband makes.
Allocating and investing our savings
By living on one income even when we have two incomes, we are able to put money aside for several different purposes. My husband and I have a savings account for college, a new car and house maintenance and repairs. We also save a portion of the money for retirement. Any money leftover goes toward paying off our mortgage early.
Staying out of credit card debt
After we started living as if we only had one income, I started to understand why so many one-income families go into credit card debt. It's tempting to use a credit card to make purchases, especially when it's a gift. I found it's impossible to stay on budget if we have to pay interest charges in addition to the balance on credit cards. By paying off the balance right away, we avoid the credit card debt trap.
My husband and I don't plan to live on one income forever. After we have our home paid off in another 5 to 8 years, we will begin to enjoy being in a dual-income family. Later, one of us may retire before the other one, which means we will have to adjust to one income unless social security is there for us, which I don't expect. Stay-at-home parents are not the only ones who can benefit from living on one income. Pretending to be in a one-income family has taught us to appreciate everything we have.
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- Personal Budgeting