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My income took a drastic hit when I left regular employment to move out into the self-employed world. It was cut to almost nothing after leaving the hotel business, and while it has recovered is still only about a third of what it was during my best earning year in hotels.
This means that I've learned to make up for my reduced income in other ways.
Child Care
Since I am now working from home, we've been able to realize significant savings on child care. While at first this might not seem like much, especially for those of you without children, it can add up to huge savings for those of us with kiddies. In fact, with child care often costing somewhere in the $200-$250 a week range, we're talking about between $10,000 and $13,000 a year for a period of four years now. That's a total of between $50,000 and $65,000 in savings before my little guy even heads off to kindergarten.
Vacations
Don't get me wrong, we still take vacations, though we may have trimmed back a few of those long-weekend trips we used to take. However, rather than spending additional thousands of dollars over the last several years staying in hotels, lodges or resorts, we've centered more of our trips around staying with friends and family. This allows us to still take time away to enjoy ourselves, but do so at a significantly reduced cost.
Housing
Another way in which we've made up for my diminished income is through looking for cheaper housing by way of downsizing our home. After selling our home during the summer of 2011, we've been staying with family until we find a more affordable and reasonable living situation.
The apartments we are currently considering rent for nearly 40% less than we were paying for our house. And while renting may not be an "investment" like so many claim that a house is, it can be a heck of a lot cheaper, especially in the Chicagoland area.
Shopping Resale
Unlike many people, I don't have a problem shopping resale as long as it's for the right purchases in the right environment. I'll admit; I used to be one of those people who turned his nose up at resale buys. Then I graduated from high school and college, ventured out on my own, and had to start paying my own bills.
At that point, I began to explore various resale opportunities and realized that there were plenty of places out there selling items in perfectly good condition and that had only been slightly -- and in some cases never -- used. I took my resale efforts to the next level once my income was diminished, and managed not only to save money through these opportunities, but to add income to my coffers each year from certain resale efforts online, through garage sales, and by way of brick-and-mortar resale shops.
Delay Gratification
We've always been pretty good at delaying gratification and putting off big-ticket purchases if at all possible. We're still driving our SUV, purchased in 2002. We still don't have a flat-screen television. We still have a pay-as-you-go cell phone, still read books, and have yet to be swayed toward buying the fancy new techno-gadget replacements for such items.
Our ability to be content with what we have, rather than pine after the things we don't, and delay the gratification that comes with replacing the old and used with new, helps us better maintain and sustain our lifestyle in a lower income situation.
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