Leaving my steady-income accounting career was incredibly scary to consider. For most of my working life, I’ve been someone else’s employee. It’s what most families know. Before Jason lost his job as a morning radio show host in January of 2012, he had also been employed by someone else his whole adult life. While there are never any guarantees of continued employment, working for someone other than yourself has an inherent sense of security and stability. There is an agreed upon wage, a set work schedule, and a predictable pay day. Leaving my job meant that our family of four would have to rely on Jason’s self-employment income (and eventually the self-employment income derived from this blog). When you own a business, it’s difficult to predict what your income will be from one week to the next. There can be greater opportunity for financial success, but also greater risk for financial failure. In short, it can be stressful.
When we first started talking about the idea of shifting to a single income, it seemed as though it wouldn’t be possible. We thought ‘how could we possibly take such a risk with our family at stake‘? We both wanted me to be home with our kids (instead of hiring a child care provider), and we hoped it would be worth the financial risk. After much deliberation, we set our minds to acting as if it could happen. We threw all of our (available) energy at our goal, and got to work making it a reality. In our hearts, we believed we could be like other families who made it on one income. If they could do it, we could do it.
Based on Jason’s anticipated annual income, I compiled a new family budget. It became clear during that process that if we made some sacrifices, we could make it happen! Jason and I immediately implemented changes to better prepare. Mostly, our mindset on how and why we spend our money needed to change.
I’ve compiled a list of the 10 most significant ways we’ve improved our family finances (in the order we made the changes). Whether you are trying to live on one income, or just want to improve your family’s financial situation, these changes will point you in the right direction. Some of the items on the list are actions you can take, others require bigger picture mindset changes. This is not meant to be a one size fits all list, merely an accounting of what our family did. Take from it anything you might find useful.
- Nix the cable. This can be one of the simplest changes you can make. Before we had children, a large portion of our free time was spent sitting on the couch watching cable shows or movies. Initially it was Jason’s job loss that forced us out of paying for cable, but it opened the door to changing the couch potato habit itself. We curtailed our viewing to a few favorite series via Netflix or Amazon, and we rarely sit down and watch a movie from beginning to end. Watching less TV also goes hand-in-hand with our health goal to be more active. Jason and I are still able to watch a few of our must see shows throughout the year, but there’s no pressure to make an “appointment” to watch at a set day/time. There are also plenty of fun, educational, and age appropriate programs for LB to enjoy (with limits). The benefits to getting rid of cable are many, but maybe the most enjoyable is avoiding terrible commercials. All told, after an initial investment of $100 in a Roku Streaming Media Player, we’ve been saving at least $50 per month since we made the switch. Technology and options continue to expand, too. Amazon now offers their Amazon Fire Stick for $39, with which you can access streaming services like Sling TV which offer options very similar to traditional cable, at a greatly reduced cost. Our savings: $600 annually
- Streamline your phone service. About a year and a half ago, we got rid of our landline and switched to Republic Wireless for our mobile phone service. Losing the landline was not a difficult decision to make for us, since we literally never used it. The only calls we received on that line were from telemarketers, so we scored a victory right out of the chute. There certainly are reasons to keep a landline, but for now we’ve decided to go along with 38% of American households who also forgo the $30 per month expense of having traditional phone service. Our switch to a different mobile carrier (we were US Cellular customers for many years prior) was a no brainer. We essentially cut our monthly bill in half, saving $50 per month. For the most part, we’ve been happy with the switch. If you’re interested in more details about Republic Wireless, you can find Jason’s review here. Our savings: $960 annually
- Stop spending so much on food. It was a little shocking to realize how much we were spending on food. As a dual-income-no-kids family, we used to go grocery shopping more than once per week, generally without a list. We would buy what sounded tasty at that moment, rather than planning weekly meals around store sales and specials. We also ordered food deliveries more often than I care to admit, and dined out more than we should have. Our food expenditures were an outrageously high percentage of our overall spending. I’m a little sick to my stomach even thinking about it. After having kids, and to prepare for a single-income, here’s what we changed: We’re much better at planning ahead, and make almost all of our meals at home. We rarely dine out, but when we do, we keep spending in check (step one: drink water, step two: order cheap, step three: skip dessert, step four: plan on having leftovers to take home). We shop deals and sales on whole foods and plan our weekly meals around those purchases. We buy and cook in bulk, freezing or storing what we can for future meals. To get the highest return on our limited time, we stick to our store coupon flier (and no more than thirty minutes of coupon-clipping). Doing so saves us $20-$50 per shopping trip. Note: This is an area which requires a concerted effort, as we’ve found that meal planning can quickly fall off the radar in a busy home. But it’s well worth the effort. A conservative estimate of what we’ve trimmed on our food/meal spending by making these changes, is $400. Monthly. Gulp! Our savings: $4,800 annually
- Do we really need it? Like many families, our spending had crept up to meet our income. If we earned it, we spent it. Now, instead of succumbing to impulse-driven consumerism, we are much more selective with our purchases. One of the methods we’ve tried is the ‘two day rule’. Since we do most of our shopping online, it’s too easy to buy something as soon as the thought crosses our mind. In addition to the ease of online shopping, a new Costco opened last year just a few miles down the road. If you’ve shopped at a Costco, I needn’t say more about how an unfocused trip there can decimate a family budget. The ‘two day rule’ says that if we still need it two days later, we can buy it. The result is that we’ve stopped purchasing things we don’t really need. I don’t have an exact estimate of our savings here (since we’ve long forgotten about the stuff we wanted to buy, but didn’t), but my best guess is somewhere around $200 per month. Our savings: $2,400 annually
- Don’t buy everything new. This applies to kids clothing and toys, as well as household items and even furniture. While there are certain things I will always buy new, underwear for instance, I consider a used purchase for most things. Twice a year, I shop a local kids consignment sale and stock up on the clothing we’ll need for upcoming seasons. In between those bigger sales, I’ll pick up an item or two at individual garage/yard sales. Jason and I haven’t purchased any clothing for ourselves since the beginning of the year, but when we do we’ll shop sales or clearance racks (even online shopping can net some clearance or sale items if you just take the time to look). My friend group also organizes regular clothing exchange parties, which is a fun way to get a few new to you clothing items. If our family needs something specific like a baby monitor, or if it’s a larger ticket item like a computer desk, I look on Craigslist or eBay (depending on the item). Again, I can’t possibly come up with an exact savings figure for this, but we’ve saved approximately $1,500 in the first half of this year by favoring used over new. Our savings: $3,000 annually
- Refinance your home. The goal here would be to reduce your monthly payment. In our case, we refinanced from a 30 year fixed rate mortgage down to a 12 year fixed rate loan, and kept our payments the same. We did this in haste the week before LG was born, mainly because we were promised a quick turn around and a home appraisal wasn’t required. When we shared this information with our financial adviser, she urged us to refinance again to a 30 year fixed rate mortgage. Her advice has always been “obligate yourself for as little as possible. You can always pay the loan off faster, but don’t lock yourself into a higher payment.” By the time we tried to accomplish this, I had already given my notice at work and Jason’s new business doesn’t yet have enough income history. We’ll have to try again after the first of the year. Provided interest rates stay relatively low, the move back to a 30 year note will save us $600 per month (the interest is tax deductible on the payments, and what we save can be invested at a higher rate of return than the interest we’re paying). Our savings: $7,200 annually
- Make do with one vehicle. Now that I’m not driving to the office every day, we don’t need two vehicles. I realize we have an advantage in that Jason works from a home office, which makes this change much easier. However, we have a few friends who manage with one vehicle when one or both parents work outside the home. They drop each other off at work, or utilize public transportation. Cars are expensive to maintain, insure, and drive. Not to mention they take up space in a garage or driveway – and Wisconsin winters are not pleasant in those terms. Now that we’ve sold our second vehicle, we’ll be saving those repair and maintenance costs, insurance, title/fees, and fuel (which I have included with item 9). According to Edmunds.com, these costs are far less for some vehicles than others. Our 2007 Hyundai Sante Fe (with 90,000 miles) wasn’t terrible, but it was a little shocking how much we were paying without realizing it. Our savings: $2,200 annually
- Avoid child care expenses. This is the biggest expense most families face. It’s the reason many families decide that one parent should stay home. We’ve never paid for child care because Jason has been LB’s caregiver since he was born. As Jason’s voice acting business grew, we were faced with adding paid child care for the first time. Based on the average weekly figures for an infant and a two year old from Community Coordinated Childcare, Inc., we will be saving over $2,200 per month in child care expenses. Our savings: $27,300 annually
- Eliminate work expenses. The expense of working outside the home isn’t the same for everyone. My work-related expenses were parking, gas, professional clothing, and meals (on the days I neglected to pack a lunch for work). I estimate we’ll be saving $250 per month because I’m no longer working outside the home. Our savings: $3,000 annually
- Earn a little money. There are many opportunities for stay at home parents to earn a little extra money. You could ‘freelance’ or ‘consult’ based on your professional skill set. For example, I could prepare tax returns or provide bookkeeping and accounting services on a part time basis. If I was a crafty or artistic person, I could create trinkets to sell on Etsy. Since my passions are writing and my family, I’ve parlayed those interests into a family and lifestyle blog that I’m very proud of. Blogging isn’t for everyone. It takes a lot more time than you might think, and sometimes a sizable monetary investment, to get it off the ground. I’ve been told that if you really love blogging, it will shine through in your writing and people will read it. We don’t have any income figures for this yet, but the hope is that within a year or two it will make up a noticeable increase in our family income.
*For those numbers geeks out there (like me), the total amount saved after implementing all of these changes for one year is $51,460!!