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Thursday, March 16, 2017

How to Make 1 Income Work

My goal here is not to feed into the debate of SAHM vs WM.  Every family needs to decide what is best for them.  But I do feel like there are a lot of women that wish they could stay at home but can't see how it could ever work.  Or may you are just getting married and thinking that when you have kids you would like to stay at home but can't imagine getting by on just 1 income.  Having lived it, I can tell that it is definitely possible.

What you have to decide is what sacrifices you are willing to make.  I've never been a Starbuck's person.  In fact, I hate the taste of coffee.  I've never been one to love eating out all the time, I prefer to know what's in my food.  I don't wear make-up as in high school my skin was super sensitive and I just never started doing it after that.  So these may be some areas to consider reducing your budget with.  We chose to cut back as much as possible.

One of the biggest things that helped us was the decision to take 1 year at a time.  We looked at our budget and our income when I got pregnant.  We knew that our house was purchased based on 1 income.  This is key if you are planning for the future as housing is going to be the biggest expense each month.  I tried to find some side jobs and as a former teaching was able to pick up some tutoring for extra money when the kids were tiny, but never worked much until they started school.

Once our first child was born, we said I would stay home for 1 year and then we would evaluate where we were financially.  Jon was only making around $40k/year before deductions at that point.  We had no car loans, but both had significant student loans.  But there were 2 major reasons why we decided to try me staying at home for a year.  First and foremost, it was what we both really wanted for our child.  We wanted one of us to be with her as much as possible.  It made sense for it to be me since I could then breastfeed, a huge savings for our budget.  Second, we looked at what I was making.  I was 25 when Carolyn was born and finishing my 3rd year of teaching.  I was making similar to Jon at around $40k.  By the time we considered paying for day care, gas, taxes, and work clothes expenses, the amount we would get to keep from my paycheck was pretty small.

So what did we give up?  We stopped going out to eat.  But who really enjoys going out to eat and wrestling a baby the whole time?  Once our contract ran out, we gave up cable.  We opted instead to use Redbox to rent movies, check them out from the library, or watch movies we already owned.  We shopped sales to reduce our grocery budget.  Along with meal planning, this made a large impact on our monthly expenses.  Jon packed lunch for work each day to keep our food expenses as low as possible.  Realistically, because we were quite young when our first child was born, we did not have an extravagant lifestyle so we didn't miss much of what we cut.  When it came to clothes, we graciously accepted all hand me downs available.  Especially when kids are tiny, they outgrow things so fast that most of what we received was nearly new.

Something nobody tells you when you're about to have a baby is that month to month, babies are cheap.  The first few years of life, when kids are most malleable, child care is most expensive, and you can have the most impact by staying home, that's when kids are the cheapest to stay at home with.  Babies don't need to take classes.  If you join a moms group, you can find playgroups to attend or park gatherings to get out of the house.  Going for a walk is good exercise and most little ones love it.  Once you've come out of the sleep-deprived coma of the first 2 months, you can even use your baby as a "weight" to combine bonding time and a work out routine.  Our kids loved it when would lift them over our chest (just not right after nursing).  The first 6 months there don't have to even be any additional food expenses.  If you breastfeed, that is all the baby needs.  And if you are home with the baby, you don't have to worry about pumping.  Our oldest had maybe 6 bottles while our youngest had none.  For the next 6 months, purchasing real food for the child to try is minimal.

My kids are now 6 and 8, our income has increased dramatically since those first few years.  One year we were less than $1k away from receiving the EIC on our taxes.  As the kids have grown, I have increased my work with 2 online companies.  Now that both kids are in school I find myself often working 5-6 hrs/day.  But because we've always done such a good job with our finances, my paycheck can fund all the things we gave up when the kids were tiny.  I love being home each day when the kids get home so they can just play.  And they would tell you the same thing.

So if you feel in your heart that you want to be home with your kids, know that you can make it work.  It might not always be easy and you will have to make some sacrifices, but you can make it work with some planning.  One thing when looking at your income to consider is how much less in taxes you will pay with an extra dependent and a significant reduction in income.  If you'd like ideas of things to cut, I'd love to help.  Start by writing down all your expenses for a couple months and I'm happy to take a look for you.

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