This past summer I posted pieces on how two different families were going from two incomes to one (see How One Family Went from Two Incomes to One -- And Developed a Business in the Process and How to Go from a Two-Person to One-Person Income for specifics.) I know that many more would like to do this, but they are often weighed down by two major issues: they have a huge amount of debt and they rely heavily on the second income to make ends meet. These two are deal-killers for going to one income, right? Not really.
How can I say that? It's because I have a great example in the Tardy family (yes, that's their name). Here's their story (the last one in the linked to post):
A couple years ago, I decided I wanted to have a baby and quit my job. But there was a problem. My husband and I were in debt, and I made two-thirds of our household income. So I couldn't just quit.
I started out by sitting down and adding up all our debt -- which ended up being around $70,000. The first thing I thought was, 'Wow, we really need to start getting rid of this. We should sell our car right away.'
After some prodding, my husband got on board too. We sold his car and were able to immediately get rid of $19,000 of our total debt. After that, we knew we were totally doing this.
Craigslist and eBay became our best friends, and we sold everything from a kayak to a weight bench and a computer monitor.
My husband did some website design jobs on the side to make some extra money, and we printed out a budget each month so we knew exactly how much we could spend and what we would be spending it on.
We saved on gas costs by limiting the amount of driving we did, and we put ourselves on a grocery budget of $300 a month. On top of that, we cut out cable, lowered our phone bill as much as humanly possible and switched our car insurance twice in one year to find lower rates.
By the time I quit my job for good -- which was less than two years after I started the budget -- we had paid off $70,000 in debt and put $23,000 in the bank as an emergency fund.
So, the formula appears "simple":
- Create as much cushion as possible between what you make and what you spend by increasing income and decreasing expenses.
- Pay off the debt.
- Sock away a good amount of savings.
- Move to one income and keep your spending low.
That said, I'm pretty impressed by this couple. They had so much debt and she made two-thirds of their income -- and yet they were able to do so much in such a short period of time. Then again, I'm thinking their incomes had to be pretty high to pull this off. Perhaps she made $100k per year and he made $50k (or some similar set of numbers.) It's still a great accomplishment nonetheless -- but the (likely) higher incomes make it a bit less impressive.