Last Monday, I posted a set of comments to my post on how to thrive on one paycheck. The original post told how couples could move from two paychecks to one. This sort of post gets more comments than almost anything else other than a free giveaway post -- and many good ones at that. Here's the first one I wanted to share today:
It all comes back to perception. People perceive that they need more than is necessary. If people could realize that there is a marked difference between need and want, they would be able to get ahead. Even if people choose to have a two income, or more, household, they should still see what they could do to live off of one income. What would happen if an income is lost, either temporarily or permanently? I think I know the answer, as indicated by polls about families living paycheck-to-paycheck.
For instance, my wife's family lived on one modest income for years. There were five children in the house at the time. As my wife reached high school, and the youngest child reach elementary school, my mother-in-law decided to go to school to become a nurse. Now, the youngest child is just out of high school, and they pull in a substantial income through two working adults. You would think that their expenses diminished as the children moved out. However, they have very high withholdings for taxes, and they still owe the IRS. After preparing their taxes, they are dumbfounded as to where the money went all year.
The answer? Well, they don't live a lavish lifestyle, but they do have many more wants filled than before. They have two vehicles they pay for, when they used to have one company vehicle and a paid off used car; they have satellite, internet, cell phones, and featureful home telephone service now when they used to have a standard phone line; they go on many vacations throughout the year, they go shopping often, they go out for dinner more often than necessary, and they go to movies. They did none of these things before, and they lived fine. What is it that happens? People feel so free when they have a new found income and they think they deserve to spend it... but then they realize that they cannot just get anything they want without financing. Then, it just becomes a cycle.
People just must reverse the cycle. Wealth can be made with the same cycle, and it can grow exponentially, just as debt can.
Yep. We talk a lot about that here at Free Money Finance: if you simply spend less than you earn over a long period of time, you can really grow your net worth significantly.
Here's the next one:
We have one little girl. Somehow by luck, getting some exceptional bonuses at work, my wife is able to stay at home as I head to the office. I have spent time each week going over our budget. We have rented for the last 8 years and are currently getting ready to settle on a house. Things will definitely be changing once this happens. We will eat out less, lower the cable bill, stop buying books, maybe just use a cell phone and get rid of the "landline". It's either make personal sacrifice of living life with less convenience or work to put our daughter in daycare. My choice is for my wife to stay home and it will be tough but I believe the sacrifices will be worth it.
I think so too. My wife is at home and the sacrifices we've had to make for this to work are well worth it.
The next comment:
When we got married (almost 6 years ago) my husband and I decided that one of us would always be at home with our children. That said, every decision we made: financial, lifestyle, education etc. supported that overall goal. I finished school before we had children, and we bought a house we could afford on one paycheck. Our first is a little over a year now and I work very part-time (12 hours a week) and my husband has a flexible schedule and he is able to work from home a couple days a week, so one of us is always able to be with our daughter.
The first commenter is absolutely right about being perceived as having an elitist attitude, when you've made those kinds of decisions. People at work often ask me why I don't work more and when I tell them why, they often reply "Well, I'm glad you can afford to do that". The way (most) people talk about it, makes it sound like people who plan for their financial futures or choose to live with less are some kind of freaks.
Funny isn't it? We actually might be freaks. If you define "freak" as a person who's far out of the norm, then this would fit for people who choose to spend less than they earn and/or make sacrifices that support family lifestyle choices.
The next commenter has a couple of great points:
I think in a lot of cases it is a choice either way. I plan to stay at home while my wife works once she completes her PHD. I wouldn't mind working as well, but between the cost of a 2nd car, day care and other expenses incurred by my taking a 2nd job, we wouldn't actually be making much extra as a family, and I'd lose out on time spent with the kids.
On the other hand, I think telling someone you plan to put your child into daycare it is met with a similar cold response, as it is viewed as caring more about your career than your children. It works both ways, people get defensive because they are working a second job (even if it is a choice) because if they act like it is a choice they are treated like they care less about their children than those people that make the choice to have one parent stay at home with their children.
The first part is a great money tip. Be sure you're actually making more with a second income. Once you run the numbers, it may turn out that you're spending more than you're earning.
The second part is true as well -- people who choose to work are often looked at as not loving their kids as much. Obviously, this is unfortunate. However, it would certainly be interesting to find out the percentage of people who WANT to work versus the percentage that HAVE to work.
Here's another viewpoint on the issue:
My wife and I are having our first child soon and we feel blessed that we have the opportunity to go down to one income. The numbers, strictly speaking, argue for a two income family, but we have pruned many "wants" from our lives and believe we've made the right choice. I try to respect that people have different financial circumstances and expectations, but I wish that more people could choose to have a one income household. The two income requirement is possibly the clearest indicator of a falling standard of living in America over the past thirty years, but I believe the trend could be reversed through realistic definition of "want" and "need".
Yes, there's certainly a problem in the US separating "needs" versus "wants".
Finally, we end with a success story:
My wife & I had our first child quite a while ago (he's now 28), but we had the same choices to make. We chose for her to stay home, at least until the kids were in school. I made $12,500 a year. We owned a "starter house". We adjusted & cut out some of the fat. We made it. She went back to work part time when the kids were well on their way. Later she went back full time when the youngest was in Jr. High.
She retired 2 years ago (at 55) after 10 years full time work in order babysit our granddaughter so she didn't have to be in day care all day.
I call her not working those years "Our greatest luxury". The retirement check she gets for those few years is small. I'll work until 62 instead of 60 as I'd like, but we feel it was worth it.
It's the satisfaction of doing the right thing that makes it worthwhile!
By the way, we moved up to a nice suburban house, nice vehicles & put money in the bank. It can be done. We even took a few nice vacations. You just have to want this more than the extra income and the extras it buys!
Yes, if you really want to do it, you can thrive on one paycheck (at least in many cases). You just need to plan a bit ahead, then manage your finances accordingly.
We are living with one income while my wife stays home with our two kids and the financial aspect can be tough. One perception I've had is that the economy is based on two incomes. I look at home prices in St. Louis and I'm shocked! $300-500k houses everywhere. Now using the basic math the mortgage people give you (income * 3=House price), how can a single-income family afford a new house? I don't know a lot of individuals making $100 let alone $200 or $300! But two people making $60-70k can afford these high prices. It just seems like a one-income (modest income) has it particularly tought these days.
Posted by: CW | April 10, 2006 at 02:43 PM
My wife stays home with our 3-month old son, but we have had those expectations since well before we got married - in fact, this is a good thing to discuss with a potential spouse pretty early on, IMHO, but that's another topic for another post. Most of our friends have 2 incomes and are in debt pretty badly. We're fortunate enough that my income is more than most of our friends' combined incomes - if we made what they do, we'd be calling grandparents, friends, anybody to help us with child care so that my wife could go back to work. We do a pretty good job managing our expenses, but there are an awful lot of two-income no-degree families out there that really don't have the option of one parent staying at home, especially if they want any kind of health care.
Posted by: Michael | April 10, 2006 at 05:39 PM