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Back To Living Off One Salary Again! (Womp Womp)

by J. Money on Tuesday, May 21, 2013

antique blue typewriter

The Mrs. has officially ended her part-time job to start on her dissertation, so we’re back to a one salary household again! After a solid 7 months of bringing home an extra $1,600 a month too – yikes… This will be our 2nd time in a year living off one paycheck! And I’m not gonna lie – I’m going to miss those sexy little greenbacks. They were so cute! ;)

But with many important things in life, you often have to cut something out in order to advance into other, brighter, areas. And right now that means no distractions whatsoever for an entire year, or however long it takes to get that paper done. It could be 12 months, it could be 18 months, or it could be 16.3578 years, who  knows. Either way, the wifey shall not be taking on anything extra outside of paper writing which means no dinero for the J. Dinero household (Ya see what I did there?)

Despite the major con of losing money, however, there are some niceties that come with this too:

  • I get a new office mate! We’ll both be working at home all year long now, which I suspect will go 80% well, and 20% we-want-to-kill-each-other,  haha… But isn’t that how all co-workers operate? ;)
  • She’ll be poised to land a decent job once finished. It may be a teaching one with not-so-stellar paychecks, but regardless she’ll be in a field she absolutely enjoys and back to the work force again. It’s already been over 4 years since she “dropped out” to pursue this PHD – which means we’ve been pretty good surviving off less money now that I think about it… Go us!
  • No commuting and no parking nightmares. The pros to researching/writing at home!

And I’m sure a ton of other things too that she’d tell us if I weren’t so lazy and got off this chair to ask her ;) As for the finance aspects to it all though (the reason you’re on this blog reading!), we’re losing money in the near term for much MORE money in the long term. Which is something I think any of us would take if we had the option and/or motivation/skills/energy, right?

So the pressure’s on! Not only being dependent on one person’s income going forward, but a person who’s also SELF-EMPLOYED, haha… and who’s about to spend thousands updating their old house and moving into new one etc/etc. If that doesn’t scream security I don’t know what does ;)

But that’s the point of tracking all this stuff like we nerdly do – to be prepared for what the future holds. The goods, the bads, and the un-sexy. It’s not always going to be peaches and cream (nor will we be completely on our game at all times), but the more we pay attention and make tweaks, the better we’ll be when life comes a knockin’. You want to be answering that door well dressed and ready to party!

So I’m off to go find my leather rock star pants and shake on over to the next item on our moving-out list: Figuring out health insurance, ugh… Something tells me it’s not going to be as easy as driving over the state lines… I’m sure I’ll be back to rant about this in no time ;)

In the meantime though, think about your current setup and what you’d do if your income got cut in half or even by, say, 10-15%. How would your budget handle it? Would you be up a creek or still sitting pretty? I pray it doesn’t happen to any of you, of course, but we all know this life can get pretty crazy… Best to be prepared like a Boy Scout. Or even better, a Budget Scout ;)

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(Photo by Jack Parrott)


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{ 50 comments… read them below or add one }

1 Elvin @ Journey To Millions May 21, 2013 at 6:17 am

In our case, we make it to a point that we live in one source of income. So the rest of the earnings from the other source are used to fulfill our dreams. Glad that you still see the positive side of losing a job.

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2 Free Money Minute May 21, 2013 at 1:31 pm

We are heading toward a one income family once our third child is born at the end of the summer. We will take a 40-50% pay cut. I am still a little bit bummed about it, but we live way below our means now and I would love to see my wife home with the 3 little ones. Looking forward to the non financial benefits of it.

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3 J. Money May 21, 2013 at 2:33 pm

Cool!! The money is always nice, but a home full of babies and love can be even better :)

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4 Pauline May 21, 2013 at 6:18 am

My sister makes about the same and I argue that she doesn’t bring much to the household’s income. Because her salary takes them to a higher tax bracket, she needs a car to commute, daycare, etc. and while at home she could reduce expenses, cook from scratch, and so on. Anyway, if you do a serious calculation you’ll probably see you will only miss a fraction of the income.

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5 J. Money May 21, 2013 at 2:35 pm

True true… And it also forces you to live cheaper even though we all think it’s not possible ;)

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6 Niki August 9, 2013 at 10:59 am

I agree with you about commuting/daycare. However, I know your point about tax brackets is made in the US quite frequently and it is fundamentally misguided. I’m not sure where you live, so this may be irrelevant to your situation. In the US, moving to a higher tax bracket does not impact the taxation of funds below that bracket level. Let’s take an example based on joint filers in the US where rates are 10% for up to $17,400 and 15% for $17,400-70,700. The argument that making 25,000 will push you to a higher bracket is technically correct, but it is important to remember that the first 17,400 is still only taxed at the 10%. So you pay 1,740 on the first 17,400 and 1,140 on the 7,600 (25,000-17,400). However, at the end of the day, you still added 6,460 of income thanks to being “pushed” into a higher bracket. Again, can’t speak for your taxation system, but in the US, this point is flawed.

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7 Jane Savers @ Solving The Money Puzzle May 21, 2013 at 6:29 am

I am a single person and in 2012 my employer announced some outsourcing and overtime was eliminated. More financial stress. There is more psychological pressure knowing that you alone are responsible for every expense and if something goes wrong it is all on your shoulders.

You have a partner to rely on and even if she isn’t generating a weekly cheque she’s got your back and knowing you have someone to count on if the road gets bumpy will help you sleep well at night.

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8 J. Money May 21, 2013 at 2:36 pm

Also helps with the opposite of sleeping at night, ow ow! Haha… But yeah – I agree :) Though playing devil’s advocate you’d also have more chances of extra debt/expenses/etc w/ a significant other.

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9 Lance @ Money Life and More May 21, 2013 at 7:23 am

My fiancee is unfortunately on disability again for another foot surgery so she is only getting 80% of her stated income now. Thing that stinks is she normally got some overtime, so it is even less than that in reality. It just means putting a little less toward the student loans.

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10 J. Money May 21, 2013 at 2:39 pm

Yes, but on the plus side she’s getting paid for doing nothing!! If that happens to me everything stands still… No pun intended, haha…

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11 Elle May 21, 2013 at 7:42 am

We’d have to cut back on some extras, but the bills would be paid. We’ve set it up where we keep our bills under one income, so that has helped. The secondary income (mine) we use for paying debt, investing, and bonus items as my income can vary month to month.

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12 J. Money May 21, 2013 at 2:39 pm

Love, love, LOVE that. Such a damn good way to have it set up – way to rock it!

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13 Greg@ClubThrifty May 21, 2013 at 7:43 am

Luckily, we’ve trimmed our budget to a bare minimum. Our expenses pretty much as low as we can get them, which gives us a lot of flexibility. Also, if we had to, we could pay less toward our house. My wife was even able to quit her 9-5 a few weeks back to focus on freelancing. We thought we were going to take a pay cut, but it turns out that having more time allows her to do more work…and make more money than she was making at her 9-5! Yay!

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14 J. Money May 21, 2013 at 2:40 pm

nice!! what does she do again? for freelance? write or photos?

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15 Edward Antrobus May 21, 2013 at 7:54 am

“We’ll both be working at home all year long now, which I suspect will go 80% well, and 20% we-want-to-kill-each-other”
My father in law is semi-retired (he takes some contract work when he can get it, but doesn’t go out looking for it) and my mother-in-law recently started working “from home.” They live in a pretty small place and knew that if they were going to be around each other 24/7 they would drive each other crazy. So my mother-in-law works from our home instead!

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16 J. Money May 21, 2013 at 2:40 pm

HAH! And does she drive YOU crazy then? :)

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17 Sheri May 21, 2013 at 8:07 am

A long time ago, in a state far away; I was laid off with pretty good severance and could not find work for a little over a year. Between that and unemployment we survived until I could find a job (in another state). I had been the only breadwinner in the family by choice; the youngest needed someone at home. That job came in at 60% of my pre-layoff salary, and we had no more reserves. Paying a mortage, and rent, and expenses of moving and two households for about six months created a prime environment for Chapter 7. House got sold before foreclosure and bankruptcy (barely) on a short sell.

Before that, even before being stretched so painfully, we weren’t savers and we had late payments off and on a lot. Our strategy changed drastically and since the backruptcy there have been no late payments, and we have a six month plus cushions in savings and insurance (if absolutely necessary) to carry us further. It had been more, but we made the decision to buy and a lot of that savings went to enough down payment that no mortgage insurance was needed. If my pay dropped again, I could handle tightly a 40% drop in pay. perhaps even 50% should I have to.

Everything else in life is stressful right now – money isn’t. *grin* It feels good.

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18 J. Money May 21, 2013 at 2:42 pm

Well that’s a happy ending to the story – I started to get worried there for a bit ;) Thanks for sharing it with us today.

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19 cashrebel May 21, 2013 at 8:25 am

I suppose id either just save less money, or id finally move out if the city and closer to work, a sacrifice I haven’t made just yet.

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20 Michelle May 21, 2013 at 8:35 am

We always try to live on less than one of our incomes. It makes it a lot safer and we can worry less. We don’t want any extra stress!

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21 John S @ Frugal Rules May 21, 2013 at 8:53 am

We had to go through this when I left my job last year and came through in flying colors. We had to make some cutbacks, but have been able to add a bit of it back as business has gone well. Good luck with the health coverage. That was my biggest fear of going it on our own and thankfully it was not as bad as I expected.

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22 J. Money May 21, 2013 at 2:43 pm

I’d say it can’t get worse than our $600+ we pay now for it, but something tells me that’s not the case ;)

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23 Mr. 1500 May 21, 2013 at 8:57 am

“Budget scout”

Love it! I wonder if there is a merit badge for personal finance? There should be!

I try to live my like I’ll get canned tomorrow.

It cracks me up that after the 2008 crisis, saving went waaaaaaaaaaaaay up, but now, its back down to 2006 levels. Short term thinking isn’t good people!

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24 J. Money May 21, 2013 at 2:44 pm

HAH! There SHOULD be a merit badge for personal finance – I like that!!! I might have to blog a letter out to them if it doesn’t exist – good one ;)

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25 Mrs Smith May 21, 2013 at 9:11 am

Budget Scout is fantastic! I love Mr1500′s idea of a badge!
Heck, I think you should start a whole youth group devoted to helping kids become financially savvy.

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26 Jacob Erickson May 21, 2013 at 9:41 am

It’s nice that you guys are in the position for your wife to voluntarily quit her job. If my wife were to lose her job we would be able to survive on just my income, but we wouldn’t be saving very much money monthly. I guess we’re lucky that we’d be able to survive at all, but hopefully we don’t have to anytime soon.

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27 SavvyFinancialLatina May 21, 2013 at 10:11 am

We live on less than 50% of our income. However, if I were to lose my job we would have to quickly start living on way less because I’m the high earner in our marriage.

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28 Kyle @ Debt Free Diaries May 21, 2013 at 10:38 am

When Leslie left her retail management job, we went down to just my income for a few months. It was tough but we made it work. Now she is working part time with our landlord and it’s helping a little bit with the bills and paying down debt, but if I were to lose my job there would be no way we could make it. Lost of motivation to get out of debt!

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29 Mike@WeOnlyDoThisOnce May 21, 2013 at 10:49 am

Good luck to you both! That’s definitely a solid investment.

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30 Retire By 40 May 21, 2013 at 11:36 am

It would be really hard for us to only live on my self employment income.
We’ll probably have to sell our condo and move to a lower cost area. Once we do that, it should be sustainable.

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31 J. Money May 21, 2013 at 2:48 pm

At least you know what you’d do :) Usually people start by freaking out, followed by a ton MORE of freaking out, haha…

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32 Jacob @ iHeartBudgets May 21, 2013 at 11:55 am

Happened to us a year and a half ago. Wifey quit to be at home with our little man. Once we found she was pregnant, instantly kicked in the “trimmed down budget”, and rocked that for 9 months, so by the time she quit, we were used to it. been on it ever since :)

Good luck with the transition!

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33 J. Money May 21, 2013 at 2:49 pm

Even better – a “plan ahead” plan! Glad it’s all working out for you guys, congrats :)

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34 becca May 21, 2013 at 12:55 pm

What’s her PhD in? Unless it’s economics, I wouldn’t count on the “more money later” part ;-)

Mo degrees, Mo problems…

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35 J. Money May 21, 2013 at 2:50 pm

HAH! Mo degrees, Mo debt usually too!

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36 Bryan May 21, 2013 at 1:06 pm

Good luck to her on writing her dissertation. I’m just finishing up the first year of a PhD program, so my dissertation-writing still feels pretty far away. I can’t wait to get there, though.

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37 J. Money May 21, 2013 at 2:51 pm

I remember her saying the same thing — and now here we are 4 years later and BAM!

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38 Grayson @ Debt Roundup May 21, 2013 at 2:40 pm

I have been working hard to try and widdle down our expenses so we can “live” off of one income even though we don’t need to. Good luck to you J. Money!

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39 Lisa E. @ Lisa Vs. The Loans May 21, 2013 at 3:48 pm

As of right now, I don’t think I can handle a 10% cut in my income. Once all that credit card debt and student loans are gone, I think I’ll be able to manage. I can’t wait for that day!

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40 pd May 21, 2013 at 6:25 pm

As a single person living off of my one income, 10-20% cut I could handle, I’d basically not be sweeping anything in my savings and roth.
Now if I were to get a 50% paycut, I’d have just enough to cover mortgage/hoa dues/taxes. That’s a scary thought! guess that’s what my savings are for. haha.

Good luck with her dissertation.

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41 J. Money May 21, 2013 at 9:59 pm

That’s pretty good though! Not many people can survive a 50% cut :)

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42 Shafi May 21, 2013 at 7:34 pm

patience J., patience. When folks say patience is virtue, that’s what they mean in situations like this.

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43 Financial Black Sheep May 22, 2013 at 2:20 pm

I am handling a 100% pay cut as of right now. I am glad I am debt free. Life just happens sometimes, but I know I can make it :)

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44 J. Money May 23, 2013 at 5:36 pm

Woahhhh if you can survive off that then you’re REALLY good! Haha… Which I know you are, or else I’d be trying to offer advice ;)

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45 Anton Ivanov | Dreams Cash True May 22, 2013 at 8:28 pm

Better get to working on your online business 200%! But in all seriousness, you bring up great questions about the possibility of loosing some (or even half) of your income. I would like to think that my finances are set up to handle that, but I better take a closer look now :)

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46 Andi B. May 24, 2013 at 11:01 pm

The best part about working from home is when gas prices skyrocket in the summer, you just shrug and say “eh, whatev.”

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47 J. Money May 25, 2013 at 9:34 am

True dat.

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48 Catherine May 25, 2013 at 3:20 pm

This did happen to us. When I went on my maternity leave for a year I lost 60% of my income. It wad the best thing that happened to us. Proved we could live on a lot less!

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49 J. Money May 25, 2013 at 4:12 pm

Well, congrats then! On both the baby and better finance management :)

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50 Mike Carlson May 26, 2013 at 9:57 pm

Good luck with having to bear a single paycheck for a year or more. It will be a lot of sacrifice, but for sure things after that will a lot better.

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