Although it was last May that I dropped to part-time employment, it was a year ago in March that we started living as if we had only one income.
Although it’s not always something you can plan for, if your goal is to have one spouse manage the home and/or kids full time, there are a few things you can start doing now to ensure you can make that happen.
Pay down debt.
If you have student loans, car loans, or credit card debt, you want to get rid of that as soon as possible, preferably before you leave full-time work. Debt payoff gets a lot harder once your income shrinks. While we have never had credit card debt in our marriage, we did have the last $5000 of a student loan for me and we bought a brand new minivan in January of 2014. The money we were paying for three kids in day care and towards degree #3 hampered those payoffs, but we still put everything we could towards those loans. We paid off that student loan last March, and paid off the van the day after my last full-time day in May, 16 months after buying that van!
2. Make sure you have a cushion.
Car repairs, broken appliances, and medical bills are inevitable. Saving for an emergency fund will be easier before you leave your job. We had about 6 months expenses in savings before I left.
3. Cut back on expenses now.
Cutting expenses now will help you make the best use of those full-time dollars so you can start your new role debt-free and with that important cushion. You don’t have to go to extremes to make this happen (unless, of course, you want to make it happen even faster). There are abundant entertainment alternatives to cable, cheaper cell phone plans, frugal fitness, cloth diapers, frugal travel, and most of us probably eat out more than necessary. I found that once I was home, I had more time to research and plan frugal alternatives that I avoided when time was short with our busy two-income lifestyle.
4. Start living on one income.
This was crucial to our plan. If we couldn’t make it on one salary while we had extra money coming in, how could we possibly do it when crunch time came? For two months before I submitted my resignation, we lived within my husband’s salary and banked the part of my income that was not used for day care. Not only did this prove to us that it could be done, but it helped knock out that last loan just in time for me to leave my job. If you can’t survive on one salary, you may not be ready for the real deal.
5. Be ready to track every penny.
We have no wiggle room for mindless spending, especially since we are paying cash for my graduate school. I use an Excel spreadsheet to track what I spend- and pull myself into line if I am getting off track- but there are many other budget tracking alternatives out there. Whatever you use, it doesn’t work if you don’t use it. Find something and stick with it.
Are you a single income family? What do you do to stay within your means?