Live off 1 income - become a millionaire

[moneyclass]

So I read alot of money articles. And just actually finished one and want to get others opinion.

It says to become a millionaire (one way) is to live off 1 income if there is a husband n wife. Can people still do that with this economy n gas so high?

[mom-from-missouri]

yep. live off of one, and invest the others pay.

[disneysteve]

Originally Posted by moneyclass

Can people still do that with this economy n gas so high?

Absolutely. People make all kinds of excuses about why they can't accomplish this but the main reason is that they choose to live a lifestyle that requires both salaries to support.

Of course, the primary income needs to be sufficient to support a reasonable lifestyle but if you always want more, a bigger house, a newer car, a more exotic vacation then you will always find a way to spend the additional income from the other spouse.

We have never lived on 2 incomes. That made it simple for my wife to become a SAHM when she got pregnant. She remained a SAHM for 10 years before returning to the work force. She now works 3 days/week and puts 50% of her income into her 401k. We actually wanted to put 100% in but 50% was the contribution limit.

If you commit to living below your means and build your lifestyle around the one income then you can bank the 2nd income and watch your savings grow.

[TheMom]

Well, we only have 1 income and are doing fine. When I was working, we lived off only 1 income and paid off our house with the other income. We looked at it as short-term savings as we knew we'd move once we had kids. It worked out well for us. Now, we have kids, have moved, and live on DH's income alone. It's fine and while it would be nice to have more discrenary money, we are doing fine this way.

[moneyclass]

well heres my situation i dont have a wife yet. i have a house so there is only 1 income in my household. i live off like three qaurters of my pay and invest the rest for my retirement. times get tough but i stick it out.

i know one thing i do alot is keep revisiting my monthly budget to see where i can cut back at to save even more money.

[disneysteve]

Originally Posted by moneyclass

well heres my situation i dont have a wife yet. i have a house so there is only 1 income in my household. i live off like three qaurters of my pay and invest the rest for my retirement.

Perfect illustration. So if you ran off next week and got married to a woman who has a steady income, that money wouldn't be needed at all to run the household. It could all go to savings if the two of you chose to do so.

[maat55]

Originally Posted by moneyclass

So I read alot of money articles. And just actually finished one and want to get others opinion.

It says to become a millionaire (one way) is to live off 1 income if there is a husband n wife. Can people still do that with this economy n gas so high?

We live off my income and save all of DW's. We could save part of mine if DW was fully on board.

[Andrew Jackson]

Originally Posted by disneysteve

Perfect illustration. So if you ran off next week and got married to a woman who has a steady income, that money wouldn't be needed at all to run the household. It could all go to savings if the two of you chose to do so.

Although we are only renters at the moment I feel like my fiance and I could be in a similar situation if we so desired. Currently she is finishing up her masters degree in Biology this spring. She works as a TA and nets about 1,000 a month. I manage a pizza shop and net about 3,000 a month. I am able to save half my income (need to save up for that house down payment) and we get by paying the bills just fine. Assuming my fiance is able to find a nice job paying at least equal to what I am making (hopefully more with her masters) that would leave us with a lot of "extra cash." The key I think would be to not get in over our head with a mortgage payment. I would like to put down at least 20% and just by something modest.

[disneysteve]

Originally Posted by Andrew Jackson

The key I think would be to not get in over our head with a mortgage payment. I would like to put down at least 20% and just by something modest.

The two biggest mistakes people make is buying too much house and too much car. They lock themselves into huge payments that suck up way too much of their income for up to 30 years and that ties their hands as far as cutting back, living on one income, having a stay at home spouse once a child comes along, etc. We bought a modest home that was well below the 28% rule and that largely enabled us to live on one income while still saving significantly.

[moneyclass]

Originally Posted by disneysteve

Perfect illustration. So if you ran off next week and got married to a woman who has a steady income, that money wouldn't be needed at all to run the household. It could all go to savings if the two of you chose to do so.

Yep thats what I would like. Still trying to find that girl that has the same financial goals as me. There tough to come by. These girls like to spend money now a days.

[krantcents]

We too live off my income and invest my wife's income through 403B, IRA and Roth IRA. We have been doing it for ten years. Our children are grown and we downsized so it is relatively easy.

[LoriMcDevitt]

Originally Posted by krantcents

We too live off my income and invest my wife's income through 403B, IRA and Roth IRA. We have been doing it for ten years. Our children are grown and we downsized so it is relatively easy.

My husband and I have decided to do this as well. We will live off his salary and sock away mine.

Lori

[LivingAlmostLarge]

Same here, SAHM. When we both worked my income was enough to pay taxes.

[snshijuptr]

We sock away more than my income every month. When I graduate and get a real job, I'm excited to double our savings. One big trick is to avoid lifestyle inflation after marriage and kids. It really is easy after the wedding to think that "growing up" means you need expensive, "nice" things. Just because your married does not mean you need silver flatware, fine china, and expensive furniture. Same goes for babies and all the stuff the industry tries to tell you is necessary. Budgets should inflate based on the CPI, not lifestyle.

[disneysteve]

Originally Posted by snshijuptr

Budgets should inflate based on the CPI, not lifestyle.

I think it is okay to gradually improve your standard of living as your means allow. Just don't go to extremes. If you go from taking home 30K to taking home 40K, don't increase spending by 10K. Perhaps you could increase spending by 3K, which would be a 10% jump in spending while simultaneously increasing savings by 7K. You need to enjoy life and you need to enjoy the fruits of your labor. I could still be living like a poor college student and socking away 100K/year but I wouldn't want to be doing that (and I'm sure my wife wouldn't go for it either).

The same goes for debt repayment. Each time we've paid off a debt, we've put most of the payment amount into savings but added some of it to general spending. So if a loan had a $200/month payment, we upped our savings by $175/month and added $25/month to our spending budget. That way we gradually got a nicer lifestyle while also increasing what was being saved.

[snafu]

Most of all you need a partner who is 'on the same page.' Arguments about money can lead to [very expensive] divorce. We have a formula for how increases in income will be parsed out

[MonkeyMama]

Since married, we have always lived on one income. I think it's easier if you start out with that mentality. It's simply not raising your lifestyle to the bigger income. I agree that buying a modest home and modest cars have been really key. The other thing I often say is that we buy a lot of used stuff. These seem to be really key. Not sure the price of gas means much to us - that is pennies compared to new furniture, new electronic toys, new cars more frequently, and a huge house payment. But, instead of deprivation, we tend to buy a lot of this stuff used and keep them a long time. Win-win.

I also think this is extra important if you plan to have kids. Most our friends struggled with having to work more than they wanted to with kids, versus taking huge cuts to their accustomed lifestyle. IT's just a time when financial struggle seems to be the norm. My spouse got laid off the second I got pregnant. We have barely sweated it. OF course, one reason we committed to living on one income is we expected one of us to stay home a few years. 2-3 years has turned into 10 years, thus far. But my spouse is gearing up to re-enter the workforce. We still have decades left to save his income and go back to that ease. Things are extraordinarily easy financially when you save $30k per year (second income). My income covers all expenses and about 20% to savings, so that is just gravy.

[LivingAlmostLarge]

agree 100% with MM. Another point, is that if you are used to saving on one income the second income truly is gravy. And it's easier to never haven gotten used to that second income lifestyle. Most of our friends did, hence the problem after kids.

Kids do take up more money like medical insurance and care, diaper, formula, etc. But the biggest expense daycare? Is not there when one person doesn't work. Neither is the need for a second car, eating out more, dry cleaning, gas etc. It adds up fast.

But if you don't work you don't get bonuses, raises, etc. So it's all tied together. But then my DH loves the fact that I do everything not just raise my daughter. I take care of stuff around the house, the dog, our parents (Yes though they are young), etc. My MIL said why do I do this? My DH laughs and says it's for the best.

[feh]

Short answer - it depends on the breadwinner's salary. If somebody is making $20K/year and all their income goes to living expenses, then the chances of becoming a millionaire are quite slim.

But, given median household incomes, if people live well within their means, it is very possible.

[maat55]

Originally Posted by disneysteve

The two biggest mistakes people make is buying too much house and too much car. They lock themselves into huge payments that suck up way too much of their income for up to 30 years and that ties their hands as far as cutting back, living on one income, having a stay at home spouse once a child comes along, etc. We bought a modest home that was well below the 28% rule and that largely enabled us to live on one income while still saving significantly.

I think in some cases that food(junk foods, eating out and luxury foods)make up a considerable expense in many peoples expenses. In most cases, if people were frugal in all three of these areas, they could save large sums of money.