Getting out from under the "two income trap"?

[MrsChambers]

So I wanna get out of this "two income trap"... but I'm not sure If it can be even done and how long it would take to do it.

Have any of you got out from under that two income Trap?

how did you do it?

did you plan it or did life happen *kids* that sort of forced you into it?

what changes did you have to make in order to make it work?

The way I see our finances, The two biggest things that are killing us are the TWO car payments and my friggin student loan.

Now I know that the cost of living is different, but how much do you think one would need to bring in each year to comfortably support two adults?

let's chat.

[sweeps]

Great question. Yes, a new baby did that for my wife and me. We chose the stay-at-home-mom route over daycare. Our income was cut by about 1/3 but we've been able to get by through some strategies:
-- My wife now works part-time while I watch the little one on certain evenings and weekends. This has the advantage of giving me more father-son time and my wife some time out of the house to socialize with coworkers. The disadvantage of course is that my wife and I spend less time together now.
-- We eat out much less often. Mmm, mm. Home cooking. Leftovers make for an easy lunch the next day too.
-- Less taxes! There's always a bright side to making less, right?

My wife and I were lucky enough to have the dual incomes long enough to retire one of the car payments and both of our student loans, so that has been a big help. If you can, try to pay off one of your three loans to free up some cash. (Whether you should get rid of the highest interest loan first or the loan with the least principle is a discussion for another thread. )

[dolfinrose]

It can be done, but there are some sacrifices

Here are some things we did when LIFE happened to us 3 times.

1. Went to Basic cable,
2. Eating out only once a month
3. Plan all meals and cook at home.
4. Consolidated car loans and only purchased good used cars.
5. Found a place to live close to the one who is working jobsite, less gas, or could walk.
6. babysit 2-3 kids during working spouses work shift to bring in extra money and then write off use of house for taxes.
7. Pay off as many bills as possible and don't make new ones
8. sell anything just sitting around collecting dust


That was some of the things we did. I think the biggest savers for us was consolidating the car loans and moving into a place that was cheaper to live in and also was closer to my dh work.


We lived off of $18,000 one year and had 3 kids to take care of, so it can be done.

[Snoopy2645]

Well we did it when I had 2nd dd. What I did was started selling stuff on ebay & figuring out how to get everything I possibly could for free. Sometimes that means using a coupon & rebate & combing with a sale. I also only bought kids clothes at 90% off or garage sales. I started only doing free things. And waliking more instead of using the car. After baby #3 things got really tight so I went to work pt doing demos just a few a week but it was a huge help & made me feel better about myself too. Also for xmas & stuff I try to only get free things or super cheap things by using coupons & gcs.

[mom-from-missouri]

I was more or less forced into it when my ex husband moved out. We are making it fine on my income only (he pays nothing-no child support or anything). We don't have a lot of frills, but us girls are happy. The bulk of our shopping is aldi's, consignment stores, ebay and garage sales (few auctions also). We garden, and I go in with a friend halves on buying our meat (beef and ham). We make do with what we have, recycle it and wear it out. We watch pennies, pick up walnuts (for our own use, and some to sell), mow our own lawn, wash the vehicle ourselves (great family fun with the hose), even make our own icecream. As the girls outgrow clothes, I sell them at the consignment store or on ebay. I usually have to work weekends, so on my day off during the week, I often sub teach (extra $60 a day when I do). I coupon when that brings the price (along with sales) down to cheaper than aldi's--I am not brand loyal. I also take advantage of walgreens rebates to get many items free. I paid cash for my suburban, which has 109,000 miles on it now-it had 69,000 when I got it. I learned to change my own oil, but sometimes on a special, jiffy lube can do it for less than I can buy the filter and oil for. I use the walmart gift card routine to save 3 cents a gallon on my gas. I hang dry my clothes, and burn some wood in the winter. I keep the thermostat low in the winter, and high in the summer. I only run the dishwasher/clotheswasher when full. I use cold water to wash clothes. I do some bartering--last year I got free housecleaning in exchange for teaching the ladys oldest daughter sewing, and youngest piano lesson. My neighbor shovels my snow, and I watch their baby for a couple hours once a month while they go out. I watch the ads for free items--can find firewood free, esp after a storm, but you do have to cut and haul it home yourself. Like I said, I was forced into it, so I learned hard and fast. My only debt now is the mortgage. When he left, I owed everything he stuck me with, which was around $7,000. I had it paid off in 2 years.

[CJsoccerchic]

I was just a bartender when me and my husband got married. He's in the military and has to work from5 am to 4 PM. I usually went to work at 5 PM so our time with each other was limited. Soon after we started dating, I switched over to a day job so I could work when he worked. That barely brought in any money, but it helped very slightly. (Gas and food money basically)
Then we got married, he made more for being married, and now I just go to school I pay my school as I take the classes and I have a 2003 Honda civic that was paid off in APril of this year. He drives aorund cars that you wouldn't give your sixteen year old (the worst cars you'll ever see) but he likes them. So, I take classes and pay as I go, and he works and in the evening,s we get to spend time with each other!

[Bluezy]

I stay out of the two-income trap by staying a single mum and keeping what is ours private.

Sure, I don't travel as much now that CJ is small, but this means that money saved now can be used for travel later. I see nothing wrong with no cable TV, few meals eaten out and roughing it while I finish my studies. This is a special time between CJ and I, and don't feel like messing it up with a marriage!

[Tree0164]

Well it sort of happened! I got pregnant with twins and was on forced bedrest for last 2 months. Paying daycare costs for 2 infants plus a 3 yr old would cost way way to much for me to work. I was earning close to what my husband was so it was a huge tumble. Luckily I was already frugal-some credit card debt, less than 3 months owed on my car. We got even more frugal than before. Alot of our wants had to remain wants.

If you do want to do the 1 income family, do a 6 month plan.
1. Get those cars paid off or downgrade them to where you wouldn't have a payment anymore.
2. Get the creidit cards paid off.
3. Look at your tax situation and the cost of working. Daycare, transportation, etc
4. Try to live on your DH salary for several months and bank yours.

It can be done. Dr Phil several times has had Elizabeth Warren on his show. She seems to give good solid advice on getting finances in order. She wrote a book with her daughter called How to get out the two income trap. I would check that out from library.

[MrsChambers]

I have read Warren's TWO INCOME TRAP.. but I didn't know that she had a book on how to get out of it... interesting indeed.

[PrincessPerky]

My two cents, some things people often over look.

1. two cars, do you really need them? sure everyone else and their brother has two, but do you NEED it?

2. Two car insurances, if you have only one car, why insure (or have a liscense for) the other driver? I know that means I CAN"T drive, but really like I have any intention of waking up that early to take DH to work, I can't think of a single thing worth it to me, and if he is home he can drive. This saves on the insurance, the gas, the car repairs, and the 'outings' if I could drive I would... but I can't so I don't, so it is FREE.

3. Food, honest you can afford to cook your own, big time savings, and yes if you are home all day, even with kids, you are more willing to cook. (though I prefer to bake, but... I do cook)

4. Entertainment, somehow I do not think Abraham Lincoln or George Washington lamented the lack of cable in their area . Amazing how much fun simple things are if you look for them. How much TV do you WANT to admit to watching, not how many shows do you watch, how much do you want to havewritten about in your memoirs? Me I like to keep it down, and I am not paying 30$ a month for Andromeda! (which may not even be on basic cable anymore?) - But don't get me wrong, I am not giving up cable net anytime soon .

BTW as for a plan, I would prolly pretend to cut the second salary (whichever is going away) in half at first and live on what is left (use the hidden part for debt or savings) then cut again when that got comfy, if half is to fast, cut only 100$ or whatever you are comfortable with. IF the pay is variable, pick a number that you 'get' each month dump the surplus (and try not to touch it, again debt or savings)

[cicy33]

Originally Posted by PrincessPerky

My two cents, some things people often over look.

1. two cars, do you really need them? sure everyone else and their brother has two, but do you NEED it?

This has been a note several times but yes I do believe that most families NEED two cars when they have kids. There are doctors appointments, emergencies, general errands you cannot do after 5 or on the weekends. Then there is school. Unless you live more than a mile out of the city limits in my town you do not qualify to ride the bus, however, I am NOT letting my 7 year old walk the 20 minutes by himself to school. So parents are required to figure out a way to get them there. oh, and in my area there is no public transportation. No, you don't need 2 $20,000 cars but you do need a second vehicle. It is not always possible to take your spouse to work and keep the car. Wouldn't be in my household. my husband travels all over. But back to the original topic I think that best way would be as said above is try to live on one salary for a few months and see if you can.

[TBH]

Life happened to us, too, but we couldn't figure out a way to get rid of the second income. Instead, we went from 2 full time incomes to 1 full and 1 part time. Gotta make enough to pay for benefits and daycare.

Wish I could figure this out, too.

[DivaJen]

We stopped being a two-income household when DD was about 10 months old. Since then, I have done tutoring and worked on DivaTribe, though the money I make from that varies and has never even been half of what I was making as a teacher. It hasn't ever been even a quarter of what I was making, come to think of it. DH has gotten some increases in his paycheck since leaving teaching, though there were lean times periods while he was part-owner of his own business and cash flow came up short. Things are good for us now in that he has a steady paycheck (not an owner in that other business anymore) and plenty of freelance work as well. Essentially, our household income now is about where it was when we were both still teaching (although that was in 1999). Dh works many hours, though - he works almost every night and weekend, in addition to his regular full-time job.

Things that are different? When we had two paychecks we went to Kauai twice in two years, paid for our wedding, bought a new car, had new windows installed throughout our home, replaced the plumbing throughout our home, bought an above-ground spa - things like that. It isn't that we didn't think through our purchases or plan for them. It just seemed easier to do those things. Now, when we spend thousands of dollars in one fell swoop, it's for medical reasons or education.

We haven't taken a really nice vacation since 1998. Our cars are 6 and 11 years old. We don't have cable (but then, we never did. ) I don't buy new clothes very often - when I was teaching I bouht something new every month, just because I could and I enjoyed picking out something new to wear. We've refinanced our home. In fact, we could have really shrunk our monthly payment the last time we refinanced, but we elected to go down to a 20-year mortgage instead and keep our payments about the same.

When DH was self-employed, insurance premiums were really hurting our budget. It's nice having him with an employer that offers good benefits and a decent premium rate for me.

If I knew I was going to be going from two incomes to one, I'd ty what someone else suggested: save all or at least part of that second income and try living without it. See what it feels like, make some changes, go from there.

[Snoopy2645]

I think one person going pt around the others job so thier is no daycare costs is really the best way to go. For my family I have 3 kids who would go to daycare I cant make enough to pay daycare so its obvously cheaperfor me to stay home & just work pt around dh's schedule. Now I will be working pt at home so that cuts out gas & eating out when I am working & uniform expense. And I still can help bring home money so we are not in debt!!

[PrincessPerky]

Originally Posted by cicy33

This has been a note several times but yes I do believe that most families NEED two cars when they have kids.

I have kids .

I don't drive my kids to school, we learn all day every day, no need to segregate it and therefore drive to it .

Single moms manage with one driver, I figure married parents can manage with one car more often than is attempted. BUT, yes some people have a lifestyle that they do use both cars frequently for, which is their money, not condeming it, just saying when looking at cutting to one salory, look at what you need first, then add back the luxuries you can afford. In order of desire and all that.

[cicy33]

Originally Posted by PrincessPerky

I have kids .

I don't drive my kids to school, we learn all day every day, no need to segregate it and therefore drive to it .

I take it that you homeschool? That is something that is great if you can do it but I don't feel that I could. Plus I personally believe the interaction is good for the child. but remember that is my opinion. I am just not qualified enough in my opinion to teach a child so I send mine to school. Hence must get the child there. Matter of fact some of the homework they have brought home I can't do!

[PrincessPerky]

Yeah we homeschool, I love learning new things, I often remark, I never knew how LITTLE I knew till I had kids .

Like I said, not for everyone, but overlooked in most.

[DivaJen]

Originally Posted by PrincessPerky

just saying when looking at cutting to one salory, look at what you need first, then add back the luxuries you can afford. In order of desire and all that.

I agree. Pay for what you need, and then figure out from there what your values and priorities are and figure out what else you can have.

[Tree0164]

Originally Posted by DivaJen

I agree. Pay for what you need, and then figure out from there what your values and priorities are and figure out what else you can have.

You end up deciding what is important and what is not.

When I was working outside of the house, we would often eat our 2-3 times a week. Now it is maybe once a month. That saves me atleast 1-200 dollars a month.

I am able to cook more from stratch probably a savings of $80-$100 a month

I don't need a new sweater or new shoes all the time. I don't need dry cleaing all of my suits. That is usually a savings of $100 a month

I have more time to shop for bargains, on kids clothes.

[_yb]

My wife and I want to get out of the trap. We should be able to make it happen in the next couple of years. Been paying down debt for awhile now. We want our only debt to be our mortgage by the time we go to single income. She also should be able to make our current combined income by herself in the next few years.