Advice on going to one income

**disneysteve** · 10-15-2010, 06:35 AM

Cable: $56 x 18 months = $1,008. So it costs you $1,008 to keep it but only $360 to cancel it. That means you save $648 if you get rid of it now. Keeping it due to the contract makes no sense.

How many people in the family? $500 for groceries sounds high but it depends how many mouths you are feeding.

What is the interest rate on your mortgage? Your house is 39% of income which is rather high but doable if you cut other expenses.

What ages are the kids? You and your wife can budget $0 for clothing. You have all you need. But kids do outgrow stuff, though if you stick to thrift shops and craigslist and freecycle, you can keep those costs to a minimum.

$500 for gas? Do you have a super-long commute?

Why is your wife going to college if her goal in life is to become a homemaker? That doesn't require a college degree. And please don't take that wrong. I'm all for SAHMs. My wife was one for 10 years. Perhaps she needs to reconsider that.

Obviously, the tithe is a problem from a financial standpoint but I'll stay out of that argument as it never accomplishes anything.

**MonkeyMama** · 10-15-2010, 06:53 AM

First off, what are your tax refunds like? How much does your wife bring home now? Generally, losing a second income can save you significantly in taxes. Maybe $3500 net if you have no other deductions from your paycheck but taxes. (If you have other deductions - what are they? medical? retirement?)

I'd drop the cable, too. Look into prepaid cell phones. I'd drop the tithe, myself.

College tuition - I'd keep. I think it's important to be educated. Stuff happens. Every SAHP in my family has a degree (even if they never need to use it again - it's there if they need it).

I am also curious if you are saving anything. I think it's okay to stop saving for a short time to stay home (particularly if most her income is going to daycare, etc.). But for the long term, this is way too tight if you aren't saving anything. Retirement, rainy day, etc., etc.

**kork13** · 10-15-2010, 06:57 AM

My first question centers around taxes. Do you normally receive a large (>$500) tax return? If so, you should look at adjusting your withholding exemptions so that you get less taken out (thus you get more money each paycheck). You're married, have children (unless those gymnastics lessons are for you

), have a mortgage, education expenses, and give $4000 in charitable donations (tithing) each year. Those are all factors that should significantly reduce your tax bill, and yet your net income is only 70% of your gross. Something doesn't add up. If you adjust your exemptions to aim for a reasonably small refund, that could potentially increase your net by a few hundred dollars a month.

Also, if you don't want the cable anymore, go ahead and cancel it. Simple math: $56 x 18 months = $1008. If you drop the cable, you pay $360 now, and save almost $700 over then next 18 months. $50/mo saved. Also, I'd look at if you really need a $100/mo phone bill... Do you really need and use all of the minutes/texting/web access/whatever else that you're paying a pretty penny for?

Is "gas - $500" supposed to be $50? I'm not sure what to say here -- even for an active family with a pair of F-250's, I'd be surprised by more than $200/mo in gas... And $500/mo for food? That seems maybe a bit high. Keep in mind that if your wife stays home, she'll be able to cook most of your family's meals from scratch, which could cut your food bills pretty significantly. Also, can you pack lunches for your children? That could save on paying for school lunches, and most likely be healthier for them as well.

Last thought for now, you should also re-evaluate your savings. You're currently only saving ~5% of your net (even less in gross), and at that, splitting it between retirement and college savings. As a general ROT, you should aim to save at least 10% of your gross, more if possible. But you can increase that over time as you shave down your expenses...

Overall, I think you could definitely make it happen. And if it's your wife's desire to be a stay-at-home mom, I'm sure she'd be motivated to help make it possible. On a $50k/yr income, you can definitely do it. It's just a matter of being careful about where you let your money go to.

ETA: haha i guess that's what I get for writing a novel... DS and MM both already hit most of my points... lol

**itguy12** · 10-15-2010, 09:07 AM

disney:
I hear you on the cable, and have been going back and forth on it like crazy. It's just hard to pay a one time fee of $360, but I see it would def be worth it. We just moved into this $175,000 house in May, and the interest rate is 4.875 at 30 years. So I doubt we can do much better than that. Also, I commute about 1.5 hrs each way, or about 70 miles each way, to work. So the gas is fairly accurate, and is at least in the 400's for sure. My family is me, wife, and 2 under 5 daughters. Keep in mind that when I say Groceries I really mean all food purchases including eating out. I don't no 100% if she will stop her college studies. She is studying to upgrade her LPN to RN, so that may be worth it in the long run after the kids are gone. The $125 expense for this is from a loan/contract that will have to be finished. And I completely agree on the retirement/savings. This will need to be increased at some point.

monkeymama:
Our married/filing jointly refunds have been between one and two thousand the past few years, i guess mainly due to the 2 child tax credit. Maybe this is too high? I am claiming 1 exception federally and 2 on the state side.

Also, I am saving an additional 6% of gross to company 401k.

**MonkeyMama** · 10-15-2010, 09:37 AM

Originally posted by itguy12 View Post

disney:

monkeymama:
Our married/filing jointly refunds have been between one and two thousand the past few years, i guess mainly due to the 2 child tax credit. Maybe this is too high? I am claiming 1 exception federally and 2 on the state side.

Also, I am saving an additional 6% of gross to company 401k.

Okay, that makes the savings sound a lot better (I also see your $180/month to savings, now).

Yes - that is at least another $100 per month you can squeeze out of your pay check, right there. OF course, I think your tax refund would be MUCH higher if your spouse did not work - but you did not share her income so I can't estimate that without more info. Still seems to me that you can net a bigger paycheck, based on your income alone. Maybe $3200/month net considering your 401k contribution.

For a LOT of people, with a similar income ($50k) I have ran the numbers and shown some substantial tax savings living on that income. Most people tell me "I can't give up the big tax refund at the end of the year."

P.S. IF the kids are under 5, cut the gymnastics. My spouse stayed home and we lived off my $50k income when we had our first child. We chose a spouse at home over extra-curriculars. Heck, we still do. Beauty/haircare? Is that more important than staying home? It's really helpful to think in these terms. IT can be done, but priorities have to be carefully considered.

**disneysteve** · 10-15-2010, 10:12 AM

Originally posted by itguy12 View Post

We just moved into this $175,000 house in May
I commute about 1.5 hrs each way, or about 70 miles each way, to work.

My family is me, wife, and 2 under 5 daughters. Keep in mind that when I say Groceries I really mean all food purchases including eating out.

She is studying to upgrade her LPN to RN

Why did you buy a house 70 miles from your job?

It should not cost $500/month to feed 2 adults and 2 preschoolers. Are you eating out a lot? Buying a lot of processed convenience foods? You should be able to knock a couple hundred off of that number pretty easily.

If she is getting her RN, I'd stick with it. That is a very useful degree for a SAHM because she could just do agency work and maybe pick up a couple of shifts per month on days when you are able to take care of the kids. I have a friend who worked one 12-hour shift every other weekend when her children were small. She made enough money doing that to be able to afford to be home the rest of the time. Once her kids hit school age, she went back to a regular full time nursing job.

**LMA** · 10-23-2010, 03:53 AM

I know the Tithe thing is a touchy subject for a lot of people, but on your income that is a lot! Have you consider trimming this?
Also, just because she is staying at home does not mean she cannot produce income. There are many ways to get some income going from home without taking away from being a full time mom.
$100 for two cell phones can also be trimmed. IF you switch companies or go to prepaid phones this can come down.
Your mortgage is about 40% of your take home pay. That is high but I don't know there is anything you can do about it. Can you refinance? Is selling and moving to something cheaper an option?

**LMA** · 10-23-2010, 04:00 AM

Originally posted by itguy12 View Post

disney:

monkeymama:
Our married/filing jointly refunds have been between one and two thousand the past few years, i guess mainly due to the 2 child tax credit. Maybe this is too high? I am claiming 1 exception federally and 2 on the state side.

I missed this the first time. I used to have a salary around yours and I claimed married and 9 dependents on my W4 and still got money back at tax time! Understand that part of it was because I got a lot of deductions from my real estate. But still the others are right, if you go down to one salary you can up your dependents significantly and get more out of your paycheck. In an ideal world you want your tax refund to be $0, no more no less. Don't let the IRS keep more of your money than they need to. Instead get that money in your paycheck every month.

**buildmybudget** · 10-23-2010, 05:53 AM

Have you prioritized what you use your dispensable income for? I think this is the key to making it work, for both you and your wife. You can make it work, but you'll have to make some tough decisions(ie: Tithe) as well as some easier decisions. For example, if you're spending that much on food each month, you should try to have leftovers the next day for lunches. Good luck!

**Tree0164** · 10-24-2010, 01:43 AM

My family had a very hard time transitioning to one income family.
I have been there and done that. Right after my twins were born, we were really struggling to pay our bills. I left a good paying career and my husband income wasn't covering the bills. We didn't do the proper planning. I felt like I was robbing Peter to pay Paul. I felt sick to my stomach anytime I thought about money. My mother was keeping us supplied in diapers and my father slipped me a $20 each week that was almost our food budget. "Buy something for the kids" he would say.

**scfr** · 10-25-2010, 01:01 PM

My suggestion is to immediately start living on what you estimate your take-home would be if you only had your income. Start banking the "extra" income your wife makes. Not only will this help you decide if it is something you are comfortable doing, it will also help you build up some extra cash cushioning.

We switched from cable to OTA (over the airwaves = FREE) TV when we bought our house 1-1/2 years ago. We bought an antenna and paid to have it installed. I have never once regretted the decision.

In addition to what others have suggested, Beauty/Hair Care jumps out at me as one that could be brought down to just a few bucks a month for essential toiletries. Buy some hair clippers and do at-home hair cuts. If hair coloring or manicures are really important, they can be done at home, but of course the cheapest thing is to eliminate them completely. Same thing with makeup; if it is currently being purchased, eliminate it completely, or look for cheaper alternatives. (This is part of helping you decide if going to one income is something you are really comfortable doing.)

**snafu** · 10-27-2010, 08:27 PM

I suggest both you and DW re-examine your skill sets to figure out what DW could do to contribute income as a SAHM? Would she be willing to take the steps necessary to provide accredited childcare? Would she consider being a Day Home provider? One lady on our street bakes wonderful cakes to earn home income. Would you be willing to seek extra work to facilitate your wife's wish?

**mrsmoneysaver** · 10-28-2010, 12:56 PM

The four things that I see that can be reduced or eliminated are:

1. Groceries-I think you could cut that number in half. Use coupons, make a menu and make a shopping list from the items on your menu. It is very possible to make a $5 meal for a family of your size. Contact me if you need ideas.
2. Beauty/Hair Care should be included in your grocery budget.
3. School lunches-make your own
4. Clothing: shop at thrift stores, garage sales, etc.

**Hector** · 10-28-2010, 01:40 PM

I am sure that you would have reasons for buying a home which is 70 miles away from work. But is it a possibility to rent your house to renter and rent another house near work in similar amount that you are getting from rent so that you could save a lot in expenses related to commute?

I think it is possible to reduce your $500 food expense if you start eating home cooked food often.

A lowest family plan without data and text services should cost less than $100 in cell phone bill.

By looking at numbers, I think it is going to be very hard. Asking your wife to work part-time and/or you try to find better paying job and/or get a second job (part time) would help.

Advice on going to one income