Back in October of 2014, my wife and I realized we had $61,000 worth of debt. We paid that off in 16 months and now we live on one income.
Having the ability to live on one income has made being laid off much less stressful.
Instead of worrying about how we’ll pay our bills, I get to focus on spending quality time with my family, creating new income opportunities, and even meeting with community leaders to discuss ways we can create a more equitable society.
With that said, I’d like to share 7 things we’ve done since 2014 that I feel have gotten us to this point of being able to live on one, single income.
1. Create A Monthly Spending Plan
So the very first thing that we decided to do that helped us live on one income as we were trying to get our finances in order was to create a spending plan.
Creating a spending plan helped us by pointing out the problem areas in our spending. And I gotta be honest, our spending plans the first few months were absolutely terrible.
We’d forget to add stuff or overestimate in another area. It was just bad.
But as we stuck with our routine of sitting down together every single month and forecasting our income, then subtracting our expenses, we just started getting better. And it really didn’t take long at all for both of us to realize that having two car payments, credit card debt, an expensive house, and eating out a few times a week was not going to help us reach our life goals.
And here’s the thing. It wasn’t like we were struggling or like we were behind on our bills when we created our first spending plan, we just knew that we couldn’t save or invest according to the goals that we had.
Like we could save and invest a little bit, but if we have these big, big goals, then we need to have big big savings and big, big investment contributions. And we just didn’t have that.
And so that’s what a spending plan does.A spending plan moves you towards your dreams and away from distractions. Click To Tweet
And to this day, we still sit down and do our spending plan every single month.
We grab a bottle of wine, order a pizza or something, then we review how we did on that current month spending plan.
After that we finalize the spending plan for the next month. The whole thing takes like 30 minutes.
So if you’re wanting to start living on one income, a great first step is creating a monthly spending plan which will highlight the adjustments that you need to make to your spending habits.
2. Pay Off All Consumer Debt
The next action that we took that helped us live on one income is becoming consumer debt free.
Consumer debt is any money you owe outside of a mortgage.
This could be credit cards, cars, personal loans, payday loans, or anything else you owe that’s not a mortgage.
Taylor and I got serious about our debt very early in our marriage.
As a matter of fact, our first conversation about debt happened on our honeymoon and the result of that conversation was us eliminating $61,000 worth of debt in only 16 months.
And so not only did we decide to pay off our consumer debt, but, at that point, we committed ourselves to not taking on any debt that wasn’t a mortgage in the future.
3. Keep Housing Costs Low
Having a budget and being firm about that budget when you’re buying your first house is absolutely critical.
A house is probably the most expensive purchase you will ever make, so getting it right in terms of making sure that it’s something that you can afford in a worst case scenario is extremely important.
So during the home buying process, pretty much everybody from our lender to our realtor would have loved to see us in a nicer, more expensive house.
I mean, at the end of the day, it makes all of them more money.
But just as much as they want to make more money, I want to keep more of my money.
It’s not my job to get them paid. My job is to make the best decision for my family.
So before we even started shopping, we knew exactly how much we wanted to spend every single month on a mortgage.
And there were three things that helped us come up with this number.
- We knew we wanted to pay off our house in less than 10 years. This meant we needed some additional room in our budget to make extra principal payments every month.
- We wanted the ability to invest enough every month to be financially independent within the next 10 years.
- We wanted to have the ability to live off one income should something drastic happen.
Once we had an amount we were comfortable with, we ran some calculations on that monthly mortgage payment to see how much house we could afford in total if we did a 30 year mortgage for maximum flexibility.
So we came back at a number that was just under $215,000, but when we submitted all of our documentation to the bank, they approved us for like $450,000.
I’ll be honest, it is tough to see that big number and then realize that what you’re wanting to spend is less than half of that.
And truthfully speaking, it was a little tough to find a house that really fit our needs and some of our wants within that $215,000 budget.
And so there was several times where our realtor was kind of like trying to nudge that number a little higher, but we ignored that and we stuck to our budget and we ended up finding a house in a great neighborhood and a great school district and we got it for under $200,000.
So yes, we sacrificed some things, but I’ll be honest, I love living in this house. It fits our needs perfectly.
And here’s the thing- buying a $400,000 house or even meeting in the middle at $300,000 would have crushed our ability to live on one income.
That one decision would have added so much unnecessary stress and pressure to our marriage and I wouldn’t be able to focus on everything I mentioned earlier.
But that one decision to stick to our budget saved us a lot of stress and panic and even money during a time like this.
And it allows us to really live pretty comfortably on just the one teacher salary that we have coming in right now.
So if you haven’t bought a house and you’re hoping to do so one day, create a budget and stick to that budget and really be aware of how that one simple decision can impact so much later on.
A lot of people get that wrong. And it’s painful to see when people realize that they’ve gotten that decision wrong.
So really do your homework if you’re considering buying a house in the future.
4. Search For Free or Low-Cost Items
Taylor will tell you that I am notorious for searching online for coupons and coupon codes for anything we’re about to buy.
And the thing is, I find them more often than not
So for instance, there’s a software that I wanted that was going to help me automate some things for winning to wealth.
The cheapest version that I could find was like $39 a month, which is a good price.
But then I found the same software on this site called appSumo for only $99 for a lifetime.
So that’s $369 that I was able to save this year, and another $468 that I’m going to save every year I continue using this software, all because I took five minutes to do a quick Google search.
We also aren’t ashamed to accept hand-me-down items and clothes for Alison.
As a matter of fact, we love it especially considering like just how fast she’s grown out of clothes and shoes and all that stuff.
Another way we’ve saved money is by hopping on a shared cell phone plan with my cousin and his wife.
Taylor and I were paying well over $220 a month, but we linked up with them and we switched to t-mobile and got this family plan and that’s dropped our bill to like $115 a month now.
And another perk is that T-Mobile actually covers our Netflix bill too!
So don’t be ashamed to find creative ways to save your family some money, that kind of stuff goes a long way.
A simple Google search before you buy anything, or even being okay with like less expensive or even gently used items has really helped us as we live on one income.
5. Keep Food Spending Under Control
So the first month that we tracked our spending, we realized that we had spent more money on food than we had on rent.
I’m not joking there.
Now maybe you’re not that bad, but food spending trips a lot of us.
And so to get a handle on this, we really had to look at how we were doing our spending plan and adjust it.
We went in our spending plan and adjusted the categories from just one “food” category to two categories- groceries and restaurants.
Save Money On Groceries
I’m notorious for going overboard with the snacks and just junk in general at the grocery store.
And while these items are cheaper to buy at the grocery store than at a convenience store, they were still costing us a lot of money.
Now I could have tried to strong arm and muscle myself into stopping the impulse snack buying, but listen, I like easy and I like simple.
And so the easiest way for me to address this was to remove the opportunity to impulse shop.
See- grocery stores are designed to get you to make impulse purchase. Like those are the high margin items for them and I know this because I worked for Coca Cola and I remember fighting with other vendors for product placement in certain locations because those spots are known to drive sales.
So again, I know this it just would have been tough for me to stop- so we just made the decision to start ordering our groceries online.
And there’s usually like a $5 fee, but that $5 fee is way less than ice cream and the cookies or whatever junk I’d find so it’s worth it for us.
Save Money On Restaurants
Now, when it came to restaurants, there were two times I noticed that we would spend too much.
- When we didn’t manage our time effectively and we had to buy fast food last minute.
- When we decided to go out with friends and family at the last minute.
So now what we try to do is have our meals planned before the week starts.
We also keep little quick meals- think frozen pizzas and freezer meals- on hand in case something does pop up. S
Also, before ‘rona happened, we would invite people over for dinners or a potluck-style game night.
What that did was eliminate that $40 meal for not just us, but our friends as well.
And so all of this working together has saved us a ton of money on food over the years.
And it’s also allowed us to live on one single income which has become fantastic at a time like this where I’m not earning an income.
6. Learn Travel Hacking
The next action we took that helped us live on one income is we started travel hacking.
Now this was important because we both love to travel.
As a matter of fact, a lot of the credit card debt we racked up while we were dating was due to our love of travel.
But travel can get expensive.
And especially when you like to travel in luxury like we do.
Travel hacking has been a great way to cut back on a lot of those travel costs which helps us live on one income in normal times.
7. Pay Yourself First
Most of us get paid, spend money, and then think “Oh my gosh, but there’s nothing left to save.”
We get paid, save and invest first, and then we say, “Okay, this is what we have left to spend”.
Having this mindset made it easy for us to buy a house that costs less than what we were approved for.
Having this mindset made it easier for us to spend less on food.
Paying ourselves first made us get creative and find a way for us to travel in luxury that worked for us.
And paying ourselves first makes it easy for us to say no to car payments and other types of consumer debt that will actually take away that ability to live on one income.
Now, the key here is to have some long term goals and the entire investing or saving strategy to that.
So our goal is to become millionaires this decade so that we can be fully financially independent expats living in Europe, for however long we decide to stay there.
So to us saving money first isn’t about saying no to something that we might want today.
Saving money first is about moving ourselves towards a big, ultimate life goal.
Do you have a desire to live on one income?
Or are you currently live on one income?
I’d love to learn more about the steps you have already or are planning to take to get to that point.
Head over to my private Facebook group and share any strategies or tips that have worked for you.