Monday, April 26, 2010

Living off one income

Last night Peanut and I talked about whether we could live off of one income, either before or after we fully combine our finances. We both make pretty good money, and our salaries are now almost even.

 

We started this project at 11 p.m. last night, so we didn't get too deep into it, but it appears that we could not, at this point, live off of one income and still maintain our goals of paying off student loans at an accelerated rate and maxing out our Roth IRAs. In terms of costs of living, though—rent, food, utilities, etc—we could pretty easily do it if we became a little stricter with budgeting.  

 

It's something I want to strive for—while kids are still a few years away for us, we want me to be able to stay home and/or work from home or part time for the first few years. We want to have our loans paid off before the kids come along (which would enable us to easily live off one income). We want to be prepared in case of layoffs, or in case one of us wants to take a very low-paying dream job, or if one of us gets a job offer across the country and the other can't find work right away. And if we both stay gainfully employed for a longtime, how great would it be to save literally HALF of our income? Hello, early retirement or traveling the world or whatever we want.

 

To get there, we will have to really rethink the way we spend our money. Right now, I have a budget that works like the Pirate's Code: really more like "guidelines" than rules. Peanut has no budget (he just doesn't spend money on anything but food!). We have automated Roth contributions, and he pays his student loans back at twice the minimum payment (mine are still in deferment but will also get paid at twice the minimum as soon as my grace period is up). But to be able to save one of our incomes (or use it to really aggressively pay off the loans, and then start saving it), we'll have to be very intentional with budgeting. We'll have to carefully weigh trips home to see family, gifts, even grocery spending. We'd probably get less fancy phones when our contracts are up. We'd cut way back on going out to eat (Peanut says we have to stop eating out entirely, I say that's setting me up for failure).  

 

But you know, I think we can do it. And even if we only did it for a year or two, that's many tens of thousands of dollars right in the bank for our future—a very worthy goal.   

 

4 comments:

  1. That is seriously exciting.

    BF and I (if we had steady jobs and combined our incomes), would do a similar strategy..

    Well, we actually do something similar like that now. We each pay $800 for EVERYTHING, and we could easily pay $1600 each with our salaries, if we had permanent jobs.

    Peanut sounds a lot like BF -- only spends on food :]

    I spend on makeup, toiletries... lol

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  2. Interesting. I think that "living" off one salary is totally doable, but actually "saving" off one salary would be a stretch for us at this point.

    When T finishes his PhD, I think we could probably live off one no problem, but we'd have to be more budget minded.

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  3. Very exciting. I think, talking as someone who is old{er}, lol, learning to, and being able to, live on one income in your twenties would be about the best financial move you could make.

    :-)

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  4. You can totally do this! I wouldn't stop eating out altogether, though...that sounds like a recipe for disaster! (And some serious feelings of deprivation).

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Thanks for commenting!