Three months on one income prompts a change

This week marks a notable anniversary in M’s and my household: three months living on one income. All in all we’ve managed well, but I can see things getting more difficult in the months ahead. So we are planning to take steps now to avoid trouble later.

Living smaller
While it hasn’t been easy, living from my income alone hasn’t been too difficult since M left her teaching job last June. The bills are paid. The pantry is stocked, though the shelves get a little more bare before the next trip to the Stop ‘n Shop. We’re surviving without cable television (though disappointed to discover that there’s just as much junk on regular TV from which to shield my teenage stepdaughter as there is on digital TV).

We’ve also achieved a couple goals. We used savings to pay off all of M’s remaining undergraduate school loans. That put us in position to apply for a special federal grant that M qualifies for, which will pay for her recent grad school classes—thus freeing us completely from student loan debt. M also tapped into some of the last cash we received from our wedding (three years ago) to have our kitchen finally painted a color she likes, rather than despises.

Worth the sacrifice
The best part of our one-income life has been seeing M happy and enjoying her new job as full-time mom, which has benefited us all. For example, the start of the school year usually brings a lot of stress, with frantic shopping trips for school supplies in crowded stores and stacks of school forms going unsigned days past their deadlines. This year, my stepdaughter had all her supplies before her first day in seventh grade, and the forms she dumped in a pile on our dining room table were returned the very next day.

It’s all been well worth not being able to watch my beloved Phillies on TV every night—even though they are in the hunt for their first baseball postseason appearance in 13 years.

Drain on savings
Still, I can see clouds on the financial horizon. M and I continue to create a spending plan prior to the start of each month—as we have for the last year—but have yet to stay within the plan’s boundaries. We haven’t overspent by much, mostly on things that have “just popped up,” but to compensate we’ve dipped more heavily into our cash reserves than we should be doing at this point.

Those reserves have been further drained by our house and cars. In July the dishwasher died, followed quickly by the basement dehumidifier, and a sporadically leaking toilet. Both vehicles stopped working at different points this summer. Apparently, these material things don’t understand the limits of our resources.

And needless to say, we have ceased saving—for college, the kids’ clothes, Christmas. I still contribute to my retirement plan, though only to the amount my employer matches. In retirement, M and I should actually be in very good financial shape—when we get there in 25 years.

Kickin’ things up a notch
So what to do? In October, we’re taking an Emeril Lagasse approach with our finances and “kickin’ it up a notch.”

Today, we purchase almost everything by credit card. We pay off the entire card balance each month and get rewards points have that helped us save a good amount of money on plane tickets and on our recent Disneyworld trip.

Next month, we’re moving to a cash-based system. We won’t be keeping envelopes stuffed with twenty-dollar bills around the house, but we will be using old-fashioned hard currency for things like groceries, gifts, entertainment, and household purchases.

I expect the move will help us stay within our spending plan’s boundaries—if something “pops up,” we’ll have to decide where the money is coming from to pay for it, or run out before the next payday. But it should also help us spend less. Research says that credit card users spend approximately 30% more than those who make cash purchases. It will be interesting to see if that bit of data holds true for us.

I’ll let you know how our experiment is going, and whether it’s worth trading off the savings from our reward points. In the meantime, keep us in your prayers.