From Two to One: Planning

As I posted here, I'm letting you in on all the ins and outs of our journey to becoming a one-income family.  As of this post, I only have 3 full-time days of work left.  After that, I'll be part-time, bringing Bunny to work with me for up to two more months.  Making the decision to stay home full time was a fast one for us, but that doesn't mean it wasn't hard.  Here's how we've been preparing.

1. If you haven't already done so, MAKE A BUDGET!!  If you don't know where your money is already going, you won't know where you can make cuts.  We are fans and followers of Dave Ramsey's Baby Steps and have used his guidance to set up a zero-based monthly budget.  Take a look at his website.  Even if you don't go whole-hog with his Baby Step Program, you can learn a lot of valuable information regarding finances.  
2. TRIM THE FAT!!  Now that you have your two-income budget set up, start playing with the numbers based on only the one income you will maintain.  Get rid of everything you have to in order to make that final number a zero rather than going into the red.  Take stock.  Can you really make it on only one?
3. BE REALISTIC!!  Review that exploratory budget you just made.  Is it realistic?  Can you cut out the satellite tv, eating out, and internet service?  Sure!  Can you cut your electric, water, and/or gas bills in half?  Cut the grocery budget down to a quarter of what it was?  Maybe, maybe not.  Be SURE your goals are attainable.
4. BUDGET HIGH.  Don't set unrealistic goals.  (You can see how these steps all refer back to each other...that's part of the plan.  Every step has to work together before you can move on to the next.)  Want to slash your grocery budget by half?  It's great in theory, but will it really work?  Out here where I live we have two grocery stores, owned by the same company, that don't accept internet coupons.  We don't receive circulars with coupons out here, either.  We have to shop off of sales, so cutting our grocery budget by half wasn't feasible.  Cutting it by 1/3 was, so that's what we did.  Budget high in every category, just so you can be prepared for the worst case scenario.
5. Once you've been through these basic steps, you're ready to take an objective look at your situation and MAKE A PRELIMINARY DECISION.  Just realize that this is a very basic rundown of what we have done.  It took us many, many evenings of budget discussions and many different versions of our budget were developed before we felt we had one we could work off of.  It necessitated more cuts than we thought possible, but we did it.  After all of that, we were finally ready to make a preliminary decision.  Why preliminary?  On to step #6.
6. Spend at least one month, more if possible, LIVING YOUR NEW BUDGET.  Take as much time as you can living off of only one income.  When your secondary income comes in, move it immediately.  Where to?  A good place to start is setting up your $1,000 emergency fund.  If that's done already, start sending it to pay down debt.  Do this for as long as you can stand it.  You need to make sure your new budget actually works.  If it does, you're ready to make your big decision.  If you have any expenses, such as daycare, gas for the secondary earner's commute, and etc. that will go away once you start staying at home, they should be taken out of the secondary income.  You won't need to budget them in once you stay home!!
7. Develop an EXIT STRATEGY.  Once you have all your ducks in a row, figure out a quit-date and notify your employer.  One thing that is important when you do this is to make your exit with integrity and grace.  Do not burn this bridge!  You may decide to, or need to, return to work one day and you may need this employer as a positive reference.  Whether you put in a two-week notice, 1 month notice, or longer, don't forget to continue only living off of one income so you are ready for what's ahead.

In the interest of full disclosure, MM and I did not follow this plan verbatim.  Our decision was God-led so what we really did was make the decision for me to stay home and then follow the steps in the plan to figure out how we were going to make it work.  In an ideal world, though, this is what we would have done and as soon as the decision was made, this is what we did do.

It was a tough process, but we had a goal in mind and were going to get it.  Some of the expenses we are letting go of are satellite TV and daycare, and we have made fairly severe cuts to our clothing, gas, grocery, and entertainment budgets.  We did not change the amount of our utility budget, but have been doing what we can to limit our use with the hopes that those items will be under budget most months which will allow us to contribute more to our debt snowball.

After all is said and done, we are ready to become a one-income family in a two-income society.  As I've said before, it is going to be hard, but the work is well worth the reward!