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!

From Two to One: Choosing to Make a Change

Some of you may have read this post, where I announced that MM and I had decided that the most important place for me to be was at home with Bunny.  While we're certainly excited about the benefits this will bring MM, Bunny, and I, we are still apprehensive about the financial aspect of what we're doing.

First off, I'll run down the basic math.  I was making a whopping 45% of our income.  For all intents and purposes, we're cutting our income in half.  Sure, we won't be paying for daycare anymore, but we will have the added expense of me being added to MM's insurance premium.  He is also adding me as a dependent for his income tax withholding, but that doesn't make a whole lot of difference.  Once I make adjustments for the costs of daycare, extra gas, and the difference between the additional insurance premium and the new withholding amount, we are looking at a 40% reduction in monthly net income.  On top of that, we still have a substantial amount of debt that we would like to not just pay, but pay off way ahead of schedule.  Can you say YIKES?!

It's time to tighten our belts!!  

So, how are we going to do it?  Well, over the next 6 months, I plan to detail for you our journey of going from a two-income family to a one-income family in the midst of a recession.  We know we are swimming upstream.  We realize that what we are doing is not the norm.  We also know, however, that God's plans are central to this decision and that He will provide.  No, he probably won't provide a raise for MM, or a sudden windfall, but what he will provide us with is the tools, discipline, and determination to make our financial goals possible.

I'd love for you to follow along as we work through this new chapter in our lives.  There's sure to be successes, but failures as well, and I assure you, some of my efforts will probably have comedic, catastrophic results, so be ready to laugh and learn from my mistakes.  My hope and prayer is that it may be an inspiration to someone who is struggling to make the decision to stay home or not, is feeling trapped in an ever-expanding sink hole of debt that seems impossible to conquer, or is just looking for some ideas for how to trim the fat off of the family budget.  And if I don't inspire you at all, at least you'll be able to laugh along with me & my mistakes!!

Thank you for reading and God Bless!