Can You Live off One Income?
Because I can’t.
I’ve done the math a million different ways, but it just doesn’t add up. M and I would have to move to a different apartment (forget about buying), save less than half of what we’re currently saving every month, and contribute a lot less to our retirement accounts.
And that still might not be enough.
Is it because we live a lifestyle that’s too extravagant? Is it because we aren’t responsible with our money?
No. You’re talking to a guy that eats the same sandwich every day, year in and year out. Boring? Sure, but it saves me a lot of money.
The reason I bring it up is that Steve over at Brip Blap recently wrote a post titled The Two-Income Myth. In the post, he hints at something that really got to me: the main reason why couples can’t live off one income is because they refuse to sacrifice “luxury vacations or idle purchases of gadgets and jewelry and so on.”
I respectfully, vehemently disagree.
I know the people Steve is talking about: we’re surrounded by them. They spend more than they make, they use their credit cards irresponsibly, they buy things on a whim because they “need” them, etc.
But sometimes it’s just as simple as not making enough money.
I’d love to live off one income and save the rest (and will have to eventually), but the math just doesn’t add up.
We would need to either drastically alter our lifestyle or we need to make more money.
I’m curious to hear other people’s thoughts on this. Is it just a matter of revamping one’s finances or is there more to it? Because right now I just don’t see how we could do it other than going ultrafrugal, which I don’t think either one of us would be happy with.
January 15th, 2010 at 8:59 am
You should let M stay at home and quit her job when you have children. You can always get a second job and see your children in between the two jobs.
January 15th, 2010 at 9:05 am
Thanks for the thoughts! I’ll just point out a couple of things. Quote: “We would need to either drastically alter our lifestyle or we need to make more money.” Yes. You live in Chicago – could you move to, say, Carbondale or Milwaukee or even Kansas and live a less expensive lifestyle? I’m not trying to do a “gotcha,” but I believe you own a G1 phone, a Wii, and got a flat screen TV (albeit as a gift, if I remember) in the last year or so. You’ve written about being tempted to buy a house you would barely have been able to afford, too. These are choices, not necessities.
I’m basically just repeating a mantra of a huge segment of the personal finance/frugality blogosphere: you can choose to have two incomes, live in high-priced metro areas, buy instead of rent and get video games, new TVs, the latest phone, etc. Or you can adjust your lifestyle to live off one income. Or you can do things to increase your income: start a business, get an MBA, etc.
So yes, you got it right: You would need to either drastically alter your lifestyle or you need to make more money. Both are possible, right? My wife and I drastically altered our lifestyle, moved from New York to Florida to decrease our cost of living, and I have aggressively pushed to increase the income I make (which is now about 90% of what I made in NYC, while our cost of living has gone down significantly). Yes, you might have to forget about buying. Yes, you might have to move to a cheaper place, or buy fewer gadgets, or even save less. My wife and I were both highly-salaried professionals who spent most of what we earned when we met. We saved 100% – ALL – of my wife’s salary for two years after we married, kept renting until we could afford to buy (I didn’t buy a home til I was in my mid-30s after saving enough for a cash down payment), and drastically reduced our lifestyle. Hence, we can now live comfortably on one salary, even with two kids.
I just want to be clear: it’s fine if you WANT two incomes, for career reasons, for money reasons, hell, even if you just like buying tech gadgets. Really. But my point is simply this: for most middle-class people – people with cell phones, video games, buying homes, etc. – it is a CHOICE, not a necessity.
January 15th, 2010 at 9:16 am
Yes, we’ve been living off one income for 4 years. It’s great being able to save my wife’s entire paycheck every 2 weeks and good practice – she’ll be quitting in June when we have our second child.
It sounds like you could do it too, but choose to save extra $ and rent a more expensive apartment instead – choices.
January 15th, 2010 at 9:49 am
We can live off one income, even the lowest one between my wife and me. This gives us great peace of mind which we would not have if we lived a more lavish lifestyle.
January 15th, 2010 at 10:22 am
What a great post! I always have this debate with people…and with myself. My husband lost his job last year and we have lived off my meager nonprofit income for the last year. He has finally gained a contract job and we are going to see the burden ease. But I agree. It’s really hard, especially being in a city to function on one income. I also think it’s easier to say “save one income” than it is to really make it happen. I am glad that you brought this up. It’s a great topic!
(p.s. have been reading your blog here, and love it. this is my first comment
)
January 15th, 2010 at 12:06 pm
I agree that sometimes you simply can’t live off one one income. I live in Omaha, NE, which is touted as one of the cheapest places to live. My S/O and I both work in professional careers with Fortune 500s and make decent salaries. Yet, there is no way that we would be able to save one of our entire salaries.
We don’t live extravagant lifestyles and we even have a roommate who pays for our cable service. Before she moved in, we used bunny ears. I still have an el cheapo cell phone on my parents plan, because its cheaper for me to spot them the $10 than for my S/O and I to be on our own “family plan.”
We do eat out occasionally and we do take vacations, but the vacations are paid for off of credit card points generally and eating out is our form of entertainment. We don’t generally attend more than two sporting events per year and concerts are a rarity. Maybe our one “luxury” was the adoption of our elderly Great Dane, but the joy she brings offsets the financial burden.
But once you get down to our available after taxes, retirement and savings, there really isn’t a whole lot left over. We’re comfortable yes, but choose to live on just one salary? It’s just not likely going to happen.
January 15th, 2010 at 2:40 pm
@Melissa – Hmm… I don’t get it. I work in a professional career for a Fortune 500 company in Omaha as well. My family of 4 can live off one income – we did for the last 6 months or so after our 2nd child.
My wife recently went back to work part-time for adult interaction and for a little extra money – but it was possible.
January 15th, 2010 at 3:00 pm
I’m with Joshua. I have friends in Omaha. They have 3 kids, nice house, and he works as a mid-level manager for a Fortune 500. She stays home. So it’s possible, especially if you both make decent salaries. If you’re charging enough on a reward card to take multiple vacations on points, you’re racking up some expenses somewhere.
But I would still challenge your statement that you “can’t live off one salary.” You can. You just don’t WANT to. And again, I’m not trying to bash, it’s certainly your lives and your choice. Do what works for you.
January 15th, 2010 at 9:17 pm
I have to side with WC on this one. Not every couple can live off of one income. If they don’t make enough money, then it is isn’t going to happen.
I think age is a factor – when I was in my twenties I never made enough money to support myself never mind anyone else. Sure, I could have moved to a cheaper city to live in but I wouldn’t have made as much money either.
It’s easy for someone who makes $100k+ to say that it’s easy to support a family on one income but unfortunately – not everyone makes $100k. I’m not saying you need $100k to support a family but it makes it a lot easier.
January 15th, 2010 at 9:22 pm
I live in the Washington, DC area (Arlington, VA) and can easily save half my salary and I live by myself. This area is a little more expensive than Chicago, unless you go super high end in IL, and way way way more expensive than Omaha. I chose not to save half, though I do come close. I honestly don’t see any reason a couple couldn’t live on one income in Omaha (I’m not taking kids into account). I have lived in a cheap city (Pittsburgh) and I saved at least half my salary, probably more, when I made 2/3rds of what I make now, and I lived in a spectacular area, had cable, a PS2 (the best at the time), went out at least 1 night a week, and had a car. I don’t buy that a couple can’t live on 1 income unless that person works a non-professional job (McDonald’s, Starbucks, etc.).
January 15th, 2010 at 10:40 pm
It’ll be tough with a kid Nut. Best to wait, if you can’t live off one income.
I guess I can we can do it, but we’d have to get rid of our vacation home in Tahoe. Hopefully that will be paid off in 8 years, when my wife no longer wants to work.
Adjustments will need to be made for sure.
January 16th, 2010 at 12:50 pm
I’ve been thinking about this a lot after reading Steve’s post, his comment, and everyone else’s comments. And I think Steve is right. It can probably be done, but I need to seriously re-evaluate everything we spend and everything we make.
I’m going to chew on this a little longer and try to put a potential plan together to see if it’s even possible. Drastic measures included.
Thanks for the great feedback to everyone though!
January 17th, 2010 at 6:31 am
Not making your specifics know makes it hard for me to know if you can live off one income. If, for some reason, you really want this, I would suggest one of you drop to part time first and see how much lifestlye you can cut back. It’s about standard of living.
January 17th, 2010 at 10:19 am
I believe you CAN live off of 1 income. I’ve went from a 2-income household to a 1-income household. There were definitely some initial financial shock issues. But, I relentlessly looked at my expenses and cut out any frivalous spending. I also pursued legitimate ways of earning money online. But, creativity is key here.
CarA
January 17th, 2010 at 11:38 am
@CarA: I’s curious what kind of creative things you did to achieve this. Any good tips?
January 18th, 2010 at 9:23 am
Hey Nut- Some creative things I did:
I sold my second vehicle, which had a car payment of $450 of month. Having a second vehicle is a luxury for me at this time.
I also got a roommate. I know that probably wouldn’t work for your situation but it drew in an additional $450 a month.
I also joined some secret shopping programs and some online surveys that helped out some—granted, you won’t get rich off of these but it helps.
I cut out multiple bills like: land line vs. cell phone, home internet vs. cell phone internet, etc.
I stopped eating out and started finding ways to have fun without spending money.
I also started looking at the freecycle.org website to get other’s unwanted items. There are truly some great items that others no longer want that you can utilize.
I also know where my money is going. I have it all in black and white.
It hasn’t been easy, but I’m getting better every day. I also have some huge credit card debt I’m working to eliminate and keep track of it on my blog.
Hope it helps!
CarA
January 20th, 2010 at 10:36 pm
@FourPillars: Mike – it was a long time ago, I know, but my parents raised me and my brother on my college-professor-dad’s salary alone. My mom stayed home until I was about 14 (she was going to school) and I guess my dad made in the mid-30s (granted, during the 80s).
I’m sorry. Again and again I come back to my point – it’s doable. I know a lot of people here in Florida now who get by on one military salary with kids. They have a decent life. It’s easy for me, making over 100K, to say it’s doable but again, it’s doable if you WANT to do it. You don’t HAVE to do it, but it can be managed.
February 21st, 2010 at 10:23 pm
Yes it’s doable to make it on one income, at least for us it is. We tested this out last year when I quit my six figure job after an unfortunate late pregnancy loss. My husband’s income was 25% less than mine and we had to really cut back but we were just fine. The year off for me gave us the opportunity to deal with our loss and refocus on life’s priorities. It gave us time to appreciate all that we do have, especially when so many of our friends lost their jobs in 2009 due to lay offs in their companies. Leaving work during a time when jobs are a rare find wasn’t a difficult choice to make. It helped me realize that a job is just money and there are things in life that are more important.
We saved $1500 last year on unnecessary “added crap” that was on our auto/home insurance as well as our cell, cable & internet bills. I even found a bunch of fees charged by our bank in error. The bank reimbursed us over $700!
Restaurant dining was a treat we did 1x month and most often it was limited to something like Olive Garden where we both shared a meal and drank water instead of wine. (Those restaurant meals are too large anyway) We downsized to 1 car and refinanced our home. Instead of vacationing afar, we stayed home and rented movies for our “vacation.”
My point is – when the money is flowing like milk and honey it’s easy not to pay attention where its going. Now that I’m back to work, we’ve kept our thrifty habits. We’re focused on retirement investments and paying off the 2nd mortgage.
February 13th, 2012 at 3:38 pm
I think the demographics of the American family have changed and allowed the consumerism model to take hold. What used to be a choice or a luxury is a requirement. An unintended consequence of two incomes has been the increased consumerism and helped convince us what the new ‘normal’ is.
Couple this with wages that have been somewhat flat for decades, prices for housing and healthcare that have been rising relative to other costs and the 2 income model that should be a boost to the family is now a must.
Living on a single income is not impossible, but it is quite a challenge. Single income household tend to have meager (if any) contingency funds…so any expense that cannot be budgeted is another opportunity to incur more debt. One good car repair could cripple a 30k family for some time. The debt cycles starts and never seems to end.