Some couples choose to go to one income: to have a baby, to go back to school, to start a business. For others the change is involuntary and terrifying: layoff, illness, a business going under.
Those who seek change have the option of preparing for it. Those who have change thrust upon them can only scramble to minimize the damage.
I interviewed two couples, one from each camp, for “How to become a one-income family,” my current Living With Less column over at MSN Money. [Edited to add: This column, along with my other MSN Money articles, disappeared after Microsoft changed platforms. Sorry about that.] They discuss what they did (and didn’t do soon enough) to deal with the challenges.
The “choice” couple’s story might encourage those of you dealing with debt. They started out $70,000 in the hole: student debt, a HELOC and an auto loan. Within two years they’d paid most of it off and created a $23,000 emergency fund. To do this they sold a bunch of stuff (including the car they’d just purchased) and slashed their expenses ruthlessly.
These days they don’t have to be quite so careful. For instance, each now gets $100 a month in mad money vs. the $25 a month of their bare-bones-budget days. Yet they still live frugally, especially since they’ve had a second child. What’s interesting to me is that neither of them has a full-time job, but they earn decently and spend carefully.
Has your family made — or been forced to make — a similar change? What advice would you give to folks looking at voluntary or involuntary downsizing?