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. 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?