Friday, December 17, 2010
Going From Two Incomes to One (Part 3)
You can read Part 1 here and Part 2 here, but I left as:
With all of this being done, a month and a half before the scheduled “quit” date, we ran a test month on one income. All of my husband’s income went directly into a savings account.
So for our test month, we were not allowed to use any of my husband’s income. All of his income would go directly into our savings account. We deemed our test month as “Super Family Holdback”. We only bought what was necessary. Using some of the principles from Dave Ramsey’s Total Money Makeover, I made a spreadsheet to incorporate all funds coming in and out for the month. For the first time, I told our money where to go for the month.
For our test month, I recorded every penny we spent for that month on my spreadsheet. What a surprise to both of us, that it was possible to live on one income, you can read about our test month here. We were even able to still put money into our kids’ 529 accounts, retirement, and put money in our emergency savings account. So back to my “signs” I was waiting for, well this was a sign, a sign that we could do it. We were actually kicking ourselves on not doing this earlier! We were actually able to save more money than normal since we had reduced our spending so much.
My other “sign” came when I found out from my work that I would be charged a $125 monthly spousal surcharge if I carried my husband on my health insurance when he had access to health insurance from his employer. Well he did have access from his employer at a rate of $199 dollars a month for a single person! So when I totaled my new surcharge that came out to a whopping $1500 a year! This would in actuality further reduce his salary by an additional $1500. We just did not see the benefits of him continuing to work.
Our minds were made up; we could live on one income. We would have to watch our spending and track every penny of it to make it work, but we could make it work. It was decided and my husband turned in his two weeks notice at his employer.
To be continued in Part 4 (Final Post)...