guy holding cash
Finances,  Frugal Living

From Double Income to No Income

In less than a year we went from being a double income family to having no  income.  

Last year, in preparation for my sabbatical, we were able to get a grasp on our finances. We found ways to reduce our monthly expenses and live on one income. Now, with the temporary closure of my husbands business due to the coronavirus, we find our selves being a no income family for an unknown period of time.

If amidst this coronavirus pandemic you are finding your family dealing with a lot of financial changes, you are not alone. 

I’m sharing the process we used to reduce our expenses for my sabbatical in hopes that it will help you make it through these difficult financial times. I’ll share an easy process to examine your finances and reduce your monthly expenses.

If you are still making the same income, that’s great! I would recommend that you still use this process, and put that extra money in an emergency savings fund. 

Change is Scary!

Let’s be honest. It is scary changing your income level! 

Even though our reduction of income for my sabbatical was planned, it was still scary. We had been a two income family for nearly 20 years. We went from being a two income family to a one income family. 

Control What You Can

coins with clock

It has been a much different feeling choosing to reduce one income versus having it mandated. In the case of my sabbatical we were nervous, but the thought of staying in the same miserable work scenario indefinitely was much worse. I was extremely burnt out and I needed a change badly! See my post on Why I Quit My Job As A Pharmacist. 

We were motivated to figure out how to make our finances work so that I could leave my job. When we began the journey, I was still trying everything in my power to make my job work out. But by focusing on our finances over many months I started to feel hope and have confidence that I would actually be able to quit my job at some point. That was great motivation to keep working hard on our finances!

Once we had a good grasp on our finances, the math explained itself. We were able to make a plan and felt confident moving forward. It took us about one year of tracking our finances, making changes, and planning for the future for us to get to the point that we felt comfortable with me quitting my job.

Fast forward 10 months, to this month, early March. The news started showing the severity of the coronavirus and talking about predicted temporary closures of businesses. We knew this was probably going to impact us at some point, so we started thinking about reducing our expenses even more.

Evaluate Your Expenses

Evaluating your expanses can be hard work and takes time, but it is worth the effort. Here’s how we did it then and what we’ve been doing now to reduce our expenses even further.

The first step in reducing your monthly expenses is to get a good understanding of your expenses. Where is your money actually going? 

Before my sabbatical, we always had enough money to cover our bills. Because of that, we never bothered tracking the details of our expenses to see how much we were spending, saving, and exactly where all of our money was going. We had a general idea, but we didn’t know the details.

To track our expenses we started using an expense tracking app. We log our expenses in it every time we spend money. We log our bills and daily expenditures, as well as our income. 

We set up categories to track the expenses so at the end of the month we can see the total expenditures and how we are doing in each category. Using it, we could actually see where all of our money was going! It was an eye opener to say the least. 

If you need to get a handle on this right now, instead of going through the process over several months like we did, you could review past expenses (bills) and estimate cash spending to get an idea how your money was spent over the last few months. 

Plan for the Infrequent Expenses

holding a dollar bill

Estimating expenditures for the long term is harder than the month to month bills. Be sure to keep in mind things that come up infrequently or are “unexpected”. We’ve learned this the hard way, through experience.

After tracking for a year, we realized that nearly every month we had about $1,000 of “unexpected” expenses. For example, we’ve had to replace a computer, water pressure tank (we use well water), a new engine in our 18 year old car, vehicle registration and insurance, other home maintenance items, Christmas, birthdays, vet bills, health bills, travel, etc. 

By tracking our expenditures, we were able to realize that these “unexpected” expenses were not actually “unexpected” like we had always thought. Every month something came up and most of them were recurring periodic expenses that we just didn’t plan for. These infrequent expense may be harder to anticipate but by tracking them you will be able to find patterns and get a full picture of your expenses. 

Investments and Extra Payments 

This post isn’t about investing, but I do want to touch on this for just a second.

If you’ve been making extra payments on debt like vehicle, credit card, and house payments or investing extra cash, track those as well. If you are trying to reduce your monthly expenses due to loss of income, those extra payments and investments can be dropped. I’d recommend that you continue paying the normal payments in order to avoid fees, just stop making extra payments if you are needing to reduce monthly expenses for a time. You can make extra payments again once things settle down. 

Reduce Expenses

Rice and Beans

Reducing expenses and living a more frugal life takes effort.

“Frugality is the quality of being frugal, sparing, thrifty, prudent or economical in the consumption of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance.” (Wikipedia)

We started to reduce our expenses before I quit my job. We tested out the changes to see if we could support our life on one income and maintain those changes. We then adjusted as needed. Without the luxury of time, we are making changes quickly.

There are many ways to cut back your expenses. Look for things that you pay for that are not giving you value. Here are some ideas to get you started.

  • Cancel unused subscriptions 
  • Switch from expensive satellite or cable to streaming TV 
  • Lower cost cell phone plans
  • Pack lunches instead of eating out 
  • Pack snacks instead of buying them
  • Make coffee at home and take it in a thermos
  • Pack your own water instead of buying water bottles
  • Eat out less, cook at home more
  • Choose lower cost options on daily items (e.g. grocery sales, generics, garage sale or thrift store items)
  • Use what you already have (e.g. freezer and pantry foods, cleaners, clothes, craft items, etc)
  • Borrow from a friend instead of buying something that you will only use once
  • Walk or bike instead of drive
  • Do all the errands in one trip instead of multiple trips to save on gas
  • Groom dogs at home
  • Instead of shopping for fun, do something else! Spend time outdoors, visit friends, do a hobby (use up that craft supply), anything instead of buying more stuff that you don’t actually need!

Optimize Spending

In general, we just made choices that optimized our spending. We evaluated what was valuable in our life and cut out unnecessary expenses. We didn’t make life miserable for ourselves, but we did cut back wherever we could. By doing that, we found that we actually had more appreciation for the things we were spending money on and didn’t feel like we were depriving ourselves. 

Going through this process helped us build up our emergency fund so that we could make the change to being a one income family. That emergency fund will continue to help us as we proceed through this temporary stint with no income.  

We will be cutting back even more during this temporary unemployment due to the coronavirus.

Saving Even More

Here’s how we’ve reduced our expenses even more this month….

  • Almost zero eating out. If you can support local restaurants, do it! But if you need to cut back in order to keep your family safe, then that needs to be your priority. Trust that other people will support the restaurants.
  • Making more low cost meals, especially since feeding all four of us 3 times a day plus snacks. I have a teen and pre-teen boy, they eat a lot!
  • Feeding the kids lunch at home is actually cheaper than the hot lunch price we pay at school. They both hate cold lunch so this is a weird quirk that is working in our favor right now.
  • Less driving! I used to spend 1 to 2 hours per day driving back and forth to the gym, after school activities, and evening activities. Now I rarely leave the house. I’m saving a TON on gas! 
  • Eating more of the stuff I already had in the freezer and pantry. Using up what we have!
  • Less money on entertainment, no movies, music, bars, etc.
  • No money for travel (gas, hotel, dog kennel, meals, entertainment, etc) 
  • Probably spending more on in home movie rentals, but not much. We always check for a free movie first!
  • Our electric bill might go up from so much TV and Xbox usage. It will be interesting to see how much change there actually is!

Review Expenses Often

Couple having wine and cheese

We review our finances every month.

My husband is actually the financial guru, and at first all this financial talk was like pulling teeth for me. But once I had a goal and a reason for tracking all of this, I was motivated and on board with it.

Maybe a recent loss of income is your motivation. It has certainly renewed our motivation!

In order to make our monthly financial check in more fun, we plan a monthly meeting in a relaxing, date type environment to review our expenses, income, goals, plans, and progress. We like to do things like have wine and cheese on the patio, wine and appetizers with a gift card from Olive Garden, or breakfast in bed with lots of coffee. The key for me is to make financial planning fun as well as informative.

Clearly seeing how our money is spent on an ongoing basis continues to be key in helping us focus on making sure that our money is funding the priorities in our life.

Try it Out

If you don’t already have a process to evaluate expenses in your life, I hope this article inspired you and gave you a simple process to start taking control of your finances. Knowing exactly where your money is going is life changing. 

I pray that you all are well. Stay healthy! 

I’d love to hear how you are cutting back on your expenses! 

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