I spent 2008 getting to know my future spouse.
In the late summer, we had a pragmatic discussion about how each of us wanted our futures to look.
There was a lot of overlap, which was a relief at that point in our relationship.
The future Mrs. RBD earned a Master’s degree and had a lucrative career, but she didn’t see it as sustainable if she were to become a parent.
The hours were inflexible, and she didn’t enjoy it.
That conversation gave us foresight and was our first step toward living on one income.
After we married, we started pretending to live on one income, using my salary for expenses and hers to save for a house down payment.
Then she worked part-time after having our first child, but that only lasted another year before fizzling out (about five years after the conversation).
That’s when we actually began living on one income. It scared me at the time.
It’s part of why I started blogging in 2013 in hopes of replacing her income.
This week here in 2021, Mrs. RBD went back to work. But her new job is nothing like her former career.
The COVID-19 pandemic tested parents — requiring us to balance careers, homeschooling, and anxiety.
I am fortunate to have a stable career with a premium employer and the flexibility to work from home.
Our household income never faltered.
Mrs. RBD wasn’t working, which took some of the parenting heat off of me.
She handled the brunt of the disruption for the many months when the kids were home from school and learning from computers.
We didn’t anticipate pandemic lockdowns back in 2008 when we started thinking about living on one income.
But the decision to live on my salary alone helped tremendously throughout 2020.
We struggled to manage our household at times, but I watched friends and coworkers who had it worse. I’m thankful we prepared for uncertainty when times were good.
Had Mrs. RBD continued her career all these years, we’d be much wealthier today and probably living in a bigger and more expensive house (for better or worse).
But we wouldn’t have had the flexibility to keep one of us focused on the kids each day.
It certainly wasn’t easy for her to stay home while I was in the office — the kids are far more exhausting than (most) coworkers.
Ask her if she’d make the same decision again, she’d say yes — though she was not immune to second-guessing her decision in the trenches of having three kids under age four.
Her going back to work now won’t change our spending habits.
The new job is part-time and doesn’t pay much. But she’s not in it for the money.
She’s going back to work because it’s an opportunity to be engaged in our community.
Her new paycheck is gravy — bonus money, in our minds.
Our youngest is out of preschool now, saving us tuition for the first time in seven years.
We’re getting money from the government, too, even though we don’t need it.
Suddenly, our cash flow changed sh** up on its own.
One covers our expenses. The other five build wealth.
These alternate income streams didn’t appear overnight.
They took time, work, financial sacrifice, and patience to build.
My uncle gifted me one share of stock for my 20th birthday. On June 12th, 1995, I received my first dividend — a $0.46 payment from Chevron (CVX).
It was my first taste of passive income and compounding.
Combined with my college job developing film and printing photographs (skills that would soon be obsolete), I had two incomes at age twenty.
The second income was pennies, but I discovered a repeatable process that I could scale.
The $48 gift from my uncle opened my eyes to what was possible.
Today, we’re reaping the benefits — we have a savings backstop and sufficient income from the five secondary sources to cover our basic living expenses. It’s enough.
Eventually, my salary will go away for good.
Privilege and Challenges
I want to acknowledge our family’s privilege.
Since birth, we have had several advantages working in our favor, including education, socio-economic status, ethnicity, good health, and being raised in stable households.
These advantages become more evident with hindsight.
But privilege only gets you so far.
Part of what inspired this post is watching real estate prices surge in our area.
From 2019 to 2020, prices in our zip code rose about 10%.
In 2021, prices rose another 20%, according to Redfin.
One house sold for $115,000 above the previous highest sale in my neighborhood of about 90 houses. Another home sold two months later for $30,000 more than that.
Existing owners are eager to tap home equity with cash-out refinances to remodel their homes. Contractors have their pick of the litter.
But the steep price increases make it more challenging to buy in our neighborhood.
We have many single-income families because there’s a large transitory military presence in our area.
Even dual-income families are struggling because they often stretch to afford a home where they want to live.
Payments toward student loans, healthcare, cars, kids’ activities, and child care reduce what’s available to put toward a mortgage payment. Saving and investing come last.
Incomes have risen slower (<5%) than housing, and it was already expensive before 2019.
It’s not easy to live off of two incomes, let alone just one — especially in high cost of living areas.
It is possible by growing your overall income and maintaining a low spending rate relative to your income. Then put aside what’s leftover to build security, passive income, and wealth.
Just as important is to diversify your income, so you have other sources to fall back on when life throws curveballs.
But it takes time to get ahead if you’re starting from behind.
Plant the Tree
Readers of this blog range from twenty-somethings to the fully retired.
Some are financially secure, and others are barely scraping by.
Regardless of your stage of life or level of financial security, we can all benefit from taking steps today to reduce financial vulnerability.
Financial vulnerability is:
- Living paycheck to paycheck
- Having no emergency savings
- Wanting more than you can afford
- Carrying excessive debt
- Not investing
- Being uninsured
- Retiring too early
You can’t go back 20 years and make different financial decisions.
But you can plan and make decisions today to empower the future you with more stability and options.
- Reduce monthly spending to free up cash
- Build savings to brace for uncertainly
- Reverse bad financial decisions (excess car, house, etc.)
- Invest for the long-term
- Maintain a modest lifestyle
- Build multiple income streams
Starting small is better than not starting at all.
A big part of successful personal finance is simply making more good decisions than bad and doing that consistently for decades.
As your financial IQ grows, you find that the benefits of good decisions begin to trickle in.
Then they pour.
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Personal Capital - A free tool to track your net worth and analyze investments.*Advertising Disclosure: RBD partners with Credible which offers rate comparisons on many loan products, including mortgage refinances and student loans. This content is not provided by Credible or any of the Providers on the Credible website. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by Credible. RBD is compensated for customer leads. Credible Operations, Inc., NMLS Number 1681276, not available in all states. 320 Blackwell Street, Suite 200 Durham, NC 27701.