Transitioning From Two Incomes to One

The day I became a mom is when I actually gave a second passing thought about our family's finances. The day I lost my job when my daughter was four months old, well, that put the "personal" in personal finance.

Because of the unrelenting recession, several people have been forced into a one income scenario. I never thought about my finances seriously until they became personal so the recession is an excellent platform for this- it's serious and it's personal. According to the shockingly high unemployment rates and house foreclosures, it's obvious people are downsizing and transitioning from two incomes to one and/or living off meager unemployment checks.

Note: Even if you have a steady two incomes, it's a great habit and practice to live on one income, and save the other. Folks who do this have ample retirement savings and other benefits as well.

When I lost my job, we had no back-up plan, our salaries were equal. I was given only a 2 week notice from my employer about being laid off. Talk about last minute financial planning and no room for errors. Our monthly income was cut in half! Logically we had to reduce our spending by half as well. That can seem like a daunting task so I had to break it down into steps.

Begin by printing up copies of your bank statements for the prior 2 months. This enables you to identify needless spending. Between my husband and I, there was a total of $500 a month spent on going out to eat. Starbucks coffee might as well have been a bill, it totaled a consistent $150/month for us. Trinkets and toys for the kids can add up, excessive beauty products seem to pile up in the bathroom, unnecessary technology, home phone, hair coloring, and gas.

Looking at our past spending was eye opening. On our bank statement, I highlighted all the spending I deemed unnecessary. Then my husband looked it over and did the same thing. I knew what I could cut down on and it was important for him to recognize what he could cut down on as well. You have to be a team with your spouse and other family members, such as teens, who have spending responsibility as well.

There will be automatic costs eliminated when a spouse loses a job:

• Not driving to work: less money needed for gas. Maybe one less car.
• Less money spent on more expensive clothes for work attire is unnecessary.
• Daycare: Take care of your kids while you're at home.
• Paying for conveniences because you don't have time to do something yourself; you were always at work.
• Cooking at home instead of going out to eat because you got home from work too late and too tired.
• Less income equals more assistance available such as food stamps and other programs.

Rearrange your money:

• Communicate with banks about your finances as soon as possible. They may help or know someone who can to make your money work for you, and in your best interest. If you or your spouse work for certain companies affiliated with a credit union or you are a federal employee, they can easily assist you with loans to consolidate and get lowered payments on many of your bills.
• Put a savings account in your child's name. I realized this was a mental trick for me because it was too hard, and not tempting at all, to take money out of my little girl's account. How could I take money from my baby?
• Arrange your bills to come out of your account or to be paid at convenient and well-planned times of the month. Rent is usually due at the beginning of the month so negotiate other bills later in the month.
• Prioritize your bills. House, insurances, and car payments are large and necessary bills so always put them first and go down the list from there.

The negotiation and bartering process can be fun. One way to do this is by trading services among your friends and family, especially others who are unemployed. An unemployed friend of ours is going to school, but knows a lot about cars and does some of our mechanical work for us. We pay for the parts and he does it free of charge and only asks we be a good reference for him when he applies for jobs. We have a friend who is trying to break into family photography so we got excellent family Christmas pictures free. We've set up exchanges for babysitting services and pet sitting as well.

Suppose you don't have the yard space to grow your own fruits and vegetables, local churches and community places have garden space for you to use. Some churches grow their own gardens and let members, and even non-member, pick produce for free.

I'm always amazed at how many people don't ask others for help or help in exchange for help. You can also exchange money saving tips with your friends and family as well. Right now in this recession, it's almost become "cool" to budget and be cost-savvy so take advantage of it. When times have been tough in the past, bartering and exchanges were a common tool people used to make ends meet. It also creates a sense of community.

There are sites available to rent stuff, anything really. If you want to make a big purchase like a new iPad, but you want to know if it will be worth it, rent it first. If you need to cut down a tree in your yard, rent a chainsaw (if you can't borrow one). And vice versa, rent out some of your stuff laying around as well. Sites like Zilok and lonables are excellent resources. Selling your stuff on eBay and second-hand stores is another good way to turn "junk" in the garage to money.

Since every dollar on a lower budget is worth more, you should get your money's worth.

• Save your receipts: Honestly, I probably return something almost every week. If something doesn't work very well or as promised, I am not keeping it. I used to casually throw these items away or store them with good intentions, but now I return them. As a consumer, I deserve and demand my money's worth.
• Read product reviews, blogs, or customer comments. Google/search the specific item and find a place that sells it, then check out the customer reviews/comments for it.
• Coupons are great, but many stores have automatic price reductions if you get their free store card for discounts. Rotate between three stores- one of them will always have what you are looking for on sale.
• Be aware of size reductions

Many companies have reduced the sizes of their products; Hagen Daz has Buy in bulk

It's best not to look at the situation as temporary. The recession is anything but temporary and you won't benefit from the situation if you anticipate the next bit of extra money you can spend. If you are living paycheck to paycheck, a dedication to changing your lifestyle will improve your mentality and attitude about it. Essentially, adopting a sensible approach to living on less can be viewed as a choice rather than a punishment and will help relieve you from the pressure of keeping up with the Jones'.

The main goal is to maintain a modest lifestyle and not fall into the same predicament down the road. One of the first things people are tempted to do is maintain their former lifestyle of spending irresponsibly, even if it means extending credit card limits and ignoring a budget; champagne lifestyle on a beer budget. More appropriately known in our house as a steak lifestyle on a Bologna budget, only because having steak regularly was the hardest thing my husband gave up, but probably better for his health.

People who don't choose a new lifestyle will only regret it and possibly find themselves in a much worse situation. Don't max out all credit cards before filing bankruptcy or using credit cards to maintain needless spending and old lifestyle.

Your lifestyle overall will improve by:

• buying more whole foods, buying in bulk, and planning meals ahead of time.
• People who give up expensive habits such as smoking and take-out food, save money while getting healthy.
• You can find Chinese or alternative health schools in your area to find discounted alternative medicine and acupuncture. Massage schools offer really cheap, sometimes free massages too.
• Go vegetarian a couple nights a week and save on the meat portion of your grocery bill.
• Lower your cable bill and inadvertently watch less TV and get outside more.
• Parent staying home with child/children can improve and reinforce traditional family values.

I would have been the last person on earth who thought I'd be staying home with my child and learning how to cook. I only knew myself as a fast-paced working girl with goals 100 miles high. Since my layoff (2 years ago), I've enjoyed making the sacrifices to stay at home. I started a wonderful hobby of writing on Hubpages and I learned there is life without triple shot mochas. I am happy with this new lifestyle and making money with my writing. It's all about perspective and resiliency.