5/18/2011 1:47 PM ET|
Can your family survive on 1 income?
There are real financial risks when one parent decides to stay at home, but careful budgeting and expense trimming can help make the transition work.
Cricket Jones was a stay-at-home mom for 28 years and raised five children. Then she and her husband divorced.
The Boise, Idaho, woman doesn't regret staying home, but she does wish she'd finished her college degree and kept one foot in the work world with some kind of part-time employment.
"When I divorced, I was left without any skills to get a decent-paying job," Jones said. "I went back to school at the age of 48 and became employed a year later. Not the best way to do things."
Many discussions about becoming a stay-at-home parent focus on the benefits to the children and the immediate costs -- having to live on a budget, eating out less and so on.
But deciding to become a one-income family carries some long-term financial risks as well, especially to the person who's leaving the workplace. Without careful planning, the result can be more debt, less in retirement savings, atrophying job skills and greater vulnerability to economic setbacks.
The stay-at-home parent not only gives up current income but may also face lower lifetime earnings and retirement benefits because of time away from work. In her book "The Price of Motherhood," former New York Times economics reporter Ann Crittenden estimated her decision to stay at home cost her between $600,000 and $700,000 in reduced income and lost pension credits, while economist Shirley Burggraf calculated that a couple earning a combined income of $81,500 could lose more than $1 million if one partner stopped working. Even a lower-income couple where one partner earns $30,000 and the other $15,000 faces a $600,000 difference if the lower-earning spouse stays home.
Taking just a few years off from work wouldn't be as expensive, but labor economists warn that any substantial time away from the working world can result in lower earnings when you return.
When I asked my Facebook fans who lived on one income to offer their best advice, it boiled down to this: Prepare well in advance for what you're about to do.
"Plan, plan, plan," wrote one. "One of the best things we did was refinance our home at a low interest rate while we still had two incomes (so we could qualify) under stricter banking rules. Also, we started living without my husband's check to see if we could live on one income. His checks went into our emergency savings fund."
Kristina Olson of Delta, Utah, and her husband started living on one income while she was pregnant with their first child. Before that, they paid off $28,000 in credit card debt. Her one regret is that they didn't start living on one income earlier and retire all their nonmortgage debt.
"I do wish we had used more of my income to pay off more debt before that, but all of our rates on student loans and vehicles have always been lower than 5%," Olson said. "We have paid off some here and there, but probably could have been completely out of debt a long time ago."
Candace Thelen Rose of New Richmond, Wis., echoed that sentiment. The family trimmed utility, insurance and food costs, but such moves ultimately weren't enough to prevent her from having to go back to work.
"It would have been so much easier to stay on one income if we had not had $400 a month to pay on debts," Rose wrote.
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It seems making money working for pay is so much more important than staying home and raising the children one works so hard to gestate. My society makes me feel like I am a villain for being the Stay At Home Parent. I did things differently than most women, however, I worked for 20 years before becoming a wife and mother. Perhaps I have a different perspective. My child will be with me (most likely) the rest of my life. Paid work will not...even though our society is working hard to eliminate such things as retirements for the folk 55 and under. What is five years out of my paid career to make sure my child gets the best start in life I can provide?
The myth that only paid work is work must die.
1. No credit cards. If I don't have the cash, I don't need it
2. Nothing is the newest, biggest, baddest, best. I don't try to keep up with anyone
3. Doing what needs to be done. When laid off, I took a job as a security guard, went from 6 figures down to 9.25 an hour. Never missed a house payment, or a truck payment, my family never went hungry, although I did a couple of times. When the jobs came back, I moved on.
Plan ahead is a joke. Millions of people planned ahead, then Wall Street started screwing around with 401k funds. Millions of people will now work till they are dead, and never retire. Work hard, save where you can, stay OUT OF DEBT, and you too can make it on a single income.
It's all about choices and lifestyle. My husband and I live on one income that amounts to $60,000 a year and we do just fine. We pay our bills on time, we don't overload ourselves with debt, we live within our means and treat ourselves to something special once in a while. We couldn't care less about keeping up with anyone else in society, we set our standards a long time ago and that's what makes us happy.
Love to all!
We also used any extra money i.e overtime to pay down debt or ad to savings instead of splurging on ourselves.
The way we see it is that we still have a great life and we always take time out for each other.
Looking back we have not missed the extra TV channels, the cars or the cell phones.
You can do without them - really
By the way, we are a one paycheck family. We each have a vehicle and we each have a cell phone. We do not need or want to dress in the latest fashions. Dollar General sells clothes for $5 - $10, that is all I need. I am not Miss America, nor will I ever want to be. My child does not need the latest video games or high tech toys. I have raised him with an imagination and he sometimes blows my mind with his creativity.
GROW UP PEOPLE AND SEE THAT MATERIAL THINGS ARE JUST THAT! THEY WILL DISINTEGRATE BECAUSE THEIR LIFE CYCLES ARE VERY SHORT. FAMILY IS FOREVER!
If you have no debt you are winning the game. We paid off the house in 15 years by not eating out...(why pack that salty fat laden food in your gut anyway?) Stay away from the $12.oo movie tickets sitting in someones sneeze wiped chair...We have never ever made "payments" on any credit card..keep a ZERO balance, credit is for losers. Avoid the braindead ads all over the tube and internet....fast forward through all commercials, they are worse than solicitors at your door.
Shop the 99 cent store for lots of basic stuff, why pay for a "name" brand when all you get is the same item....you are paying for their ads.
The list goes on and on...use some common sense with your folding money!
Oh, and I will never ever buy a lotto ticket, probably the worst way ever to throw your cash away.
(how many times do you expect to get hit by lighting....thats right...never!)
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