Living on one income in a two-income world
Sunday, February 01, 2004
Strategies from parents who have done it Story by Carol Larson • illustrations by Denise Friant
Kathy Evers met her husband Russ on a volleyball court in 1998. Later that same year, they left the sands of beach volleyball for the sands of Las Vegas. In the heart of Elvis' Chapel of Love, the couple exchanged vows and were pronounced husband and wife. At the time, they dreamed of raising a family but they were in no rush.
"Our plan was to enjoy being married, travel, pay off credit card debt and postpone having children for at least two years," says Evers. But a few months after the wedding, a doctor confirmed that she was pregnant. Without warning-or time to fix their finances-the couple had to give up Plan A and switch to Plan B.
That included moving out of a small apartment in Lisle and buying a three-bedroom house in Wheaton. There they had easy access to relatives, church, parks, retail and restaurants and could provide a long-term, comfortable home for the baby-just like the childhood they both enjoyed. "Russ and I have many memories of playing in a yard when we were kids, and we wanted the same for our children," says Evers.
Plan B was working well-until the baby was born.
"The first year after McKenzie's birth was the most difficult year of my life," recalls Evers. "I couldn't keep up at work or with McKenzie."
She says she remembers coming home, sitting on the couch and wanting to curl up and cry. That year, her back went out and painful migraines followed. Her energy levels hit an all-time low. Finally, at the point when she started to lose a lot of weight, Evers saw a doctor who attributed the symptoms to stress.
"I talked to my husband and we both agreed that something had to change," says Evers.
Because Russ' job as an airline attendant requires him to travel extensively, he was rarely available to relieve Kathy of the pressures associated with taking care of a newborn, managing a home and teaching full-time. After weighing the options, they decided Kathy should quit her job. But with a child, mortgage and credit card debt, they wondered how they could afford to live on one income.
They are hardly alone. U.S. Census Bureau figures show that two-income families earn at least $30,000 more than one-income families. The result is a substantial economic gap. And the gap grows along with the number of children because of the high costs associated with raising a child.
What parents say
So how do single-income families make ends meet?
With a strong will and a strict budget.
It's not easy, but it is possible if you follow these money-saving tips and strategies.
• Create a budget based on needs, not wants. Paul Ranieri, financial planner at New Trier Federal Credit Union and adjunct professor of finance at Northwestern University, acknowledges that raising a family can be a challenge. He says: "The media always tells us to buy, buy, buy. This is a big problem. Our consumption habits make it extremely difficult to live off of one income. We associate obtaining products with being worthwhile human beings, so we just consume an enormous amount of stuff."
Most people who lived through the Great Depression seemed to save primarily by budgeting. With this in mind, Ranieri advises his clients to create a sound budget. "It's about getting a grip on your finances and setting up different accounts for every aspect of what you need. Segregate your money according to where it is going to go."
Former Oak Lawn resident Lara Thomas, mother of one, agrees. She streamlines her family's finances by consolidating loans and holds only one credit card. "It is a better way to keep track of what you're buying and how much you're spending."
• Minimize your debt. Living on a single income can be daunting in an era of fast cash, and it is easy to get swept up by offers for pre-approved loans and low-interest credit cards. But self-discipline is the key to keep from sinking into a pit of financial quicksand. One way to reduce your overall debt is to analyze your bills and pay off first the bad debts- those that have higher interest rates and fewer benefits. For example, if you have an extra $50 to spend on bills per month, there will be a greater payoff if you use it to pay down a high-interest credit card rather than adding it to your mortgage payment. Aside from prioritizing your debt, you can further reduce your debt by shopping for lower interest rates. If you have good credit, you may be able to call your credit card lender directly and request a better rate.
• Become a savvy shopper. Savvy shoppers have a system. They often buy in bulk, use coupons, find the sales and take time to research the best prices, even for nonmaterial items such as car insurance and telephone calling plans. Leyda Martinez, mother of two in Evergreen Park, learned how to stretch a dollar after she stopped working. "When we started living off of one income, we had to stop spending money on things we didn't need," she says. "Now, we buy in bulk and stock up on things we use regularly."
In addition, Martinez searches for coupons. "One thing that we do is to call in for coupons," she says. By phoning companies, Martinez says she sometimes receives coupons in the mail worth $10 and some sample products, too.
Buying lower-maintenance products will also reduce overall expenses. For example, clothing that can be washed at home will reduce dry cleaning expenses; landscaping with native plants may save money on water and fertilizers.
• Change your eating habits. After a major airline cut her husband's salary, Christy VanMerkestyn, mother of two in Oak Forest, changed her family's eating habits to save extra money. "If we were running errands, we used to make a quick stop for fast food," she says. "Now, if I know we are going to be out during lunch, I'll plan ahead and make sandwiches for the kids." Doubling the portion of food she makes for dinner and freezing half of it is also a quick way to cut back, she says. "So when my husband goes to work, he doesn't spend money on takeout."
There is a substantial savings when you choose to cook at home. For example, feeding a family of four a chicken entrée, a vegetable and rice can cost as much as $50 including tax and tip-even at a moderately priced, family restaurant. Preparing the same meal at home costs only about $10. That's a saving of as much as $40 per meal. Cutting just one restaurant dinner per week can result in savings of as much as $2,000 a year.
Other ways to save money on food are to reduce your meat consumption, grow your own vegetables and bring your own snacks to movie theaters. Karen Ritter, mother of one in Chicago, says she brings her own beverages and homemade trail mix to the show. "Movie theater popcorn and soda is extremely overpriced and fattening. If I bring my own snacks, my husband and I can save close to $10 and eat healthier food."
• Conserve, reuse and recycle. Conserving resources also saves money. For instance, you can reduce your spending on gasoline by car pooling, creating efficient errand schedules and buying a more fuel-efficient car. Since her husband takes the train to and from work, VanMerkestyn's family downsized one of their vehicles. "We purchased a smaller car and now we get nearly 40 miles per gallon," she says.
Besides conserving resources such as gas, water and electricity, you can save by reusing and recycling materials. Tyrone Martinez-Black, father of one in Oak Lawn, says he no longer buys as many disposable products such as disposable razors and paper napkins. "Instead, we'll get cloth napkins and reusable razors that will last and save us money in the long term," he says. He also recommends using the library and recycling gift bags to cut back on the expenses of buying books and wrapping paper. He says he probably saves hundreds of dollars a month budgeting this way. "Not only do we spend less money, but it is also better for the environment," he says.
• Find entertainment alternatives. After Martinez-Black's wife left the work force in 2000, they had to reevaluate their spending. Among the first things to go were regular trips to the movie theater and cable television. "At first, it was difficult because my wife and I love to watch movies," he says. "Now when we go to the movies, we look forward to it." He adds that even though his family has less money, they still have fun together. "We take advantage of our parks, museums and other local events," says Martinez-Black.
He says the free dance lessons and summer concerts in downtown Chicago keep his family active, entertained and offer great opportunities to hang out with family and friends more often. For vacation, he says he'll go camping or do something within driving distance. "It really boils down to being creative about what you do and a willingness to take the time to look for things."
• Use your skills and talents to supplement your income. In order to make ends meet, some parents find flexible, nontraditional methods for generating extra money. Kathy Evers uses her artistic skills to create crafts, furniture and jewelry. She plans to sell these items via Internet auctions, open air markets, arts and crafts shows, and consignment shops. Christy VanMerkestyn opened an Ebay store and now sells collectibles on the Internet during her spare time. Lara Thomas freelances as an analyst and works from her home. Not only do these activities bring in extra money, they also keep parents connected to the work force.
Cassie Luckinbill, mother of three in Aurora, believes that it is important to stay active while you are unemployed if you plan to return to a regular workweek. "If your resume shows a long period of no activity, you may be at a disadvantage in a competitive job market," she says. "You can stay active by getting involved in professional organizations, taking classes, volunteering, freelancing, etc." Seven years ago, Luckinbill quit her job to stay home with her children. In order to stay connected to her field, she volunteered for a professional organization. Now she works four hours a week as a human resource specialist.
Why work for only four hours? She makes a little money and, she says, "I can keep my foot in the door, stay tied to my field and still have time for my children."
Revisiting the Evers
Four years after the birth of their son, McKenzie, the Evers continue to live on Russ' income in spite of salary concessions and a new addition to the family, their daughter Elaina.
"In the beginning, we flushed out our finances," says Evers. "It was tight, and we had to make huge adjustments." To start, the Evers made their own coffee, ate at home, shopped sales and used coupons. Their goal was to use only cash. And for larger expenses and things they really needed, they put aside emergency money.
Evers says there have been times they've had to rely on family members. She says when Russ' salary was cut, they had to work seasonal jobs to bring in extra money for expenses such as insurance.
"It is difficult to live on less, but for me, it has been worth it," says Evers. "Once you learn to make things work, it definitely becomes easier. You just have to be a little more creative and change your frame of mind."
Carol Larson lives with her husband and daughter in Oak Lawn.