Preperation from two to one incomes

**hamchan** · 04-14-2014, 06:03 AM

I don't think I'd be comfortable with a budget with that little wiggle room. You'll want to be able to still set aside some money each month for savings. You have a mortgage and you have a car, so that means there will be repairs occasionally. And diapers are going to be a big budget category unless you do cloth. Which would increase the water and electric costs a bit. Formula is also expensive, should she not be able to breastfeed for some reason. It was easily over 100$ a month when my DD was a baby 13-14 years ago.

I'm also not seeing any categories for medical expenses (if your insurance covers everything 100% consider yourself very lucky), clothing, gifts, vet expenses, haircuts and other personal care. Even though you can do a lot of these things very cheaply, they still cost and they add up. Babies/kids grow (and need bigger clothes) really fast and come with a LOT of expenses, even if you are pretty frugal.

**MonkeyMama** · 04-14-2014, 06:36 AM

I'd work on getting that phone bill down. What phone provider(s) is the $80 for?

Odds are that your income taxes will go WAY down, and you can decrease your tax withholding. When my spouse stopped working I Was able to give myself a 10% or so take-home raise by adjusting our tax withholding appropriately. That was always a large part of our plan.

What is the interest rate on your mortgage? Refi to bring down the payment?

Other than that, though I often post here that losing our second income was "no big deal". We had taken many steps to prepare. We had practiced living one one income for all the years of our marriage (Which meant a LOT of savings), and we had no non-mortgage debts. I can't say we really did much to tweak our budget - it had a lot more fat than yours does. (probably mostly by virtue of not having debt payments). The one big budget change we did was switching from "90% eating out" to "100% home-cooked meals". Which was of substantial savings for us. But that was really our only lifestyle change.

How long is your wife wanting to be home?

**breathemusic** · 04-14-2014, 06:56 AM

This isn't really so much budget advice as just a general note about the pet allergies.... how confident is your vet that the dog's allergy is a food allergy? Animals can develop allergies just like people, and they can be to just about anything. I went through the same thing with my cat and after spending god knows how much on both Rx food and the non-Rx pricey stuff like "lamb and peas" type foods, none of it worked. In the end, I had to take my cat to a vet dermatologist to get allergy tested and the allergy wasn't to a food, it was to about 8 different things (several pollen types, ants, and cotton.... yes, cotton!). I ended up having to do allergy shots for the dang cat, which sometimes are needed for life, but luckly my cat was able to build up an immunity and now only very occasionally has a light flare-up.

Long story short, the cost of seeing the vet and getting the testing was probably no more than what I spent on months of special foods. Had I just gotten the testing done from the start, I could have spared myself the wasted money as well as the months of my poor cat being miserable and living in a cone so that she didn't scratch her face off.

**breathemusic** · 04-14-2014, 07:04 AM

On a completely different note regarding your budget... I agree that things seem just too tight. And honestly, I don't see a whole lot of room to reduce your expenses, so you guys need to find a way to increase your income somehow. Do you have things around the house you can sell? Once wife is recovered and baby is settled and baby is sleeping through the night and you guys aren't completely wiped out.... would you wife consider babysitting and watching an additional child as a way to make money? (I'm not a parent, so I honestly have no idea if that's possible or if things are just way to hectic for a first time parent). Can you guys clip coupons to save on groceries and baby needs? Can you take on a part time job?

I agree with MonkeyMama and would definitely look into doing some tax calculations to see if you can reduce your withholding since you'll now owe less taxes with the extra deduction.

The only other thing I can see is that maybe you could try to pay down the car loan early. It's great to build up your savings, but if you can get rid of that car payment, then that will free up almost $200 in your budget so that things aren't as tight.

**Eagle** · 04-14-2014, 07:51 AM

Originally posted by ourfirsthome View Post

Any suggestions on the budget or ideas on how to transition into this period of a single income for those of you who have gone through this?

Thanks!

1. Mortgage, Car Payment, and Groceries:
A. Looks like 42% of your budget is going towards your mortgage. That is really high. When did you buy the home and what would it cost to refinance? Would it be worth the savings?

B. Your car payment is 9.2% of your budget. As others have suggested perhaps look into paying this down sooner to free up that money in your budget?

C. Can you guys get by on $280 a month in groceries? Remember too that whatever your wife eats (cheap food for example) is what she will pass onto the baby if she nurses. Formula costs an arm and a leg. Typically, a nursing mother needs to eat more calories (typically 500 or more) to account for the nursing. The exact amount depends on a person’s weight, exercise habits, frequency of breastfeeding, and type of metabolism.

2. Other Expenses not included:
A. You haven’t included basic necessities like clothes, diapers, wipes, maternity clothes, vitamins, etc. Consider this thread: http://www.savingadvice.com/forums/f...u-ll-need.html

B. Also you didn’t include car insurance, car maintenance, car repairs, doctors’ visits (baby or Mom), etc. into your budget. Typically you can pay car insurance 6 mo at a time for a discount.

3. Bottom line:
A. You need more income. That means either getting a 2nd job or getting a better paying job. What industry do you work in and what kind of education do you have?

B. Cut your phone expenses to the bare minimum. That probably means giving up your phone data plan. When does your contract if applicable expire with your phone company?

C. Consider also asking your internet provider for a discount on your internet by threatening to find other service. Are you on a contract with your internet provider?

D. Unfortunately, you can no longer afford your dogs either. Dog food accounts for 6.3% of your monthly budget. I realize the dogs are probably like family but consider finding another home for them.

I know that this is hard but a baby changes everything. You can do this just need to make some adjustments!

**ourfirsthome** · 04-14-2014, 07:55 AM

Originally posted by hamchan View Post

I don't think I'd be comfortable with a budget with that little wiggle room. You'll want to be able to still set aside some money each month for savings. You have a mortgage and you have a car, so that means there will be repairs occasionally. And diapers are going to be a big budget category unless you do cloth. Which would increase the water and electric costs a bit. Formula is also expensive, should she not be able to breastfeed for some reason. It was easily over 100$ a month when my DD was a baby 13-14 years ago.

I'm also not seeing any categories for medical expenses (if your insurance covers everything 100% consider yourself very lucky), clothing, gifts, vet expenses, haircuts and other personal care. Even though you can do a lot of these things very cheaply, they still cost and they add up. Babies/kids grow (and need bigger clothes) really fast and come with a LOT of expenses, even if you are pretty frugal.

I agree, I am looking to free up some more wiggle room. Insurance covers 100% for baby from 0-6 years old once born. We've been paying all medical bills as soon as we get them which is fine with DW's extra income, and after baby is born whatever bills we get if we had to tap into the 10,000 EF we will have to do so as of now.

Originally posted by MonkeyMama View Post

I'd work on getting that phone bill down. What phone provider(s) is the $80 for?

Odds are that your income taxes will go WAY down, and you can decrease your tax withholding. When my spouse stopped working I Was able to give myself a 10% or so take-home raise by adjusting our tax withholding appropriately. That was always a large part of our plan.

What is the interest rate on your mortgage? Refi to bring down the payment?

Other than that, though I often post here that losing our second income was "no big deal". We had taken many steps to prepare. We had practiced living one one income for all the years of our marriage (Which meant a LOT of savings), and we had no non-mortgage debts. I can't say we really did much to tweak our budget - it had a lot more fat than yours does. (probably mostly by virtue of not having debt payments). The one big budget change we did was switching from "90% eating out" to "100% home-cooked meals". Which was of substantial savings for us. But that was really our only lifestyle change.

How long is your wife wanting to be home?

US Cellular and we are looking on somewhere that we can get a cheaper phone plan through. We don't need the data etc. that we have and would like options of where we can go for a cheap plan.

How do I go about changing m tax withholding? Is that just filling out a new W4 and giving it to HR?

Mortgage rate is 6.5%. We weren't sure that refinancing would be the best option if we planned on only being here a few years, but if we could save some money that would definitely be an option that we'd like to look into.

I think we can bring down our grocery cost as well by starting to coupon again and not going out to eat anymore.

Originally posted by breathemusic View Post

This isn't really so much budget advice as just a general note about the pet allergies.... how confident is your vet that the dog's allergy is a food allergy? Animals can develop allergies just like people, and they can be to just about anything. I went through the same thing with my cat and after spending god knows how much on both Rx food and the non-Rx pricey stuff like "lamb and peas" type foods, none of it worked. In the end, I had to take my cat to a vet dermatologist to get allergy tested and the allergy wasn't to a food, it was to about 8 different things (several pollen types, ants, and cotton.... yes, cotton!). I ended up having to do allergy shots for the dang cat, which sometimes are needed for life, but luckly my cat was able to build up an immunity and now only very occasionally has a light flare-up.

Long story short, the cost of seeing the vet and getting the testing was probably no more than what I spent on months of special foods. Had I just gotten the testing done from the start, I could have spared myself the wasted money as well as the months of my poor cat being miserable and living in a cone so that she didn't scratch her face off.

Thanks for the heads up. I will ask the vet if we can go an allergy test because that is something that we haven't had done yet. She just told us that it was food allergies and that we should try this prescription food which is why such a high cost for dog food as of late.

Originally posted by breathemusic View Post

On a completely different note regarding your budget... I agree that things seem just too tight. And honestly, I don't see a whole lot of room to reduce your expenses, so you guys need to find a way to increase your income somehow. Do you have things around the house you can sell? Once wife is recovered and baby is settled and baby is sleeping through the night and you guys aren't completely wiped out.... would you wife consider babysitting and watching an additional child as a way to make money? (I'm not a parent, so I honestly have no idea if that's possible or if things are just way to hectic for a first time parent). Can you guys clip coupons to save on groceries and baby needs? Can you take on a part time job?

I agree with MonkeyMama and would definitely look into doing some tax calculations to see if you can reduce your withholding since you'll now owe less taxes with the extra deduction.

The only other thing I can see is that maybe you could try to pay down the car loan early. It's great to build up your savings, but if you can get rid of that car payment, then that will free up almost $200 in your budget so that things aren't as tight.

We thought about the option of paying off the car, but then we were worried about using up our EF to do so.

**ourfirsthome** · 04-14-2014, 08:10 AM

1. Mortgage, Car Payment, and Groceries:
A. Looks like 42% of your budget is going towards your mortgage. That is really high. When did you buy the home and what would it cost to refinance? Would it be worth the savings?
Once DW's income stops coming in, yes the mortgage rate to income will look pretty high

. We bought our home in 2008. We will need to look into the refinancing because I'm not sure if it would help us our not.

B. Your car payment is 9.2% of your budget. As others have suggested perhaps look into paying this down sooner to free up that money in your budget?
To pay this off we would have to use up EF money which we figured was probably a bad idea?

C. Can you guys get by on $280 a month in groceries? Remember too that whatever your wife eats (cheap food for example) is what she will pass onto the baby if she nurses. Formula costs an arm and a leg. Typically, a nursing mother needs to eat more calories (typically 500 or more) to account for the nursing. The exact amount depends on a person�s weight, exercise habits, frequency of breastfeeding, and type of metabolism.
We are going to try to get this cheaper by couponing. She eats very healthy.

2. Other Expenses not included:
A. You haven�t included basic necessities like clothes, diapers, wipes, maternity clothes, vitamins, etc. Consider this thread: http://www.savingadvice.com/forums/f...u-ll-need.html
Thank you I will read this.

B. Also you didn�t include car insurance, car maintenance, car repairs, doctors� visits (baby or Mom), etc. into your budget. Typically you can pay car insurance 6 mo at a time for a discount.
Car insurance is included in my budget under insurance. Car maintenance needs to be a category that we don't currently have. Baby doctor visits are 100% covered from 0-6, we will just have to worry about me and DW.

3. Bottom line:
A. You need more income. That means either getting a 2nd job or getting a better paying job. What industry do you work in and what kind of education do you have?
I am in school working on finishing my bachelors degree which I will hopefully be finishing in the next few years but until them I have a good paying job without using the degree. I currently am at around 38K/year, will be at around 43K/year by December at my current job. This is before taxes though.

B. Cut your phone expenses to the bare minimum. That probably means giving up your phone data plan. When does your contract if applicable expire with your phone company?
This is something we are looking into.

C. Consider also asking your internet provider for a discount on your internet by threatening to find other service. Are you on a contract with your internet provider?
Will do.

D. Unfortunately, you can no longer afford your dogs either. Dog food accounts for 6.3% of your monthly budget. I realize the dogs are probably like family but consider finding another home for them.
Not possible they are family. We would never get rid of them no matter what the expense was. You don't get rid of a family member because of an illness or problem which requires an additional expense.

I know that this is hard but a baby changes everything. You can do this just need to make some adjustments!

**MonkeyMama** · 04-14-2014, 08:10 AM

Originally posted by ourfirsthome View Post

US Cellular and we are looking on somewhere that we can get a cheaper phone plan through. We don't need the data etc. that we have and would like options of where we can go for a cheap plan.

How do I go about changing m tax withholding? Is that just filling out a new W4 and giving it to HR?

Mortgage rate is 6.5%. We weren't sure that refinancing would be the best option if we planned on only being here a few years, but if we could save some money that would definitely be an option that we'd like to look into.

I think we can bring down our grocery cost as well by starting to coupon again and not going out to eat anymore.

We recently switched to Ting, which is GREAT. WE pay about $25/month for lots of data and minutes. But, you may need to buy phones for Ting. That's the catch. On the flip side, you can earn referral credits to help pay for a modest phone purchase. (Our first 5 months have been completely free. We already had Sprint phones that transferred over). I think there was another recent cell phone thread around here - may find some other ideas.

Whoa. Mortgage rate 6.5%! I didn't expect that. I would look into a refinance ASAP while you still have a second income. You may not be able to easily refinance with only one income. You do have to factor the costs of refinancing and so on, but I'd maybe bite the bullet just to make the short term easier. {You would have to close before spouse quits working, so it's a tight time frame. OTherwise, would have to reveal her loss of income. We did refinance once when I was like 8 months pregnant. IT was just because interest rates went crazy low, but ended up being nice timing, so maybe why I think to that}.

Yes. Fill out a new W-4. What is your gross household income (without spouse)? I might be able to give you an idea what your tax situation will be.

You didn't answer my last question about time frame.

I also thought of another question: Are you contributing to 401k? Any savings coming out of your paycheck?

**ourfirsthome** · 04-14-2014, 08:19 AM

Originally posted by MonkeyMama View Post

We recently switched to Ting, which is GREAT. WE pay about $25/month for lots of data and minutes. But, you may need to buy phones for Ting. That's the catch. On the flip side, you can earn referral credits to help pay for a modest phone purchase. (Our first 5 months have been completely free. We already had Sprint phones that transferred over). I think there was another recent cell phone thread around here - may find some other ideas.

Whoa. Mortgage rate 6.5%! I didn't expect that. I would look into a refinance ASAP while you still have a second income. You may not be able to easily refinance with only one income. You do have to factor the costs of refinancing and so on, but I'd maybe bite the bullet just to make the short term easier. {You would have to close before spouse quits working, so it's a tight time frame. OTherwise, would have to reveal her loss of income. We did refinance once when I was like 8 months pregnant. IT was just because interest rates went crazy low, but ended up being nice timing, so maybe why I think to that}.

Yes. Fill out a new W-4. What is your gross household income (without spouse)? I might be able to give you an idea what your tax situation will be.

You didn't answer my last question about time frame.

I also thought of another question: Are you contributing to 401k? Any savings coming out of your paycheck?

Ok that is something we will look into on the refinancing ASAP then.

With me alone I gross about 38K a year at the moment. Will be about 43K by December. She plans on being off of work 3 or 4 months depending on how everything goes. I am contributing 4% to my 401k with employer match of 3%. All of our extra money for savings come from DW's income.

**MonkeyMama** · 04-14-2014, 08:50 AM

Originally posted by ourfirsthome View Post

Ok that is something we will look into on the refinancing ASAP then.

With me alone I gross about 38K a year at the moment. Will be about 43K by December. She plans on being off of work 3 or 4 months depending on how everything goes.

Okay, for 3-4 months, not sure it is worth a refinance. But, certainly see what your options are. 6.5% may be way too much to pay, even for just a few years. May save money overall, by refinancing.

I don't know, for 3-4 months, not sure I would over-stress it. BUT, it also doesn't hurt to put yourself in a strong financial position as possible. (Maybe she will really want to stay home 6-12 months and maybe you can work it).

Going with the $38,000 figure, I project about $500 Federal taxes you will need to pay for 2014. You have to factor what wife will make too, but you can really back off the tax withholding and have her pay "second income" taxes if she goes back to work. I am guessing you already paid in $500 Federal taxes for the year (From your own paycheck). But, unfortunately, you can't rachet your withholding down to $0. I would claim something like 8 exemptions. See what that does to your paycheck. (Child tax credit is equivalent to 2 exemptions. You will have 3 literal exemptions. Plus, standard deduction is worth like 3 more. That is how I get to a total of 8). 5 is conservative (like if you prefer a tax refund). 8 is aggressive (more breakeven). I don't want you to owe tax next year. But no point paying in taxes that you don't need to, while income is tight. You have probably way over-withheld the first few months of the year, as most people tend to do that anyway and you have large tax changes this year. {If you claim 5-8, then wife should claim zero}.

If you have 401k contributions, your income taxes will likely be *zero* on just your income. I assumed no other income or deductions.

Good Luck!

**ourfirsthome** · 04-14-2014, 09:01 AM

Originally posted by MonkeyMama View Post

Okay, for 3-4 months, not sure it is worth a refinance. But, certainly see what your options are. 6.5% may be way too much to pay, even for just a few years. May save money overall, by refinancing.

I don't know, for 3-4 months, not sure I would over-stress it. BUT, it also doesn't hurt to put yourself in a strong financial position as possible. (Maybe she will really want to stay home 6-12 months and maybe you can work it).

Going with the $38,000 figure, I project about $500 Federal taxes you will need to pay for 2014. You have to factor what wife will make too, but you can really back off the tax withholding and have her pay "second income" taxes if she goes back to work. I am guessing you already paid in $500 Federal taxes for the year (From your own paycheck). But, unfortunately, you can't rachet your withholding down to $0. I would claim something like 8 exemptions. See what that does to your paycheck. (Child tax credit is equivalent to 2 exemptions. You will have 3 literal exemptions. Plus, standard deduction is worth like 3 more. That is how I get to a total of 8). 5 is conservative (like if you prefer a tax refund). 8 is aggressive (more breakeven). I don't want you to owe tax next year. But no point paying in taxes that you don't need to, while income is tight. You have probably way over-withheld the first few months of the year, as most people tend to do that anyway and you have large tax changes this year. {If you claim 5-8, then wife should claim zero}.

If you have 401k contributions, your income taxes will likely be *zero* on just your income. I assumed no other income or deductions.

Good Luck!

Thank you for the information. Is there a way to see how much this will change my take home pay? I would rather have more money per check versus a refund at the end of the year anyways, or am I just supposed to play around with the number? How will I know what exemption number is right so we don't have to pay in next year but are close to 0 as possible?

**MonkeyMama** · 04-14-2014, 09:05 AM

Originally posted by ourfirsthome View Post

Thank you for the information. Is there a way to see how much this will change my take home pay? I would rather have more money per check versus a refund at the end of the year anyways, or am I just supposed to play around with the number? How will I know what exemption number is right so we don't have to pay in next year but are close to 0 as possible?

The best thing you can do is project your taxes and compare to your withholding. But, I think this is hard to do. Takes some brushing up on tax knowledge. Which is why I just crunched a few numbers for you.

(That said, all you probably need to do is take gross income, deduct $12,200 standard deduction, deduct $3,900 exemption per person in household. That's your taxable income. Look up 2014 tax rate table to calculate tax due. Deduct $1,000 from tax due, for child tax credit. My standard deduction and exemption figures were from 2013, but close enough. 2013 is just what I have in front of me... To be clear, this does not factor any other income or deductions, but gives you a ballpark).

Paycheckcity.com is an excellent website for plugging in your paycheck, to see how different exemptions change your paycheck and taxes. It figures state taxes too.

**ourfirsthome** · 04-14-2014, 09:07 AM

Originally posted by MonkeyMama View Post

The best thing you can do is project your taxes and compare to your withholding. But, I think this is hard to do. Takes some brushing up on tax knowledge. Which is why I just crunched a few numbers for you.

Paycheckcity.com is an excellent website for plugging in your paycheck, to see how different exemptions change your paycheck and taxes.

Thanks I will check the website out. I appreciate your help!

**MonkeyMama** · 04-14-2014, 09:12 AM

P.S. I edited my last post so go back and read it. (Not sure if you saw).

Preperation from two to one incomes