“I don’t know how you do it” is a common reply I hear when someone finds out that I’m raising a family of six on a single income in Seattle, one of the least affordable cities in America (it’s the 8th worst).
Most of the time that’s where the conversation ends. I go my way and whomever I was talking to goes theirs. But every now and then someone will come back later and ask “seriously, how do you do it?”
I have a hunch most people are secretly hoping that I’ll let them in on some little known life hack that only I know about. I wish I had that information to share, but all I have to offer is what has worked for us as we’ve built a situation that allows us to not only get by, but thrive financially.
There’s no secret. Just some common sense, hard work, and if I’m honest – a little bit of luck too.
HOW WE’RE THRIVING ON A SINGLE INCOME
My wife and I have four kids, aged 17 to 7; three boys and one beautiful flower in the middle of our weed patch. I work full time as a marketing manager and my wife works overtime as a stay at home mom. Together we have one income and we’re thriving financially.
Yes, thriving on a single income. While that’s a subjective word I think it’s appropriate since we’re able to not only pay our bills on time and save for retirement, but we’re saving and investing for financial independence and an early retirement. We also live in a near-new home, drive a brand new car, take multiple vacations each year, sign the kids up for activities like swim lessons, little league, and gymnastics. I call that thriving on a single income.
These are five things we’ve done throughout our twenty years of married life to make this possible.
We didn’t get in this position overnight and we’ve not always been able to thrive. Sometimes we were barely able to survive. My wife and I got married young (21 and 20). The early part of our marriage was tough when we were broke and I was a car salesman working on commission. I still remember times when I didn’t sell any cars during the pay period and received no check on payday. Those “paydays” were painful. It didn’t take long to realize how bad that sucked and that I wanted something better.
My dad always told me “make it be a good day.” The essence of that advice is personal responsibility. Nobody was going to hand me a better life so if I wanted more out of mine, I needed to work for it. So that’s exactly what my wife and I did.
Hard work alone isn’t enough. You’ve got to work hard for a long time, continually improving your situation. There are only two ways that I know of for someone to get rich quick. One way involves breaking the law, the other involves breaking the laws of probability. Don’t waste your time chasing either option. Getting rich quick takes time, but it doesn’t need to take a lifetime either.
Roll up your sleeves, get to work, set yourself up for success, and be patient.
SET YOURSELF UP FOR SUCCESS
If you don’t like where you’re at in life, do something to change your situation. I didn’t like being a broke, mediocre salesman (neither did my wife), so we changed things up by deciding to send me back to school to get my college degree. We knew that a college diploma would provide better opportunities and a more stable income. Although going back to school full time meant we’d temporarily make even LESS money than we were already making, that was the price that needed to be paid.
One way or another, you’re going to work hard during your lifetime. I figured I might as well get paid well for that hard work.
So I loaded up my class schedule to graduate as soon as possible. While in school I started a marketing club on campus as a way to differentiate myself from other graduates. I used that marketing club as a way to network with local business leaders that I solicited to come and speak to our group. When graduation day finally came, I had a solid network already built and found a good job in no time.
Humans are terrible at predicting what will make us happy, but we’re pretty good at recognizing what won’t bring us happiness. If something in your life sucks – eliminate it. Relentlessly eliminate the BS from your life and eventually you’ll have a life that’s largely free of the BS.
FOLLOW OPPORTUNITY, NOT PASSION
Sorry, but it’s true. I know that you dreamers out there don’t like to hear this, but very few of us get to do what we’re passionate about for a living. My advice: save your passion for your hobby – follow opportunity to build your fortune.
Of course you don’t have to follow opportunity, but if you’re trying to thrive financially, then you’ll almost certainly be better off if you do. Think of it this way – you can spend your golden years pursuing your passions but use your peak earning years to earn a buck.
So much about ‘setting yourself up for success’ and ‘following opportunity’ requires flexibility on your part. In our case, we moved from a low cost of living state with limited job opportunities to Seattle, Washington. Sure we now live in a high cost of living city, but high paying jobs are abundant.
Seattle is home to some of the biggest and most well-known companies in the U.S., if not the world. Microsoft, Amazon, Costco, REI, Eddie Bauer, Nordstrom, T-Mobile, Nintendo USA, Starbucks, and so many others are all headquartered here. To thrive, we’ve had to follow opportunity and set ourselves up for success and that meant we’ve had to move far away from family, friends, and all that was familiar to us.
Had we not been flexible, we’d still be living in a low cost of living state with limited job opportunities for someone with my background. I’m sure we’d be fine, but would we be thriving? I don’t think so.
There’s a quote that says “you can do anything, but not everything.” That’s so true and it applies to personal finance as well. You can have anything, but you can’t afford to have it all. In our case, we’ve decided that the best thing our money can buy is freedom.
Here are a few of the things we’ve done or given up throughout our marriage to make thriving on a single income possible:
- Traded in our Mercedes GL450 for a bus pass
- Moved out of the million dollar home that we were renting and into something that nobody would mistake for a million dollar home
- I drove a 20 year old car, with unknown mileage, for years
- My wife drove a 12 year old used minivan with high mileage for years
- We’ve completely eliminated our second car
- We moved into my parent’s basement
- We moved into my in-law’s basement
- We uprooted our kids and relocated over a thousand miles away from family & friends
- We have taken fewer destination vacations
All of these things were done to help us get ahead financially in some way. Most of the things we’ve given up were nothing more than expensive luxuries that didn’t make us any happier than we are today without them.
The million dollar home? It’s the people inside the home that make me happy, not lumber and paint.
The Mercedes? The bus gets to me to work just as well as the Benz did. I’ve been taking the bus to work for over a year now, losing weight, and saving a small fortune along the way.
At the end of the day getting by and thriving on one income really boils down to priorities. You either sacrifice for the things you want, or the things you want become the sacrifice. Looking back now I am SO happy that we prioritized our long term goals over our short term desires. Our lives are better today because we did.
If you want the new home, fancy car, and amazing vacations then you’ll probably not be able to thrive on just one income. If you’re trying to do those things and raise a family then you’ll most likely need two incomes to make that happen. And that’s fine if that’s what you want.
We could have the nicer home in the right neighborhood. I could park a BMW and a Rover in the drive way, but these things would make saving impossible and would certainly require us to get back into debt. My Break Even Point would be near the end of the month, rather than near the beginning.
No thanks. These days I’m much more interested in buying my freedom rather than stuff that’s going to become garbage someday.
If you want those things, then great. I’m not going to judge you. I strongly believe that everyone is free to pursue that which makes them happy. But you’re reading a post about thriving on a single income, so I assume that’s what you want as well. If that’s the case, then this is my advice.
HOW YOU CAN THRIVE ON A SINGLE INCOME
First, I’m making a couple of assumptions:
- That you can get by on two incomes, but want to be able to eliminate or save 100% of one of them.
- If you already live on a single income, you’re interested in thriving on it (and not just making it work).
Transitioning from dual incomes to living off a single income requires change, and the most difficult thing to change is your mindset. But once you’ve accomplished that, the rest is easy. You can absolutely thrive on a single income, you just need to start thinking and acting differently.
1. ASSESS YOUR CURRENT FINANCIAL SITUATION
Begin by taking a financial inventory. If you’re going to create a plan, you’ll need to understand what you’re working with.
- What’s your TRUE income? How much of your money do you get to keep?
- How much are you really spending? If you don’t know – get a free account with Personal Capital and start tracking your expenses today.
- Mind the gap. The difference between what you make and what you keep is vital. Do all you can to increase that gap.
2. ASSESS YOUR FINANCIAL GOALS
Once you have a clear picture of your true financial situation you can then set a realistic goal. To give yourself the best shot at reaching your goal, make it S.M.A.R.T.
- S -Specific
- M – Measurable
- A – Agreed Upon
- R – Realistic
- T – Timely
Your goal should be detailed, not vague and open to interpretation.
Make your goal quantifiable. Add in dates and real numbers that are easy to measure.
Everyone involved in your plan needs to be on board (including yourself!). You’ll have a hard time reaching your goal if everyone isn’t on the same page.
Be realistic with yourself. Setting a goal that’s just not feasible will lead to discouragement and probably derail your plans.
(Or Time Bound). You need to give yourself a finish line. A clear ending which signals success or failure.
A SMART EXAMPLE
“By this date next year we will be thriving on a single income, defined as:
- On my paycheck alone, we will
- Have the ability to pay all bills and other financial obligations on time
- Be able to max out my 401(k) contribution
- Be able to max out my Roth IRA contribution
- (if you have a second income)… Save 100% of our second income
Additionally, by this date next year we will have reduced our current monthly financial obligations by 30%. To do this we will:
- Eliminate our second car payment by selling the car
- Pay off the existing credit card balance using proceeds from the sale of the second car
- Cut the cord; no Cable or Satellite TV service
- Make an additional $200 principal payment on the mortgage loan until we have a 20% equity position and can eliminate PMI; this should take 10 months.
Lastly, at my next review at work I will ask for a 5% raise, which is 2% more than I normally get in my annual cost of living increase. I’ll justify this pay increase to my employer by:
- Showing how my contributions over the past year produced a larger than expected contribution to the company’s annual revenue targets”
Now that’s a S.M.A.R.T.goal!
Getting to the point where we can thrive on a single income hasn’t been easy. We’ve gone through some dark times that pretty much wiped us out financially. We’ve made sacrifices. We’ve given up some luxuries that were pretty nice to have, but for us that’s exactly what it takes to thrive on a single income while trying to raise a family of six.
Sorry if you were looking for a different answer or some crazy life hack that would make all of this easier, but that just doesn’t exist. The good news, however, is that it can be done. All it takes is hard work, sacrifice, support from your family, and a little bit of luck as well, but even luck isn’t totally out of your control. I’m a big believer that you create you own luck.
The harder I work, the luckier I get.
Today I feel like the luckiest man alive to have four amazing kids with my high school sweetheart, whom is able to stay at home with them and be a full time mom. I might not be rich yet, but I’m beyond wealthy.
Could you thrive on a single income? Are you able to thrive with a dual income? Have you had to sacrifice anything in order to meet your financial goals? Please let me know if the comments!