When I was pregnant with my first son I never considered leaving work and becoming a stay at home mom. I loved my job and I had worked hard to get to where I was at in my career. My husband and I were both Officers in the Army. Which meant late nights and a lot of time ways from home for both of us. I never stopped to consider how difficult it would be to balance both a high-stress job and a family.
I reached a breaking point when my son was around a year and a half. We were going through the process of getting our son diagnosed with autism (You can read that story here). Which triggered some serious working mom guilt. I was also working hours long hours which included days or weeks away from home for training.
I was reaching a state of severe burnout, suffering from regular panic attacks. Something had to change. We made the decision that once my obligation to the Army was finished, I would become a stay at home mom.
I’m not going to lie, the idea of losing 60% of our salary sent me into major panic mode. We had racked up quite a bit a debt between student loans, new cars, and a new baby. But I knew the best decision for my family and for myself was to become a stay at home mom. We needed to come up with a plan to allow us to go down to one income while maintaining our financial stability. Below are the 5 financial planning steps we took prior to me leaving my job.
Track your current expenses
I’ll be honest and admit that I am horrible at budgeting and tracking where our money was going. Automating all of our month bill payments allowed me to go on autopilot. I had a good idea of what our monthly fixed expenses were. But I wasn’t tracking exactly when everything was due. I also wasn’t tracking how much I was spending on things like gas, groceries, eating out, etc.
Once we initially began the process of preparing to go down to one income, my husband and I sat down and went over all of our bills and expenses. We found areas we could save money and what expenses we could cut. This allowed us to develop a good plan to begin paying off debt.
Knowing where our money was going each month allowed us to identify areas where we could save money. Like most people, I discovered one of our largest budget items was groceries. I have a bad habit of doing one grocery store trip a week and a few random trips during the week to pick up a thing I had forgotten to buy.
It was difficult for me to develop a meal plan that I could stick to while I was working. I often wouldn’t have the time or energy to cook a meal at the end of the day. I found myself spending a lot of money on packaged food. Which meant a large grocery budget despite my best intentions. Now that I am no longer working my goal is to develop a meal plan I can stick to. Hopefully, it will reduce how much I spent on groceries and avoid those last second trips to the store.
Create a budget based on your single income
Just before I stopped working we created a budget based on just my husband’s income. I used the Dave Ramsey website Every Dollar to help me with this step. Creating a budget based on your single income allows you to do a few different things. First, you are able to see what areas of your budget need to be adjusted to allow your family to live off one income. It will also help you determine the steps you need to take to make it living off one income possible. We quickly realized that we would need to pay off the majority of our debt before I could stop working.
This step was the honestly the hardest for me. My paycheck was the larger of the two. Taking that out of the monthly equation was a bit of a punch to the gut. It made me realize that I had some unrealistic expectations of what we could afford on one income.
It took me some time to get over the initial shock of what our new budget looked like. And honestly, I did have some second thoughts about leaving work. Once reminded myself why it was important to become a stay at home mom and I was able to start adjusting my mindset and prioritizing what’s most important to our family.
We determined that during my final year of work our two financial priorities would be paying off debt and building up our emergency savings. We also wanted to continue contributing to both of our IRAs. Saving for retirement is extremely important to me and its something that we will continue to do no matter how small the contribution is. This meant we would need to eat out less and spend less money on things link clothes for us and toys for the kids.
Like I discussed before I would highly suggest that you consider keeping the money for savings in the budget. Both for emergencies and retirement no matter how little. This will help to cover unexpected expenses and keep you from going into debt further by having to use credit cards. It will as help secure your future through retirement savings.
Pay off Debt
When we made the decision that I would become a stay at home mom I had about a year left in the army. This gave us time to begin aggressively paying off our debt. We used the Dave Ramsey snowball method to tackle our debt. Doing so we were able to pay off about $30,000 of debt during that year. I highly recommend the snowball method. It was incredibly motiving to see us quickly making progress by knocking out our smaller debts first.
We did modify the snowball payment plan slightly once we paid off all debt except two car loans and a camper payment. I began focusing on paying off one of our vehicle loans with the lower balance. We did this was because on one income we could not afford two car payments totaling over $900 a month. But we could afford one car payments and our camper payment which was only $100 a month.
There is no one size fits all approach to paying off debt. I combined advice from both Dave Ramsey and Susie Orman to come up with a strategy that best fits my family. I recommend doing research into the many different methods of reducing debt and find what works best for your family.
Save for emergencies and unexpected expenses
I highly agree with Dave Ramseys suggestion of having at least $1,000 of emergency savings to help cover emergency expenses. This savings provides a cushion in case of an emergency. It can help prevent you from going back into credit card debt when faced with an unexpected expense. The last thing you want to do is work hard to pay off your debt only to get right back into it.
As we were paying off our debt we continue to contribute to our savings accounts and our IRAs. We could have paid off debt faster had we not continued to do this. Having money in savings gives me peace of mind. It helps to relieve some of the anxiety I have about going down to one income. We currently have about 4 months of basic living expenses covered and are working on getting to 6. We’re also trying to save money for a down payment on a house in the future.
Cut unnecessary expenses and renegotiate bills
Don’t be afraid to call your utility, phone, cable, and internet provider to negotiate lower monthly payments. Many companies will give you lower rates if they feel like they are going to lose you as a customer. Also, reevaluate your cable package and phone plan.
Will you need the same phone plan now that you are no longer working? Look into a cheaper cable plan or ditching cable altogether. My husband is was able to get the monthly payments for both our cell phone and cable monthly payments reduced, saving us over a $100 a month. You can all also contact your loan provider and credit card company to ask about reducing your interest.
It’s never an easy decision to leave the workforce. Going down from two incomes to one can be a scary thought for many people. These are the steps that worked for my family and allowed me to become a stay at home mom while maintaining our financial stability. We continue to refine and adjust our budget in order to keep us on track. It’s a continuous learning process and I constantly have to keep our family on track.
If you are looking to go down to one income I would encourage you to do your research and find what method works best for you. There are so many free resources out there to assist you. If you have gone down from two incomes to one I would love to hear what steps your family took to prepare and what has worked for you.