If you are a long time reader, you have followed me through my $1,500 projects that started back in 2007 and concluded in 2009. The goal was to create or save the equivalent of $1,500 on a monthly basis so my wife can stop working. In May 2009, my wife quit her job and we became a single income household. I read this post again recently and found it interesting that I had 2 plans back in 2009 in order to cover my wife’s income:

#1 Make a lot of money online (currently at 10K/month of gross income with 50% participation in this amount)

#2 Work hard and earn a big pay check.

2007 Vs 2012

Back in 2007, my total income was at $63,000 (read how I went from 30K to 176K in 8 years). In 2009, my total income (not base income) was $103,000. It was then easy to make the decision to go with a single income household. In that year, my bonus was literally more than what my wife used to make in a year. Since then, I have never looked back. Today, my base income is at $79,000. That alone covers $1,333 of my $1,500 per month. I also have to add my bonus and online income to the equation in order to cover the $1,500/month my wife used to make.

When you only look at numbers, living on a single income appears quite easy as I make a lot more than I used to. Unfortunately, the expenses increased accordingly too! It is true that it requires sacrifices from time to time but it’s really worth. Let me tell you why…

Completely Focused on Making Money

My wife and I have a simple way of taking care of our household:

She takes care of the house and kids.

I take care of making money.

This seems quite simple and even stupid when you say it that way. But the key lies in simplicity. Since my wife takes care of our house and kids (this includes not only chores but everything), I can focus on one of the thing I do best: making money.

I don’t have to bother with when I need to bring that cat costume for my daughter’s presentation or when they go to the dentist or when the latest arrival has an appointment with the pediatrician. I don’t even have to wonder what we will eat at night! Mind you, I still cook, but everything is ready when I get home. This is why I can focus on being awesome at work and awesome in my business. This is probably how I can grow both my career and business at the same pace simultaneously without burning out! My brain power is focused on a very limited number of things. This is likely how I can become better and faster.

So while I was looking to make more money so my wife could stop working, the answer was in the goal. As soon as she had stopped working, we saw our household income increase significantly! Believe it or not – having my wife stop working was the fastest way to earn a stable 6 figure income.

More Free Time for Everybody

Another impact of having my wife at home is the free time that we all benefit from. Every weekend, we wonder which activities we will do as all the chores and boring stuff have been done during the week. Therefore, we are all set to enjoy the weekend the way it should be. We have enough time to work on landscaping or renovation, going to the park, inviting friends over for a nice lunch, etc.

It’s basically like having mini-vacation each week!

Other Advantages

There is a long list of advantages for having only one person work while the other takes care of the household. Among them, I would only list the *most* important:

-          More time with the kids

-          Quality time to help them to do their homework

-          Time for community volunteering

-          No more “gotta run to catch the daycare on time”

-          More time to start a garden and eat better food

-          More time to try new things (activities, recipes, hobbies, etc)

-          You save money on afterschool daycare

-          You save money on clothing (only 1 person needs to dress for work)

-          You save money on dining out (how many time you eat out because you’re too tired?)

-          More activities

-          More fun

-          Less stress

-          Less arguments with your better half

-          More energy… which leads to more S…..X (don’t laugh, it’s true!)

All right… I should have put the Energy advantage first…

I now look back at my previous life back in early 2009 and really don’t have any regrets today. In fact, if I had known this, I would have started on my $1,500 project before my wife gave birth to our first son! Life is just easier and more fun… in fact, life is now the way it should be!

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We are hoping to sell our house pretty soon and we are already looking forward to buying our next one. We know where we want to go but we haven’t visited the properties we are comtemplating. Why? Because I made the “mistake” of making a conditional offer to purchase a house thinking I would sell mine quickly. In the end, I imagined myself in this new house for about 2 months and they finally sold it before I sold mine… result: I was left with a house to sell and nowhere to go!

So in the meantime, I play with my excel spreadsheet and figure what my new budget might look like. I love playing with numbers . My wife and I were in a serious discussion about how much we can afford for our next mortgage. Since I am moving for bigger and better, we may have to pay more for our next property. The numbers seem too big which scared her a bit.

This is when I pulled out my previous budget from a year ago. She was working full time and we were comparing how much money we were making back then and how much money we are currently making now that she has quit her job and that I am working 4 days a week. Believe it or not, we are now fully covering her income! In fact, we are making much more money now, than when she was working!

Passive income is the key to money problems!

A year ago, I was struggling between my MBA, my new job as a financial planner and working on my online company. Today, I am done with my MBA, I have learned the financial planning game enough to succeed and my online company is generating a very interesting passive income.

Over the past 12 months, we have made several websites purchases, modifications and partnerships throughout the web. We are always thinking about how to make more with less effort and it is working perfectly.

Last week, I wrote about how cool it is to earn passive income. Well over the last weekend, I realized that my online company not only pays for gravy stuff like a Blackberry but also provides me with a better quality lifestyle (working 4 days a week) and is now compensating for my wife’s income. For the record, my wife was making about $25,000.

Fighting for your right to paaaarty!

Love this song from the Beastie Boys . But seriously, this is how I was working to make a few more bucks at work; fighting for raises in my salary! I have written about how I got 3 raises in the span of 12 months and I am looking forward to getting another one in the upcoming months. These income increases were enough to allow me to keep the same net salary now that I was getting when I was working 5 days a week. It does put a lot of pressure as every Monday morning, I wake up thinking I have to bring more money in my book so I can get another raise. But you don’t get anything for free and I am willing to pay the price of pressure to make even more .

Bonus is gravy

Last year, we took the decision of having my wife stay home based on my bonus forecast. I told her that I will be getting her salary as a bonus so she doesn’t have to work anymore. Today, the bonus is not necessary anymore. Therefore, I can plan other uses for it such as:

#1 paying my parents back this year!

#2 going on vacation next year

#3 improving our future house

I guess this is what makes my calculation so “interesting”. I have to figure out a way to buy the house I want while paying back my parents… I wouldn’t buy a bigger house and then tell my parents “sorry folks, I’ll have to postpone my debt for another 5 years!”

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Back in May, I announced that my wife was quitting her job and we were starting to live on a single income. I didn’t win the lottery, no  promotion either. I actually dropped in revenue as I am now working 4 days!a week! We didn’t inherit or receive financial help either. So how and why can we live on a single income with 2 kids at home?

There is no easy answer to this one. You know that I am not the most frugal guy on the planet. We haven’t really cut our day-to-day expenses much either. Yet the very first step was to decrease our existing expenses:

- Exit the cleaning lady (aaahhh… I miss her… well not HER personally but the super clean house!)

- Benefit from the low interest rates. Some smart people are paying down their mortgages at high speed; we simply lowered our mortgage payment according to the ridiculously low rates. It is not the wisest choice, but it allows me to do other stuff while keeping my house.

- I really wanted to add something extra, like that I was able to miraculously drop my expenses by $1,500 per month… but I didn’t…  In fact, the difference in my mortgage payment has been replaced by a car payment. As you can see, I am not really saving much right now.

I am diving directly into the bankruptcy hole! (this is why my parents and a few friends feel bad for me… hehehehe!).

Seriously, I have a plan. I actually have 2 plans! So here’s how I intend to live with a single income without cutting my expenses (and bringing back my mortgage payment to a normal rhythm).

#1 Quebec Pension Plan (QPP) has been paid in full

In Quebec, we have to pay a general pension plan for all workers (withheld at source by the employer). However, there is a maximum of what you pay in one calendar year. I had reached the maximum a couple of weeks ago so I won’t feel my net income cut until January 2010. This leaves me 3 months to generate more income. Since this is recurring annually, I have 3 months with the same level of net income (this surplus was never calculated in my budget… we used to spend more until the end of the year!).

#2 Getting a nice fat bonus

As funny as it seems, I might be able to get a bonus big enough to cover most of my wife’s missing income. Considering she was not earning much and I am having a really good year at the bank, I will be around 50% of her income by the end of the year. This should buy another 6 months to find more revenue.

#3 Dividing my single income into multiple sources of passive income

While point #1 and #2 help me find 9 months of my previous income level, I am still far from keeping the same lifestyle with a single income. Therefore, I have to find a solid, reliable solution to increase my income.

Well, increasing my current income would be the “normal reflex”. As this is how we have been raised and educated; work harder = get a bigger pay check. But what if I could multiply my sources of income and live from passive income? I would become a single income earner with tons of checks coming into my bank account…

Ok, back down to earth. My main plan is obviously to improve my blogs and other websites. If John Chow can make $40K/month, why can’t I? The best part about this plan is that I can still “survive” with a single income for at least 12 months. This is long enough for me to realize if I can keep up with my sites alone or not. Worst case scenario would be that I keep my day job and have a bigger side line with blogs. This would also work.

What about plan B?

My second plan is quite simple. It is the “hard work and earn a bigger pay check” option. I could probably change offices at work, move closer to downtown with a bigger book of clients. They offer a bigger base salary and bonuses are the same. This way I could compensate for my wife’s income and still live with a single income.

I prefer to take more risk and give my business a try. If I have to lose money, I rather do it in my twenties. I have the rest of my life to get it back

image source: Krish Tipirneni

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It’s okay ‘cause I am good with chaos. I actually got that nickname when I was a kid. Chaos would not exist without planning and planning would not exist without Chaos. This is an interesting balance.

So, Chaos knocked on my door once again over the weekend. We are not starting the daycare at home anymore. Say what? I asked my wife. “I changed my mind”. Hum… that sounds very familiar hehehe!

However, I must admit that I have to take my share of responsibilities in this mind turnover. I am actually trying to convince her of having a third child (since we are at it!). The thing is that if she keeps her job and she becomes pregnant, she will automatically stop working (because her job is too dangerous for the foetus health) and still get paid. Therefore, she will get 21 months paid at 90% (9 months), 70% (6 months) and then 55%(6 months) of her pay cheque.

By that time, I would probably be able to tell my wife that she can stay home forever! My job is going well, the internet company is growing, everything is in place so she can stop working and take care of the kids.

I was actually thinking about having another one for a while now. However, I had to make sure that the financial advantages were not the main reasons why I wanted to have one right away. It obviously played a role in my decision. However, it was important for me to make sure I was not mainly benefiting from the fact that my wife could stay home as of 2009 without any other effort.

So plans are plans and reality bites you in the neck when you are about start a new project! So the daycare is ready but we are not anymore. The good news is that we have the option to start it whenever we want (and that I now have a 5’ X 3’ full ceramic shower and my basement!!!).

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Our efforts paid!

Those who have been reading this blog for a while will remember that I was working for a year on the $1,500 project. Back in September 2007, I gave myself a year to increase our cash flow by $1,500 a month in order to give my wife the opportunity to stay with our kids until they go to school. Last September, I post my latest results on my project and deception since I didn’t achieve my goal in the required time. However, our efforts were not lost since we increased our cash flow enough to accept the drop of income incurred by the fact of having a daycare at home.

In fact, I was wondering why we didn’t start the daycare right away last year. I pulled out my old calculation sheets and find out that the daycare revenue were not sufficient to cover for our expenses. The irony stands when my wife’s daycare will be accredited by the government. She will actually make more money than she is right now. The problem is that since it’s a government program, we know when we start the process, but we have no clue as of when we will receive our accreditation. Anyway, in both cases, we can live with the “temporary” drop of income.

It requires time and planning

Since we want the children to be in a nice environment, we decided to finish our basement and build a bathroom on the same floor. Those changes will improve both children and my wife’s working environment. This will definitely be a plus to compensate the extra hours.

In order to do so, I need a contractor and to plan everything so the daycare will be ready for January 5^th. We thought it would be nice if my wife can stop working before Christmas and start the daycare after the holidays. So we are now shopping around for the best deals on materials and bathroom equipment.

Projects make us feel alive

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