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to miraculously drop my expenses by $1,500 per month… but I didn’t… In fact, the difference in my mortgage payment has been replaced by a car payment.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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