Living on One Income

I often hear people talking about living on one income, or needing two incomes, or some variation of this topic.  Today, I read Start Living on One Income! at Debt Free Adventure.  While I don’t agree with every word, I definitely agree with the general principle, and I think it is even more important for military families than for the rest of the world.

The main idea of the article is that your family should finance its month-to-month needs by using only one paycheck.  If the other spouse does work, or you have a second job, that money should be spent on things outside of daily living expenses:  paying down debt more quickly, building an emergency fund faster, additional saving for retirement, etc.

I’m sure someone out there is saying, “Do you know what young military folks make?  They need to have more than one income.”  Yes, I do know what young military folks make and I agree that it isn’t much, or nearly enough.  I also know that using that second income to finance fixed expenses (rent, car payments, etc.) is a recipe for disaster.  If you are relying on that second income to meet your monthly expenses, what happens if that second income is lost?

The military lifestyle adds lots of extra reasons why that second income might go away, including regular moves, deployments that make it hard to keep up with a family and a job, and the crazy working hours of the active duty spouse.  If a military member can find a second job that works for him or her, it is usually a short-term situation as working schedules and deployments interfere.  Statistics show that military spouses have higher rates of unemployment and underemployment than their civilian counterparts.

So, what’s a military family to do?  Just as suggested in the article, military families would be smart to keep their necessary expenses down to the amount that can be paid by just the active duty income.  Rent, loan payments, food, gas, and utilities should not exceed the active duty pay and allowance.  A second job, or a spouse’s job, can pay for non-essentials:  paying off debt faster, building up your retirement, vacations, big purchases, and fun stuff.

I don’t want you to think that people who are living on only one income should neglect their savings or debt repayment.  Those things are important no matter how much income you have.  However, the second income allows you to do those important things even faster, and have fun at the same time.

This is sounding like a gloom-and-doom post, but it is meant to be encouraging.  Once you do the hard part of paring your essential expenses, the rest is a bonus and will make life that much easier for you.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • ReadyRedd

    Now that was a very informative article and I think it could apply to civilians as well. Good job, please keep them coming.

  • Kristina L

    My husband is in the National Guard. We just went through the Dave Ramsey program called Financial Peace University. I do know that they offer this program to military personnel which applied it toward theie unique sistuation. This program has helped us a lot. We have a goal and will be debt free with the exception of our home within one year. That is paying off over $53,000. You have to work hard but for one year it will be worth it to have it all gone.

  • Linda A.

    Yep, Financial Peace University is an incredibly awesome, easy to follow and thorough program. We went went through the program and from prioritizing to budgeting… it’s a program all families OR singles should go through as soon as they have the chance. FPU (as it’s called) is something that is offered at a reduced rate to military families. You can attend the seminar (11-13 weeks) at a host location or just complete the program online. Plus, the forms you need to succeed ongoing are all part of the program. It’s worth it and to be able to pay down as much debt as Kristina (above post) and her husband did makes it well worth the effort. It is tight to work on your financial goals and to retrain yourself. But, as Dave Ramsey says… it’s about 20% knowledge and 80% behavior (or something close to that).

    Good luck to all.

  • Charles W

    The problem with living completely debt free is you loss the leverage to make your money go further than it otherwise would. For on a 5% loan you can have 25000 which only really costs you 3 dollars a day for a 5 year term. Thats really cheap money which can be used to free up other money to invest. All you have to do is make more than 3 dollars a day.

  • I RETIRED WITH OVER 20 YEARS IN THE MILITARY. WE LIVED ON ONE INCOME THE WHOLE TIME. WE PAID ALL OUR BILLS ON TIME, AND ALWAYS STAYED WITHIN OUR BUDGET. WE WOULD BUY OLDER HOMES AND CARS TO STAY WITHIN OUR BUDGET. I DO NOT UNDERSTAND WHY ANYONE SHOULD HAVE TO PAY SOMEONE ELSE TO TELL THEM HOW TO STAY WITHIN ONE INCOME BUDGET. WE WOULD BUY JUST THE THINGS WE NEEDED, NOT WHAT WE WANTED. A BIG DIFFERENCE BETWEEN THE TWO. ANOTHER BLESSING IS THAT WHEN I RETIRED IN 2002 WE ALREADY HAD OUR HOME PAID FOR AND MOSTLY EVERYTHING ELSE. ALSO WE WERE ALMOST DEBT FREE AND I DID NOT EVEN HAVE TO GO BACK TO WORK ON LESS I WANTED TO. SO I DECIDED TO RETIRE, AND HAVE BEEN DOING SO FOR THE PAST SEVEN YEARS, AND LIVING JUST ON MY RETIREMENT. CHECK. THIS HAS BEEN A REAL BLESSING TO US.

  • I sympathize with all respondants that are in debt as I am one also. I am glad to hear about David Ramsey and will get his program. It sounds like it will help us too.

    Not everyone is diciplined enough to get on a scheduled plan on their own and do what the last writer did. I aplaud them for being able to do as they have and are now enjoying their fruits.

    I believe we will make it because we are determined.

    Thank you

    virginia

  • I agree with Virginia knowledge is power. If I can learn more about paying debt down, I’m willing to listen. We as a society are so quick to point the finger versus helping someone understand what their doing wrong with their money. As my favorite financial advisor says (Suze Orman), “People First, Then Money, Then Things”.

    Not everyone can handle their money well, they need to be taught. So I applaud Mr. Ramsey’s Financial Peace University.