13 May

Living on One Income: How We’re Cutting Expenses

Living on One Income

Image courtesy of Ppiboon at FreeDigitalPhotos.net

One thing I realized from being unemployed for over a year is that we cannot survive in our current lifestyle on one salary. My husband’s take home pay of $2,000 a month plus a few hundred dollars (at most) from my various odd jobs doesn’t cut it when our monthly rent alone is $1,092. That’s over 50% of our current income!

We knew we needed to make some major changes if we wanted to have any hope of paying off my massive debts, so we sat down and began identifying the ways we can cut our expenses over the coming months. Our goal is to reduce our most basic, necessary bills enough to cover with one salary. Then when I finally find a job, be it full or part-time, that money can go toward other expenses.

What is a Necessary Expense?

While food, water, and shelter are the three requirements we need to survive, in today’s modern world you need a bit more than that to get by. Our current “necessary” bills are as follows:

  • Rent & Renter’s Insurance
  • Utilities (Power & Water)
  • Internet
  • Cell Phone Plan
  • Car Insurance
  • Health Insurance

Credit cards and student loans are high priority payments, but not necessary for survival. When push comes to shove, the above list comes first. Besides job hunting, I use our internet and my smartphone for self-employment work and it would likely cut into our income to try and forgo them.

Start with the Highest Expenses First

Rent and our current smartphone plans take the biggest chunk of money. Rent is over $1,000 and our joint smartphone account is $200 per month. The obvious target is rent. After spending several weeks researching apartments in our area, we have identified a list of potential matches in the $750 – $850 range.

For our phone plans, I am considering switching to MetroPCS. We can cut our phone bill to about $60 per person and save $80 a month without sacrificing our current data usage or minutes. The key is waiting until MetroPCS offers a good deal on purchasing new phones to avoid spending hundreds of dollars to switch.

Potential Monthly Savings: $420

Compare and Cut Utilities

Utilities don’t always have a lot of wiggle room, but it never hurts to check out competitor’s offers. If you have internet and TV, see if you can bundle those together for a cheaper offer. If you’re moving to a new apartment, like we are, consider switching internet service providers to take advantage of new customer discounts for your first year. If water and power are high, see what you can do to reduce your usage or upgrade your home or apartment for better efficiency.

Potential Monthly Savings: $30 – $50

Shopping for Insurance

Sometimes it feels like you need an insurance plan for everything. I would say it feels like you need insurance just for living, but that’s called health insurance! The best bet is to look at what’s in your budget, how much coverage you’ll realistically need, and then shop, shop, shop! I switched my car insurance to Progressive several years ago when I realized they offered a cheaper plan, and my husband switched health insurance first to a plan from the healthcare marketplace and then to a plan through his employer when it became available. I pay $65 per month for auto insurance and he only pays $30 monthly for health insurance (albeit not a very good plan, but he isn’t big on going to the doctor anyway).

Potential Monthly Savings: $50 – $100

Total Savings: $450 / monthly

Once we move in July and make changes to our smartphone and internet plans, we should start seeing an average of $450 extra income each month. Whereas we currently pay over $1,600 a month in bills, not counting debt repayment, groceries, or gas, we can lower that to about $1,175 with a few one-time changes. That extra money could be a credit card payment or the money we need for food and fuel so that any income I earn can chip away at our debt.

Even with that chunk of potential savings, finances are still tight while I look for work. Which brings me to an important question: what do you do when you can’t pay your bills?

I’ll be writing a blog post soon discussing the best ways to divide up your money when you simply don’t have enough for everything.

Feel free to add your own advice in the comments! Have you ever found yourself unable to pay all your monthly expenses? Did you come up with any creative ways to cut costs?

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