Debt Management

8-month plan to shift family from two incomes to one


Moving from two incomes to one can be terrifying, but surviving and thriving on just one income can be done — and in just eight months

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Even in financial boom times, moving from two incomes to one can be terrifying. When times are tough, the fear of taking the one-income plunge can freeze you into that workaday lifestyle you really don’t want.

The good news is that the idea of surviving on just one income isn’t a pipe dream, even for families with credit card debt. It just requires plenty of planning, patience and belt-tightening.

According to U.S. Census data, almost a quarter of American families with children younger than 15 have at least one stay-at-home parent — more than 5.18 million parents total. Even when kids aren’t a factor, some partners drop out of the full-time workforce to care for an aging parent, go back to school or take a sabbatical from a stressful career.

So how do you prepare for this change? Our month-by-month guide to getting ready to live with a single income tells you:

8 months out: Begin with the end in mind. Before embarking on a major lifestyle overhaul, talk about why you’re doing it and whether it’s worth it. “When my husband and I really looked at our vision for our kids, it wasn’t that we’d both be working and providing material things for our family,” says Jill Savage, a mother of five and author of “Living with Less So Your Family Has More.” “Our vision was that we wanted to provide emotionally for our kids; we wanted to be there when they got off the school bus.” Those emotional underpinnings motivated the couple to figure out how to live on what Savage calls her husband’s “pretty mediocre income” as a pastor. Remind yourself of similar goals by, say, posting a picture of your baby at your desk or leafing through the brochure from your dream grad school. It will make it easier to make the hard choices.

7 months out: Calculate a savings goal. Crunch the numbers to determine how much you currently earn and spend by using free websites such as or to track and categorize expenses, or by sifting through stockpiled credit card and debit card receipts. “It’s a math equation,” says Lauren Bakken, a certified public accountant and co-author of “One-Income Household: How to Do a Lot with a Little.” “This is how much we’ll need per month, how much we’ll have coming in, and this is how much deficit there is. Multiply that out over how many years we’ll be home, and that’s how much money we need to save.” Use that number to build a detailed plan for bulking up savings and cutting spending now.

6 months out: Tuck away one salary. While you’re both still working, begin channeling 25 percent of the paycheck you’ll lose to an online savings account, both because it’s good practice for living on less and because you’ll need the money later. Experts recommend stashing away as much as 12 months’ living expenses as an emergency fund — and if you’ll rely on only one income, you may want even more of a cushion — so slowly bump up the amount you’re putting away to 50 percent, 75 percent or even 100 percent if you can manage it.

5 months out: Make drastic changes. When one partner quits, some expenses may disappear, such as commuting or child care costs. But if the shortfall between what you’ll make and what you think you’ll spend is more than $5,000, you may need to resort to a grand gesture, such as downsizing your home, moving to an area with a lower cost of living, becoming a one-car family or selling belongings. Former financial analyst Jenny Rothlisberger of Crofton, Md., and her husband downsized to a much-smaller apartment once their daughter, Elena, was born so Jenny could afford to stay home with the baby. “Some days I had to remind myself several times a day why it was important that we were there,” she says.

4 months out: Devise a new income stream. Steve Chou of Mountain View, Calif., was onboard with his wife’s desire to be a stay-at-home mom, but “it wasn’t until she officially became pregnant that it hit me that we were going to lose over $100,000 a year,” he says. “We started working furiously on our online store pretty much as soon as my wife peed on the stick.” Business was slow at first, but by September 2009, when their first child was 1, the couple hit their $100,000 profit goal with their online wedding linens store (and started teaching others to do the same thing at Recreating a six-figure income may seem like a long shot, but plenty of skills — Web design, tutoring, professional organizing — can fuel a decent part-time income.

3 months out: Pay off debt. Carrying loads of high-interest credit card debt, car loans and even student loans can render a one-income plan impossible, so funnel extra cash toward paying off debt. “At the grocery store, if you budgeted $150 for groceries but used coupons and only spent $100, take that $50 you saved and put it toward the MasterCard,” says Ellie Kay, author of “The 60-minute Money Workout: An Easy Step-by-Step Guide to Getting Your Finances into Shape.” And unless you’ve lost a job, forget about financing your stay-at-home plan with credit.

2 months out: Make tough choices. “When we had to look at living with less, we made a decision that we would not do cable television,” says Savage. “My husband salivates over cable, so for him that was a huge sacrifice. But it was like, ‘Was cable television important enough to not have somebody here after school?’ It wasn’t for us.” Having trouble agreeing on priorities? Talk to a financial planner or credit counselor, who can help you examine your spending and make some tough calls.

1 month out: Become super-savers. Re-evaluate your auto and homeowners insurance, track down online coupons at sites such as, make your own laundry detergent (find a recipe at or sign up for the Facebook pages of retailers you love so you’ll be first in line to get digital coupons. “When you go from two incomes to one income, guess what becomes your new part-time job? Saving

money,” says Kay.

See related: Don’t be afraid of online coupons, How to pick the best credit counselor, How to face a student loan disaster, 8 steps to reducing credit card debt, How to establish an emergency fund, First step of any budget: monitoring spending, Trying to cut spending? Go BIG

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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