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Planning For a Decrease in Income

If you haven’t heard the news- we are expecting baby #1 early January 2014! I hit the 6-month mark this week and am grateful to say it’s been a smooth pregnancy so far. We’ve got less than two months left of our 6-month stint in Calgary for my husband’s job assignment and then we head back home to Michigan. We’ll finally get to live in our new home that friends have been renting out while we’re gone and we’ll have about 2 months to settle in before our baby girl arrives. While we’re currently a DINKs couple (double income no kids), a lot of changes are coming up which means it’s time to revisit our budget. Here’s a summary of what’s in the near future for our budget:

Decrease in tithe & investing

We put 15% of our income toward tithing and 15% toward investing. The percentage will stay the same but with only one income the total monthly contribution will go down.

No additional mortgage payments

It’s been awesome being able to make double and triple mortgage payments toward our mortgage while in Canada. We still make a monthly payment, our friends who currently rent our condo provide an extra payment, and the bump in salary brings us to the triple payment. It’s brought us closer to eliminating the additional PMI cost that sucks money from our payments. Without renting our condo or having the bump in my husband’s salary, any additional payments toward the mortgage principal won’t be nearly as large as they have been.

Health insurance premium

We’ll switch from a couple insurance plan to a family plan which means the monthly cost goes up.

529 college savings

We’re not sure how many kids we’d like to have or how much we want to save for their education. My parents covered my first year and my 3 sisters’ first year of college. My husband’s parents invested in a 529 plan and paid for all 5 kids to attend a 4-year university. There’s no perfect formula to do this. Regardless what we end up covering, we’ll start investing some amount once the baby is born.

Life Insurance

Right now we just have the basic life insurance my husband’s company provides which I believe is equivalent to 6 months of his salary if he were to pass. With a child, a mortgage, and other factors in the picture we are looking at additional life insurance options.

Phone plan

In my last article here at LAMF I talked about the possibility of my husband ditching his Smartphone and going back to a Dumbphone. That will cut down costs significantly as well as switching back to our standard plan instead of the international plan we currently pay more for.

Utilities

We’ve never had a washer/dryer in our apartment, wifi was included in rent, we never used our heat or air conditioning, and our monthly utility bill was only $40/month. Now that we’ll be in our condo we’ll be getting our own wifi provider (no cable) and we’ll have our own washer/dryer. Also, I can’t quite make our newborn suck it up during a hot summer or chilly winter night so we’ll be using the air and heater. From seeing the bill while our friends are renting the place, it looks like we’ll be paying around $100/month in the summer and likely more in the winter.

Gym membership

This is definitely a “want” and not a “need” category but for us it’s worth it to have a gym membership. I love group fitness classes and my husband is more productive at the gym than at home.

We’ve always been a “single income” household

For the past 3 years we’ve been married, our budget has been set up so we’re able to live off of my husband’s salary alone. Anything I made went to our financial goals- first paying off $30k of student loans, then a 6-month emergency fund, then car replacement savings in case our 1999 Honda Accord with 200k miles dies on us. I’m thankful we set up our budget this way because it will make the transition to only living off of his income a little easier. Anything I make from my jobs will continue to be counted as additional income that will go toward some sort of financial goal. We’re excited for the new addition arriving in January and are taking steps to ensure our family will be financially ready for this new chapter of life.

If you transitioned from double income to single income, how did you prepare for it?

This has been a guest post from Jessica. She is a Registered Dietitian and shares practical, useful tips on food, fitness, and finance. Be sure to subscribe to her blog, Budget For Health.

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