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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.


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.



My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. We are currently preparing to lose my day job income. Yes, I will still have my self-employment income, but that fluctuates so we are trying to lower our expenses and increase our EF as much as we can.

    • That’s wise. We did the same when I picked up shifts at the hospital because they fluctuated each month. It was easier to not account for that income in the budget and view why I made as extra.

  2. Congratulations on the baby! My wife and I just had two girls *gulp!* in June. Before the babies came we made it a point to live off of just my income as best as possible – honestly, though, restaurants and entertainment still were our splurges. The biggest blessing was that we were able to pay off all non-mortgage debt. That was like $200 a month of student loans and $600 in monthly car payments. Our budget will never be the same, but it’s definitely for the better!!

    • Twins!! Double congrats for you! Triple congrats for knocking out debt too! How exciting 🙂 I’m sure our splurges will be in similar categories. It will probably take time to figure out the new budget but like you said it will totally be worth it.

  3. Hey, congratulations. I’m due in February, so we’re also trying to prepare for that time. I’m the main ‘earner’ in the home, my part of the business is what’s bringing in most of the money, and I’ll surely be ‘off’ for at least 2 weeks.

    The good thing is that I do work from home, so it will be easy to resume work and hopefully make up for the few weeks I won’t be able to do any major work.

  4. I had no idea you were having a baby! Congrats! That’s so exciting!

  5. It sounds like you’re well prepared for your growing family.

    Life insurance is the big hole I see. Glad to hear you’re tackling that one head on. Personally, I go term life for the amount to pay off the primary mortgage, pay for children’s college, and a little more just-in-case money to cover until “retirement” age. I don’t consider insurance an investment, it’s just peace of mind and hedging risk.

    • Thanks, Jack. You make a lot of sense. We got a quote on an amount but I thought the amount covered wasn’t enough. Another thing that confused me was that the quote was for an equal amount of coverage for both my husband and myself even though he’ll be bringing in the income and I won’t when the baby comes. Life insurance isn’t as easy as “click to purchase”!

  6. Yay for paying down the mortgage while you have had the opportunity! I have thought about this problem as well. We are also set up to live on less than one of our incomes, but that’s with only two of us in the picture. I like saving a ton of money, I think that if we were to have kids it would be really emotionally difficult for us to lose that huge buffer zone for awhile.
    I’m glad to hear you’re looking into insurance. One of the crappy parts about it is that the younger the kid, the more of it you need.

    • I like saving as well! Even being able to make big payments on the mortgage so we can get rid of the PMI has been sweet. We’ll definitely have less of a buffer zone as you called it. Does this mean kids are coming in the picture soon?? 😉

  7. I agree with Jack that you need to get term life for both you and your husband. You need enough on your hubby to pay for loss of income. You need enough on you to pay for childcare while he works.

    • Those two points you made are why I thought it was odd that the quote we got was for the SAME amount of coverage! I’m glad to know we were thinking in the right direction.

  8. You will not regret starting a 529 Savings plan. Our youngest is in her freshman year and while we were lucky both girls earned partial merit scholarships the cost of going to college went up far faster than anyone anticipated when our girls were born. If we hadn’t started saving when they were infants we’d have a much tougher time helping them get through undergrad without going into debt. Good luck!

    • That’s great to hear! It seems way less of a financial committment only having to put a little away each month starting with a newborn rather than dishing out huge chunks of money to start saving when our kids get into high school!

  9. Congrats on the baby! We’ve always been DINKS as well, but one of our incomes is very irratic. I’ve been working hard at boosting the primary income so that the additional income is just that; additional that can be applied towards debt repayment. Good luck on the transition!

  10. Congratulations! It’s really tough when you have to go through some financial changes, so it’s really important to do some budget planning before the transition, and to put in allowances, when creating them especially for first time expenses.

    • It will be an interesting transition but I’m glad we’re getting a head start at trying to figure out what changes will be made. Thanks for the tip on first time expenses- I’m sure some will pop up for the baby so we’ve been setting money aside for that.

  11. Well first of all congratulations on Baby #1. There’s no better way but to prepare I must say for everything that will come your way. Decreasing income is never easy especially since you are about to increase your costs with the baby on the way. Creating a checklist of sorts for the things you need to prepare for can also help clear your mind. Personally seeing things written on paper helps me visualize and plan ahead.

    • Thanks Marissa! It’s hard not being able to estimate the cost of baby stuff since we aren’t sure what our baby will be like but I’m sure we’ll start adjusting our budget after a few months and it will be back into a routine. I’m the same way with checklists so I’ll be sure to keep that up 🙂

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