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Spin off: Could you live on 50% of your income? - Page 5

post #81 of 118
I was laid off a few years ago and lost a 6 figure income. At the time, I was the higher income spouse. So yes, not only could I, but we do. It was very hard but we muddled through and have adjusted. No more shiny toys though.
post #82 of 118
No. Not unless we were able to move to a much cheaper house, cancel all un-necessary bills (phone, internet, tv) and eat only beans and rice for...ever.

100% of our income is barely enough. 50% just wouldn't do it.
post #83 of 118
We just realized today we're living on 70% of our income. I think 50% would be doable, just really tight. But I don't know. Dh's pay is dropping over the next 4 months so we might be there.
post #84 of 118
Originally Posted by EFmom View Post
No, but I wonder how this is supposed to be computed. We put 15% of our incomes in tax-deferred supplemental retirement funds. Does this 15% count toward the 50% I'm supposed to be saving? If I withdrew it before retirement, I'd pay scads of taxes, so it's not like I can use it to count as my 6 month emergency fund. But I think it's important to have good retirement savings. We do something similar with education funds for our kids.
Dave Ramsey counsels stopping all retirement and education contributions until the 6 month emergency fund is saved up, for that reason. I don't know whether Suze Orman has the same advice, but it wouldn't surprise me.
post #85 of 118
Well, we did that a few years ago when I left work to SAHM. Probably closer to living on 45% of our income.

No way in hell we could cut that in half again.

The good news is, when I go back to work full time, that extra income will be all the sweeter.
post #86 of 118
i just can't help but think--50% of someone like suze orman's income would be a windfall of major proportion to a family like us. 50% of our current income is like, not even enough for many people's grocery bill.
post #87 of 118
Originally Posted by Krystal323 View Post
i just can't help but think--50% of someone like suze orman's income would be a windfall of major proportion to a family like us. 50% of our current income is like, not even enough for many people's grocery bill.
yep. Suze Orman doesn't live in the real world.
post #88 of 118
In the Bay Area? No, we couldn't.
post #89 of 118
Yes... but...

Right now, we both work FT. We have a nanny who cares for the baby, and our older son goes to preschool (which costs money).

We'd have to switch to a cheaper daycare solution. If I'm not working, then our mortgage is 50% of our income. (However, because we're using a fairly pricey daycare situation, my take-home after subtracting our childcare expenses doesn't even cover our grocery bill.)

Our mortgage (the number I'm using for it includes property taxes and insurance) is about 30% of our combined income with me working.

I actually *am* thinking of going back to being a SAHM in the fall, when DS1 starts kindergarten (public school, free-ish) and DS2 is old enough for preschool a couple days a week.

But... the upshot is, while changing childcare solutions would be the BIG change, we'd also have to lower our utilities, grocery bill, cut out our spending money, lower our car insurance coverage, dump all the stuff in storage, and cut out a couple of luxuries like our every-two-weeks gardener and housekeeper. Right now, our expenses run about 91% of our take-home.
post #90 of 118
We could if we weren't up to our eyeballs in student loan debt. We have an average income and an average priced home, and we don't have a lot of luxuries. But the student loans are going to do us in.
post #91 of 118
I think that we *could*... maybe. My question is, where is the balance between saving money/ trying to live on as little as possible, and value? For example, I (like a lot of MDC'ers, I think) spend a lot more on groceries than I absolutely have to, because I buy grass-fed beef, organic dairy and eggs, etc. (etc etc etc.) If I stopped doing that and started going to Wal-mart for the absolute cheapest-per-pound stuff I could buy, it would cut our food bill drastically, but at the cost of going against my personal values. Similarly, I plan to SAH once our baby is born. In my case, it won't make a huge financial difference one way or the other, because what I take home = cost of daycare anyway, but even if I were making more $$ I'd want to, again based on what I value, what I think is important. Same thing goes for charitable contributions, tithing, etc. Basically, we all spend money in ways that reflect our personal belief systems.

Now don't get me wrong, DH and I still blow a lot of $$$ on trivial, frivolous stuff, that we could cut out easily (and will have to, once I stop working). And if it came down to it and we HAD to live off of $1,200 a month instead of $2,400, (e.g.) then I would do whatever it takes to do so-- what choice is there, then? But I wouldn't want to try to do that NOW, at the cost of everything that is important to me. I guess what I'm saying is, we don't live on 50%-- or 60% or 70%-- but it's not just because we spend mindlessly, needlessly. There is some thought involved, YK?
post #92 of 118
Originally Posted by maryjane View Post
I read in the Suze Orman post that she recommended that people live on 50% of their income. I'm assuming she means take-home pay.

What about you? Could you/do you do it?
Nope. Our rent is 50% of our take-home pay, and the difference between our mortgage and rent we receive from our tenants (a house we own in another state) is probably another 10% of our income. So 60% on housing alone.
post #93 of 118
I don't think we can without some major changes. The funny thing is if DH's pay (our only income) is cut by 50% we can still manage OK. The difference is we'd be hardly pay any taxes and will get more child tax credits with that income level. So 50% of his current pay will be a LOT more than 50% of his take-home pay.
post #94 of 118
We could, but we're choosing not to.

Obviously some things would change if we were laid off. We wouldn't have to pay childcare anymore, and that's not something that we can cut out any earlier than necesary.

I'd have to stop giving to charity. We'd have to stop giving gifts - most of which are useful things that my sisters (who have lower income than we do) really use.

My daughter will be going to private school next year. I feel very strongly about the quality of education available at this school. As long as we're still working, we'll keep sending her to that school. We'll pull her out when and if we were to actually be laid off.

I also consider myself fortunate to currently afford to support local organic farmers. I consider that a useful way to spend our income.

We have 3-6 mo in savings, depending on how you calculate it. I know we ought to have more, and we are building that, but I'm not going to negatively affect other people (like our charities and local farmers) in order to do that faster.

We are prepared to cut down our spending to that 50% mark if either of our jobs were to be lost, but we have no intention of doing that prematurely.

I'm not sure I'm buying this recommendation to cut back to 50%. I think she should more realistically recommend that you try to set your budget up so that you could go to 50% if you had to. But a lot of things change when not working. Lower gas bills, possible lower grocery bills, lower child care bills, etc.

post #95 of 118
If we bought a smaller house we could do it, but with this morgage we couldn't.
post #96 of 118
Does this question pertain to still living the same lifestyle you are living now or include willing to scale down? Because here is my take on what I have been reading in this thread. A lot of people said they would have to get a smaller house and car with no payments. So I think the answer is that most could, but choose not to. We probably live on 60-70%. And that is with a mortgage and a car payment on my Jeep. DH and DD have cars that were bought out right. So yes, I could. I would just sell the house and move into something smaller, sell my car and buy one out right and take fewer vacations.
post #97 of 118
Between DP and I we make 50k a year. Housing here is cheap (we currently pay $375 a month and our utility bills range from $40-$120 depending on the season) and I have no debt and DP pays about $400 a month toward his (car/student loan) so I don't see any reason why we couldn't.

I do pay about $500 a month to DX for his food, gas and bills so he can be a SAHD but we could always arrange working opposite shifts etc if we had to if I could no longer support him but right now that is not an issue.
post #98 of 118
We are currently living on 40% of our total household income b/c DH was laid off a couple of weeks ago. We have saved aggressively for years and the only debt we have is our mortgage so it's not bad. Yet.
post #99 of 118
I don't think it would be humanly possible.

post #100 of 118
Looking at my budget we would have to be COMPLETELY debt free for us to live and save for car repairs , replacements , home repairs etc to live 50% of DH's income. 50% would be close to what his mom will get with early SSI . :P

I think her number is from having each adult with a full time income. living off 50% of that. So no SAHM's in this figure I suspect.
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