In 2009, the Mrs. quit her job and decided to go back to school for her teaching degree. Three years out of college and two years into marriage, we went from a dual income to a single income family. The budget we were used to living on now required some drastic changes! Mrs. GFY had a couple of jobs she worked on the side while going to school, but her income was effectively cut down to about a quarter of what it was. On top of that, we were paying for tuition without any long-term student loans.
If that weren’t enough to handle, the economy was in the tank. The country was in the middle of the worst financial crisis since the Great Depression. Lucky for us, I had a decent paying job that was secure. At the time, I was a CPA working for a public accounting firm. I wasn’t going to get fired unless I did something incredibly stupid. With very high turnover rates in this industry, it takes a lot to get fired! But with the economy in the dumpster, pay raises and bonuses were eliminated.
Like most difficult situations, I viewed it as a challenge. How were we going to live off one income and pay for school without relying on student loans? It wasn’t easy and it took sacrifices on our part. After being flush with money for three years out of school, we now had to go back to living like broke college students.
We look back on these times and kind of chuckle about how we lived. Not that we’re extravagant spenders now. We’re definitely not. But we can go out for an occasional nice dinner and not get stressed out by the prices so much. Back then, it was a much different story. The budget for entertainment was miniscule. I dreaded being asked to have a drink with friends because that meant paying an expensive bar tab. Anytime we went out to eat, my focus was only on the right side of the menu… $$$.
Vacations were out of the question. For 2 1/2 years we did not take any vacations. The only travel we did was for out of town weddings… which we had a bunch! Being in our mid to late 20s at the time, we had a LOT of friends getting married. On top of having to pay for hotels for some of these, there were wedding presents. When you’re on a shoestring budget and have 10 weddings to attend in one year, those presents start to add up!
We didn’t have much of a budget for anything outside of the necessities. For Mrs. GFY, that meant sacrificing shopping for new clothes. For me, golf rounds at $50-65 a piece were few and far between.
Even the necessities were limited. We did our best to keep groceries to $50 a week. As people who today don’t take lightly the quality of food we put into our body, this seems crazy now! But it was one of the many short-term sacrifices we made for a better future.
Don’t Sacrifice Savings
Prior to the Mrs. quitting her job, we both contributed 20% of our pay to retirement accounts through our employers. When she quit her job, our contributions dropped to 10-15% of my paycheck depending on how much money Mrs. GFY was able to make through part time jobs. When she began student teaching and could no longer work on the side, our income dropped even further. Student teaching is basically an unpaid internship. Not only do you not get paid, you have to pay to do it! The school requires you pay 9 credit hours of tuition during the semester you teach. At this point, with our income cut even further, I reduced my 401k contribution to 6%, which still allowed me to get the full employer match.
It was important to me during this time that we keep paying ourselves first. I was lucky enough to be given a copy of The Automatic Millionaire by David Bach when I graduated college. I highly recommend this book to anyone new to personal finance. This book taught me the importance of saving early and often, and the magic of compound interest. It would have been very tempting to have an extra few hundred dollars in our pockets each month. But we both were willing to forego this in the short-term as we continued to keep our eyes on the future.
Find Cheaper Forms of Entertainment
When you’re living on a tight budget, entertainment is the first expense that gets cut. But that doesn’t mean you’re stuck doing nothing. There are plenty of free or cheap forms of entertainment. For us, going out for dinner and a movie Friday night was replaced with Red Box and cooking at home. With two dogs, taking them to the park to run around and swim made for a fun day at no cost.
There are many other options available. If you enjoy going out to bars with friends, invite them over instead for drinks. We love inviting friends over for game night. Picking up a six pack or two at the liquor store ends up being a lot cheaper than the typical bar tab.
Short-Term Sacrifice for Long-Term Benefit
Living on this budget was difficult, and at times, stressful. In the end, it was completely worth it. We could have taken an easier route and skimped on savings, taken on more student loan debt, or run up credit card balances. But we would have been in a much worse position in the end.
By the time Mrs. GFY finished her student teaching and graduated with her degree, we had no student loan debt. During those 2 1/2 years, I continued to contribute to my 401k. We also continued to build up our emergency fund little by little. This came in handy as Mrs. GFY’s lemon of a car required some significant engine repairs. Without an emergency fund, we would have really been hurting. Despite incurring some significant unexpected costs during this time, we were still able to increase our emergency fund by $600.
So what did we do when we became a dual income family again? Immediately take our new found cash and go a shopping spree? Nope. The strings on the budget were loosened a bit. We included some fun money for each of us to spend how we wanted as well as some money for going out as a couple. The biggest change with our newfound cash flow was increasing our savings. We were able to immediately bump my 401k deferral back to 20% and increase our after tax savings. And the reason we were able to do this so quickly was because of the discipline we had to get by on less instead of racking up debt until we returned to a dual income family.
Readers: I’d love to hear your stories about living on a tight budget. What did you sacrifice? Let us hear your tips for getting by on less.