Like many modern families, we both work full time and have two incomes. It was great to be a DINK couple for over a decade. We can afford pretty much anything we want, travel to exotic locations, and we didn’t have any problem putting money away into savings and investments. We live below our mean and didn’t have many money problems. Eventually, I want to leave my full time job and we had a chance to try living on one paycheck during the 3 months of bonding leave earlier this year.
We already have been reducing expenses over the last few years in an effort to eventually live on one pay check. I thought we were quite far off from being able to do this, but things aren’t looking too badly after each monthly accounting. In April and May, we had a small negative cash flow which was expected, but in June we actually had a positive month. We are a lot closer to being able to live on one paycheck that we thought!
This week I went to our online tax program and deleted my whole W2 income to see what would happen to our 2010 tax and guess what… We swung from owing the IRS $4,000 to getting about $5,000 refund. That’s a huge turnaround. It’s like an extra $750/month pops out of thin air. hahaha :D! I have been taking all the W4 exemption in my paycheck over the last few years. I’m pretty sure Mrs. RB40’s W4 is still claiming only 1 exemption. When I leave my full time job, she can increase that to 3 or 4 and we would have quite a bit more monthly income from her paycheck!
Couple that with the extra $450/month reduction in the rental home mortgage payment (refinanced to get lower payment) and I am pretty confident that we will be able live on one pay check soon. It seems like we are right there and just a few more moves will enable us to get over the hump. I still have a few years left before I turn 40 so I’m very optimistic.
One thing we are working on is acquiring a 4 plex, but that deal seems like it’s going down the drain quickly. Not a big problem though, we can just move the down payment into my dividend portfolio instead. Lately, I’m beginning to think investing in an REIT might be less headache than owning more real estate.
I’m pretty sure quite a few Yakezie bloggers are living on one paycheck and saving the whole other one. This is a great way to turbo boost your saving and investment. I know having kids can throw a wrench into this dual income thing. If you have 3 kids, the day care will cost over $3,000/month. You’ll have to be making quite a bit more than that to make it worth it.
What is your situation? Dual income no kids? Dual income with kids? One income? I’m curious to see what everybody’s situation is like. If you have two income, can you live with one paycheck?