Sep 18, 2009

Tips on Living on One Income

at 10:53 AM

Thought I'd repost here a pretty neat list of financial advice on one income households from parents.com


Here are six steps you can take to adjust your family to life on one income:


1. Cut your grocery bill. No, don't go on a starvation diet. Instead, cut out convenience foods, such as precooked dinners and packaged snacks. They're priced to provide maximum profit for your grocer. Also, clip coupons. Avoid coupons that encourage you to buy new or packaged items that you might otherwise avoid, but seek out those that save you money on your staples.

2. Consolidate to one credit card with a low interest rate. A wallet full of cards just encourages you to spend. And many cards now offer very low interest rates. But be sure to read the fine print: some low-interest deals are just introductory offers. This one I disagree with. I believe a family should get a credit card that has ZERO% APR, pay it off then get rid of it. Now I know there are some who wants to keep it in case of an emergency and that's debateable. Yet I do not agree anyone should have a credit card for regular uses, especially if you are on one income.

3.. Barter with other families. One of the easiest things to barter is babysitting time. Connect with other families trying to cut back and trade babysitting services. You cut your child-care costs and you can still get out of the house once in a while.

4. Pull the plug on cable. Anything worth watching will turn up on video three months later.

5. Don't move. While it may be tempting to pull up stakes and move to a cheaper community, the financial cost and emotional burden of moving often makes this idea more trouble than it's worth. Instead, look for ways to reduce your current housing costs such as refinancing your mortgage or reducing your home-related taxes.

6. Save up cash to make any big purchases. This achieves two goals. One, it forces you to consider, over a lengthy period of time, how badly you really want a new sofa, computer, car stereo, etc. Second, by saving cash for the purchase, you avoid racking up a credit card bill and owing interest.

While all these steps will help, perhaps the most important part of life on less than two incomes is the support of your spouse. You both need to be committed to making the new financial arrangement work. If one spouse is working to contain costs and the other is out buying new CDs, the process is doomed. Whether it's because you want to spend more time with the kids, or because you and your family are getting through a rough patch of economic times, it's key that the family work as a team to make ends meet.

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