Reaching FISave More, Spend Less

How We Can Save 50% on One Income

Saving 50% on One Income

As you may know, I am officially working from home. After lots of planning and calculating, we are ready to hit the ground running. Even though the actual day we decided to put in my notice was somewhat unplanned, we had actually planned for the possibility of me leaving wage-paying work. We had planned to continue saving money and obviously be able to cover all of our regular expenses. So we wanted to dedicate this whole post to how the heck we are going from a DINK (dual income, no kids) to one salaried income and one stay-at-home blogger making $0 (SO FAR!). And yes, as the title suggests, we are still able to save over 50% on just one income.

Sounds scary and terrible, huh? Don’t worry, we got it figured out!

How do we plan to sustain ourselves? 

Now for the most asked question, how are we going to be able to afford our lives? 

As a DINK couple, we will definitely need to adjust our spending habits and our savings rates now that we will be moving down to one income. But in no way are we going to be hurting or struggling for money as so many think we will be.  

Someone at my work even asked me if my parents were going to be helping me out. Now, don’t get me wrong, my parents would support me in any way needed. But no way in HELL would I ever ask them for money. ESPECIALLY, if I am voluntarily quitting my job to pursue a passion. I know people do this but I do NOT recommend it. There are still so many ways to support yourself and actually plan for opportunities like this to arise.

Opportunity Fund

Opportunity Fund

This is where I recommend everyone starts, not only with their FI journey but when looking to have any sort of income changes like quitting or changing jobs.

Mr. TTF and I have had a heavy focus for the past year on piling away an easily accessible, all cash savings. This is often known as an Emergency Fund to most in the FI community. However we feel that this cash savings will help give us more opportunities to grow and be free, more so than just cover us for emergencies. So we have named it our Opportunity Fund.

We have also decided to grow this Fund far past the recommended $1,000 or 3 months of expenses. We are pushing to reach the $100,000 that Scott Trench recommends in Set for Life. This will allow us opportunities to cover 1 year of expenses (around $40,000) and have money ready for a down payment on a home, whether primary or for investment purposes.

Now, we have not yet hit that $100,000 mark, but we have just surpassed $51,000 in cash. Again, this does not include any investments we currently have in index funds or retirement accounts. But with this $51k, we feel safe enough to take the leap into the one-income lifestyle. 

Reduced Expenses

This works hand in hand with the Opportunity Fund as the less you spend, the more your Opportunity Fund can cover. For example, a Fund of $100K for a couple that spends $20K a year has 5 years covered. Compare that to a couple that spends $80K a year, they have just over 1 year covered. Now that may seem like a pretty dramatic difference, but this is a common reality for many couples in our community.

That said, we have been working significantly harder to reduce our monthly expenses to reach under $3,000 a month. To some in the FI community that may sound like a lot. And don’t get us wrong, we don’t wish we were spending that much, but living in Southern California, 42% of that is just for our rent. 

Check out more of our fixed expenses and costs here!

Nonetheless, we are proud of where we have gotten our spending to. Just last year, we were spending an average of $4,200 a month. Our quality of life has not changed at all, in fact, we are happier with our new lifestyle as we spend more time with family, have less clutter in the house, and spend far less time at the store or on the road.

So, had I quit a year ago, we would have needed $50,400 to cover just 1 year of expenses. That would have been our entire savings. Now that we have cut our monthly spending habits to $3,000 a month, we only need $36,000 to allow us one year of hustling to replace that income. That extra $15,000 that is currently in our Fund can now be used for a second year of emergency fund or in our case for a down payment on a rental property or for our 2020 Roth IRA contributions.

Mr. TTF’s Income

Lastly, and most importantly for us, Mr. TTF’s income is now able to safely cover our monthly expenses. This is strictly due to our focus on cutting those expenses as much as we could. We wanted to still be able to save 50% of our income so we had to work diligently to cut our expenses to reach below that 50% line. Here is a current breakdown of our expenses:

  • Fixed Expenses: $1,590.00
  • Variable Expenses: $910.00
  • Total Expenses: $2,500.00 (45% of take home pay)
  • Savings: $3,100.00 (55% of take home pay)

We are lucky to be in a situation where Mr. TTF is making a significant amount of money but we are not solely relying on this. Even if he were to lose his job (Heaven forbid), we would still be able to safely cover our expenses with our Opportunity Fund. 

How will our expenses change? 

Even though we have worked hard in the past year to cut our expenses, we still need to account for any potential changes that will come in our expenses with me no longer working. Since I will be cutting out a huge chunk of my day being spent elsewhere, there will be some changes to the main categories of our spending and a few to our smaller categories. 

Transportation Expense

Transportation 

As I’m sure I have mentioned before, my commute is 19 miles each way to work and I need to go into work Monday – Friday. This adds up to 190 miles a week just driving in rush hour. According to AAA’s 2018 Driving Costs Report, my VW Jetta (small sedan) costs me $0.45 a mile. This adds us to $85.50 a week and $342 a month.

Now since this is an average estimate, we won’t directly see the $342 correlation in our monthly budget. But we will see far fewer gas trips, oil changes, new tires, and general car maintenance throughout the course of a year. 

Since Mr. TTF has a 2008 and I have a 2010 and my car is a bit smaller than his, I have historically gotten better gas mileage than him. His car also takes premium gas which runs about $0.30 higher per gallon in California. On average, we spend around $175 a month on gas for his car and right around $120 for my car.

Since he is going to be driving so much farther than me everyday, we have decided to switch cars. He will be driving my car to work everyday due to the better gas mileage and I will drive his around town, only if needed.

With these changes, we are expecting to see about $100 drop off every month from our Gas and Fuel category coming in right around $200 a month now.

Food Expenses

Food 

Don’t you just love food?! Me too!

Now that I will be home all day, we are expecting this expense to go up slightly. I was lucky in that one of the benefits of the office I worked at served food for the employees for FREE. We had access to coffee and breads in the mornings and a full lunch with a salad bar and soda station throughout the rest of the day. I would get my coffee for free in the mornings and then a full lunch. I would bring maybe 1 meal a week for lunch just in case there was something I didn’t care to eat. Most of the time, I could make it work though and would just bring home my lunch and eat it for dinner one night. 

Since I will no longer have lunch provided, or coffee (gasp!), we will need to adjust our our weekly meal preps. I am currently making enough food for Mr. TTF to bring to work and enough for our dinners for the week. But I am still learning meal portions and how much food we will actually eat!

I don’t anticipate that we will need to adjust our budget too much though, given the changes. We have been much more dilegent in our grocery shopping and meal prepping. In June we were able to get our grocery expense down to $100 for the whole month! It may have a bit of learning curve but I am adamant to keep our grocery budget under $200 as our average is $187 for the first half of this year.

Happy Hour Expenses

Social Outings 

I was previously working in a very close office space with fellow salespeople, so yes, we can talk. And we can talk a lot. All of my closest friends have come from work and I was last in an office with some of my closest friends.

Not only did we see each other every single day but we attended many work outings together. We’ve gone to baseball games, amusement parks, the zoo, conferences, and even on sales calls out of the state. Needless to say, we spent a lot of time together.

Now that I have started working from home, I no longer have that luxury of taking a 10-minute break to play foosball with some co-workers. In fact, I am completely by myself for the majority of the day. (Hopefully, we get some doggos here soon!)

All in all, our average spend for outings (bars, restaurants, events, etc.) is $170 a month. (Note: this does not account for any of our trip spending as those are separately labeled in vacations.)

I separated all the transactions into the following categories to see how we can estimate moving forward.

  • Date Nights
  • Mr. TTF’s Parents’ 2 Month Visit
  • Friends and Family
  • Miss TTF’s Outings

And lo-and-behold, I was floored to found out that even though my work would take us out for great “free” events, I ended up totaling $232.82 on work related spending for just the first half of this year alone! This is all birthday lunches and additional booze at said outings. Just to be clear that is almost $40 a month for work stuff!

So even though it may feel like I am “going out” more in order to see my friends, it looks like I am going to just about break even as I do usually go out once a month or so already.

Hosting Gatherings

Hosting Social Events

In all fairness, I would LOVE to host friends and family at our place. However, we live 20+ miles from all of our friends in the area. And unfortunately, a good majority of our friends and family live much farther than that, ranging from 125 miles for my family to 5,275 miles to my bestest friend in Europe. So… hosting is not as convenient as we would like it to be. Once we are able to purchase our own home though, or at least have a guest room, we will gladly have everyone stay over for a fun night or weekend!

Health Insurance Expenses

Health Insurance 

This is one that many people have questions about. What am I going to do about health insurance?

Surprisingly enough there are options out there. Yes, there may be added costs compared to what you pay with your current company. But please don’t let just one expense deter you from changing your life. Just like anything else, you just have to budget for it. If it is a well-researched, expected expense, you will be okay! 

For me, however, I will not have to go through the hassle or cost of paying for my health insurance quite yet. I am luckily still on my parent’s health insurance and I will be on that for the next 2 years (once I turn 26, I am booted off).

At that point, maybe I will be able to add on as Mr. TTF’s family at his place of work. Or, maybe Mr. TTF will be able to join me on the self-employed side of the world. At that point, we will both need to dive into the world of research for our own health insurance and be sure to educate everyone with our findings. Until then, we will count our blessings and not account for any changes to our health insurance costs.

Utilities Expenses

Utilities 

Last up: utilities. We only pay the electricity at our current apartment as the rest is covered in rent (trash, water, and gas). However, since I will be home far more often, we will be certainly be using more electricity.

From power cords to computers and laptops to lights and most expensively the AC. We live inland so summers are HOT and our windows face East and West. Allowing the sun to beat in through the windows for the majority of the day and at the hottest points, our house turns into an oven.

Additionally, our energy company has implemented tiered pricing based on when you use electricity throughout the day. We have peak times, off-peak and super off-peak. Those peak times are 4 pm – 9 pm and nearly double the cost of use. 

On a normal summer weekday, we might run the AC from 5:30 pm for an hour or so and then open up. Being home, I have been turning it on once it reaches about 87 inside (boiling, I know!), usually around 3 pm. So this will add an addtional 2 – 3 hours of AC on regular days. According to the SF Gate and our current pricing plan, that will run about 900 watts of electricity and cost about $1.00 more a day for the extra time.

If we start dog sitting more (fingers crossed), we’ll have to keep the AC on even more throughout the day. Probably adding another 2 hours to the run time or an additional $0.70 per day.

Overall, the increased use could run us as much as $40 more a month. Given that’s worst case scenario, I would imagine our bill will only go up about $20 each month for July through September. And add maybe $5 with increased light and outlet usage during the remaining months. Definitely something we can factor into our budget but nothing that will break the bank.

Conclusion

All in all, we are able to keep our expenses relatively similar to what they were before quitting my job. A summary:

  • Transportation: -$100
  • Food: No Change
  • Social Outings: No Change
  • Health Insurance: No Change
  • Utilities: +$20 for Summer and +$5 for all other months

This will allow us to continue saving money from Mr. TTF’s paychecks, to the tune of 55%! So with one of us working a full time job and the other hustling away on side hustles, we are going to be able to still save about $37,000 a year. Of course without factoring in any potential earnings from our side hustles.

Now it’s your turn. How can you find ways to save 50% on just one income?

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