Surviving on One Income: Evaluation

December 3rd, 2008 |

Author: Kara_S

Welcome to step one of my Surviving on One Income series. If you didn’t read the series introduction, please go here.

The first step in surviving on one income is to evaluate your situation. When you find out that your income is being cut dramatically, totally disappearing, or just not enough, you have to evaluate.

Evaluation is the point where you prioritize and decide what is important and necessary and what isn’t.

Immediately after you find out that your income is decreasing, stop spending. Pay your bills and purchase necessities like gasoline. But if it isn’t necessary for survival, don’t buy it.

Trust me, if that bag of potato chips isn’t a necessity (which it probably isn’t), don’t buy it. When you need that $2.50 later, you’ll kick yourself for buying that bag of potato chips for a moment of self satisfaction. A meal out isn’t necessary for survival either.

Don’t be tempted to sustain your life by using your savings account either. Stop all spending for now!

Creating more debt (credit cards, home loan, etc.) to get over this bump in the road is never a good option for the future because you don’t know what the future holds. Did you know that you would be suddenly on one income or have a lower income? Probably not. Be prepared and don’t take on more debt.

Once you freeze your spending, look at your budget. What?!? You don’t have a budget? Make one immediately. It doesn’t have to be fancy. Just list your income and expenses. For your expenses, list your bills – the things you are obligated to pay (phone, mortgage, electric, tuition etc.). Skip anything that you don’t owe to someone else.

Making a mini-budget will tell you what money you have left over for fluctuating expenses, such as food, gasoline, toiletries, eating out.

Now that you have a budget, sit down with your spouse and determine how long you will be able to make ends meet given your current situation. Does that fluctuating expense money seem sufficient for your family?

Ask these questions of each other:

Can we survive one month? three months? six months?
Will our lifestyle need to change dramatically to survive? (For example, instead of eating out 3 times a week, can we eat out just once? Instead of buying lunch in the cafeteria, is it okay to take leftovers from dinner the night before? Can we carpool?)
How long until one of us needs to obtain more income?
Are we both willing to abide by the budget and not dip into the savings account every week?
Can we cut any expenses? (If you have credit card debt, seek credit counseling to help eliminate this financial burden.)
Do we need to seek temporary assistance? (food stamps, family help, etc.)

A successful evaluation now will save much heartache later. Trust me, been there, haven’t evaluated, regretted it later.

Living on one income, even if temporarily until a spouse finds another job, is very possible, and it can be done successfully too.

Series posts: Introduction, Step One: Evaluation, Step Two: Creative Adding, Step Three: Creative Stretching, Step Four: Shopping Strategies