Surviving a Single Income
My fiance and I were watching the news today and major headlines were being made concerning the state of the economy. There is a lot of scary stuff going on. Investment banks are collapsing. Gold and oil are reaching new highs. My fiance started thinking about what would happen if one of us lost our job.
I feel very fortunate that my job is very secure. Assuming I don’t punch my boss in the face sometime in the near future, there is little to no chance of me losing my job. It is a strange situation to be sure, but one I am glad to be in.
My finace is not that lucky. Although I think she is a highly valuable employee, she feels that a sudden downturn in business could lead to layoffs.
So we sat together and pulled up our budget. Assuming her income goes to zero, could we survive?
The final answer was yes, but barely. My income could shoulder her share of the apartment expenses as well as her student loans, car payment and insurance. We would have to cut back on eating out and entertainment as well as forgo saving for a house, but we would keep all the bills paid.
I think we could do better though and here is how.
Pay Off the Cars
By paying off our cars, we would save $500 a month together. This is a very achievable goal. I only have a little over $3,500 left on my own car loan while my fiance has around $5,000. With a little bit of intensity, we could knock off both of those debts in a few short months.
Pay Down the Student Loans
Student loan debt eats another $400 from us each and every month. This would be a challenge though. We owe almost $40,000 together. But somehow, I just don’t see myself still paying for our student loans the same time we are starting a family.
Combine our Emergency Funds and Build it Up
Losing a job is just the kind of tragedy an emergency fund is designed to handle. History tells us that most economic downturns last less than 8 months on average. Stashing more money away in a dedicated do-not-touch account will provide ample cushion in the event of an unforeseen financial downturn.
By reducing our bills we would be better able to make it through a tough time unscathed. We have been very blessed so far in life but we have to be prepared for whatever life throws at us. As Dave Ramsey would say, “I’m positive, it’s going to rain.”.