Friday, January 8, 2016

My Single Income Household Budget

So here we are! Our baby is now a little over seven months old and our household is in the groove of operating on a single income as my wife goes off to work and I am daddy day care. And I have to admit I don’t miss the extra disposable income one bit. As a quick recap my wife and I are debt free (myself since 2009, my wife since 2012) and we have amassed to this point a portfolio worth a little south of half a million dollars. So we’ve decided to take our foot off the gas pedal income and savings wise to have one of us home with our child for a few years. We came to the conclusion that I would stay home chiefly because of my wife’s super awesome health insurance offered through her employer. Currently she carries a family policy with a low deductible and pays no monthly premiums, it’s all covered by her employer.

So for us it was a no brainer that  I would stay home with our little one. But just how exactly do we make it work on one income, in a major metropolis in the US? To start I have to tip my hat to our debt free journey. I doubt we could have pulled the single income household off if we still had monthly debt payments. At its peak our student loan debt totaled $80,000 and between the two of us our monthly payments were right around $1,200 a month. With that kind of debt and monthly payment hanging over our heads there was no way I could envision us having a child AND going to a single income.

So with our household debt having been cleared collectively four years ago, having spent the time since our debt elimination pouring extra income to building a six month emergency fund and funneling as much as we could to retirement and non-retirement investment accounts, we felt confident at this time to drop to a single income and ultimately lose our excess disposable income for this period of our lives.

At the onset I will say that my wife continues to max out her Roth 401k match with her employer, so in that sense we are still contributing to our retirement accounts in at least some form. And to spare you the agonizing details of our full blown budget I have only included the major categories and percentages that comprise our monthly budget so the total does not equal out to 100%, as this is merely an overview snapshot. So here it is, a quick look at the major nuts and bolts of our budget.

  • 31% Rent
  • 26% Entertainment and groceries
  • 10% Give
  • 9% Travel
  • 8% ESA and diaper service
  • 8% Brokerage

For starters we put together before the start of every month a zero based budget that starts with our expected take home pay and ends with that number being dwindled down to zero. Again, these are some of our major categories and the percentages allotted do not equal to 100. At first glance obviously monthly living expenses in the form of rent, going out and groceries take up more than half of our monthly budget. We also are continuing to tithe, save specifically for ongoing travel as well as into our taxable brokerage account. It is also a priority for us to use a sinking fund to both max out annual Education Savings Account contributions (annual max of $2,000 as of this year) and to pay for cloth diaper delivery and cleaning service for our little one. For posterity purposes I will say that the missing percentages are scattered amongst non medical insurance premiums, saving for clothing, utilities and blow money. So what I have listed are the heavy hitters of our budget.

Overall I am happy with our planning and implementation. In the months leading up to us formally shifting to a single income household we did practice living on this type of budget before my paychecks stopped coming. We were surprised to find that aside from cutting the amounts that we saved and invested, that we were kind of already were living off of one income when we had two. Although the details of who paid what expense were split between my wife and I, numerically speaking we had been for years living off one income and saving and investing the other. So thankfully this shift has been a seamless one for us. And even pulling back to look at it now, knowing what we used to bring, I really don’t miss the extra income at all. Having this time with my son is something that does not have a price tag on it in my book and I am forever grateful and thankful to my wife for helping get to this scenario where I could stay home with our little guy. It still amazes me that this was not the plan, but here we are and I could not be any happier than I am now.

Friday, January 1, 2016

My New Year: 2016

I honestly can’t remember the last time I was a little sad to see a year come and go. 2015 turned out to be an amazing year for my wife and I. The biggest reason for that was the birth of our son, and that he was able to witness (albeit from the perspective of a baby that couldn‘t hold his head up) our beloved Chicago Blackhawks win a Stanley Cup on home ice! During the course of 2015 I changed from a married husband, to an expectant father to a father who knew very little about what he was doing in the realm of trying to take care of a baby, to a competent stay at home dad. And it’s amazing for me to look back on all this and wish it to never change.

I love taking care of my son. I love holding him, feeding him, changing him and doing all of the things that you do with babies. And with a new year comes more growth and development in my little one. As he already has been in a lot of ways already, he will eventually make the full transition from baby to toddler and in a lot of regards will not be as dependent on me later this year as he is today. And that fact is a very bittersweet pill to swallow. I have loved every second of being his dad. Even when I get frustrated, tired and flat out exhausted, the best thing I have done with my life is to help bring this little guy into the world.

2015 for me was a moment in time that I wish I could freeze forever. And I’m sure that 2016 is going to bring its own victories, changes and developments. But for the first time that I can remember, I was actually sad to see a year end. So here I am, a SAHD (we seriously need to find a new acronym for that, it is hardly sad) with a whole new year in front of me.

Obviously our net worth is marching closer than it has ever been to the half million mark. I do expect to see significant growth in the overall market due to 2016 being an Olympic and US Presidential election year, and that a lot of sectors in 2015 were flat and even in the red for some. It will be interesting to see if this time next year whether we’ll get the less than 40k  in growth and contributions needed to hit the half million mark in our portfolio.

We have our plan in place and are more than ready to tackle the new year with our single income household budget. Being home I have enjoyed meal planning and having dinner ready by the time my wife hits the door, and of course there’s that fringe benefit of spending the entire day with my son, which I must say is second to none. I’m looking forward on the home front to add some new recipes and meals to my weekly repertoire and see my son continue to grow and develop.

So while I’m a bit saddened at the anticipation of my baby no longer being my baby, I’m happy and excited to see what this new year will bring. Especially now that I’m settled into the role of a SAHD and can throw my focus into my family and not whether I will attempt a balancing act between work and family. So I want to wish all of you a Happy New Year and all of the best in 2016!