Due to a recent crippling bout of burnout, my husband and I made a decision to allow me to completely take off of work, indefinitely.
Healing time is very personal and relative and we both decided that after 13 years of going hard as a surgical PA, I deserved to take my time to heal completely and fully. For a person like me, that has a very difficult time allowing others to take care of me, the energetic significance of being with a partner that cares for my wellbeing in such a way has healed parts of my soul that I didn't even realize needed healing.
Going down to one income was not easy by any stretch, but thankfully for us, it was doable with some sacrifices.
When it comes to money management, we each have our strengths and weaknesses. I'm usually the one who keeps more of an eye on our spending habits and my husband Mike is an excellent saver. This is not to say we haven't had many moments where we both make mindless financial decisions, but for the most part, we make a good team. When we actually pay attention, that is. More on that in a moment....
Throughout this period of financial downsizing, These are the 2 most impactful financial lessons we have learned that have completely changed the game for us.
Not only did these money moves, help us significantly reduce our spending to accommodate to 1 income, but we were actually able to save more money than we ever have before.
1. Financial Clarity
At the time when we made the decision for me to stop working, we were kind of in the middle of a period of financial blindness where we hadn't really been looking at the nitty-gritty of our finances. Aa it usually happens with busy, working people, we were not well aware of our overall financial picture that included: spending habits, trends, savings and having clear financial goals. Both of us work in intense surgical specialties me specializing in cardiothoracic and my husband in trauma surgery so it was not uncommon for us to get flattened by our jobs occasionally and then have to play catch up financial planning.
When we first got a real close look at what our finances looked like- we were horrified. One month we spent $1500 on eating out and food delivery! Also, I had missed some credit card payments after one of my account numbers changed due to fraud charges and I forgot to hook the auto-pay back up. My dear husband that plays in the stock market spent 7K in one month on our brokerage account, and it wasn't even a blip on our radar! That's how blissfully unaware we had become.
I admit we did beat ourselves up over it a bit. We knew better. Between us, I think we've read a minimum of 10 personal finance books, so the guilt that came with knowing better and not doing better was something we had to contend with.
Horror. At the state of our finances despite being considered good earners.
Angry. Because we let it get this out of hand.
Guilty. Because we knew better
Grief. Over the loss of valuable income that came from our financial mindlessness that really could have served us in this period of downscaling.
Then finally there was the drive to course correct and move forward more intelligently.
2. Adopting a Zero-Based Budget
So we sat down together and got serious. Whiteboard with colored stickies serious.
This was the energy I called my husband with at work while I was uncovering the ugly truth. 😫
First, we shone a light into the dark corners of our accounts. Then we gained enough clarity to untangle some easy things to fix like the ridiculous amount of money we were spending on unnecessary subscriptions. Then we began to untangle the bigger issues with building a realistic + sustainable budget for ourselves.
When it comes to budgeting, we have tried excel spreadsheets, banking apps, downloadable budget templates, digital budgets like Mint- which is a great tool, but all fell short for us. You see, it's impossible for busy people like us to be constantly editing the budget sheet. Not only do we not have the bandwidth to do this, but also we don't want to.
What we found is that in using traditional budget tools, without constant manual updating, much like writing down your expenses in your checkbook log, no static budget can survive the fluidity and kineticism of real life.
Especially now with most of our money being spent via swipe or online, money is constantly in motion, and if you're not extra careful the balance on your accounts rarely reflects the true amount that is available to you for spending after taking all of your expenses into account.
Here is where Zero-based budgeting wins the gold.
According to Jessie Meecham from You Need a Budget, "a zero-based budget means that you allocate all of your budgeting dollars to different categories. If you have $100 to budget, you might budget $50 for food, $25 for clothing, $15 for toiletries, and $10 for entertainment. You now have zero dollars left to allocate (and later spend)."
In other words, when money hits your account, instead of just hoping that what you have will cover your expenses, you are assigning every cent of your income different categories until you have $0.
This gives you a more realistic assessment of your true bank balance, not just the one reflected on your account before it's been hit with the expenses.
This is where it gets cool. If there is money left over after you have budgeted for your essentials and non-essentials (and when you live within your means and consciously spend less there will be) you can allocate that money towards retirement, debt, savings, and even vacations, home projects, saving for a home or any other things that can improve your quality of life.
Awareness is the first step to changing a habit & Zero-based budgeting is extremely effective in helping to reign in spending by keeping you aware of your true cash flow. It is also an incredible savings tool that simplifies consistent saving.
When it comes to budgeting- we have had success with electronically categorizing our expenses with YNAB.
I love the concept of assigning every single cent you have into a category and automating this process as much as possible so that I don't have to keep a written registry on the back of my checkbook. I mean, who even writes checks anymore? Nowadays, even your bank account may already be automatically separating your expenses for you.
Keep in mind that just like any other budget, YNAB does not physically transfer money between accounts, you still have to do that or automate it in any way that serves you. It simply digitally earmarks your money into categories much as a cash envelope system would.
By using this tool not only have we been able to significantly reduce our expenses to transition to a 1 income household, but somehow we have also managed to pay down 20K in CC debt, save enough to purchase 2 cars cash, A new couch cash, fully fund our retirement accounts, and even save for two vacations in 2020.
We never expected the second part to be honest.
This has kind of made us understand that building wealth and financial freedom has a lot more to do with having clarity, a budget, and spending mindfully than it does with just earning.
In addition to allowing you to keep an amazing, fluid digital budget, YNAB is also a pretty incredible educational tool. They have a free, in-depth blog and digestible, short money lessons on pretty much everything you can think of as, well as a podcast.
It also happens to be a really good financial goal-setting tool, which we used to stay on track to pay down debt and incrementally save every month for true expenses like Christmas gifts and our yearly flood insurance.
The projects were tackling next are my student loan debt, (my husband has none- how lucky, right?!) saving to invest in real estate, and re-doing our outside space because were such have coffee with our dogs and listen to the birds outside type of people and an outdoor oasis would really do us some good mentally.
For all these reasons, our favorite digital budgeting app is YNAB aka You Need A Budget.
It's like being constantly hooked up to a detailed vital sign monitor, but for your money.
They also have a book if you're like me and love diving deep into details and triumphant money stories of regular people with regular incomes and jobs.
They have a free 34-day trial and it can continue to be free if you refer your friends or you can pay a pretty decent monthly or yearly fee.
You can sign up for a free YNAB trial here. Share it try it out and let me know what you think.
*Disclosure: This blog post provides personal finance educational information and experiences, and it is not intended to provide legal, financial, or tax advice. I am in no way an expert in any of these areas, I simply want to share what has worked and what has not, and what I have learned along the way. All of the content of this blog post is my opinion and not that of my employer, affiliates, or business partners. I do make a small commission from any affiliate links in this post.