Just under two months ago, I closed on my house. In just a few months more, I expect to be a married man. Life is changing fairly rapidly for me, and as a consequence, so is my budget. My fianc� and I are pretty much on the same page, money-wise, though I will admit to being a bit more frugal than she is. We haven't formalized a budget yet, but we have talked and share many of the same goals. Become a Complete Fool
We both want to be able to raise our own children. She wants to be a stay at home mom, I'm willing to be a stay at home dad. Obviously, we both can't stay at home, otherwise we'd go broke trying. In all likelihood, she'll be the stay at home parent, although we fully expect her to get a part time "sanity preservation" job, perhaps teaching night school at a local community college. However, her job is quite a bit more secure than mine is, so we may need to revisit who stays at home, if I lose my job between now and then.
The big thing is that one of us will stay at home. So, even though our combined income is quite a bit larger than our separate incomes, we expect to save at least one paycheck every month (we're both paid once a month), on top of maxing out our retirement plans. That way, if we are blessed with children, moving to a single income will not be quite the shock it would be otherwise.
Towards that goal, I bought the house, with a large enough down payment to qualify for the best rate/no PMI plan that my lender offered. My fianc� is handling the wedding budget along with generous help from her family, and we have every expectation of having "The Big Day" paid for by the wedding itself. Together, we're coming up with the cash for the honeymoon, which we expect to be pre-paid before we leave. We did, however, get ourselves an 'insurance policy' zero interest card, because a few unexpected expenses (such as a dead air conditioner) ate through our emergency funds and left us completely without a buffer on the wedding savings. Other than her student loans and car loan and the mortgage, we expect to be bringing no debt into the marriage.
As we were sitting here, talking about budgeting and money and our post-marriage financial goals, it struck me just how well we have it. Sure, we both make decent money, but that's not the point, as we expect to be giving up one income, anyway. It struck me that we have it well primarily due to living below our means.
Because we live below our means now and expect to do so following our wedding, we will be able to afford to have one of us stay home and raise our children - a blessing if there ever was one. Because we live below our means, we have a house that is way too nice for a couple of wage slaves like us, but a payment that either of us could afford alone, if it came to that. Because we live below our means, a major financial blow (like the air conditioner going out) didn't mean instant debt at outrageous repayment terms. Because we live below our means, we have the ability to pay for what we need, the beginnings of nest eggs to carry us through our golden years, and a little bit extra, to enjoy life along the way.
I mentioned "a house that is way too nice for a couple of wage slaves like us." Let me explain. I drive a 1998 Saturn, my fianc�, a Honda Accord. Reliability, safety, and affordability were our primary motivators in choosing our transportation. Our cars stick out on this street of Lexuses, Cadillacs, Mercedes, BMWs, and Porsches. There is one Acura in the driveway across the street from me - I think it's the kids' car, as it's always there and never garaged. Sometimes I laugh as I'm stopped at the light near the neighborhood - some of the cars in line with me probably have payments at least as large as my mortgage (P+I) payment is, and if they do, their owners likely have even bigger mortgage payments, to boot... It would not surprise me to find out that my household has the lowest income on my entire street, especially since most of the households that I know of have two wage earners.
Yet we all live in the same neighborhood, our kids will all go to the same schools, and it would not surprise me one bit to find out that our long term future is at least every bit as secure as the "Joneses" in the neighborhood. It's amazing how far a salary can stretch, if it's not tethered down to excessive debt. It's amazing how liberating and high quality life can be, in spite of a cloudy employment picture, when the outgo is below the income, and the long-term goals are being funded.
The key to it all has been Living Below Our Means. Just how powerful a key that is became clear to me as my fianc� and I were figuring out our worst-case scenario budget. If we both lost our jobs, we could survive on a combined salary that is just about half of what mine alone is now, without having to move. That's "survive," not "survive, keep two cars, fund all our future goals, take vacations every year, and retire comfortably." And that's in spite of likely currently having one of the lowest household incomes on the street.
To paraphrase Yoda: "my ally is LBMM, and a powerful ally it is." For anyone else out there wondering why LBYM, as I once did, this is why. It is the most liberating feeling imaginable.
Thanks for reading this far! And thanks for showing me how to avoid the "dark path" before it "forever dominated my destiny." (More Yoda.)
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Just under two months ago, I closed on my house. In just a few months more, I expect to be a married man. Life is changing fairly rapidly for me, and as a consequence, so is my budget. My fianc� and I are pretty much on the same page, money-wise, though I will admit to being a bit more frugal than she is. We haven't formalized a budget yet, but we have talked and share many of the same goals.
Become a Complete Fool