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Start Living on One Income!

02.03.2012 by Matt Jabs //

I strongly urge you to do everything in your power to start living on one income, however and whenever possible.  If you are single, concentrate on living well below your means, paying off any debt you have, saving money, and giving generously.  If you are a two income family, please read on with a hopeful and open mind.  🙂

Why live on one income?

Living on one income does not necessarily mean you’re only earning one income.  Whether both spouses work, or only one works and the other stays home… there are many benefits to living on one income only.

When both spouses work

As it sits right now, me and Betsy have no children and are self-employed, but it wasn’t long ago that we were both working full-time jobs. There are benefits to having both spouses work, but if you do I still encourage you to live on only one income while you save the other.

Here are a few noteworthy benefits of a two income family living on one income:

  • A hedge against job loss. If both spouses work, yet they only require one income for their living expenses, then the other spouses job can be lost without an enormous family crisis taking place.
  • Pay off debt faster. Use the second income to get you out of debt in record time.
  • Save more money. Once you are out of debt, start packing away boatloads of cash.
  • Give more. Because you can, because it will make you happy, and because “…God loveth a cheerful giver.”  II Cor 9:7
  • Retire earlier. Once your emergency fund is established, begin fully funding your IRAs, 401(k)s, and other investments so you can retire earlier and spend more time doing what you love.

When only one spouse works

If you have been blessed with children then most of you will likely be forced to decide between having one spouse stay home and putting the children in some sort of day care.  Let’s take a look at some of the benefits of being able to skip the day care and enable mom or dad to stay home with the children while the other spouse brings home the bacon.

  • No day care. You raise your own kids… full-time.  You do not have to pay for day care, and no longer have to worry about whether or not your children are being properly raised 8-10 hours of the day.
  • Less stress and more quality time. When the working spouse comes home, many of the household duties, cares, and concerns can already be taken care of by the homemaker.  This affords the couple much more quality time with much less stress.
  • Enable one spouse to take care of the home, and everything in it. One spouse goes to work for pay, while the other stays home and works as the support system.  A homemaker taking seriously the job of caring for home and family may just be the most honorable and rewarding position there is – and I think we, as a society, are in dire need of more of this type of thing.

I hold to the belief that a woman will feel more fulfilled in the role of staying home and caring for the home and family while the man goes outside the home to earn.  I am not a chauvinist, and I do not think “stay-at-home-moms/wives” have it “easy,” that couldn’t be farther from the truth.  What I do believe in are the gender differences ordained and given us by God Almighty.  Don’t get me wrong… either spouse can provide, and either can stay home… but we are most interested in how intrinsically fulfilled each of us feel in either given role.

In conclusion…

Living on one income while both spouses earn gives you increased security, speedier debt repayment, more capability to save, give, and retire early.  Living on one income and raising a family will afford you less costs and outsourcing in regard to raising children, lowered levels of household stress, and more time together as a family!

Whichever route suits your family best… don’t the benefits of living on one income sound appealing?  So what are we waiting for?  Let’s start tweaking our budget so we can live on one income and start reaping some of these benefits!

Do you (or can you) live on one income?

We want to be there as soon as possible… so we’re working to get rid of all our debt (and a lot of our possessions.)  We cut costs drastically, are living far below our means, and would probably be fine if we were forced to trim down and live on one income only.

What about you?  🙂

Categories // Earn Money, Money Management Tags // career, Children, home, income, Money Management

Should We Pay Children Allowance?

09.16.2009 by Matt Jabs //

Should We Pay Children AllowanceIn these economic times it is not only crucial that we reevaluate the way we handle our finances, but also the way we teach our children to handle theirs.

This post is not written to reiterate popular modern methods of teaching children about money, but rather to help us move toward a proper system of training, regardless of what is currently popular.

Children learn from watching their parents behavior, not from listening to what their parents preach. Understanding that, the best way to train children on the proper use of finances is to use our own finances properly.

A Proper Approach to Allowance

I believe we are doing our children a disservice if we give allowance solely as a reward for doing chores.  Allowance should be given for use as a tool to train them on budgeting and how to handle their finances, not as a reward for completing household chores. Do you agree with this philosophy?  Before you answer that question… read on.

Most commonly, a family is an interdependent group of people living together in a love relationship.  Members of the family depend on each other and work together for the benefit of the unit as a whole.  They share most everything and do not benefit by keeping separate accounts of “yours and mine.”  Just as parents make dinner, wash dishes, clean the home, and offer transportation without expectation of allowance… children should be trained to contribute in much the same way.

By paying children for daily chores we are actually robbing them of their opportunity to contribute based on love, and instead teaching them that they should be paid for their contribution to the family.

So what about reward for excellent behavior?  Rewards should be given for going above and beyond the normal call of duty – thus earning a bonus – but not for performing everyday tasks.

A Proper Distribution

Since allowance is a tool used to train the child on the matter of proper money management… what about taxes?  I believe children should have taxes taken out of their allowance in order to paint them a more accurate portrait of how money is handled in “the real world.” Some may find this legalistic, but I’d rather they be as prepared for reality as possible.

Here is a solid outline for proper distribution of their allowance.  Take this and make it your own based on your situation.

  • 15% giving – Based on gross amount… taken before taxes or anything else.
  • 10% to taxes – Just as we have to pay taxes as an adult, we should give the child a similar opportunity… after all the idea is to train them.  Put this amount back into their college savings fund or some other savings account to be used for their future.  It may not seem like a lot, but remember… every penny counts!
  • 25% to savings – What to save for?  This is a very personal matter to be determined by the parents.  If nothing else, simply save it to save it.
  • 25% to bills – This is a very powerful concept, so keep an open mind here!  This money should go back to the parents and gives the children the unique opportunity to contribute to the household bills.  This builds confidence, self-worth, and an unmatchable feeling of usefulness.  This philosophy can also be used to teach them to conserve spending on household utilities, groceries, etc.  As much as possible, try to involve them in the bill paying/grocery shopping process… doing so will give them a “vested interest” in cutting costs.
  • 25% to spending – This can be used as the child desires, but be careful here – proper use of this portion is critical in shaping their future spending habits.  If they want to spend it, they can spend it.  If they want to roll it into their savings, they can do that as well.  If they want to help out with bills, that too should be welcomed!  I think  you will be surprised by how much of it they simply want to give back to you in an effort to further “help out” with the costs of running the home!  Always make yourself available to help them make these decisions.

Give the children all their money up front, so they can see it and physically handle it.  Then help them divvy it up according to the distribution system you set up.  Also, include a statement of distribution so the child can see where all their money goes; just as your employer does with your paycheck.  Do not simply withhold a certain amount, because you want them to be as involved as possible.

What do you think?

Although we do not currently have children, we have interviewed several of our relatives on this matter, my wife also holds a masters degree in child psychology, and the concepts I’m about to lay out make perfect sense – although they will challenge you since they are not in-line with the popular way of doing things (which in my opinion is a good thing!)

For those of you that currently have children, what are some challenges I’ll face while trying to implement this system?  What system do you have in place?

*******

Categories // Giving, Money Management Tags // Children, money

Sound Money Advice for You & Michael Jackson’s Kids – DFA Tip of the Week

07.08.2009 by Matt Jabs //

Michael Jackson's Orange Zipper Jacket

“And he said unto him, Well, thou good servant: because thou hast been faithful in a very little, have thou authority over ten cities.” Luke 19:17

There are many small ways to reduce costs in our every day lives, so to help do just that each week I post a money saving “Tip of the Week”.

This weeks tip involves…ways to boost your savings!

The King of Fads

Back in the 80’s Michael Jackson was not only The King of Pop — he was also The King of Fads.

If a company could get MJ to endorse their product, it would instantly blast off into the realm of over-night success.  Just consider for a moment his orange jacket with 100 zippers pictured.  What kid growing up in the 80’s didn’t have, or at least desparately want one of those?  Where they a necessity?  Was it practical?  Absolutely not… but it was “cool” and that is a testament to the power & influence of the infamous King of Pop!

A lot of fads come & go be it clothing, housewares, automobiles… there is always some new & exciting product that advertisers & culture dictate as “must haves”!  If you pay attention to these trends you will see that all of them come & go with the passing of time.  Most of them don’t even last an entire season… rushing into our lives, then fleeting away just like the passing of another day.

Today I wanted to offer up some tips that will NEVER go out of style! These are sound money tips that can be employed by you, or by Michael Jackson’s kids.  It doesn’t matter who you are or how much money you have, you still need to manage it wisely.

Instead of spending your money on the latest fads & trends, inventory your stuff to see what you already own then make it useful or give it to charity & write it off on your taxes.  Then take all the money you save by not buying loads of new toys, clothes, household items, etc… and establish an automated plan to save your money.  Focus on saving percentages of your money.  Even if you can only save 1%, then save that 1%.  Then establish progressive goals to save progressively higher percentages as time goes by.  It doesn’t matter if you are saving $5 a month, or $500,000 a month — just save whatever you can.  Trust me… you will never miss the difference!

My wife & I use Capital One 360 for our banking needs, which I highly recommend.  Capital One 360 has an awesome feature called their “Automatic Savings Plan” that allows you to automate your savings in whatever way you wish.  We are currently saving 5% of our money, but have progressive goals in place to increase that over time as we pay off more debt & inch closer & closer to financial freedom & independence!

So What’s The Answer?

mj4

Here are my tips for boosting your savings:

  1. Spend less than you earn! Michael Jackson’s kids are being left with a legacy and rumor has it, not a whole lot more.  Just like the rest of us, they need to learn how to properly manage their finances, and save their money!  Remember… no matter how much dough you have, you can only make so many cookies!
  2. Now matter how “little” it is… just make sure you save something every month! As I mentioned above, don’t worry about how much your are saving… just start saving.  You will be amazed how fast it adds up and how you will never even notice that small percentage of money no longer funding your bad spending habits!
  3. Set savings goals! Create both short-term & long-term savings goals… that way you know where you are heading, what you are trying to accomplish, & can receive encouragement as you reach your smaller goals enroute to your more long-term goals.  A few of my long-term goals include reaching $100,000 saved, and also saving 50% or more of my income.
  4. Automate your savings! Take the amount you decided on in tip #2 and set up a plan to automatically save that money every month.  The best advice I can give you is to set it up in some automatic format, so you do not have to think about doing it every month.  See if your bank offers an automated savings plan.  If they do not, consider opening an Capital One 360 savings account which allows for automatic & easy money distribution.  Remember… just set it & forget it.
  5. If nothing else – hide it well! If you’re one of those people who just wants to hide their money… just make sure you hide your money in a safe place.

Remember… saving your money never goes out of style!

Whether you are the ever-famous children of the late Michael Jackson, or if you are just a regular Joe… saving your money is something that will be fashionable until the end of time!

Click here to see all our past DFA Tips of the Week.

DFA is passionately dedicated to helping people break the bondage of debt & work toward financial freedom using biblical principles.

Categories // Money Management Tags // automate, Children, Finances, goals, kids, pay yourself, Savings, totw

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