income Archives - Live Debt Free

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? 🙂

Cash For Trash

10.28.2011 by Miles Williams //

You have all heard the saying “one man’s junk is another man’s treasure.” Well this holds true. How many items are around your home that you don’t use? Appliances, furniture, clothes and books are often left sitting unused because they no longer work right, no longer fit, don’t match the décor, etc. Take a look around and make a list of everything you no longer use. Put everything unused on the list, don’t second guess yourself… just write it down, you’ll be amazed at what other people are willing to buy.

Organize your junk

After writing out your list look it over and organize it into categories such as appliances, furniture, metal, non-working parts, wood, clothes, etc. This makes it easier to turn your junk into cash because different piles will need to be dealt with differently. Name the categories anything you want, just don’t get carried away. Remember to K.I.S.S. (Google it.)

Sell your organized junk

Many people get stuck on this step because they’re way better at accumulating stuff than getting rid of it. There are countless ways to do it and I could list them all here but instead I’ll point you to the best resource I know of to help you sell your crap and make some money.

Trade for things you need

You don’t necessarily have to get cash for your items, you can trade some of it for things you need. Trading can save you from having to spend time and cash buying things new. You can also profit from trading items if you practice up on your negotiating skills. Some shops will take your clothes and allow you to take something from their shop in return. I once traded in five pairs of generic jeans that didn’t fit for two nice pairs of name brand jeans that fit great. Me sexy! Consignment shops are everywhere these days… when’s the last time you’ve been in one?

Some appliance stores will take your old appliances to repair and re-sell them. Why not see if they will exchange your unneeded appliances for something you do need? There are also internet sites like Craigslist that allow you to trade items you don’t want for things you do.

Sell, sell, sell

Junk removal businesses will come to your home, help you organize your junk, then take it to the appropriate scrap yards or stores and split the cash with you. This takes a lot of the work out of your hands while still delivering a profit – nice. Do your best to check the reputation of the businesses performing these services to be sure they’re reliable. Check their rates too; some charge more so compare costs and services offered and go with your gut.

Call your local scrap yards for current price lists of what they’re willing to take. Try to get rid of as many items as possible at each place so you limit travel costs. Commonly accepted items include: old junk batteries, wire, aluminum, small engines, steel, cast iron, copper… the list goes on. You’ll be surprised what they take and pay for. Always check to see if they have free pick up, that will save a lot of work and money.

Websites like Craigslist and eBay allow you to open your junk yard to the world wide web.

Donate to the needy

If you’re going to give something away be sure the person or organization wants or needs it. Call around to your local homeless shelter, Goodwill, Salvation Army, etc. and ask for a list of items needed. Providing for the needy makes you feel good, it’s the right thing to do, and you can write it off on your taxes.

Go get started!

Like Matt said in point 4 of yesterday’s article, getting rid of stuff is hard at first… but it feels great when you’re done and it gets easier as you go.

What are you waiting for? Quit reading this and go give your unused stuff a new home – I promise it will make you feel good.

Debt Score – What Is It and Does It Matter?

03.20.2011 by Matt Jabs //

Many people have at least some idea of what their credit score is, but how many people know their debt score? I stumbled upon the concept the other day and found this free tool to calculate my score… I figured I’d pass on the info for anyone interested. I scored a 28, which was an “A”. 🙂

What is a debt score?

The Debt Score was developed by Oweing.com as a way to educate borrowers on how much debt is appropriate for their age, income, and education level. The method for calculating your debt score is similar to the method used by mortgage lenders to calculate debt to income ratio.

What is debt to income ratio (DTI)?

The two main kinds of DTI are expressed as a fraction (e.g., 28/36).

The first fractional number, known as front-end ratio, measures the percentage of income going toward housing costs. The second fractional number, known as back-end ratio, measures the percentage of income going toward all recurring debt costs, including housing.

The importance of your debt score

Let’s be honest… our credit score serves lenders more than it serves us. It tells us if we can get credit but doesn’t help us determine how much debt is considered healthy for our age and income level.

Enter the Debt Score…

Most of us carry different types of debt at various stages in life. For example… when we’re just starting out we may have student loans and credit card debt, then down the road we might acquire auto loans and a home mortgage. Regardless of the type of debt or how old we are, it will always serve as an obstacle between us and financial freedom.

Your Debt Score helps reveal if you are carrying an unhealthy amount of debt for your age and income level, what debts are particularly troublesome, and what you can do to fix it.

Especially for those who got into debt early… knowing your score can help you get it back down to manageable levels.

What is my debt score?

I signed up to find my score and see how my Debt Free Adventure was progressing.

Here is a screenshot showing my results and how they arrive at the calculation (click to enlarge):

I received a 28 overall – which is an “A”. My score showed me I’m doing well on housing and lifestyle, but that need to work on my student loan debt!

Looks like I’m doing pretty well… how about you?

Share your score in the comments.