In June 2009, a few months before our wedding, my now-husband was desperate to quit his job of 7.5 years. His mother had just lost a long battle with cancer, we’d just finished doing hospice care ourselves, and he had an insufferable, ignorant-and-does-not-want-to-learn, sexist pig of a boss (I know because Sweet Husband and I worked at the same company). Sweet Husband left, with another employee, to co-found a company.
Since I’m a fan of detailed, quantitative evidence, this is how we went from two incomes to one with San Francisco rent and a lingering Chicago mortgage (and no tenant!), and paid for a wedding a cash a few months later. It can be done.
We followed Elizabeth Warren’s advice: We reduced our fixed expenses, and I was able to increase my income. I do not claim that anyone else should follow our lead, and I’d like to be the first to acknowledge that a lot of this was dumb luck (i.e. I got a new job in this economy). We also started with plenty of savings to fall back on and no children to worry about. That said, we…
1. Increased my income by $15,000/year. If Sweet Husband wasn’t going to be able to pay himself while getting a company off the ground, I needed to provide health care for both of us and I wanted to increase my income, either through a new job or by taking on freelance work in addition to my existing job. I hated my job, too, and was fortunately able to find one that paid me $15,000 more than the previous one.
2. Reduced fixed expenses. A lot of them:
- I refinanced my condo in Chicago (on my third attempt, but that’s another post) and saved $321/month.
- I emptied my storage crate from moving out West and saved $70/month.
- We got rid of cable (DirecTV) service and use Netflix on demand or the Internet instead, saving $98/month.
- We ditched the posh gym memberships near the office we no longer worked in, saving $230/month.
- We got rid of auto liability insurance we didn’t need (we don’t even own a car, but it makes extended rentals cheaper – which we never do), saving $72/month.
Total savings: $791/month (almost exactly Sweet Husband’s share of San Francisco rent that he wouldn’t have to take out of savings).
3. Got creative about cutting down on food expenses without sacrificing quality. We are picky about high-quality food. We eat almost nothing that comes out of a can or a box, we only eat grass-fed meat, we only eat organic produce. This post is not for explaining why, just to note that we do. Purchasing food like this at Whole Foods is a rip-off. We are fortunate enough to live in Northern California, with year-round local produce, so turning to our local farmers to buy direct was easy. It also saved us a LOT more money than we expected.
- We earn 7% interest… in vegetables. We had a CD of $10,000 sitting in the bank earning a piddly 1.85% interest. We wanted this cash to be easily accessible in case we needed it, but also to get a better return. We gave a local farm a $10,000 loan, because the farm pays 7% interest in vegetables. That 7% interest covers an entire year of biweekly produce box deliveries, the vast majority of our fruit and vegetable grocery costs. How does this benefit the farm, if we can get our money back anytime in 7-10 days? Cash reserves help the farm look like a low risk, and gets them better terms on loans from their local bank. Everyone’s happy.
- We participate in a meat CSA. This means that, along with neighbors (who are really “strangers in the same geographic vicinity”), we purchase a share of a cow, pig, veal calf (pasture-raised, pink-not-white veal mind you), lamb, goat (usually 1/4 to 1/2 of an animal depending on its size), chickens and eggs directly from a farmer. The farmer delivers the butchered animal, shrink-wrapped, to one location in the city and we pick up our meat share from that location. One animal share lasts us six months. This means that we get grass-fed, pasture-raised, local lamb for $5-$6/lb. instead of the $11-$18/lb. you’d find at Whole Foods.
This means our only remaining grocery costs are staples (coffee, tea, paper goods) and the occasional bakery trip. Oh, and wine. I can’t forget about wine.
4. Taken on freelance work. This one belongs mostly to Sweet Husband. I’m working a lot already (and Sweet Husband is too, but he has a lot more flexibility in his schedule because he runs his own show, while I work for The Man). Sweet Husband participated in a focus group phone call for $250 for one hour (!!!), wrote a series of articles for a commercial publication for $4,500, and is doing some contract programming for a friend’s start-up for $150/hour. Honestly, if we lived in Montana we’d more than get by on Sweet Husband’s contract work. All told, freelance work has covered about one year’s worth of Sweet Husband’s living expenses (rent and utilities).
Now, if only I could find a renter for my condo…