2008: Getting Ahead or Just Getting By?
One quarter into 2008 we are finally feeling the difference between having dual incomes with no children and a single income with one child.
Our impending move at the end of June(as I transition from being a Resident to a Fellow) has caused my wife to drop to part time at work rather than having to find and pay for childcare for a few months.
While this has been great for our family, it has slowly become a challenge for our finances. We have gone from a household living off of a six figure income with minimal expenses to one having to live on roughly half that income with slightly higher expenses.
We have gone from striving to get ahead to striving to get by.
The mental difference between the two is dramatic with every financial decision now being well thought out. It helps me appreciate the struggles that many families face trying to get ahead when it seems that they are doing everything they can to get by.
It has been important to remember that the drop in income does not fundamentally change what we are trying to accomplish financially.
It instead helps us focus on making sure we are on doing the little things better so our big picture remains bright.
The common response in this situation is to focus on limiting your expenses. This is something that we have been slowly working on for the past 2 years and is slowly reaching a plateau as we have eliminated all of our easily eliminatable expenses.
It is equally important for us to do what we can to maximize our income beyond working more hours because this is no longer possible.
When we were getting ahead, I was focused on maximizing our monthly gains and the best way to increase our savings. Now that we are just getting by, small changes in fees/percentages/expenses are the only variables that we have control over.
Example: We have been relatively complacent watching interest rates fall on our cash equivalent savings. As I write our Emigrant Direct accounts are earning only 2.75% APY. After a quick look over at Bankrate.com, I found multple other less popular(for a reason) banks offering much better rates(up to 4.05%).
That is an additional $1,500/year gain just for taking a few minutes to open a different online savings account.
Another Example: Our health plan has long had a heath survey to take with a financial reward for reaching certain health milestones. This week I finally filled out the survey(it took digging up some old medical records) and now have a $30 gift card to Amazon.
These are little things that brought in a little more money for our household. 2008 looks like it will be a year that the little things will make a big difference.
Even if we are just getting by, that means we are still getting ahead.
