From Two Incomes to One

    When Dee Coleman’s marriage ended, she was confronted with a very tough reality: She couldn’t survive on what she was making. “Strange now that when I look back, the emotional pain has long healed,” says Coleman, “But I still remember shaking in my boots when it dawned on me that to I needed to make some drastic changes, if I wanted to raise my eleven-year old daughter, and at the same time, not lose our home.”  

Going from two incomes to one often is often a jarring taste of reality. As Robert Brownstein, a Sausalito, Calif., CPA and personal financial advisor explains, “And most people don’t confront it until after the actual separation.” Brownstein has worked with clients whose $400,000 household incomes plunged to $80,000 and less. “Grieving the loss of a marriage is much like grieving the death of a loved one. On top of all this emotional turmoil, you suddenly find yourself facing financial problems as well.”

In Coleman’s case, $125,000 dropped to $20,000. And while her ex-husband provided some child support, the lifestyle they had lived as a family of three vanished overnight. Before the divorce, Coleman was averaging 20 hours per week as a volunteer leader for her daughter’s Girl Scouts troop. Of course, she had to give that up when her bills began to mount.

To make ends meet, Coleman went from holding down one part-time job to juggling three jobs at the same time. “It was horrible,” she says. “I loved the time I spent with my daughter, and now I was dropping her at one friend’s house, picking her up and dropping her off somewhere else, and then rushing off to my next job. I was working an accounting job, got licensed to sell real estate and was working nights to sell Mary Kay Cosmetics. Life was a three-ring circus for a couple of years. There’s just no other way to describe it.”  

“It’s very tough,” says Brownstein. “You’re not emotionally prepared to do the things to stay solvent, and yet in order to survive, you must. But stretching your income by running up your credit cards catches up to you in a hurry.”  

Changing our earning power doesn’t happen overnight. Making money is one thing. Saving it is another, which is why Evelyn Prasse, a consumer and family economics educator with the University of Illinois Urbana, suggests a complete re-evaluation of your spending habits. “Having a realistic spending plan is essential,” Prasse says. “Credit is not income. It is future income that you’re indebting.”
 
Prasse acknowledges that going on a “credit diet” is as daunting as an actual diet, but in the end you can be equally pleased with the results. “Maybe it’s for a week or a month, but locking up the credit cards for a period of time is often a valuable first step in controlling your money.” For single moms or dads, Prasse thinks it’s particularly important to make savings a family endeavor. Even children as young as seven, she suggests, will comprehend the art of envelope budgeting.

For that lesson, consider using play money. Divide the amount of your total monthly income into expense categories, such as your mortgage, utilities, groceries, insurance and savings. Include a non-essentials category, for things like movies, eating out, and toys. Write these categories on individual envelopes. The final step is for the children to put the right amount of money into the envelopes. Whatever money is left over can go in the non-essential envelope.