Part 2 of the "Interviewing Gen-X" series, we have Lisa, who tells us how she and her husband live on one income and have found greater pleasure in living simply than they ever did living outside of their bank accounts. This is her story….
Mrs. Common Cents: You may have seen some buzz around the personal finance sites about a 6 word life mantra. I'm actually more fond of a 7 word mantra ala Michael Pollan (His mantra for food is - Eat food. Not too much. Mostly Plants.) If you could describe your philosophy on money in 7 words or less, what would it be?
Lisa: Live simply. On less money. Greater happiness.
MCC: Have you always felt this way - did you have some kind of turning point in your financial life, or were you always kind of a saver?
Lisa: Yes and no. In college I was very anti-credit card debt, as I had seen my older sister get into some bad credit card debt. It wasn't until I had a job and making decent money that things changed. I suddenly had money to burn and that is exactly what I did – a lot of shopping and going out with friends for drinks and dinner. When I was bored I would head down to the mall.
It wasn't until after I got married that this line of thinking changed. I was nearly 10k in credit card debt, mostly due to overspending and not living within my means. Meanwhile, my husband had several family loans.
One night, right before Thanksgiving 2005, we talked about how we were going to get rid of this debt. I started to read financial books on how to get out of debt. It wasn't until this past spring that we were able to pay off that credit card. During debt payoff mode, we went down to living on one income, and haven't changed since.
Since that night, I became more interested in money, ways to save, get out of debt, and what to do once you get past that stage. My interest has just grown from that. Our main goal on money right now is to get through these next two years when my husband is a full time student.
MCC: You mentioned living off one income several times - what's that like? What are your financial challenges? What do you do to save money?
Lisa: Well, living off of one income isn't all that bad. We chose to live off of one income since my husband is a full time student with two years left to go. We're already half way through! It was a personal decision because he does better in school when he isn't working, both mentally and academically. This fall, he is going to try to tutor in some of the areas he excels in. Luckily, I do make higher than the average national salary, but that is still less than what we were making combined when we first got married and had two incomes.
I think when you live off of one income it just becomes a mindset. Sure you are not able to go and do as freely as others. We go camping instead of flying somewhere for vacation. I think this is where my mantra has really come into play.
Live simply: We just have to as we don't have that extra money to throw around any more. On less money: living on less money is a given on one income - less money means less stuff. Greater happiness: we are actually happier now than we were when we had more income.
The mantra also has a greater impact than just our wallet – it impacts our daily life. We are living a more simply. We now go and do things that are free, such as taking the dogs for a walk, hiking in the near by city park, riding our bikes on the trail system and just enjoying each others company.
Financially, it can sometimes be a challenge. We are unable to do things as easily as we were when we were first dating. Then again, I was most likely putting that on the credit card. Also, I mentioned being a nurse - there is never a shortage of overtime to be had and I do take advantage of that.
The bills come first; however, we are still able to save a little bit. We automatically have a certain amount every month directly put into savings from my direct deposit. We also still contribute to a Roth IRA monthly. We have my 403 (b) on hold as we need that extra money to live on right now. I do feel frustrated in that fact that we aren't contributing more towards retirement, however, that will all change once my husband is out of school. Lastly, I am very lucky to have a very good pension plan that I am now vested in at work.
MCC: Do you feel pressure to compete financially with your peers? Why do you think so many people in our generation struggle to compete with each other?
Lisa: Actually no, we have come into the mindset of less is more. We watch our peers buying the much bigger (5000 sq foot) home and we just shrug our shoulders. It is not what we want. We are happy with our little home, in our old neighborhood. Honestly, we feel it is better for the earth. We often joke about how we are becoming "those people": the tree huggers, the hippies, those that take the alternate lifestyle.
We just want less. That doesn't mean we don't like nice things, we just have different opinions of what is important to us. We would rather have a nice bottle of wine with the incredible dinner we made at home for a fourth the cost of the same meal at a restaurant.
If there is anything I feel pressure from my peers financially is that they don't believe me when I talk about still wanting to live on one income after my husband is done with school. They just laugh and say, "Oh, you will just increase your lifestyle to what you will be making." Honestly, we won't, we will just be saving it all. If anything, I just want to prove them wrong!
I think the struggle to compete that's so prevalent with Gen X is seeing what new and shiny thing everyone else has. We see what our parents have and think, "We should have it all, right now!" There is a competition for having it all now, whether it is a job or money. It's tough to learn that more isn't always better.
MCC: Where do you see yourself financially in 10 years (or longer if you want to go into it)?
Lisa: We would still like to be living off of one income, and banking the other! We would like to have children in the next few years, once my husband is done with school. Professionally, I would like to have completed my Masters of Science in Nursing. Financially, we would like to be maximizing our retirement accounts and college savings for our children as well. Most importantly, we want to have all of the student loans paid off, be debt free except for our mortgage, and start being those millionaires next door.
MCC: What financial advice would you give yourself 10 years ago?
Lisa: Start saving half of what you make now and put into a retirement account. I didn't even start that until I was 24, so that would have been 6 extra years of saving for retirement. Once you are out of college, get on a budget and stick to it! Oh, and don't use that credit card!
MCC: What are some tips you could offer for someone in debt payoff mode?
Lisa: Learn to cook, because really, eating at home is much cheaper than eating out. We now look at this as a hobby, an event to do with each other. Don't deprive yourself all at once otherwise you will not stick to the debt reduction plan. We still had cable, well, we just got rid of that too, as we hardly ever watch T.V. Make this a priority as you are only able to pay off as much as you are willing put into it. Don't go browsing at the mall, you will always come back with something you didn't plan on. Oh, and those books I read, I got them at the library. I only now buy books that I can't put down and want to reread. And this is coming from someone who wants their own library!
MCC: Anything else you'd like to add?
Become happy with what you have. Make plans, set goals, and live frugally; because really, life is better served when you aren't worried about how you are going to pay off debt. Think twice before you buy something. Give it some time; come back if you really want it. If you forget about it, you must not really need it.
I do think that we have chosen a simpler lifestyle (whether it was forced or not) because it allows us to do more. We chose to stay in our house, put in new windows (eleven of them!) and redo some of our landscaping this summer – it's all already paid for. We chose to work on the house and forgo a vacation. By cutting back, it's allowed us to do more on this house than we have in the past 4 years. We still are going places, they just happen to be closer and in a more fuel efficient vehicle. By being less materialistic we are happier in our lives and in our marriage.
Our path is right for us. Everyone must find the path that is right for them, not one that someone else thinks you should take.
Excellent advice, Lisa, thank you. Sometimes, everyone needs a reminder to take the road less traveled.
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