Too many 2-income whiners

Amy Dacyczyn

February 18, 1993|By Amy Dacyczyn

FOR the last decade or so, we've heard a common complaint: "Families just can't survive on one income anymore."

Actually, it's more of a whine.

When I've pressed the whiners about lifestyle changes they might make to enable them to live on one income, they have been shocked.

Measures such as eating less meat, saying no to teen-agers who want expensive sneakers and using cloth diapers instead of disposables have been seen as too extreme to consider.

When I was discussing my frugal lifestyle on the "Donahue" show recently and suggested using a grater to scrape the burned bottom off a cookie, the audience let loose a collective "eeeew!" as if such heroic measures to save a measly cookie were disgusting.

Whiners so incensed me that, when I got married in 1982, my husband Jim and I set out to prove them wrong. And we did.

In the first seven years of our marriage, on Jim's income of less than $30,000 a year on average, we saved $49,000. We spent an additional $38,000 on such investments as two new cars, furniture and major appliances.

Before plunking down our nest egg to buy a $125,000 farmhouse on seven acres, we were debt free. Had we had less income, we still could have done well. We would have purchased a smaller home, bought used appliances and cars and looked to make deeper cuts.

What does this mean? It means we have a choice. Living on one modest income is absolutely possible, especially if a couple plans for it from the beginning of the marriage (forgoing the pre-kid, goof-off, one-last-fling, max-out-the-Visa period).

I've heard from many couples who have decided to go from two wage earners to one. They report that not only has their family life improved, but that they have come out ahead financially as well. Although they take home less, they manage what they have better.

As I did budget analyses for them, in a few cases it was evident that going from two incomes to one might be arduous, given the couple's lack of planning and debts they had acquired. (In rare cases, the health benefits that came with the second income were necessary because of pre-existing medical conditions.)

People who are just scraping by on two incomes frequently doubt they could manage on less. I suggest that they do a little math.

The second, or smaller, income is taxed at a higher rate if the combined income moves them into a higher tax bracket.

To calculate this, figure the taxes on the larger income and then on two incomes, then subtract the difference from the smaller income.

Then calculate the second wage-earner's costs of going to work: child care, transportation and wardrobe, for example, and lTC subtract that from what's left of the smaller income. Doing this can shrink the second income dramatically, by as much as two-thirds or more.

So how does a couple make up for the few thousand they would lose? It's easier than they think.

Without too much pain most families could get their $500 monthly food bill down to $250, for example, saving $3,000 a year. (We feed our family of eight for $170 a month.)

Several thousand dollars more could be found by economizing on entertainment, clothing, gift-giving and household items. Families might also be able to move to cheaper parts of the country, drive older cars and skip the expensive vacations. So to a large extent the second income is a choice. And I think it's a good choice for some families, especially when both spouses love their jobs and dislike domestic tasks.

If this is your choice, that's fine. But some people slog along in jobs they hate because, frankly, they are just plain unwilling to give up their expensive lifestyles.

If this is your choice, that's fine too. But just don't whine about it.

Amy Dacyczyn is author of "The Tightwad Gazette" and publisher of a newsletter with the same name.

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