Saturday, January 2, 2010

Why A 2 Income Lifestyle is Not The Devil

If you read other personal finance blogs and articles, which I do - voraciously, I might add - one piece of advice that stands out over and over again is to live on one salary and save the other.

This is actually pretty good advice, and doing this would have probably saved a fair number of Americans affected by this recession quite a bit of pain and heartache.  I think it is, in the big picture, a laudable goal.   That said, I'm not sure it's always good advice.  Overall, I'm a fan of case-by-case-basis finance anyway; there's very few approaches that work for everyone in every situation.  

Sander and I used to live on one income.  Over the course of our first year and a half of marriage, and the 2 years prior, we effectively lived on a single income, using the other to pay off debt, pay for a large chunk of our wedding and honeymoon in cash (family helped with the rest, no debt was incurred in the making of our marriage), replace an older, expensive-to-maintain car, and save for a home.  We also did some traveling.

In that 3.5 year period, we saved a lot, and were completely debt free for a period of time.  

But we chose to upgrade our lifestyle 2.5 years ago when we bought our house, and again when we had our daughter.  While we do save a good chunk, it's nowhere near the % of our income it was back in our apartment renting days.  Sometimes that gives me heartburn, but mostly I am at peace with what was a very good set of decisions.  Here's why.

We bought an older fixer-upper in a great location.  While home devaluation has hit us, we've been more insulated than other cities and towns.  While I'll confess our home is something of a money pit, needing everything and anything we can put into it, the bones of the house are beautiful, and we're doing all the work ourselves, which allows us to do premium renovations for minimal money.  Scraping paint off doors or sautering pipes may not be the most fun way to spend an afternoon, but it's worth it in the long run.  We still have a good bit of equity, and the knowledge that when we sell, we will make a profit - even if that is many years away.  

Our house is in a great spot.  We've got a large yard, rural zoning, and privacy, which allows me to indulge my dreams of a big vegetable garden, fruit trees and chickens.  The school system is well-rated.  We bought knowing we would be raising a family here, and the size is perfect for us.

Had we bought what we could have afforded on one salary in early 2007 when we were house hunting, we would have been in a 1, maybe 2 bedroom condo in a more crowded area, with a small likelihood of a yard.  If we did manage a yard, we would have had much longer commutes.  I know quite a few people who are deeply underwater on condos that no longer work for their lives.  We didn't want to end up like that.

We could have moved away to a lower cost of living area - certainly an option.  But here we have great (yes, even in this recession) job opportunities, a huge network of friends and family, and a pretty excellent life.  Staying here allowed us the opportunity to have family childcare instead of having to find somewhere that we could trust, and as a result, my daughter will grow up with cousins as close as siblings, and a sense of belonging to a large circle of people she is related to by blood, marriage, and by the bonds of friendship.   While things might have worked out perfectly in another area, this is a situation that is perfect for us.  

Needing two incomes isn't always ideal.  It definitely increases the risk exposure if both incomes are required to make ends meet.   But so does living on one income - and there, if the breadwinner loses that income, there is zero coming in.  

I think it's a choice for everyone.  But I am at peace with our decision.   At some point, we'll downshift, despite the fact that we have no idea really what that will mean.  We both agree that the sometimes blistering pace of our lives isn't how we want it to be forever.   But we make time for what is important - our daughter, extended family, even the occasional date.  

Saving more is good.  But so is having all the pieces of a meaningful life.   It's worth the extra outgo.   At least in our case.


Carrie said...

Hear, hear.

I'd also add that cost of living has a lot to do with it - in higher COL areas, one income lifestyles are not always possible, much less advocated.

Glad you're back, MoneyPenny.

cjeanette said...

Of course your house was worth it, you have that rockin' lawn ;-)