How We’re Maintaining Two Residences Without Going Broke

by Kevin on January 24, 2011

I mentioned in my previous post (Embrace Life as an Adventure) that I accepted a job in a new city, left our house behind with a for sale sign in the yard, and my wife quit her job and moved with me. It’s been a fun, scary adventure.

The scariest part has been the fact that our housing cost has doubled, and our income has been cut (almost) in half. How are we doing it?

Maintain Two Residences Without Going Broke

It’s simple, really. It’s the same financial philosophy that we’ve had since we got married.

Living on Less Than You Earn

We live on less than we earn. We always have, and until we retire, we always will. We don’t buy things with money we don’t have even though we use credit cards. The credit card just lets us keep the money in our bank account until the end of the month.

The only things we have purchased on credit? Our house. That’s it. We own our cars, our clothes, our electronics… everything free and clear. We’re blessed to be in that position, and it is a major reason we’re not in a world of hurt with our current situation. We don’t have student loans or car notes to pay off.

Budgeting Actually Works

I know there are some personal finance experts — who make a lot more money than I do — saying budgeting doesn’t work. The argument is that 99% of people don’t like budgeting or are intimidated by it, so obviously budgeting doesn’t work.

Err… no, I disagree. Budgeting works if you make it work. It fails if you let it fail. Just like anything else.

I can’t believe that a majority of large enterprises use a budgeting process and that it doesn’t work for them. Departments and company divisions are given budgets and make things work off that budget.

You should run your life the same way. You have a set amount of money. You can reasonably estimate your costs with a variable of 5 to 10%. Make it work.

How do we know how much money we’ll have to spend in a given month? We don’t spend income earned in the current month. (That’s called living paycheck to paycheck.) Instead, we live on last month’s income. I wrote about this in greater detail: The Concept That Changed Our Financial Life.

Cut Our Extra Saving Temporarily

We’ve been living so far under our income that we’ve been able to set aside a healthy amount of money at the end of every month for various saving goals. Things like buying a car with cash in the future, saving for future kid costs, things like that.

We’ve temporarily cut those things out. It isn’t fun, but it’s better than going in to debt. And a temporary break (even at a few months in length) won’t kill those goals it will simply delay them a bit.

This, combined with my freelance writing income, has kept our budget in the black. My wife has had several interviews and is looking to get to work to work soon. And of course if we sell or rent our house then we’re right back to being well into the black, and can get back to marching toward those goals.

{ 2 comments }

Budgeting in the Fun Stuff January 25, 2011 at 1:16 pm

Congrats on being able to make it work. Good luck on selling your other house!

Kathryn January 27, 2011 at 8:37 pm

Kevin
Applause to you & your wife for taking the risk and being together through this transition time. Thanks for writing about the pro’s and con’s of such a move…and the budget involved. All of it is inspirational to your readers.
Visit us in Rome soon…maybe once the Smith baby is born!

Kathryn

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