Making Ends Meet

As my extended social network learns that I’m staying at home with the girls, I’ve been increasingly asked for advice on how to make it work financially.

There is no one-size fits all approach to this issue or else, I believe, more people would stay at home with their kids. The easy answer would be to have a spouse that makes plenty of money, but our society isn’t setup like that anymore for most people.

We had a nice financial setup before having kids. We both worked non-profit jobs, so we weren’t filthy rich, but we (looking back on it) had few expenses. When Olivia was born, Vanessa was making a few thousand more than I was making and Vanessa was going to stay at home. Instantly we took a 50%+ paycut.

It was a shock. Our retirement contributions stopped. Our emergency savings contributions stopped. We rolled back our charitable giving. That accounted for a 30% of our pre-kids “spending” each month already. We used to eat almost all of our meals outside of the house. Most dinners were on a walk on South Congress and most lunches were at the places near our workplaces. Half of our lunch budget was eliminated since V was at home. Dinners, for the first few weeks, were supplied by our friends coming over to meet Olivia. After that, we simply didn’t take Olivia out, so, while we still did take out too often, our dinner spending decreased too (drinks—alcohol and otherwise—and tip add up!).

Spending Less and Making More (photocredit: flickr/68751915@N05)

That stabilized us without us actually having to really think about our spending or change of lives much. Or at least more than having a kid would do in the first place.

Our spending had some non-negotiables. Vanessa was debt-free coming into the marriage, but I had a car payment (now paid, but deferring the payment amount to savings for our next car), a decreasing credit card balance (mostly paid) and student loans (will be with us to the bitter end).

Fast-forward to today: I switched jobs, we bought a house, had a baby without insurance-that-covered-maternity, between the three, depleted the bulk of our non-retirement savings and we switched up who stayed at home.

We have four mouths to feed, a house to keep and one non-profit salary. It doesn’t add up.

Cutting Expenses

There are two approaches to financial improvement. One says that you just need to spend less than you make. The other says you need to make what you (want to) spend. Frugality can take you a long way, but at some point, you just need to make more money or make large sacrifices.

We spend less now. We eat out less and have started eating out virtually only when my in-laws are in town (they pay!). We drive less (V’s commute is shorter than my daily mileage in insurance). We cut cable. We experiment on A/C settings and don’t water the grass as much as our neighbors would probably prefer to keep the utility bills manageable. We don’t have smartphones with data plans. We’ve changed auto/home insurance companies to the lowest cost at the same quality ratings. We haven’t renewed magazines. Basically, we look at our statements each month and ask “did that expense need to happen?” If not and the “want” isn’t a high priority, we eliminate it in the future.

Making More

I like this idea more. I’m fine cutting back quite a bit, but at the end of the day, I don’t want to have to act out of financial fear when a great opportunity presents itself.

You should see our taxes. In addition to your 1040, you have to file a Schedule C for any business income/expense from a sole-proprietorship. You have to file a separate Schedule C for each business you’re engaged in.

Vanessa writes for Busted Halo as a freelancer/independent contractor. It’s not a lot of extra money, but helps quite a bit.

My in-laws own a condo in Austin (where we used to live) and now is rented out. They don’t want to deal with it, so I’m the “property manager”. I collect rent, field maintenance requests, coordinate normal upkeep, draw up the contract, check out the renters, etc. In return, I get a small monthly stipend from them in that capacity. Again, it’s not a lot of money, but it’s something.

Technically, I’m still getting income from working in insurance. My setup with the company was that they would front me some money in the beginning to keep income (albeit lower than usual) coming into the house while I’m building a client list. My continued commissions are to them to pay off the advance, but still another Schedule C and increases our taxable income.

I’m building my freelance and consulting business. While I started Brandon Kraft Tech Services as a way to formalize/legalize when friends would pay me to host their websites or other really minor things, it has been growing organically to where all of my new projects contracted this calendar year are with folks I didn’t know before them contacting me for service or a RFP. While I’m still narrowing down my niche within the field and haven’t begun “branding”, this is the future. I’ve seen plenty of people with, what appears to be, less skill making a living off of this work and I’ve met plenty who are incredible at what they do that inspire me to expand my skill set (and they make far beyond what I’d like to make someday).

What About You?

Our extra sources of income are random, but they’re what we are able to do without a large investment. I’d like to get further training in XYZ that might cost serious change in classes and materials, but not there yet. For you, what are you good at that could be a marketable skill?

One friend asked about how we did it as she’ll be leaving her job as a bilingual classroom teacher. Besides tutoring, a teacher can’t do much, right? To me, I see her being able to be a translator and contracting with small companies or non-profits to translate materials into Spanish.

The woman who made our cupcake for our weddings is a stay-at-home mom of a flock of kids. She doesn’t own a bakery, just (if I recall correctly) rents space in a commissary kitchen when needed. We met her at a little coffee shop that sells her cupcakes to try out the samples (which, I assume she made at home since it would be a much smaller operation and a little different than a true commercial effort. Check with your local government on those rules though). Her niche is cupcake delivery and special events.

If you’re crafty, sell on Etsy. If you’re techy, do what I do (but not what I do… I don’t want to compete with a reader!). If you’re an educator, find out a different way to educate. If you like to bake, start a baking business.

Be careful and purposeful. You can easily throw away a ton of time and money trying to make something work, so have a plan. Get advice from the SBA and others. It’s not easy, but if staying-at-home is a goal for your household, it is worth the effort to figure out if that’s a reasonable way to get enough money in, after reducing expenses, to make it all work.