Living on One Income?! an FCS Agent’s Experience

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Living on one income as a family with children is challenging to pull off in today’s economy. It feels almost near impossible to survive during and after the holiday season especially when debt has been incurred. In our last article, we started unpacking the top five tips for one-income families (OIF) to be successful and the first tip was setting a budget and trimming the budget. The second tip is paying off debt which speaks to the issue of the habit of incurring more debt. Once you set

person chained to a tv with consumer on it.

 your budget and trim expenses, you’ll find that creating a budget opens you up to get out of debt and stay out of debt. Staying out of debt can be just as hard or even harder than getting out of debt.

To make sure you have a clear path to debt reduction and eventual debt clearance, most experts recommend that you use the “snowball method”. The “snowball method” is when you start with paying the smallest debt first while paying the

 minimum on your other debts, and when you pay off the smallest debt, you use the cash used to pay the small debt to pay the next debt in line. Others say that you can start with the debt with the highest interest rate and then work from highest to lowest. This principle has you take the extra money as each debt is paid off and put it towards the next debt on the list which allows you to pay the next debt off faster. This may work out if you have small debts that make up your overall debt total or if you have a large expendable income. However, if you have a few debts in which you owe a lot to one company such as a $35,000 car loan with a high-interest rate then it may take a very long time to pay off your overall debt total.

Now, you might say

“How does this work in real-time?” It takes good communication and commitment as a whole family. Our family has paid off most of our debt which includes all

the word debt with an eraser above it.

consumer and medical debt such as two vehicles, credit cards, medical bills, etc. To save more money to put towards debt we look for things to sell that we don’t use anymore, we find our other needs secondhand if possible, and lastly, we eat at home quite a bit. You might also say “What if an emergency comes up?” We have worked hard to take any overflow or extra

money to build an emergency fund that will cover most expenses. I call it the “Uh-Oh Fund” because it allows us to cashflow things that we didn’t foresee such as car repairs or unexpected appliance repairs/replacement. For the things that we can see coming, we start saving a few months out to cash flow them. When you can cash flow an unexpected or expected large expense it prevents you from falling back into debt and it allows you to keep paying off existing debt.