Living on one income can be a scary thought, particularly if it not something you choose to do but is forced upon you due to the loss of a job or other life event. Even if it is totally planned, it can be a daunting thought that a portion of your household income (even if it is not a large portion) will soon not be coming in to help pay the bills.

I know a thing or two about living on one income, as my wife and I have been a one income family for a little over 4 years now and my wife has been a stay at home mom (a very hardworking SAHM, I might add) since that time.

My wife didn’t get fired or laid off, but the circumstances at the time led us to make the choice that she would stay home with our young son, and we were ready for another child as well. The event that led us to make that decision was Hurricane Katrina, as our childcare provider’s house got flooded, and it was a difficult time for trying to find another daycare or sitter with all of the flooding and damage in the area. So we decided my wife would stay at home with our son, and we would start trying to expand our family.

While things have not always gone perfectly, I have managed to learn a few things which seem to make going from two breadwinners to a sole supporter financially a little easier:

Prepare financially, if possible- While you may not always be able to plan things out exactly how you want them to happen- I know we certainly weren’t planning on taking the plunge from 2 incomes to 1 before Hurricane Katrina hit the New Orleans area- if at all possible, take care of any debt, especially credit card debt, and build a healthy emergency fund if possible.

Maintain healthy communication- When you have a significant lifestyle change, such as going from two incomes to one, it is essential to communicate with your husband or wife. No one can read minds, so it is important to discuss you expectations, fears, and other thoughts with your husband or wife to make sure you are on the same page if possible, or at least know where the other person is coming from. This is extremely important if one person has lost their job, as they may be quite upset about it, and may be feeling upset or depressed about it. Not communicating to them can make things even worse.

Manage Expectations- Don’t expect that things will go flawlessly with your finances when your income is reduced. Roadblocks and unexpected financial situations can arise, but if you expect them and prepare for them it can make the transition easier.

Cut back on your spending- even if you feel like you can make do living the same way on one income, cutting back can allow you to save a little more for anything unexpected. Some things that you used to have to pay someone else to do you may be able to do yourself.

Pay extra attention to your finances, especially at the beginning- When making a big change, it is better to err on the side of caution when it comes to the amount of time you spend managing your money and how much you pay attention to your finances. Once you get comfortable with your new income amount, you can get back to your normal routine.

One interesting thing about living on one income vs. being a dual income family is that you may actually not be in such a bad position should you need additional income. The stay at home spouse can pitch in where necessary, working occasionally, part time, or even going back to work full time should the situation warrant it. In a dual income household with two people working full time already, it can be a difficult thing to do something similar as working in addition to a full time job is quite difficult to do.

Do any of you support your family on one income? What tips do you have for someone going from a dual income to a single income?

Upromise – Turn your everyday spending into college savings

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• A Look at the $8000 First Time Home Buyer Tax Credit for 2009

The $6500 home buyer tax credit for existing homeowners who purchase a new home and the extension of the $8000 first time home buyer’s tax credit were signed into law on Friday.

The official bill, the Worker, Homeownership, and Business Assistance Act of 2009 was signed into law by President Obama on Friday, after being passed by both houses of Congress earlier in the week.

The newly available $6500 tax credit for existing home buyers who purchase a new home (must be a primary residence) between November 7^th, 2009 extends until April 30^th, 2010. A home must be under contract by the April 30th deadline to qualify, and closing must be within 60 days, effectively the end of June. Home owners must have lived in their existing house for five consecutive years out of the previous 8 to be eligible.

For 1^st time home buyers, the law effectively extends the deadline for the $8000 tax credit, which was set to expire on November 30^th, for 5 months, to April 30^th 2010. As with the new credit, the house must be under contract by April 30^th, and closed on by June 30^th to be eligible.

The new law also raises the annual income limits from $75,000 to $125,000 for singles and from $150,000 to $225,000 for married couples, which applies to both the $6500 tax credit for existing home owners who purchase a new primary residence, and the $8000 credit for 1^st time home buyers. Obviously, this will allow a larger pool of citizens in both categories to participate.

To be eligible, a new home must cost less than $800,000, and the new homeowner must live in the house for 3 or more years (as primary residence) in order to avoid having to pay it back. The tax credit will be able to be claimed on 2009 tax returns, even if the house is purchased in 2010, similar to what was allowed in the original $8000 tax credit program for homebuyers.

Is the $6500 tax credit for existing homebuyers retroactive?

Unfortunately, no.  There was some speculation as the bill was working through Congress as to whether it would be applied retroactively up to some point in the past, but it is not.

Some existing homeowners who recently purchased a new primary residence undoubtedly feel like they are being left out unfairly, but the purpose of the program is to stimulate new sales in the future, not provide people with tax relief or a credit.

I understand the purpose of the law, but if I were a recent homebuyer, I am sure I would be a little angry that I was not eligible because of the timing of my home purchase, which in some cases could be a matter of a few weeks or less, and did not receive the credit.

There are many who are concerned that this is just a subsidy for the real estate market, and does not do much for the economy as a whole. For example, those that take advantage of the new $6500 tax credit for existing home buyers will most likely be putting their existing home on the market, thereby having no net effect on the number of homes purchase overall. (Although I am sure there may be some that would buy a new primary residence and rent out their old home, for example, which seems like would be OK under the new law.

Some even predict the cost to tax payers per home sold under the program to be $100,000 +. Ouch!

Here are some other good articles on the new home buyer tax credit and the extension of the existing tax credit:

Quick! Go Buy a New Home! New $6,500 Homebuyer Tax Credit for Existing Owners and $8,000 for First-Timers Gets Extended from Prime Time Money

Why The First Time Home Buyer Credit Is Terrible For The Economy at Moolanomy

It’s Official First Time Home Buyer Tax Credit Extended Now For Existing Owners Too at Free From Broke

$6500 Homebuyer Tax Credit For Current Homeowners Signed Into Law Today. Is It Retroactive? at Bible Money Matters

Did Congress Make the Homebuyer Tax Credit Retroactive? at Five Cent Nickel

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• A Look at the $8000 First Time Home Buyer Tax Credit for 2009
• Time for Homebuyer’s Tax Credit Running Out, Will it be Extended?
• What’s in the Stimulus Plan? Read the Full Text of American Recovery and Reinvestment Act of 2009
• Two Tax Deductions That Have Changed for Filing Year 2007
• Cash for Refrigerators or Cash for Appliances Rebate Program Coming- Is This a Little Too Much?

Every so often, as I am standing at the bathroom sink early in the morning getting ready for work, I hear a familiar sound-

Drip, drip, drip, drip….

I know where it it coming from, it is the bathtub faucet. If my wife or I forget to turn the faucet fairly tight after giving the kids their baths the night before, the faucet will drip- (I usually blame it on my wife). There does not really appear to be anything wrong with the faucet, but if it is not tightened just enough, it will leak-just a little.

If either of us forgets to consciously turn the faucet off with a little extra effort, we have a leak, and often we don’t address it until the next day, because we didn’t realize it was happening.

Fixing and preventing “financial leaks” takes a conscious effort as well.

Not all leaks are created equal. They could just take a little thought, like my faucet. But they can be a symptom of a larger problem- something, like  in the case of a leaky faucet, could require action on your part, even to the point of calling in a plumber to make a repair.

When it comes to your finances, leaks can cost a little over time (which can add up), or could be leading you down the path to bigger financial problems in the future.

Some causes of financial leaks include:

Forgetting- We all forget things, and sometimes we forget to take care of our finances as well. The results of forgetting things can cost a few pennies at times, but it can be big bucks sometimes as well. An extra couple of dollars for some service you forget to cancel, like premium channels can cost a few bucks a month (small leak), but if you forget to pay a credit card bill, you could end up paying hundreds of dollars (or more) in interest and penalties (large leak that can cause serious damage).

Procrastinating- Similar to forgetting things completely, putting things off until a more convenient time often means we never end up doing them. It is not always convenient to call up a customer service rep to cancel a service you have, or to drive across town to that bank branch with the account fees that are outrageous so you can close your account. But doing so can start saving you money right away.

Not consciously thinking of your money- Do you think about where your money is going on a regular basis, or how you are spending it? Doing so every once in a while can keep financial leaks from “draining” your hard earned cash.

How can you prevent and fix financial leaks in your life?

Stay alert/think consciously about your money- Pay attention to the signals around you. Are you frequently wondering where your money went, or didn’t realize how much you have spent over a period of time? Then it is time to start examining the areas you spend money, and looking for things that can be eliminated.

Write things down- Writing things down helps you “remember” when your mind forgets. Make a list, write down the things you need to do, what you need to take care of, or areas of your finances you want to re-examine so you don’t forget about them later.

Take action as quickly as possible- As soon as you identify a financial drain on your wallet that isn’t necessary, take action immediately to correct it. Cancel that extra overdraft protection on your checking account or that long distance plan you no longer use. If you put it off, chances are good it could be quite a while before you actually do what you know you need to do.

Are there any financial leaks in your life that you need to get rid of?

photo credit: Nicholas Smale

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• Tips for Making Your Personal Finance Resolutions Stick- Turn Your Resolutions into Habits

Somewhere between living in a frivolous manner and grossly overspending and living a spartan, miserly lifestyle there is a happy medium.

That happy medium is sometimes called….. Doing things in Moderation.

Consuming or spending in moderation in certain areas of your life can be a great way to save money and spend less without feeling like you are sacrificing ” the living” of your life.

For some people, when they decide to cut back in certain areas, focusing on the longer term goals, such as financial freedom, living debt free, or having a comfortable retirement can be
inspiration enough to make the necessary cuts to their spending in order to start making progress towards those personal financial goals.

I would guess, however, that for many people, “changing the habits that got them into trouble in the first place” can be quite difficult.

I think this is why losing weight, quitting smoking, and exercising can be difficult for people to start and stick with.
Bad habits can be  difficult to break and good habits can be difficult to start, when going from excess to nothing, or nothing to a regular, daily habit.

This where doing things in moderation comes in and can be quite powerful.

Do nothing to excess is an old Greek proverb that speaks volumes.

Cutting back on things such as:

• Eating out
• Socializing/drinking
• Shopping
• Energy consumption
• Wasting time on nonproductive activities

and the list could go on and on- can all lead to living a better, less excessive lifestyle- with added benefits in the personal finance area as well.

The advantage of doing things in moderation or a gradual cutback is that you don’t have to give up something you enjoy completely, but can reap the benefits of spending less, eating less, or other unhealthy or un-wallet-friendly activities.

By consuming less, or limiting habits that cost money, you can still enjoy those things in your life, and don’t necessarily have to deal with the stress of cutting them out completely, if it makes you feel like you are depriving yourself of something.

Cutting back on services or activities that you enjoy, but aren’t quite ready to give up completely, can still reap positive benefits.

Do you enjoy eating out? Well do it less often instead of stopping completely.

Do you enjoy watching programs on cable television? Cut back on the number of premium services you receive.

You can definitely save money by cutting back or limiting these types of activities, while not feeling as if you are depriving yourself of something by doing them in moderation. Living a moderate lifestyle in many areas of your life can keep lifestyle inflation at bay as well.

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The $8000 Homebuyer’s Tax Credit expires November 30th of this year, so for those planning on taking advantage of this by buying a home, time is running short. For those interested in taking advantage of the program, this means a house purchase must be completed by that date in order to receive the credit. Because many loans can take up to 60 days to process, many in the real estate and banking industry worry that the numbers will start tapering off in early October. At some point in the very near future, it is expected that mortgage lenders will stop taking applications on tax-credit loans unless it is extended.

There is movement towards extending the homebuyer’s tax credit through 2010, and increasing it to $15,000. Senator John Isakson of Georgia is leading the charge in Congress, backed by realtors, bankers, and homebuilders, who are also are promoting the tax credit extension with the tagline  “Don’t Let America’s Real Estate Recovery Expire.” The American Association of Realtors estimates that appx. 350,000 home sales were directly attributable to the tax credit.

Some wonder if the tax credit is artificially inflating home sales, and possibly inflating home prices as well.

The White House says President Obama’s economic team is evaluating the effect of the tax credit on home sales- to determine their position, I imagine. It may be difficult to get the tax credit through Congress in  short order though, with pressing issues such as health care reform looming over Congress and the Obama Administration.

Should the homebuyers tax credit be extended through 2010? Should it be increase to $15,000? Should it be available to anyone who purchases a home?

What are your thoughts?

Upromise – Turn your everyday spending into college savings

• $6500 Tax Credit for Existing Homeowners Who Purchase New Home Signed into Law, Not Retroactive, $8000 New Homebuyer Credit Extended
• What’s in the Stimulus Plan? Read the Full Text of American Recovery and Reinvestment Act of 2009
• Book Review: A Million Bucks by 30 by Alan Corey
• A Look at the $8000 First Time Home Buyer Tax Credit for 2009
• Going from Debt to Wealth- A Closer Look at Dave Ramsey’s 7 Baby Steps Plan

Summer is wrapping up, and hopefully we’ll get some nice cool weather down south pretty soon. Fall is my favorite season of the year (it may also have something to do with football!), so I can’t wait!

It has been a while since I posted some links to some of the great personal finance posts from around the web. Here are a few great reads from the last week or so:

How to Keep Your TV from Stealing Your Money and Your Life from Prime Time Money

JD from Get Rich Slowly posted his free e-book, The Get Rich Slowly Guide to Roth IRAs

51 Unusual Money Saving Tips from Readers at Wisebread

Money Lessons from Classic Movies at Bargaineering

Lazy Man and Money chronicled his experiences regarding cease and desist letters from Monavie because of his post asking if Monavie is a Scam. If they are that persistent in trying to quiet him, it make me wonder if they are trying to hide something.

Below are some of the Carnivals I participated in over the last few weeks or so (A belated thanks to the hosts!):

Automatic Finances hosted the Festival of Frugality #192

The ABC’s of Investing hosted the Money Hackers Carnival No. 81

The Centsible Life hosted the Festival of Frugality

Credit Crisis Concerns? Get 20% off FICO credit scores now

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• Weekly Personal Finance Links- Cinco De Mayo Edition
• Weekend Roundup-Slightly Under the Weather Edition
• Weekend Roundup-Dad’s Day Edition

Saving Money

Saving money, is one of those things that most people, even if they are saving a decent percentage of their income, would probably like to do a little better at. Money is just one of those things where it is hard to feel that you have too much of it. Maybe Bill Gates does, but I  know most of my friends and family don’t.

Whether you have $100, $10,000, or $10,000,000 saved, you probably don’t feel like you are “done” saving money and can spend all of your income as you see fit.

Most people want to save more money than they are currently saving-certainly for retirement, but for other things too. Here are 10 ways to help you save more and develop a saving habit.

Make it a priority-

You can’t just want it to be a priority, or say it’s a priority, you have to make it a priority. This means you have to focus on the fact that you are trying to save money, or save more money.

Save First-

We’ve all heard the “pay yourself first” mantra, and there is a reason it is often quoted financial advice. If you pay yourself (i.e., save money) first, right after you get a paycheck or out of any other monetary payments you might receive (gifts, windfalls, etc.) you remove the possibility, however good your intentions are, that you will spend that money instead of saving it.

Make it automatic-

Making your savings automatic goes hand in hand with paying yourself first. I currently have a scheduled deposit into an online savings account on the same day I receive my paycheck. This allows me to “save without thinking about it”, before I pay my regular bills, buy groceries, or spend it on other things.

Set large and small savings goals-

Setting a goal helps you focus on something tangible, instead of just focusing on an abstract number in your checking or savings account. Setting small goals (a small purchase)  as well as large ones (retirement, for example) allows you to experience the satisfaction of saving for something and “rewarding” yourself more often than if all of your goals are large ones.

Review your savings goals regularly-

Along with setting a goal or goals, you need to make sure your goals are still the same over time. On a regular basis, whether it is several times a year, or once a month, review your savings goals.

Adjust your savings goals if necessary-

Goals are set at a certain point in time, and can be adjusted as time goes by. People change, and so do our savings goals. Allowing yourself to change what you are saving for, or how much you are trying to save can allow better results when saving money.

Cut back on spending-

Although a bit a cliche’, it holds truth. If you want to save more, spend less. Cutting back of spending can be a great way to increase or boost the amount you are saving.

Make more money-

Making more money is another straightforward way to allow yourself to save more money. Even though the economy is still weak, now could still be a great time to start a part-time side business.

Stay focused-

Keep the reasons you are saving money -whether it is saving up for a purchase, a vacation, or building your emergency fund clear in your mind.

Save last, too-

Although paying yourself first is a good way to save before you spend, if you have money left over after paying bills, etc., save some of that too!

One thing about saving is that you can always spend it later. If you spend your money first, you don’t have that option.

What are some of the things that you do (tips, rules, tricks, etc.) to save money?

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In the next few weeks one lucky winner will become Lending Club’s 25,000th registered investor. To celebrate this milestone, the 25,000th registered investor will receive $2,500 cash.

In order to receive $25 free to invest at Lending Club, type in this “Referred by” code when registering: rcthinkwealth. You will get $25 free to try out Lending Club, as well as have a chance to win $2500 if you are the 25,000th investor.

The winner will be announced on the Lending Club blog after October 1^st.  For contest details visit the Lending Club Terms & Conditions page.

What is Lending Club ?

Lending Club is a Peer to Peer Lending site, also known as person to person lending or social lending. People can either lend or borrow money, without using a financial institution, such as a bank. The advantages are that a borrower can usually get a better rate than they would from a conventional loan through a financial institution, but at the same time, a lender can get much better returns that they would through normal investment channels such as a savings account. For example, Lending Club investors currently receive an average annualized return of 9.64%. The rate of return depends on the risk level (credit score of borrower, etc), as one would expect. However, borrowers must still qualify for the loans, and must have a minimum FICO score of 660, along with meeting other criteria. For more information, see Lending Club’s FAQ page.

As with any investment, there are risks, but receiving $25 free to try out investing with Lending Club seems like a no-brainer to me. In fact, I signed up for Lending Club a few weeks ago with a $25 bonus, and funded a loan with it. Unfortunately, I missed out on the chance to become the 25,000th investor, but you still have chance to win. I am going to discuss my experiences with Lending Club more in the near future.

For your $25 free to try out lending Club, use referral code: rcthinkwealth

• May 2008 I Bond Fixed Rates Go to 0.0%, Total Rate 4.84%-What Does This Mean?
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President Barack Obama announced a new initiative on Saturday, geared towards helping citizens increase their retirement savings and the overall savings rate, which had hovered around zero for several years preceding the recession .

“The fact is, even before this recession hit, the savings rate was essentially zero, while borrowing had risen and credit card debt had increased, half of America’s work force doesn’t have access to a retirement plan at work. And fewer than 10 percent of those without workplace retirement plans have one of their own,” President Obama said Saturday.

Obama’s proposal includes:

Encouraging small businesses to automatically enroll their employees into 401k plans, something many larger companies do already. Research has shown that if workers are automatically enrolled and have to specifically request to not take part in a 401k plan, they are more likely to participate.

Allow citizens to receive their tax refund in the form of a U.S. Savings Bond. This would be available via a box on tax return forms that a person could check if they wished to receive a savings bond as their tax refund.

Make it easier for employees to contribute unused vacation or overtime to their retirement plan. Most employers who pay for unused vacation time (as opposed to those that have a “use it or lose it” system) simple cut a check for the unused vacation time or overtime.

The Treasury department and the IRS will also publish easy to understand instructions regarding the rules regarding retirement plans when a person leaves their job.

These are all administration actions, which will not require approval by Congress, so they should essentially be a done deal.

I like the fact that the government is encouraging companies to auto-enroll workers, and I think the ability to contribute unused vacation to a 401k plan is a pretty good idea as well. Although I am a fan of I bonds in general, (which are currently paying a paltry 0% for this 6 month period), I am not sure if too many people would take advantage of that with their tax refunds.

I think more should be done however. For example, how about allowing people to put a tax refund directly in a 401k account? After all, the government got free use of that money for a better part of a year, so they probably don’t lose much if that money goes untaxed. At any rate, I think focusing on increasing savings is a better idea than all of the government spending of late. What do you think?

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Zecco Trading, an online discount stock brokerage, is offering 20 free trades for new customers opening an account by Sunday, September 13th, 2009. (Trades are normally only $4.50, or free if you have an account balance of $25,000 or more or make 20 trades or more per month.)

Unlike a lot of other free trade offers, you have 90 days to use your 20 free online stock trades from Zecco.

Be sure to use the promotion code “bonus1″ when signing up. Be sure to use all lowercase or the code won’t work.

Special terms and conditions:

• New Zecco Trading accounts must be opened and approved by Sunday, September 13th, 2009.
• The 20 free stock trades will be granted on or before September 16th, 2009. The free trades will expire 90 days after the date they are granted.
• Offer not eligible to existing Zecco Trading customers.
• Limit one bonus per household.

Join Zecco Trading and get 20 free trades with bonus code “bonus1″

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• Get $25 Free From Lending Club Plus a Chance to Win $2500
• Upromise-Bonus College Savings Throughout the Month of March
• Get $25 Free From Revolution Money Exchange
• Online High Yield Savings Accounts Update- ING and HSBC Both Lower Interest Rates

No one likes to pay bills, I know I don’t. Part of this may be psychological- paying for things such as utilities or cable once a month in a big chunk doesn’t translate into the time we spend using the service.  Sometimes paying bills becomes routine, however,  and we don’t realize there is a possibility that we could be paying more than we need to for certain services, or that we may not be being charged correctly. Taking a few simple steps every now again can be helpful in seeing past the bill itself and into the details- and determine if you can reduce them in any way.

Check your bills for errors or necessary fees. Whether intentional or not, errors can frequently be made on bills you receive-and it will usually not be in your favor. Checking your bills for errors will keep you from overpaying. Another thing some companies often do is add additional fees from time to time. If you notice any of these, try to get them removed as well.

Pay your bills electronically to avoid paying postage-It may be a small savings if you only have a few bills, but over the course of many years, you can save a significant sum by saving on postage. Also, paying electronically can keep you from relying on the post office to get your bills in on time, and potentially save you from paying late fees also.

Make sure to pay your bills on time or pay bills ahead of time- I used to always wait until the last minute before a due date to send in bills, not wanting to give my money to a company until I absolutely had to. Not surprisingly,  I ended up paying late sometimes, having to pay additional late fees. I now try to pay my bills ahead of time- or set up automatic payments ahead of time to be paid right before or on the due date- in order to keep this from happening.

Be direct- ask for a discount- If you don’t feel like you are getting your money’s worth for a service, or fewer you are paying too much, ask for a discount on your monthly bill. You may be surprised, but companies know they make more money keeping current customers than trying to recruit new ones, so they do offer discounts. They may offer additional services or perks for the same monthly cost as well.

Review the services you are paying for – Every so often, check your bills to see if you actually use what you are paying for. If your habits or tastes have changed, you may be paying for something you rarely use and may not even want or need anymore.

Trying doing without- This obviously won’t work with bills like electricity, but can you reduce or eliminate some of the regular monthly bills you are paying? Like the gym, for example, or premium cable? You may find that you really don’t miss them at all.

Make a conscious effort to reduce variable bills- The amount of some bills,  like electricitry, natural gas, or other utilities depend on how much you use each month. Can you reduce your household energy usage, for example?

Have you eliminated or reduced any of your regular bill payments lately? What were they, and how did you do it?

Upromise – Turn your everyday spending into college savings

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A $300 million dollar rebate program for buying energy efficient appliances such as refrigerators, dishwashers, and washing machines, similar to the highly popular Cash for Clunkers Program, is coming soon, according to an article last Friday on BusinessWeek.

Starting later this fall, the program will offer rebates of $50 to $200 on energy efficient appliances. Participating buyers will not have to turn in their old appliances, as was required in the Cash for Clunkers Program with old cars. Program details will vary by states, and states must turn in their plans by October 15th. Only appliances with the Energy Star Seal will qualify, and approximately 55% of appliances manufactured last year met that criteria.

Apparently, the appliance industry could use the boost, as sales were down 10% during 2008, and 15% through July of this year.

I was not a really big fan of Cash for Clunkers, as I felt the program had some issues. Some used cars that may not have been in very bad condition, and could have been purchased used by someone who could not afford a new car even with the rebate, were destroyed. There were other issues with it as well that didn’t seem like the best use of tax-payer dollars.

Whatever it ends up being called, whether it is Cash for Refrigerators or Cash for Appliances, I imagine that the goal is to increase the number of energy efficient appliances, and to remove older, less efficient appliances from service.

This is not necessarily a bad thing, but I am not a big fan of these rebate programs with a short deadline-it seems as if the federal government is trying to stir up a “buying frenzy” to get people spending again.

What is your opinion of the Cash for Appliances program? Is the federal government going overboard with all of the rebates they are handing out?

photo credit: AlishaV

Credit Crisis Concerns? Get 20% off FICO credit scores now

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