by The Happy WAHM
From being a double income family, can you really survive with just one income? To succeed in staying afloat, it’s most helpful to calculate, if not actually compute, the costs involved in having a second income.
I’m back to writing about our one-income household lifestyle. And today, I’m going to talk about how we came to be confident that we could survive with just one income. We worked on our numbers, and the first set of numbers we worked on was the cost of having a second income.
Of course, at the center of our planning and strategizing was my dear friend, Excel.
The Cost of a Second Income
Back in 2011, I wrote about cost to work briefly. But today, I’m sharing with you a more detailed version of the process we went through.
In a worksheet, I created two major columns:
Under each column, I added two more columns:
- I stay employed
- I stay home
Then we listed down everything. Under income, we included the benefits, like the sack of rice that we regularly received from the company.
Managing Expenses
The exciting part was working on the expenses. From Expenses => I stay employed column, we had househelps’ salaries (we had two), and 13th month pay. Those items were no longer to be seen under the Expenses => I stay home column, and because I had set up my file to autocompute, it was fun seeing the expense numbers really go down. From two househelps to zero, we also adjusted our monthly budget for electricity, water, food and other miscellaneous items like toiletries, snacks, lunch out, groceries, and phone. Then we further deducted my meals purchased at the office, wardrobe and other miscellaneous items an office girl spends on, like shoes, bags and accessories. In my case, I had a service vehicle from the company, so I had no transportation expense to take into account, but for the others who are thinking of giving up employment and are public commuters, you’ll find that your transportation expense will make a big difference on your budget.
Personally managing our home proved to be more cost-efficient, too. You won’t believe how I used to buy a liter of dishwashing liquid, fabric softener and laundry detergent weekly. But when I started to personally do our laundry, I only had to replenish our laundry supply every three weeks, same thing with the dishwashing liquid. Aside from the expected reduction of cost on food and utilities, personally managing our house meant further savings because we are more conscious about our spending.
Effectively managing your expenses and having a game plan in bolstering your income are crucial in surviving a one-income lifestyle. After you have all your ducks in a row, all your numbers computed, the difference you will end up with may not be sufficient to warrant holding on to the second income. Your reasons for holding on to a corporate career like job satisfaction, independence, career progression, and the like, may be overshadowed by being able to stay home with the children, having the time to learn a new skill, or becoming your own boss.
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by The Happy WAHM
First of all, thank you to the ladies who submitted their questions yesterday! Wow! Really appreciate your participation!
So here’s the first of the questions I received. She asked to be kept anonymous, and I respect that.
I need help in paying taxes. How do you do it? Do I need to do it? I do freelance work, too, and I also have a small online store. I just don’t know how to go about it.
Okay. I’m not sure if I can really be of help, because I’m far from being a voice of authority in this field, but I will share with you what I have done for my own business.
I started my virtual assistance service back in 2006. But it was only in 2009 that I registered as a business. Reason? I sought the advice of a lawyer who told me to wait until I’m very stable before I register as a business. Meaning, I had to wait until my income was steady at a certain amount.
When in 2009, I felt that I was ready, I registered as a sole proprietor, under “services” as the industry category. My first stop: DTI. I registered VASupportPro Services. VASupportPro stands for Virtual Administrative Support Professional. It’s the result of a month-long study on how I would rank on searches. I added “services” to make it flexible in terms of service offering. I wanted to have that elbow room to grow the business, offering services other than virtual assistance.
Then I secured a business permit, registered with BIR and had my official receipts printed.
I won’t go deep into the process that I went through, because I don’t want to turn this post into a rant. Having to transact with (some) government offices in this country can really discourage you to be a responsible citizen. Suffice it to say that I’m holding on to the belief that the change is in me, in all of us, and it is up to me, to us, to do our share and contribute to the change, for the better. So however hard it is to be good, let’s still be good. 🙂
To help you out with the process, I’m sharing here an article which lists down the types of taxes for self-employed people like us: What Taxes Should I Pay in the Philippines (Self-Employed)
I’m paying the 3% percentage tax, based on gross earnings. To help me stay organized in monitoring my earnings, I use this free invoicing platform, so that at the end of each month, I just copy everything to the eBIRform. I always make it a point that I file my monthly return on the first week to avoid the rush, but due date is always on or before the 20th of the month following the taxable month. I use the 2551M form.
For my quarterly filing, I opted for the 40% optional standard deduction, instead of the itemized deduction, so it’s less hassle for me. After all, my operating expense is pretty much the same month after month, so going for the straight deduction makes sense for me. But if your operation incurs lots of representation expenses, the itemized deduction may be a better option. I use the 1701Q form.
Putting the horrors of registration aside, paying your taxes is pretty much routine and really easy. It’s even made easier by the electronic filing that we have now. Just download the eBIRform package, set it up with your valid email address, and each month, you only need to input your gross earnings and it will automatically compute the tax payable for you. After filling in the necessary form, you will need to save it, then click on submit. That form will then travel through cyber going to the central BIR database, or whatever they call it. Wait a few minutes, and watch out for an acknowledgement of your submission from BIR via your email. While waiting for the BIR confirmation to reach your inbox, go ahead and print three copies of the form you submitted. Then, when that confirmation finally reaches your inbox, print it also at the back of the form that you already printed. After that, go your merry way to the nearest BIR office and make the payment. I opt to pay at our local BIR office. Transactions are faster. But you can also opt to pay at accredited banks. I may be doing that soon. 🙂
There may be certain months that you have no transaction to declare, like if your family went for a vacation and you opted not to work. You are still required to file. Just submit your form electronically, print the form, and print the confirmation email at the back of the form.
To wrap up, do you need to do it? I would say, yes, you do. That is, if you already have a steady flow of income, please go ahead and do it. Being able to issue an official receipt has advantages for the business. Some clients actually ask for a receipt, so being able to say, yes, you can provide it, already puts you a step ahead of competition. Being able to show an Income Tax Return also has advantages. Visa applications require that you have one. 🙂
And best of all, you sleep better at night knowing that you are part of what’s good in this country. 🙂
Do you have questions, comments or feedback about this post?
Please leave a comment below, or post them at my Facebook Page.
by The Happy WAHM
I’ve been yakking about surviving with just one income, I think it’s time I share this little Excel file I’ve been using in our money management.
So my office desktop is officially dead. And because of that, I have very limited access to online work, much less to my blog’s dashboard. So I’m going to make this short and sweet.
The funny thing about not blogging regularly is that I tend to forget what I have already written in the past. Not just once, but twice!
Check these out:
One-Income Household: The Early Days
One-Income Household: The Current Situation
Notice that I posed the same questions? That’s because I have those questions written in a notebook! And of course I always refer to my notes. 🙂
But anyway, I hope you’ll visit the old posts. And to those who are just getting to know me, my Facebook page and my blog, here’s your chance to download the money management tool I’m using. It’s pretty easy to use. It helped me identify where to cut back on expenses, and how much I should save for whatever big ticket item we’re planning to purchase.
To Liza, who left me a message at my Facebook page this morning, thank you! Timestamp shows it was received at 2:30 am. She left me a two-paragraph message, which ended with this…
Thank you for sharing! You inspired a soul today!
Thank YOU! You have made my day really awesome!
Download your Money Management file here.
Have fun!
Do you have questions, comments or feedback about this post?
Please leave me a message, or post them, at my Facebook Page.
by The Happy WAHM
7/365Challenge: There are several reasons why families can be a one-income household. It can be a lifestyle choice, when a husband works, and the wife stays home to care for the children. Or when a spouse loses a job. Or when you are single parent.
In my first One-Income Household post, I talked about how we are living on a single income, and why. It’s a conscious effort to save.
The family that saves together stays together.
My husband and I, we talk a lot. We talk about anything and everything. And money is a topic we don’t shy away from. Well, I do the talking, mostly, and he listens, and he approves. I present the numbers and lay down the plans. Sometimes, he would question the soundness of my plans, and it could be scary, you know. He’s an engineer, and he’s really very meticulous, and when he starts to cross-examine me, my brain starts to function overtime. He would have these what-if questions, and those were great to have. We get to work on alternative courses of action for any eventuality.
When his past company was bought out by the industry giant in 2013 and he was offered a contractual position for a year, I started managing our budget with just my income, and only took from his salary for big ticket expenses. So when his contract ended and we decided that he would not renew, we were okay. I’ve got it covered. When he landed a freelance gig after eight months of being idle, I told him that we should continue with our one-income lifestyle.
Well, not everything’s as rosy as it looks. I actually had a scare for a while. Coz in January 2014, we had our house extended to accommodate my home office. At that time, we were not even thinking that he would not renew. So a big chunk of our savings went to the house extension, and when he did not renew, we were almost back to zero.
You might ask, how can we even think about saving when we are barely meeting our needs with our current finances?
This is where creating a budget comes to play.
Ask yourself these questions:
What are our essential costs? – You have to know what is essential for your family. Ours are food, shelter, education healthcare, internet connection.
How much can we realistically afford? – Do you really need to buy Starbucks coffee, or will Batangas brew do? Do you really need an iPhone6 or will Samsung J5 do?
Can we afford our current house? – Lucky for us, we had the foresight to take care of buying a house before we even planned my second pregnancy. I adamantly insisted on it. But if you are still renting, think about how much you can really afford.
How much are our current monthly credit card payments? – Don’t use one if you know you are an impulsive buyer. Go ahead! Cut it in half. Now!
Can we afford maintaining a car? – Some families even have more than one. If you are a dual-income household and you have two cars, you might want to think about letting go of one. Mother Earth will be so happy.
How will be cover health insurance? – Or do you even have one?
Is our life insurance adequate? – Again, do you have one?
What’s our overall debt situation? – Credit card balances are debts, so consider those. House mortgage, car mortgage, and even insurance premiums.
How will we cut back on costs? – I have so many tips on this, starting with letting go of the househelps! How to survive without a househelp will be another good post, don’t you think?
How will we fund retirement? – Uhmmmmm… can I invite you for coffee one of these days? 🙂 Seriously, let me know if you’re interested on a financial management talk, I will sponsor you. I sleep better at night because I know we are covered. 🙂
What are our options? – How determined are you to make it work? Then you’ll know you won’t run out of options.
Can we find or create additional income? – Definitely! Just ask me. 🙂
My 15 minutes is up! Let’s meet again tomorrow for a continuation of this talk.
P.S.
I’m squatting on my kids’ PC coz my office desktop has been acting up for the last four months, and today has been the worst. Monitor dies every so often. Well, it celebrated it’s 5th anniversary last November, so maybe it’s really tired. Maybe it’s time we consider getting a replacement. And the good thing is… I’m not worried about a possible purchase because I’ve been saving for it for two years! Companies replace computer units every three years, so from the time my desktop turned two, I’ve been saving up for it.
Do you have questions, comments or feedback about this post?
Please leave me a message, or post them, at my Facebook Page.
by The Happy WAHM
Is it at all possible?
I’d say, yes, it is!
My husband and I are work-at-home parents, and we are a one-income household.
Errrrrr… how is that again?
We are both working from home, but we are a one-income household.
Simply put, both of us are earning, but we are living on one spouse’s income. The other spouse’s salary goes to a bank account.
Why are we doing this?
My husband and I started a family at a time when we were both gainfully employed. Both of us were enjoying the tenure and all the benefits that go with that tenure. We were with a company that was part of a conglomerate. The pay was good, and so were the benefits. So we enjoyed life. Regular lunch outs. Weekly out of town trips. Two househelps. Living on no budget. We simply spent on what we want. Although I was already saving, it was being done without a clear purpose.
But our circumstances changed. I had to give up my salary and benefits. But of course, we all know how I thrived on my WAHM career. And then, it was his turn. So we had a lot of practice on being a one-income household. We had a lot of practice on putting all our ducks in a row and making them stay there. Now that we are both freelancing, we have decided to forget about the rehearsal and make it the main show.
Again, why?
Because freelancing actually offers no safety nets. We are not getting any younger, and we have three kids. One started college last year. And our youngest is only ten. A lot of years ahead that we have to prepare for. So we need really deep reserves. Health, education, daily living, emergencies, investments, retirement. These are the major items in our list. I don’t want for us to grow old and be burdens to our children. Or if we go early, we want our kids to have something to start with.
We need to always be prepared for emergencies, like when Glenda happened and we needed to have repairs done around the house. Like when we were burglarized and we needed to install security cameras.
As online workers, we have to always be on top of our game with gadgets. We have to always have some amount stashed, ready for equipment repairs or replacement.
We have three kids, all needing dental braces. We already started our middlechild’s treatment. In summer, the firstborn has to start hers. Two kids are already wearing prescription glasses. These are maintenance expenses. And God forbid, if any one of us gets sick, a single hospitalization can create a big dent to our savings since we no longer have health insurance coverage. Just the SSS.
And just today, we had to pay our daughter’s mid-term tuition, and I have to renew my business permit, while hubby is out renewing our car’s registration. Tomorrow, I need to pay our real property tax. And it’s not even middle of the month yet. Imagine if we don’t have funds stashed somewhere.
So yes, we are living (or trying to live) on a single income. And yes, it is possible.
How?
On Part 2 of this post, I’ll share with you how we’re doing it.
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by The Happy WAHM
While I may be bravely going on with life as if nothing has significantly changed, I am also hard at work doing what I’m expected to do – making the best out of a bad situation. I have faced our new reality right from Day 1, and I have since taken these small, but necessary steps, to get us better prepared to survive, and with God’s grace, even thrive.
Assessing Our Current Situation
It’s true, what we need is a great workable plan. But we really cannot make a realistic plan of what we need to do and which direction we need to go if we do not know where we presently are. So just as I did nine years ago, I sat down with my pen and notebook and created a list. I tell you, I’m really getting good at this. 🙂
So my first list is all about what we have. Bank accounts [bank name, account number, balance-to-date], investments, assets inside the home like the computers and gadgets, appliances, the cars, and the value of the house itself. It’s like, okay, if my kids are about to go hungry, what can I sell?
And then another list is of what we owe, like ongoing amortizations on retirement funds, credit card balance [which thankfully is not much], and the projected big ticket expenses like tuition fees. This gives me an idea of how much more we need outside of the day-to-day cost of living. And yeah, the emergency fund, which we need to continually add to.
On another sheet, which I have since transferred to Excel, are two columns – income and expense. Under income is my salary from my retainer gig. Well, that’s all it’s going to be, for now. And under expense are the usual suspects. 🙂 Food, toiletries, gas, internet, phones, electricity, car maintenance, etc. I added these to the monthly totals of the payables above, and what I ended up with is the amount that we actually need monthly. Since we do not have any clear prospects yet for the replacement income, we need to make short-term decisions, and those are basically steps that we need to do to lower our expenses and be within my income range.
What Are Our Absolute Necessities?
Another way of posing that question is: where can we drastically cut expenses? Good thing that school is out, so transportation expense is down to almost zero. We just need to plan our grocery trips more efficiently and cut back on lunches or dinners out. We have also talked to our 14-year old who has a cellphone budget of Php200 a month [that’s Sun’s Unlimited Text with 4 hours of calls monthly] and asked if it’s okay if Daddy will just pass a load to her as needed, until further notice. Thankfully, it was accepted without any fuss.
We have also agreed that we will let go of the older car, as it needs higher maintenance and consumes more gas. And it will not make sense to have two cars when both of us will be working from home, anyway. [That part about both of us working from home is still a work in progress.] The proceeds will be saved for the maintenance and upkeep of the remaining car.
For the utilities, we have already implemented power-saving rules around the house [which I may write about in another post]. All we need to do is to make sure that those are strictly implemented. Since it’s summer, my contribution will be the no-spinner policy in the laundry department. I’ll just take advantage of the scorching summer sun to dry the clothes. And a more efficient scheduling of wash days. Since a full and a medium load consumes just about the same amount of electricity, it will have to be full load all the time.
Keeping a Watchful Eye
You may think that it’s OA to be listing down every cent that goes out, but yes, that’s what we intend to do. This will help us determine how we are doing in managing what we have. This may also aid us in determining where to take our food from – the market or the grocery. We’ve also agreed that we will use purely cash from this day forward, to avoid unconscious overspending. Because I’ve always paid my credit card in full and on time, we’ve never paid for interests [nor annual fees] on our card purchases. But it is always best to err on the side of caution, so yeah, no more credit card purchases for us. What my brother told me resonates: If you can’t pay for something in cash, you can’t afford it. That has been my mantra, too, but I kinda have gotten used to the convenience of paying with plastic. But in times like this, we cannot afford to slip.
And so keeping in mind what Benjamin Franklin said, we do have to keep a watchful eye, even on the little expenses. 🙂
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