You Cannot Out-Earn a Budget

Kristen and her husband are trying to decide if she can afford to stay home with their son. Dave is concerned about such a significant income drop and adjusting lifestyle.

QUESTION: Kristen in Oklahoma City and her husband are trying to decide if she can afford to stay home with their son. He makes $40,000 a year, and Kristen makes $40,000 a year right now. Dave is concerned about such a significant income drop and adjusting lifestyle.

ANSWER: You’ve almost tripled your income, but you don’t have much to show for it was my point. You saved $10,000 and you bought some baby stuff, but you tripled your income. I’m just concerned that you make it. I don’t want you to be under an illusion that this is going to be easy.

What you guys have got to do is you’ve got to sit down and say, “All right, here’s what our spending looks like for the last six months, and here’s what our budget will look like on $45,000.” And you have to write it out and say, “This is going to be our take-home pay on $45,000, and we’ve got to be able to live on that.”

You’re going to be tight. You’re going to be real tight. That’s a big house payment on a $45,000 income. That’s going to be like a third of your take-home pay. That’s pretty tough.

I want you to come home. If that’s what you want to do and you want to be a full-time mom, I’m with you. I want you to do that. I don’t want you to do that and then call me back in three years and go, “Well, we just couldn’t make it, and I just kept putting it on a credit card. Now I’ve got $30,000 in credit card debt. What am I going to do?” You have got to freaking live on this.

Now sometimes a police officer can pick up extra work that is very lucrative.

You cannot out-earn doing a budget. You have to do a detailed written budget, and you’ve got to be very, very careful. I think you should try it. I think you should come home. It’s what you want to do. It’s your goal, and you’re convinced you can make it. I’m not positive you can make it, but I think you can. It’s going to depend on you cutting your lifestyle, and a lot of the stuff you’ve been doing in the last year and a half you just can’t do anymore. You’ve just got to take those habit patterns and throw them in the trash because you’re going to go broke if you do that. You’re going to force yourself back into the marketplace by overspending, and you won’t be able to stay home with your child if you do that because you’ll have bills to pay, and you won’t be able to do that any other way or you’re going to force him to quit his chosen career field of being a policeman. Be careful and diligent on the budget.